Bitcoin Is Down 32% From Its $126K Record High One Year Later

Bitcoin is down 32% from its record high, a decline that would normally be considered a market crash in traditional finance. But compared with bitcoin’s previous bear markets, the latest pullback has been relatively modest.

Bitcoin reached a record above $126,000 on Oct. 6, 2025. One year later, the cryptocurrency was trading at $85,453, leaving it 32% below that peak.

The difference becomes clearer when compared with previous cycles. One year after the 2013 peak, bitcoin had fallen 69.7%. Following the December 2017 top, it was down 82.3% after a year. A year after the November 2021 high, bitcoin had declined 74.6%, according to CoinDesk calculations.

The entire downturn has also been less severe this time. Bitcoin bottomed at just below $59,000 on June 30, representing a decline of more than 53% from its record. Earlier bear markets produced drawdowns of roughly 77% to 85%.

The current cycle therefore differs in two important ways: the decline has been smaller, and the bottom arrived sooner. Previous cycles generally reached their trough around the one-year anniversary or later. This time, the low came roughly nine months after the peak, followed by a relatively quick recovery.

“The most notable changes are the significantly shortened duration of the drawdown and the reduced time spent at the bottom,” Tim Sun, senior researcher at HashKey Group, told CoinDesk.

Institutional Investors Changed the Cycle

One explanation for the difference is the type of investors responsible for the preceding rallies.

Earlier bitcoin bull markets were heavily influenced by retail traders and leverage. Those rallies often ended in severe crashes, with leveraged positions being liquidated and some funds and exchanges collapsing, as happened during the 2022 downturn.

The 2023–25 rally had a different foundation. Institutional capital entered bitcoin through regulated investment products such as ETFs, while the subsequent decline was driven largely by a macroeconomic reversal in those flows.

“While previous cycles were driven primarily by retail investors and leverage, buyers in this current cycle increasingly stem from outside the crypto market, including ETFs, asset management giants, family offices, and even corporations,” Sun said. He added that the increasing role of external asset allocation is a major reason the market has behaved differently.

Sun said the latest downturn was not primarily the result of unexpected “black swan” events. Instead, capital moved out of the market as the broader macroeconomic environment and asset-allocation landscape changed.

“Consequently, despite undergoing significant adjustments, the market did not trigger the persistent negative feedback loops seen in the past,” he said.

Griffin Ardern, co-founder and volatility desk portfolio manager at Primal Fund, said institutional capital also behaves differently from speculative retail money.

“ETF allocation money rebalances to target weights — it buys weakness by construction,” Ardern said.

He added that much of the market’s leverage was eliminated near the top and failed to return in a meaningful way. That helped limit the speed and severity of the decline.

“Hence nine months to grind out a 53% decline, rather than a few months of cascading liquidations taking it down 80%,” Ardern said.

A major leverage reset occurred on Oct. 10 last year, when a macro-driven sell-off triggered more than $19 billion in liquidations across crypto derivatives markets. Temporary price dislocations on Binance involving tokens such as USDe, wBETH and BNSOL increased the stress. Several exchanges also used auto-deleveraging mechanisms that forcibly closed profitable positions to offset losses.

Lower Volatility Cuts Both Ways

A less violent bear market may also mean less explosive upside during rallies.

“As bitcoin evolves and more participants come to market, the realized volatility of the asset will decrease. This means shallower drawdowns and lower peaks and is likely a contributing factor to the more muted sell-off we saw in the last cycle,” said Jeff Anderson, head of U.S. at market-making firm STS Digital.

Bitcoin’s volatility has declined steadily since U.S. spot ETFs launched in early 2024, reducing some of the “Wild West” characteristics that once defined the asset.

Sun said bitcoin’s current annualized volatility is around 40%, significantly below its long-term historical level of more than 80%.

The options market is showing a similar trend. Ardern pointed to bitcoin’s DVOL index, which measures annualized implied volatility, saying it has remained around 35 points.

“The shape going forward is probably a staircase — grind up, air pocket, fast repair — rather than a parabola,” he said.

Still, Sun does not believe bitcoin has lost its ability to produce sharp rallies. Bitcoin’s monetary structure could allow relatively small changes in demand to have an outsized impact.

The cryptocurrency has a maximum supply of 21 million coins, while long-term holders control a large portion of the existing supply. A combination of substantial ETF inflows over a short period, a rapid improvement in macro liquidity or concentrated short covering could therefore produce another powerful move higher.

Under those circumstances, “marginal demand can still exert a powerful upward push on prices, potentially triggering non-linear surges,” Sun said.

Derivatives Traders Remain Cautious

Ardern’s main concern is positioning rather than bitcoin’s recent drawdown.

Implied volatility is close to its lowest percentile on record, while one-year options skew remains neutral to bearish.

“The derivatives market has bought ‘shallow’, but nobody is willing to pay for ‘upside exposure’ yet,” he said.

Options skew compares the cost of bullish call options with bearish puts. A neutral reading suggests traders are not aggressively paying for upside exposure.

Ardern also warned that the narrative surrounding bitcoin’s relatively mild drawdown could itself become a contrarian signal. When investors become most confident that declines will remain shallow, the cost of downside protection may be at its lowest.

He believes the severity of bitcoin’s next major decline will depend less on the cryptocurrency’s technical chart and more on the long end of the U.S. Treasury market.

“If the 30-year [yield] defence keeps failing, this cycle may not stay shallow either,” Ardern said.

The 30-year Treasury yield recently reached 5.7%, a level last seen in April 2002. It has climbed more than 80 basis points this year, increasing the opportunity cost of holding assets such as bitcoin and gold that do not generate a yield.

The Treasury announced a larger bond buyback program in August in an effort to contain rising yields. Bitcoin responded positively, climbing from around $64,000 to nearly $80,000 within days. However, Treasury yields have continued to rise.

Some analysts argue that the increase is being driven by fiscal concerns rather than stronger economic growth. Under that interpretation, the same pressure could benefit gold and bitcoin as investors seek alternatives.

Ardern compared the current environment with the Nasdaq between 1994 and 1999, when “policy slows down, the cycle stretches, every interim correction is shallow.”

But he offered a warning about what happened next.

“Just remember how that story ended,” he said.

The Nasdaq reached its peak in March 2000 before losing nearly 78% over roughly the following two years.

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