Bitcoin's Bear Market: A Two-Month Analysis

By: Isha Das

Recent analyses from CryptoQuant's head of research, Julio Moreno, indicate that Bitcoin might have been experiencing a bear market for about two months. This assertion is based on a variety of technical indicators that have turned bearish since early November. Among these signals, the price of Bitcoin falling below its one-year moving average stands out as a significant marker, suggesting possible future declines and cautioning traders about a potentially lower trading range ahead.

Bitcoin's realized price, currently projected by Moreno to bottom in the $56,000 to $60,000 range, suggests a potential market stabilization point. This range would represent a significant drawdown of approximately 55% from Bitcoin’s peak, although smaller compared to past declines of 70% or more. This bear sentiment arrives during a period where Bitcoin’s market momentum remains subdued, with the cryptocurrency fluctuating in the $88,920 range as of the latest market analysis. Such price behavior follows a year where Bitcoin's price dynamics exhibited notable peaks and troughs, starting from about $93,000 before hitting an October high of roughly $126,050.

In the derivatives market, elusive price movement and modest volatility suggest an atmosphere of caution as Bitcoin nears major options expiries, with over $1.85 billion in options contracts set to close soon. Despite a 39% decrease in derivatives trading volume, open interest has remained stable, painting a picture of hesitancy among traders. Such conditions have confined price actions, with Bitcoin seemingly stuck within narrow trading margins.

Despite these bearish signals, the market does not reflect the same vulnerabilities seen during past crypto crashes, where unexpected events led to significant fallout. This change is attributed to the steady accumulation by institutional investors and the presence of regulated ETFs, which provide some buffer against panic-driven market downturns. Furthermore, macroeconomic and regulatory shifts, such as anticipated U.S. interest rate adjustments and potential regulatory changes, might shape Bitcoin’s path moving forward. Analysts are divided on whether the market will rebound in the upcoming year, but they agree on closely watching key metrics like the one-year moving average and realized price. As the market braces for these possible changes, both optimism and caution seem equally warranted.