Current Analysis of the Bitcoin Market: A Comprehensive Examination of the Bear Regime
Introduction
Julio Moreno, the esteemed head of research at CryptoQuant, has recently posited that Bitcoin is entrenched in a bear market that may persist until the third quarter of 2026. This assertion is echoed by Matt Hougan from Bitwise and a growing contingent of institutional analysts who are increasingly employing the term "bear" more liberally than at any time since early 2023. However, it is notable that many of these analysts simultaneously advocate for maintaining or increasing positions in Bitcoin exposure, even amidst this bearish sentiment. This phenomenon generates a definitional conundrum: if the terminology surrounding bear markets evolves—shifting from notions of widespread capitulation and exodus—what implications does this have for institutional strategy and market dynamics?
Furthermore, if the historically significant four-year market cycle is indeed rendered obsolete—as argued by VanEck, K33 Research, and 21Shares in their recent publications—what constitutes the temporal framework for a bear market when traditional calendars cease to apply?
Defining Characteristics of a Bear Market
Traditional Frameworks and Contemporary Applications
The conventional financial definition delineates a bear market as a decline exceeding 20% in a broad market index over a minimum duration of two months. The U.S. Securities and Exchange Commission provides this benchmark, which Bitcoin has surpassed with its considerable downturn. Following its zenith in early October 2025, where values exceeded $126,000, Bitcoin has witnessed a depreciation of approximately 41%, stabilizing around $74,000 as of February 3, 2026. By this widely accepted criterion, the argument for a bear market appears unequivocal.
Despite this, Coinbase Institutional research characterizes the 20% threshold as "somewhat arbitrary," indicating that it may possess diminished relevance within the cryptocurrency domain, wherein significant price fluctuations can occur without necessitating an overarching regime change.
In lieu of strict adherence to conventional metrics, analysts have adopted a nuanced three-part framework comprising:
- Price Trend
- Positioning and Derivatives
- Demand and Liquidity
Price Trend Analysis
Price trend serves as the most conspicuous indicator within this framework. CryptoQuant emphasizes the significance of the 365-day moving average as a pivotal boundary marker. Currently, Bitcoin trades below this threshold, which is situated around $101,448. Moreover, CryptoQuant’s Bull Score Index—a composite measure reflecting on-chain health—has registered a score of 20 out of 100, indicative of extreme bearish conditions. Historical analyses conducted by Coinbase have similarly employed the 200-day moving average to qualify bearish regimes, with Bitcoin likewise falling short of this benchmark.
Positioning and Derivatives Insights
The second signal emerges from an examination of positioning and derivatives markets. Glassnode’s latest Week On-Chain reports reveal notable rotations toward downside protection in options markets and conditions indicative of heightened downside sensitivity, including negative dealer gamma. Such behaviors signify that traders are investing premiums to hedge against potential declines rather than to capitalize on upward movements—a clear indication of defensive market sentiment.
Demand and Liquidity Contextualization
Demand and liquidity provide essential context regarding market structure. CoinShares estimates that substantial holders have liquidated approximately $29 billion worth of Bitcoin since October 2025, while digital asset exchange-traded products have experienced year-to-date outflows totaling roughly $440 million. CryptoQuant and MarketWatch characterize this current regime as one marked by weak demand juxtaposed with contracting stablecoin liquidity—both classical hallmarks of a bear market.
Recent findings from Coinbase’s Institutional and Glassnode global investor survey conducted between December 10, 2025, and January 12, 2026 indicate that only 26% of institutions now classify the market as being in a bear phase—a significant increase from just 2% in previous surveys. Notably, however, 62% reported holding or augmenting net long positions since October while 70% perceive Bitcoin to be undervalued. This dissonance encapsulates the defining characteristic of the current bear market: it is not characterized by capitulation but rather by an acknowledgment of regime shifts while retaining structural exposure.
The Prospective Duration of This Bear Market
Understanding Temporal Dynamics
To ascertain when this bear market may conclude necessitates clarity regarding what constitutes an "end." A rigorous analytical approach posits that such an endpoint should be viewed not merely as a temporal marker but rather as evidence of a regime shift. Analysts recognize three practical triggers for signaling the conclusion:
- Trend Reclamation
- Demand Inflection
- Risk Appetite Normalization
Trend Reclamation
Trend reclamation occurs when Bitcoin consistently regains and maintains trading values above pivotal long-term moving averages (e.g., the 200-day or 365-day) for several consecutive weeks.
Demand Inflection
Demand inflection is recognized through affirmative shifts in exchange-traded fund (ETF) and exchange-traded product flows from subdued or negative trajectories to persistent inflows. Additionally, it involves monitoring large-holder distribution trends to discern any signs of stabilization or slowing sell-offs.
Risk Appetite Normalization
This criterion pertains to options skew returning to balanced levels, indicating diminished demand for downside protection while allowing for sustainable leverage accumulation.
Projected Scenarios
The anticipated scenarios regarding potential outcomes cluster into three distinct time horizons:
- Classic Crypto Winter
- Duration: Mid to late 2026
- Characteristics: Failed rallies; deeper retests.
- Triggers: Sustained inability to reclaim key moving averages; continued weak flows; persistent downside hedging.
- Invalidation: A reclaiming and sustained holding above moving averages alongside positive flow transitions.
- Shorter and Shallower Bear Market
- Duration: Approximately three to six months.
- Characteristics: Range-bound price movements with capped upside potential.
- Triggers: Stabilizing exchange-traded product flows; exhaustion of whale selling.
- Invalidation: Breakdowns below critical support zones accompanied by rising liquidation pressures.
- Liquidity-Wave Regime
- Duration: Variable.
- Characteristics: The conclusion is contingent upon demand and liquidity resurgence rather than adherence to calendrical cycles.
- Triggers: Indicators such as global liquidity proxies; real yields; stablecoin liquidity; hedging demand.
- Invalidation: Improved liquidity failing to translate into reclaiming long-term moving averages—indicating underlying structural weaknesses.
Comparative Analysis: Assessing Bear Market Severity
The current drawdown rate approximating 40% stands considerably less severe relative to historical precedents wherein declines often exceed 70% during previous crypto winters. Nevertheless, multiple analysts project potential downside scenarios clustering around values between $55,000 and $60,000, suggesting that total drawdowns could peak closer to the mid-50% range if these forecasts materialize—still less severe than historical extremes yet substantial enough to warrant classification as a bear market under any standard.
Moreover, there exists an observable bifurcation within the market landscape: while Bitcoin maintains structural leadership amid its downturns, other cryptocurrencies exhibit far worse performance metrics. The Coinbase and Glassnode report elucidates this divergence through dominance metrics coupled with defensive positioning behaviors indicative of a K-shaped market dynamic where asset classes experience disparate impacts from prevailing conditions.
The Evolution Beyond the Four-Year Cycle
In their analyses, both VanEck and K33 Research assert that the four-year cycle has effectively disintegrated, rendering previous methodologies obsolete as cryptocurrency markets evolve towards more intricate frameworks governed by liquidity dynamics rather than temporal cycles alone.
21Shares contends that this evolving cycle may extend potentially up to five years due to lengthening liquidity waves alongside deepening institutional participation within cryptocurrency markets.
What emerges in lieu of the four-year cycle is an emphasis on liquidity-and-flows dynamics encompassing:
- Real yields
- Global liquidity impulses
- ETF/Exchange-Traded Product flows
- Stablecoin liquidity
- Hedging demand
CoinShares explicitly contextualizes Bitcoin’s recent dislocation within relational frameworks involving precious metals alongside macro liquidity adjustments. Concurrently, Coinbase and Glassnode underscore defensive positioning within derivatives markets as immediate indicators reflective of ongoing regime shifts.
The implications concerning bear market duration suggest that while such markets may become more frequent due to evolving dynamics dictated by institutional flows providing foundational support, they may also manifest reduced severity compared to historical cycles characterized by prolonged capitulations.
This engenders an inherent paradox: while bear markets may persist longer within calendar confines, they could simultaneously inflict lesser damage in percentage terms—or conversely end sooner should demand restore itself ahead of established cycle logic predications.
Conclusion: Moving Forward in Uncertainty
In summation, identifying whether we are currently entrenched in a bear market necessitates reliance on comprehensive indicators rather than singular metrics—encompassing trend breaks, hedging demands coupled with demand-liquidity dynamics all corroborate prevailing assessments identifying Bitcoin’s position within a bearish regime.
The resolution lies not solely within traditional halving calendars but rather hinges upon timely demand cycles that dictate future trajectories for Bitcoin valuations.
CoinShares anticipates an interim period characterized by volatility spanning three to six months; conversely, CryptoQuant posits potential pathways leading toward deeper lows later into 2026. Both perspectives may concurrently hold validity contingent upon evolving regime oscillations.
As we navigate these complexities within cryptocurrency markets marked by heightened institutional engagement alongside shifting paradigms, patience remains paramount amid prevailing bearish sentiments—even while institutions continue their pursuits within such tumultuous landscapes.
