High global debt, multiple sources of money creation, and massive investment needs are keeping liquidity flowing into risky assets like crypto. This metric also helps determine whether the market has entered a bear phase. At that time, many suggested that crypto prices would hit higher highs. The decline has raised concerns that the market might be entering another long period of falling prices. Recently, there’s been talk about the crypto market heading back into a bear phase. This phase occurs when supply surpasses demand, causing prices to decline over an extended period.
The duration varies, but bear markets can last months or even years, depending on market conditions and external factors. Position sizing matters more than ever during bear markets. This volatility reminds us that crypto hotforex broker markets are significantly shaped by external influences and investor sentiment—characteristics of an asset class that is still evolving. The ongoing bear market illustrates the rapid changes in sentiment within the crypto space. For example, the 2021–2022 bear market lasted 21 months, with Bitcoin’s price dropping a painful 77% from its all-time high.
Bear Market or Bear Trap? Analysts Divided on Crypto’s Latest Downturn
Taken together, these developments suggest a more disciplined and demand-sensitive market structure. Grachev echoed this view, arguing that 2026 may not align neatly with traditional market labels. Excess leverage has been flushed, but the underlying architecture — ETFs, corporate treasuries, and clearer policy frameworks such as the GENIUS Act — suggests any downturn is likely to establish a higher floor than previous cycles.
- Elkaleh told BeInCrypto that the market’s failure to meet bullish expectations in 2025 marks a clear transition from speculative excess to a macro-correlated asset class.
- However, most experts advise against shorting Bitcoin and other cryptocurrencies because it could potentially lead to unlimited losses or liquidation of your position.
- Of course, it still takes strategy and risk tolerance.
- Earlier, many market participants confidently predicted that the altcoin would reach between $8,000 and $10,000, but those expectations have yet to be realized.
- If this holds true, the bear market might not be imminent, and the cycle could still be in its bear phase.
- Elkaleh suggested that the bear case would weaken significantly if signs of sovereign adoption or large-scale tokenization of financial assets emerge.
Bull markets start when investors feel confident that prices will increase and the uptrend will continue over a prolonged period. For those out of the loop, a bear market can be best defined as a prolonged drop in asset prices, which then causes your portfolio to shed value. Following these tips will teach you how to survive crypto bear markets. Despite this fact, major altcoins have yet to reach all-time highs, which typically happens in crypto bull markets but has not happened in the 2024 bull cycle. And in a bear market, you will likely have the opportunity to buy assets at a lower price. Dollar-cost averaging, or DCA, is a simple but long-term strategy in which you continuously buy small amounts of an asset over a period of time, regardless of the price.
“The bursting of the AI bubble could also be a catalyst that brings crypto down. According to Puckrin, an extreme bear scenario would likely require a convergence of factors. While the broader outlook remains cautiously optimistic, the market has a track record of defying expectations. Grachev stressed that the “painful reset” on the October 10 crash has left the market in a healthier position.
Do all cryptocurrencies follow the same bull and bear cycles as Bitcoin?
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This fund is your safety net and it shouldn’t be considered as part of long-term savings and investment plans. When several align, it is worth rethinking how much risk you are carrying. Understanding these terms helps you gauge whether you’re dealing with temporary volatility Luno exchange review or a structural downturn. Nonetheless, the market remains notably volatile, with macroeconomic headwinds continuing to exert a substantial influence, highlighting the importance of maintaining caution.
Crypto’s 2025 ‘whipsaw’ year drove capitulation as markets look toward a 2026 rebound, Pantera says
Bitcoin will still drive the markets, but I’m not convinced that other crypto assets will follow as closely as they did in prior cycles,” he noted. This report delves into the bear markets’ specifics, analysing their characteristics, trends, and opportunities for investors. Stay calm when crypto assets plunge and learn crucial tactics to grow your investments during a bear market. Higher activity among institutional investors and growing investments in crypto assets confirm the end of a bearish phase.
Is XRP Cryptocurrency a Good Investment in 2026?
Pudgy Penguins is emerging as one of the strongest NFT-native brands of this cycle, shifting from speculative “digital luxury goods” into a multi-vertical consumer IP platform. That dynamic helped digital asset equities outperform tokens during the year. Rather than fundamentals, Pantera said macro shocks, positioning, flows, and market interactive brokers structure dominated price action.
During this time, FTX, one of the largest crypto exchanges by trading volume, collapsed following a massive bank run. If it fails to recover, it could signal a bear market. Furthermore, the economist pointed to Ethereum’s dip below $4,000, arguing that it now places ETH in an official bear market. Some argue it could mark the onset of a bear market, while others see it as a short-lived bear trap that could quickly give way to another rebound. Returns on the buying and selling of digital assets may be subject to tax, including capital gains tax, in your jurisdiction. Nothing contained herein shall constitute a solicitation, recommendation, or offer by Crypto.com to invest, buy, or sell any digital assets.
- Unlike traditional markets with decades of stability and regulation, crypto runs 24/7 with fewer guardrails.
- Around 26% of institutional respondents and 21% of non-institutional respondents reported that they believe the crypto market is currently in a bear market (markdown) phase.
- With the right investments, a bear phase can lay the groundwork for future gains.
- The winners are the ones who stay informed, stay patient, and keep showing up through every phase.
- In these cases, it is essential to modify your investment plan and the level of risk you are willing to accept with your investments.
- A bear market is marked by falling prices and pessimism, while a bull market sees rising prices and strong investor confidence.
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Before deciding to trade, you need to ensure that you understand the risks involved and take into account your investment objectives and level of experience. As a result, CFDs may not be suitable for all investors because you may lose all your invested capital. Trading CFDs carries a high level of risk since leverage can work both to your advantage and disadvantage. I’m ready to open a trading account and make money from Forex When a single asset tumbles, it can drag down overall performance. Panic selling leads to losses and delays any chance of a bullish trend.
At the same time, investors should keep a defensive posture and adjust their portfolios as market conditions change. To cut risk, investors should monitor technical indicators and consider the broader market structure. To open a short position, traders borrow an asset against collateral (margin) and sell it at the current market price, expecting it to fall. This approach works best when cryptocurrency markets are experiencing sustained selling pressure. When choosing assets, it is safer to stick with stablecoins such as USDT, USDC, or DAI, along with large-cap cryptocurrencies like BTC and ETH. Ethereum, compared with other asset classes in the crypto space, was hit especially hard during the same period.
Dollar-Cost Averaging
If the NUPL continues to decrease and reaches 0.40 or lower, bears could take control. This makes the current reading a critical point for the market. In July, a similar drop in this range led BTC’s price to decline to $55,857.
Bitcoin vs Bitcoin Cash: Key Differences Between BTC and BCH
Check out our article on portfolio management to see how to develop a long-term trading strategy. Research shows that over the long term, DCA can yield better results than trying to time the market. Timing the market isn’t the only strategy, and many seasoned traders prefer another approach known as DCA, especially during times that tug at the heartstrings.
Crypto bear markets are painful, but they are also temporary. Since cryptocurrencies are high-risk assets, they are usually the first to be sold off when investors de-risk. Around 26% of institutional respondents and 21% of non-institutional respondents reported that they believe the crypto market is currently in a bear market (markdown) phase. A recent survey by Coinbase Institutional and Glassnode reveals that around one-quarter of both institutional and non-institutional investors view the crypto market as being in a bear phase. Negative news, fear, and uncertainty often drive prices lower, making sentiment a key factor in market cycles. A crypto winter is an extended bear market with prolonged low activity and sentiment, often lasting over a year.
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