The cryptocurrency market is currently facing significant distress as Bitcoin values fall beneath the average cost for short-term investors. Data from CryptoQuant highlights a persistent downtrend over four months, suggesting the beginning of a bear market. This decline is exacerbated by the absence of fresh capital flows, which contributes to market illiquidity and heightens downward price pressure.
Are Recent Losses Indicating a Bear Market?
CryptoQuant expert ‘Darkfost’ highlights that Bitcoin’s recent price drop to about $67,000 has resulted in substantial unrealized losses for short-term investors, who entered at an average price around $94,200. These conditions resemble past severe bear markets, where prolonged stress led to significant financial losses.
A key concern is the retreat of new investment, reversing the usual bullish trend of buying into dips. The lack of new market participants to counter sell pressure signals a transition into a bear market phase.
Could Long-Term Holders Stabilize the Market?
Despite current challenges, Bitfinex experts offer a more positive outlook, viewing the present market dynamics as a “mid-cycle reset.” Long-term investors, or ‘whales,’ have resumed Bitcoin accumulation, enhancing their reserves to 14.3 million BTC. This strategic acquisition suggests the decline might be a temporary correction, not a permanent downturn.
However, Bitcoin is still facing selling pressures, trading near $67,200. Ethereum, the second-largest cryptocurrency, has also dropped below $2,000, pointing to challenges in the altcoin sector. While not yet reaching new post-March 2025 depths, recovery signs remain elusive.
Market analysis underscores several points:
- Short-term Bitcoin losses align with bear market patterns.
- New investment inflows are insufficient to support prices.
- Long-term accumulation might buffer against further declines.
- Bitcoin’s breach of key Fibonacci levels raises concerns.
Without fresh capital inflow, market testing of lower support zones is likely to continue. The recent dip below $66,000 is reducing traders’ risk appetite. Upcoming macroeconomic data and institutional actions will be crucial in determining the market’s future trajectory.
Bitfinex analysts state, “Current market dynamics are more indicative of a reset within the cycle, rather than a termination.”
