Bitcoin’s reputation has historically been built on extreme boom-and-bust cycles, with steep write-downs of up to 90% after all-time highs.
This cycle, however, the decline has been closer to 50%, a shift that analysts said reflects the maturation of BTC as an asset class.
“Bitcoin’s withdrawals compressing to around 50% is a sign of a maturing market structure,” AdLunam co-founder and market analyst Jason Fernandes told CoinDesk.
“As liquidity deepens and institutional participation increases, volatility naturally compresses on both the upside and the downside,” he added, saying that “at that point the narrative shifts from questioning its legitimacy to optimizing allocation.”
Fernandes’ comments are in response to Fidelity Digital Assets analyst Zack Wainwright’s X post on Tuesday, in which he noted that growth is becoming “less impulsive,” with a reduced likelihood of extreme downside events as bitcoin matures.
‘Less dramatic’
Wainwright pointed out that the current pullback from the Oct. 6 all-time high of just over $126,200 is much less significant than previous pullbacks.
“Each cycle has been less dramatic on the upside than the previous one, and downside risk has also been less dramatic,” he said.
Fernandes and Wainwright, of course, referred to previous “bust” periods, particularly after the peaks of 2013 and 2017.
After reaching a peak of around $1,163 in late 2013, bitcoin entered a prolonged “crypto-winter” that saw the price plummet to around $152 in January 2015, representing a drawdown of around 87%. A similar pattern was seen after the 2017 bull run, reaching $20,000 in December before plunging around 84% to $3,122 over the following 12 months.
Not all analysts agree that deeper moves are off the table.
Bloomberg Intelligence’s Mike McGlone told CoinDesk he believes bitcoin could still see a “normal return” towards $10,000, arguing that “the crypto bubble is over” and that any decline could coincide with broader declines across stocks, commodities and other risk assets.
However, Fernandes, who has previously disagreed with McGlone’s $10,000 forecast, said the scale itself is part of the story. As bitcoin grows into a larger asset class, the likelihood of 90% collapsing decreases simply because the capital required to power such moves is too great. That effect is compounded by institutional integration, from ETFs to pension exposure, making large liquidations structurally more difficult.
Portfolio ‘efficiency’ amplifier
The shift is already evident in the portfolio construction.
“The portfolio data is really what changes institutional behavior,” Fernandes said. “If a small allocation of 1% to 3% can significantly improve returns and Sharpe ratios without significantly increasing drawdowns, then bitcoin begins to function less as a stand-alone bet and more as an efficiency enhancer within a diversified portfolio.”
That framework changes the risk calculation. “The risk is no longer about owning bitcoin,” Fernandes said. “That’s the opportunity cost of having no exposure at all.”
Recent Fidelity research supports this transition. In a 10-year comparison across major asset classes, bitcoin delivered around 20,000% returns, significantly outperforming stocks, gold and bonds, while also leading risk-adjusted measures despite its volatility.
“Bitcoin remains a relatively young asset, yet it has quickly matured into a major asset class and has been the best-performing asset for 11 of the past 15 years,” the report noted.
At the same time, the balance becomes clearer.
“There’s a trade-off here that’s worth articulating,” Fernandes said. “As bitcoin matures and volatility compresses, you should also expect returns to normalize. The asymmetric upside of the early cycles came with extreme drawdowns, but as those drawdowns shrink, the asset increasingly behaves like a macro allocation rather than a venture-style bet.”
That brings it back to the cuts.
If bitcoin no longer falls 80%, and portfolios can benefit from small allocations without significantly increasing risk, then the asset evolves into something more investable and usable, Fernandes said, concluding that for institutions that could be the real pivot.
