Is Bitcoin Already in a Bear Market and What Does It Mean for 2026?

The question of whether Bitcoin is already in a bear market has become a focal point for investors and analysts in late 2025. With the price collapsing from a peak of $126,000 in October 2025 to $87,000 by year-end, the market is grappling with conflicting signals. Technical and on-chain metrics suggest a bearish narrative, yet structural shifts in institutional adoption and macroeconomic dynamics complicate the picture. This analysis synthesizes these factors to assess Bitcoin's trajectory into 2026.

Technical and On-Chain Bear Market Indicators

Bitcoin's breakdown from a long-term parallel channel since January 2025 has reignited bearish concerns. This pattern, observed during the 2021 bear market, is reinforced by negative momentum indicators. The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) are both below neutral thresholds, signaling deteriorating bullish momentum. Additionally, the price has fallen below the critical $70,500 support level, raising fears of a deeper correction below $50,000 in 2026.

On-chain metrics further corroborate the bearish case. The Cumulative Value Days Destroyed (CVDD) metric, historically accurate in identifying bear market bottoms, currently projects a potential floor around $45,000. While this level is expected to rise over time, it underscores the market's fragility. The Balanced Price metric, derived by subtracting the Transferred Price from the Realized Price, aligns with CVDD to confirm bear cycle lows. Meanwhile, the MVRV Z-Score, which measures Bitcoin's market value against its realized value, has dipped to 1.43 in late 2025, indicating undervaluation but not yet reaching oversold territory. This suggests the correction may be a typical bull cycle reset rather than the end of the cycle according to analysis.

Structural Market Differences in 2024-2025

The current bear market differs structurally from historical cycles due to institutional adoption and regulatory clarity. By late 2025, 86% of institutional investors had exposure to digital assets, with crypto ETFs amassing $191 billion in assets under management. This surge in institutional demand has transformed Bitcoin from a speculative asset into a strategic allocation, supported by regulatory frameworks like U.S. spot ETF approvals and the EU's MiCA legislation.

However, this institutionalization has also increased Bitcoin's correlation with traditional assets. The cryptocurrency now exhibits a 0.5–0.88 correlation with the S&P 500, a stark departure from its earlier role as an uncorrelated diversifier according to analysis. This shift is driven by shared macroeconomic drivers, including Federal Reserve policy and liquidity conditions according to research. For example, the November-December 2025 selloff saw Bitcoin ETFs record $3.6 billion in net outflows, mirroring the S&P 500's 4.4% decline in Q1 2025.

Bear Market Bottom Potential and 2026 Outlook

Historical bear market bottoms, such as those in 2018 and 2022, were marked by extreme MVRV Z-Score levels and aggressive on-chain accumulation. In December 2018, the MVRV Z-Score hit record lows, signaling undervaluation as the realized price approached $56,000. Similarly, the 2022 FTX collapse saw the MVRV Z-Score reach historic oversold territory. While Bitcoin's current MVRV Z-Score of 1.43 is not yet in these extremes, it suggests the market is cooling.

The Terminal Price metric, which normalizes Bitcoin's economic activity by multiplying the Transferred Price by 21 (reflecting the 21 million maximum supply), currently stands at $290,000. This bear cycle peak indicator implies Bitcoin could still reach $270,000–$500,000 in 2026 if macroeconomic conditions stabilize according to forecasts. However, this depends on institutional inflows resuming and liquidity expanding, as ETFs currently contribute $1–2 billion in weekly inflows.

Key Risks and Considerations

The 2026 outlook hinges on two critical factors: liquidity conditions and long-term holder behavior. If global liquidity contracts further-driven by persistent hawkish monetary policy or AI sector volatility-Bitcoin's bear market could deepen. Conversely, a return to accommodative monetary policy and renewed institutional confidence could trigger a consolidation phase followed by a bull market resumption.

The Pi Cycle indicator, which uses moving averages to identify market tops, remains a mixed signal. While the 111-day SMA crossing above the 350-day SMA historically coincided with bull peaks, it failed to capture the 2021 November high. This reinforces the need to use the Pi Cycle in conjunction with other metrics rather than in isolation.

Conclusion

Bitcoin's current price action and on-chain metrics suggest a bear market is in play, but structural shifts in institutional adoption and macroeconomic dynamics complicate the narrative. While the CVDD and MVRV Z-Score indicate a potential $45,000–$80,000 floor by 2026, the market's increased correlation with traditional assets means Bitcoin's trajectory will be heavily influenced by broader economic conditions. Investors must monitor key support levels, institutional inflows, and macroeconomic signals to navigate this evolving landscape.

For now, the market remains at a critical inflection point. If Bitcoin holds above $70,000 and liquidity stabilizes, the bull market could consolidate and resume. However, a breakdown below $50,000 would signal a deeper bear cycle, requiring patience and strategic accumulation for long-term holders.