"Every bitcoin price bull market to date has followed a familiar pattern of explosive upside followed by sharp drawdowns, with each cycle delivering lower percentage gains than the last. This phenomenon, known as diminishing returns, has become one of the most persistent narratives in Bitcoin. The question now is whether this cycle will follow the same trajectory or if the maturation of Bitcoin as an asset class could bend the pattern."
"One reason for the less explosive upside gains can be seen in the Supply Adjusted Coin Days Destroyed (CDD) metric, which tracks the velocity of older coins moving on-chain. In past cycles, such as the 2021 bull market, long-term holders tended to sell after Bitcoin had already appreciated ~4x from its local lows. However, in this cycle, similar levels of profit-taking have occurred after just 2x moves."
"Another factor is Bitcoin Volatility. Bitcoin's quarterly volatility has trended steadily lower. While this reduces the odds of extreme blow-off tops, it also supports a healthier long-term investment profile. Lower volatility means the capital inflows required to move price grow larger, but it also makes Bitcoin more attractive to institutions seeking risk-adjusted exposure. This shows up in the Bitcoin Sharpe Ratio, where Bitcoin currently scores more than double that of the Dow Jones Industrial Average."
Bitcoin bull markets have produced successively lower percentage gains per cycle, a pattern labeled diminishing returns. The current cycle has yielded about 630% growth from cycle low to the most recent all-time high versus over 2,000% in the prior cycle, implying roughly $327,000 would be required to match the prior magnitude. Supply-Adjusted Coin Days Destroyed (CDD) indicates long-term holders are realizing gains after smaller price increases—now often after 2x or even 30–50% moves—dampening parabolic advances. Quarterly volatility has trended lower, increasing institutional appeal and raising the capital needed for large price moves. Bitcoin's Sharpe ratio exceeds that of the Dow Jones Industrial Average by more than twofold.
Read at Bitcoin Magazine
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