Indeed, that is correct. Exactly one year after achieving a peak above $126,000 on October 6, 2025, the price of bitcoin stands at $85,453, representing a decline of merely 32%.
Within conventional financial markets, a downward movement of that magnitude would be considered a major crash. For bitcoin, however, this represents a significantly milder correction compared to historical bear markets.
Calculations provided by CoinDesk reveal that precisely twelve months following the 2013 peak, bitcoin had fallen by 69.7%. Similarly, the cryptocurrency dropped by 82.3% subsequent to the December 2017 high. One year after the November 2021 top, the asset was down 74.6%.
This reduced rate of decline is not restricted solely to the one-year mark. The entire bear market itself has demonstrated a more subdued nature. During its lowest point on June 30, when prices dipped just beneath $59,000, bitcoin was down greater than 53% relative to its all-time high. Conversely, previous bear cycles recorded price collapses ranging from 77% to 85% below record highs.
Fundamentally, two distinct elements have shifted. The bear phase has proven to be less severe, and the lowest valuation materialized earlier. In past cycles, the absolute bottom generally occurred around the one-year anniversary or later; on this occasion, the trough formed after roughly nine months, followed by a swift rebound.
According to Tim Sun, senior researcher at HashKey Group, the most prominent shifts involve the markedly shortened duration of the drawdown and the minimal time spent at the market bottom.
Market participants changed
The primary driver behind why earlier bear markets suffered deeper and longer price contractions relates to the composition of the preceding bull runs. Retail traders and their heavy reliance on leverage frequently propelled those surges, which commonly concluded with dramatic liquidations involving corporate blowups and exchange insolvencies, as witnessed throughout 2022.
Conversely, the upward trajectory spanning from 2023 to 2025 was propelled by institutional capital flowing through authorized financial instruments like exchange-traded funds, while the ensuing correction mirrored a macroeconomic reversal of those capital movements.
Sun explained that whereas prior cycles relied primarily on retail speculators and leverage, participants in the current cycle increasingly originate from outside the digital asset sphere, encompassing ETFs, major asset managers, family offices, and even corporate entities. This expanding requirement for external asset allocation serves as the primary catalyst behind these structural changes.
Furthermore, Sun noted that the recent market retracement was not solely triggered by unforeseen black swan occurrences; rather, it stemmed largely from capital outflows driven by shifts in the broader macroeconomic climate and the asset allocation environment.
Consequently, even while experiencing substantial adjustments, the marketplace avoided generating the persistent negative feedback loops observed during earlier eras.
Griffin Ardern, co-founder and volatility desk portfolio manager at Primal Fund, indicated that institutional capital operates differently compared to retail speculative flows.
Asset allocations directed through ETFs automatically rebalance toward designated weightings, meaning they structurally purchase assets during periods of market weakness.
Ardern added that leverage was purged precisely at the market peak and never fully returned, allowing nine months to slowly grind through a 53% decline rather than enduring months of cascading liquidations that slash valuations by 80%.
The bulk of that leverage was eliminated on October 10 of the previous year, when a macro-driven sell-off provoked more than $19 billion in liquidations across derivatives platforms. Temporary pricing discrepancies on Binance involving tokens such as USDe, wBETH, and BNSOL compounded the pressure, alongside automated deleveraging mechanisms on various platforms that forcibly liquidated profitable accounts to cover deficits.
The flip side
However, more orderly market corrections come with a distinct trade-off: more subdued rallies.
Jeff Anderson, head of U.S. operations at STS Digital, noted that as bitcoin matures and attracts a wider audience, the realized volatility of the asset naturally declines. This dynamic translates into shallower drawdowns alongside lower peaks, which likely contributed to the more subdued sell-off witnessed in the most recent cycle.
The volatility of bitcoin has experienced a consistent reduction following the introduction of U.S. spot ETFs at the beginning of 2024, softening the wild-west perception historically associated with the cryptocurrency, as previously highlighted by CoinDesk.
Highlighting the statistical shift, Sun pointed out that current annualized volatility for bitcoin hovers near 40%, representing a significant decrease compared to historical levels that frequently exceeded 80%.
Ardern observes a parallel trend within the options sector, where the annualized implied volatility index for bitcoin, known as DVOL, has remained anchored around 35 points.
Moving forward, he suggests the trajectory will likely resemble a staircase characterized by upward grinding, occasional air pockets, and rapid recoveries rather than a parabolic curve.
Nevertheless, Sun does not rule out the possibility of explosive rallies, citing bitcoin’s underlying tokenomics as the primary catalyst.
With the total supply of bitcoin permanently capped at 21 million coins and long-term investors controlling a substantial portion of that inventory, combined with significant ETF inflows over a condensed timeframe, swift improvements in macroeconomic liquidity, or concentrated short-covering efforts, prices retain the potential for aggressive bullish movements.
Under those conditions, marginal demand can still exert a powerful upward force on valuations, potentially sparking non-linear price explosions.
Don’t get too bullish just yet
Ardern offers a broader cautionary perspective regarding market positioning. Implied volatility remains close to its lowest recorded percentile, and the one-year options skew continues to reflect a neutral-to-bearish sentiment.
He noted that while the derivatives segment has priced in shallower corrections, market participants remain hesitant to pay for upside exposure.
Options skew evaluates the price differential between bullish call contracts and bearish put options. A neutral skew indicates that traders are not yet actively chasing call options or upward price exposure.
He also cautioned that the moment the narrative surrounding shallow drawdowns garners the most attention typically coincides with the period when downside protection is most affordable.
According to Ardern, the severity of the subsequent market decline will ultimately be determined by the long end of the U.S. Treasury market rather than technical charts for bitcoin.
He warned that if defensive efforts regarding the 30-year yield continue to falter, the current cycle may not remain mild indefinitely. Stated differently, continued increases in the 30-year yield could ignite a fresh wave of selling pressure across bitcoin markets.
Recently, the 30-year yield climbed to a high of 5.7%, reaching levels not witnessed since April 2002. Having advanced by more than 80 basis points throughout the year, this upward movement elevates the opportunity cost associated with retaining non-yielding stores of value such as bitcoin and gold.
In August, the U.S. Treasury announced an expanded bond buyback initiative designed to curb rising yields. Bitcoin responded favorably, advancing from approximately $64,000 to nearly $80,000 within a matter of days. Yet, yields have not finished climbing. Certain analysts propose that this hardening of yields stems from fundamental fiscal concerns rather than economic growth narratives, which inherently favors assets like gold and bitcoin.
Ardern additionally compared contemporary market conditions to the performance of the Nasdaq between 1994 and 1999, noting that monetary policy slows, cycles stretch out, and intermediate corrections remain consistently shallow.
He concluded with a reminder to recall how that historical scenario concluded, noting that the index ultimately peaked in March 2000 before surrendering nearly 78% of its value over the ensuing two-year period.
Originally published at https://www.coindesk.com/markets/2026/10/06/from-retail-leverage-to-etf-flows-a-year-after-its-record-high-bitcoin-is-down-just-32.
