Arkham Research has revisited the main forces behind Bitcoin’s sharpest drawdowns and pointed to a repeated pattern: leverage, macro tightening and regulatory pressure often hit at the same time. In its review, Bitcoin lost more than 60% in 2022 as the US Federal Reserve carried out its most aggressive rate hikes in four decades. The study also highlighted a nearly 50% drop after China intensified its mining crackdown in May 2021 and a 50% collapse within 48 hours in March 2020 during the pandemic-driven market panic.
Small dips can turn into liquidation cascades
According to Arkham, excessive leverage remains one of the most common triggers behind violent Bitcoin corrections. A relatively modest decline can activate margin calls, forcing exchanges to close leveraged positions automatically. That compulsory selling pushes prices lower, which then triggers more liquidations. The process can move fast.
The research team cited January 29, 2026 as one example. Weak performance in technology stocks led to a minor drop in Bitcoin, and that initial move was followed by a chain of liquidations. Arkham’s point was that many severe selloffs do not begin with a dramatic shock. They often start with a limited retreat and then spread quickly through a fragile market structure.
Fed tightening and policy actions raised pressure on Bitcoin
Arkham also framed macro conditions as a decisive factor for Bitcoin pricing. When central banks tighten monetary policy, capital tends to leave higher-risk assets first. In 2022, the Fed raised rates aggressively to fight inflation, and Bitcoin came under heavy pressure through the year, ending with a decline of more than 60%.
Regulatory developments can produce a similar effect. The report said that after China expanded its crackdown on mining operations in May 2021, Bitcoin plunged by nearly 50%. Over just a few days, the market erased billions of dollars in value. In that reading, policy news does not only affect sentiment; it can rapidly alter capital flows and risk positioning across the crypto market.
Altcoins and memecoins tend to fall harder
Arkham said major Bitcoin selloffs usually spread deeper losses across the rest of the market. Altcoins and memecoins, seen as riskier assets, often face faster outflows when selling intensifies. The study pointed to October 10, 2025, when news of a 100% tariff on China was followed by simultaneous liquidations across the market, leaving investors with aggregate losses worth billions of dollars.
The panic selling of March 2020 remains another key reference point in the report. As investors rushed into cash during the pandemic shock, Bitcoin lost half its value in 48 hours. Arkham added that once overleveraged positions were washed out, the market was able to stabilize, while long-term holders in many cases stayed through the turmoil.
Institutional participation has not removed volatility
The study said rising institutional participation has made the market more resilient in recent years, with firms such as BlackRock seen as strengthening the broader structure. Even so, Arkham did not suggest volatility has faded. Sharp and sudden declines, the report said, remain one of Bitcoin’s defining traits as an asset class, leaving risk control at the center of market participation.