Is Bitcoin Entering a Prolonged Bear Market or Just a Corrective Phase?

Bitcoin's price action in late 2025 has sparked a critical debate: Is this a temporary correction, or the beginning of a prolonged bear market? To answer this, we must dissect the interplay of technical indicators and market psychology, both of which paint a nuanced but increasingly bearish picture.

Technical Indicators: A Bearish Confluence

Bitcoin's recent price trajectory has triggered several red flags. The most prominent is the looming "death cross," where the 50-day moving average ($110,669) is set to cross below the 200-day moving average ($110,459), a historically bearish signal. This crossover, coupled with a 25% drawdown over 41 days, suggests weakening short-term momentum. While the decline is less severe than the 30% drop in April 2025, it has pushed Bitcoin below $100,000-a psychological threshold that has historically signaled capitulation.

Volume patterns reinforce this narrative. November 2025 has seen a surge in redemptions from U.S. Bitcoin ETFs, with $2.8 billion in outflows by November 18 alone. On November 13, BlackRock's IBIT and Fidelity's FBTC alone lost $256 million and $120 million, respectively, as investors fled amid uncertainty over Federal Reserve policy. These outflows, while short-term, contrast with the $59 billion in long-term inflows since January 2024, hinting at a tug-of-war between cautious retail behavior and institutional conviction.

Derivatives markets also tell a bearish story. The Perpetual Market Directional Premium has plummeted from $338 million/month in April to $118 million/month, reflecting a broad unwind of speculative long positions. Meanwhile, options traders are piling into protective puts at $85,000 and $80,000 strike levels, signaling institutional expectations of further downside.

Market Psychology: Fear, Distribution, and Fatigue

Beyond technicals, Bitcoin's market psychology is deteriorating. The fear/greed index has entered "extreme fear" territory, with analysts warning of a potential drop to $80,000-a level that would erase all 2025 gains. This sentiment is compounded by the fact that Bitcoin has fallen below the Short-Term Holders' Cost Basis (~$112.5K), indicating fading demand and the end of a prior bullish phase.

Long-term holders (LTHs) are also signaling fatigue. Since July 2025, LTHs have distributed approximately 300K BTC, a trend that has shifted from selling during rallies to offloading amid a downward trend-a sign of deeper conviction erosion. This distribution, combined with the 71% of Bitcoin supply remaining in profit, suggests the market is in a fragile equilibrium.

Investor behavior further underscores caution. While some sectors-like private-equity investments in gas-fired power plants-continue to attract capital, broader crypto markets are marked by "controlled losses" and heightened risk aversion. The Relative Unrealized Loss metric at 3.1% indicates moderate stress, but not yet the deep capitulation seen in full-blown bear markets.

Correction or Bear Market?

The data points to a prolonged bearish trend rather than a short-term correction. Historical parallels to Q3–Q4 2024 and Q2 2025 show similar patterns of weak demand, controlled losses, and cautious positioning. However, the absence of a full "crypto winter" is evident in the resilience of long-term ETF inflows and the structural shift toward institutional ownership.

A key differentiator will be Bitcoin's ability to reclaim the $112K–$113K support zone. Failure to do so could push more supply into losses, triggering a deeper bearish phase. Conversely, renewed inflows and a retesting of the death cross level might signal a mid-cycle recovery.

Conclusion

Bitcoin's current phase is best characterized as a structural correction within a broader bearish trend. While technical indicators and market psychology suggest prolonged weakness, the absence of full capitulation and the persistence of institutional demand leave room for a potential rebound. Investors must remain vigilant, hedging against downside risks while monitoring key support levels and ETF flows for signs of reversal.