Bitcoin’s Drawdown Breaks Old Rule as Volatility Stays Tame

Bitcoin’s latest downturn is exposing a fundamental shift as the dramatic price swings that once drew in retail risk-takers have softened, reflecting Wall Street’s growing influence on crypto’s market plumbing.

Despite the retreat of as much as 36% since the record high reached in early October, implied volatility has remained contained, a shift that reflects how the institutionalization of the token is reshaping risk transmission. Early in its history, Bitcoin’s value was primarily driven by speculation from traders seeking to profit from its frequent large price swings.

The original cryptocurrency is hovering around $87,000 on Wednesday after clawing back ...