Bitcoin’s reputation has historically been built on extreme boom-and-bust cycles, with steep drawdowns of up to 90% following 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 drawdowns compressing to about 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 Tuesday, in which he noted growth is becoming “less impulsive,” with a reduced probability of extreme downside events as bitcoin matures.

‘Less dramatic’

Wainwright pointed out that the current drawdown 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 to the upside than the previous and downside risk has also been less dramatic,” he said.

Fernandes and Wainwright, of course, were referring to previous “bust” periods, most notably following the peaks of 2013 and 2017.

After reaching a high of approximately $1,163 in late 2013, bitcoin entered a prolonged “crypto winter” that saw its price plummet to around $152 by January 2015, representing a drawdown of roughly 87%. A similar pattern was seen after the 2017 bull run, when it reached $20,000 in December before plummeting roughly 84% to $3,122 over the following 12 months.

Not all analysts agree that deeper drawdowns are off the table.

Bloomberg Intelligence’s Mike McGlone told CoinDesk that he believes bitcoin could still see a “normal reversion” toward $10,000, arguing that “the crypto bubble is over” and that any downturn could coincide with broader declines across equities, commodities and other risk assets.

However, Fernandes, who has previously dissented with McGlone’s $10,000 forecast, said that scale itself is part of the story. As bitcoin grows into a larger asset class, the likelihood of 90% collapses diminishes simply because the capital required to drive such moves is too great. That effect is reinforced by institutional integration, from ETFs to pension exposure, which makes large-scale unwinds structurally harder.

Portfolio ‘efficiency’ enhancer

The shift is already showing up in portfolio construction.

“The portfolio data is really what shifts institutional behavior,” Fernandes said. “If a small 1% to 3% allocation can materially improve returns and Sharpe ratios without significantly increasing drawdowns, then bitcoin starts to function less like a standalone bet and more like an efficiency enhancer within a diversified portfolio.”

That framing changes the risk calculus. “The risk isn’t about owning bitcoin anymore,” Fernandes stated. “It’s the opportunity cost of having no exposure at all.”

Recent Fidelity research supports that transition. In a 10-year comparison across major asset classes, bitcoin delivered roughly 20,000% returns, significantly outperforming equities, gold, and bonds, while also leading on 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 top-performing asset in 11 out of the past 15 years,” the report noted.

At the same time, the tradeoff is becoming clearer.

“There’s a tradeoff 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 drawdowns.

If bitcoin is no longer falling 80%, and portfolios can benefit from small allocations without materially increasing risk, then the asset is evolving into something more investible and usable, Fernandes said, concluding that for institutions, that may be the real inflection point.