Bitcoin's 2025 Bear Market: Cyclical Pressures, Sentiment Collapse, and the Road to Reversal

Bitcoin's descent into a bear market in 2025 has sparked intense debate among investors and analysts. After a 27% plunge from its peak of $126,000 to $92,000, the cryptocurrency now faces a familiar cyclical pattern that has historically defined its journey. While short-term pessimism dominates, a closer look at structural trends and investor sentiment reveals a nuanced picture: the bear market may persist into 2026, but the long-term bull case remains intact.

The Resurgence of the Four-Year Cycle

Chinese financial experts, including analysis firm Matrixport, have reinvigorated discussions around Bitcoin's "four-year cycle" as a key framework for understanding the current downturn according to Chinese financial experts. This theory, rooted in Bitcoin's halving events and historical price action, suggests that bearish pressure often lingers for 12–18 months after a peak. With the most recent halving in April 2024 and the 2025 peak now in the rearview mirror, the market is squarely in the "distribution" phase of the cycle.

On-chain data underscores this narrative. Transaction volumes and active addresses have declined sharply since November 2025, signaling thinning liquidity and reduced retail participation according to on-chain analytics. For cyclical assets like Bitcoin, such metrics often precede extended consolidation phases. However, the four-year cycle is not a rigid rule-it's a lens to contextualize volatility. What matters most is whether structural tailwinds, such as institutional adoption, can counterbalance cyclical headwinds.

Investor Sentiment: Disappointment and Exhaustion

Despite landmark achievements in 2025-spot ETF approvals, regulatory clarity, and a crypto-friendly political climate-investor sentiment has collapsed according to market analysis. A key reason? The market's failure to deliver on macroeconomic and structural narratives. Retail and institutional investors alike had anticipated a sustained bull run following ETF launches, but Bitcoin's underperformance against traditional assets like gold and major stock indices has bred disillusionment.

Crypto sentiment is now trapped in "extreme fear," according to on-chain analytics. Fear of missing out (FOMO) has been replaced by fear of further losses, with many investors exiting positions or adopting a wait-and-see approach. This sentiment divergence from traditional markets-where gold and equities have surged-highlights Bitcoin's unique challenges in 2025.

Divergence and the Long-Term Bull Case

While the near-term outlook is grim, the long-term fundamentals for Bitcoin remain robust. Institutional adoption is accelerating, with major firms integrating Bitcoin into portfolios and treasuries according to market analysis. The approval of spot ETFs, though not a magic bullet, has laid the groundwork for broader acceptance.

The critical question is timing. Chinese analysts warn that the bear market could extend into 2026 as the four-year cycle plays out according to Chinese financial experts. However, history shows that Bitcoin's bull cycles often follow prolonged periods of capitulation. The key reversal indicators to watch include:
- A sustained increase in on-chain transaction volumes and active addresses.
- A breakdown of key support levels triggering algorithmic buying from institutional players.
- A shift in macroeconomic conditions, such as interest rate cuts or renewed regulatory optimism.

Conclusion: Patience in the Face of Volatility

Bitcoin's 2025 bear market is a test of both technical analysis and psychological resilience. Cyclical patterns suggest the pain may persist, but structural trends-ETFs, institutional demand, and a maturing regulatory environment-point to a durable bull case. For investors, the challenge lies in distinguishing between short-term noise and long-term signal.

As the market navigates this phase, the lessons from Chinese financial experts and global sentiment analysis offer a roadmap: stay disciplined, monitor on-chain metrics, and remain anchored to Bitcoin's unique value proposition. The next chapter of this cycle may be written in 2026, but the foundation for a reversal is already being laid.