Bitcoin's decline from 94% to 23%: The market evolution behind bull and bear retracements

For Bitcoin holders, every dramatic fluctuation like an electrocardiogram pulse stirs countless nerves. This digital asset, born from financial ruins, has repeatedly etched the label "high volatility" through epic rises and falls. The best indicator to measure this heartbeat intensity is the retracement percentage from the peak of a bull market frenzy to the cold abyss of a bear market. This is not just a cold number; it is a history of market sentiment, capital narratives, and resilience intertwined.

Delving into historical data, a core pattern emerges clearly: in Bitcoin's coming-of-age, a typical bear market cleansing often locks in retracement depths between -75% and -85%. Exceeding -80% can be called a "deep bear"; if below -65%, it is usually regarded as a deep correction during a bull run. This "pain threshold" is the first key to understanding Bitcoin's cyclical rhythm.

1. Wilderness Era: From Obscurity to the First Disillusionment

Bitcoin's story begins with an almost zero-like legend.

· 2011 Bull → Bear (-94%): From less than $1 at the start of the year to $32 in June, Bitcoin achieved its first thousandfold surge, attracting global geeks and adventurers. The subsequent steepest crash in history followed—within five months, the price plummeted to $2, with a retracement of 94%. This crash was an inevitable pain point for a nascent entity lacking liquidity, awareness, and infrastructure, yet it also proved its resilient vitality.

2. Cycle Prototype: Double Top Pattern and the Deep Bear Mode

As Bitcoin entered a broader horizon, its cycle began to show classic patterns.

· 2013 Bull (First Top) → Correction (-75%): Driven by narratives like the Cyprus banking crisis, Bitcoin surged to $266 in April 2013, then crashed to $65 due to Mt.Gox exchange issues, completing a -75% deep correction. But this was only a halftime break.
· 2013 Bull (Second Top) → 2015 Bear (-86%): Later that year, enthusiasm in China pushed the price to an astonishing $1,240, forming a "double top." A 15-month bear market ensued, with the price bottoming at $175, an 86% retracement. This cycle fully demonstrated the "rapid rise - correction - re-acceleration - deep bear" script, with about -80% retracement becoming a market memory.

3. Prelude to Mainstream: ICO Frenzy and the Long Crypto Winter

Before Bitcoin entered the trillion-dollar market cap club, it experienced its last traditional deep bear market.

· 2017 Bull → 2018 Bear (-84%): Amid liquidity flooding from ICO (Initial Coin Offering) mania, Bitcoin soared to a record high of $20,000, becoming a global financial topic. After the bubble burst, a three-year "crypto winter" followed, with prices falling to $3,200 by late 2018, an 84% retracement, reaffirming the -80% threshold's validity.

4. Paradigm Shift: Institutional Entry and Structural Moderation of Retracement

In the 2020s, macro environment and market structure changes began quietly rewriting historical patterns.

· 2021 Bull (First Top) → Correction (-56%): Driven by institutional funds and loose monetary policies, Bitcoin rose to $69,000 in April 2021. Subsequently, China's crackdown on mining triggered a "mining disaster," with prices dropping to $30,000, a 56% retracement. Though deep, this correction did not break key trend lines, proving to be a stress test within the bull market.
· 2021 Bull (Second Top) → 2022 Bear (-77%): Later that year, after another attempt at $69,000 without new highs, Bitcoin fell to $15,500 in November 2022 amid aggressive Fed rate hikes, LUNA/UST algorithmic stablecoin collapse, and FTX exchange meltdown. The 77% retracement seems to follow historical patterns but hides two key changes: first, the bear market bottom is now much higher than the previous bull peak (2017), indicating a stepwise market foundation; second, although the retracement is deep, it did not reach the -80% extreme, showing stronger buy support.

5. New Narrative: ETF Era and "Moderate" Volatility

The current evolving cycle exhibits unprecedented features.

· 2023 to present bull correction (max about -23%): With the approval of US spot Bitcoin ETFs, Bitcoin hit a new high of $73,800 in March 2024. The maximum retracement since then was only about -23% (to $56,500). With ETFs bringing stable incremental capital, signs of structural decline in market volatility are emerging. The frequency and magnitude of deep corrections may weaken, but the cycle's pulse persists.

Conclusion: An Ever-Evolving Risk Management Textbook

Looking back at Bitcoin's bull and bear retracement history, a clear evolutionary path emerges: from early near-zero wild fluctuations, repeatedly validating the -80% threshold, to now, where institutionalization and financialization have led to structural moderation of volatility.

For investors, this history is a vivid risk management textbook:

1. Respect the cycle: Deep bear markets (-75% to -85%) are the "pressure wash" mechanism of Bitcoin's ecosystem, an unavoidable part.
2. Recognize stages: Retracements of -30% to -50% are more likely during bull markets, representing opportunities rather than doomsday; falling below -65% warrants caution for cycle shifts.
3. Understand change: The market is maturing. Financial products like ETFs act as shock absorbers, but human greed and fear remain the underlying fuel driving cycles.

Bitcoin's heartbeat remains strong, but its rhythm is shifting from heavy metal rock to a still passionate yet increasingly complex symphony. Understanding the strength of its retracements is akin to hearing the most critical notes in this musical composition.