Two Ways This Bitcoin Bull Market is Sturdier Than 2020-21 and 2017

Bitcoin’s current bull market, initiated in early 2023, presents a notable departure from previous cycles, characterized by significantly lower volatility and drawdowns. Unlike prior bull runs marked by sharp pullbacks exceeding 30%, often considered bear market territory in traditional finance, this cycle exhibits a more measured ascent.

Data from Glassnode reveals a three-month rolling realized volatility averaging below 50%, a stark contrast to the 80-100% observed in previous cycles. Similarly, Volmex’s BVIV index, tracking 30-day implied volatility, shows a downtrend. This implied volatility, representing expected future price fluctuations, further supports the observation of increased stability.

This newfound stability is attributed to several key factors. Bitcoin’s burgeoning market capitalization, now exceeding $2 trillion and ranking as the 7th largest asset globally, significantly increases the capital required to manipulate its price. This deepened liquidity inherently fosters stability.

Furthermore, the emergence of US spot ETF products and increased regulatory clarity have fundamentally reshaped the investor base. Sophisticated institutional investors, previously largely absent, now have readily available avenues for Bitcoin exposure, contributing to price stability.

The price chart itself illustrates this change. The 2020-2021 bull run, from $4,000 to $70,000, featured several steep corrections. In contrast, the current rally from approximately $30,000 to over $100,000 showcases a stair-step pattern—impulsive upward movements followed by periods of consolidation. Glassnode highlights that drawdowns in this cycle generally remain below -25%, with only two instances exceeding -30%.

This steadier trajectory is linked to increased institutional participation, reduced leverage, and lessened speculative excesses. The significant leverage (up to 100X) offered by exchanges during previous bull runs amplified both gains and losses, leading to liquidation cascades and substantial price corrections. The subsequent reduction in leverage by major exchanges, including Binance, has played a crucial role in mitigating these dramatic swings, fostering a more sustainable and less volatile bull market.