Bitcoin's Bear Market Deepens: Fed Hikes and Technical Signals Signal 30%+ Downside Risk

The Bitcoin bear market of 2025 has intensified, with macroeconomic headwinds and deteriorating on-chain sentiment painting a grim picture for risk assets. A recent Federal Reserve rate hike, combined with fragile technical indicators, suggests further downside risk of 30% or more before a potential bottom forms. This analysis synthesizes macro-driven market structure and on-chain data to assess the trajectory of Bitcoin's current correction.

Macro-Driven Market Structure: Fed Hikes and Risk-Averse Sentiment

The Federal Reserve's hawkish pivot in November 2025 has exacerbated Bitcoin's decline. A 2.95% drop in Bitcoin's price to $107,850 followed the central bank's decision to maintain elevated rates, reflecting a broader sell-off in risk assets. The Fed's tightening cycle has amplified investor caution, with the Crypto Fear and Greed Index hitting 34-a level indicative of extreme fear. This environment is compounded by macroeconomic uncertainty, including delayed U.S. nonfarm payroll data due to a government shutdown and lingering concerns about inflation.

While optimism grows around a potential rate cut by December 10, the path to relief remains uncertain. Goldman Sachs has quietly warned that the Fed's tightening bias could persist longer than anticipated, citing sticky inflation and labor market resilience. For Bitcoin, this means continued pressure until monetary policy shifts decisively toward easing.

On-Chain Sentiment: NVT, MVRV, and Hash Rate Divergence

On-chain metrics reinforce the bearish narrative. The NVT (Network Value to Transactions) Adjusted ratio, a key indicator of market efficiency, has fallen below 100%, signaling undervaluation but also a lack of marginal buyers to stabilize prices. Similarly, the MVRV ratio has contracted sharply, reflecting widespread losses among Bitcoin holders and a shift toward bearish positioning.

Transaction volume has also declined, with on-chain data from 10X Research confirming Bitcoin's entry into a "bear market regime". This is further evidenced by $870 million in net outflows from Bitcoin ETFs on November 14-the second-largest daily withdrawal since their debut according to Bloomberg. The absence of meaningful buying interest suggests the market is in a self-reinforcing downtrend.

However, one anomaly stands out: the Bitcoin hash rate has surged to a record 1,161 EH/s, defying the price slump. While this indicates miner confidence in the network's long-term value, it is a lagging indicator and does not predict near-term price action. The divergence between hash rate growth and price weakness highlights the market's fragility.

Downside Risk and Path to Recovery

The confluence of macroeconomic and on-chain signals points to a 30%+ downside risk for Bitcoin in the near term. A potential support level could emerge around $70,000, aligning with historical bear market bottoms and the MVRV ratio's troughs. However, this scenario hinges on two critical factors:

1. Fed Policy Shift: A December rate cut would provide immediate relief, but the market is pricing in only a 60% probability of a 25-basis-point reduction. A prolonged hawkish stance could extend the bear market into early 2026.
2. On-Chain Catalysts: A rebound in transaction volume and a surge in marginal buyers-typically driven by retail accumulation or institutional inflows-would signal a turning point. Until then, Bitcoin remains in a structural downtrend.

Conclusion

Bitcoin's bear market is deepening as macroeconomic pressures and on-chain weakness converge. While the Fed's potential rate cut offers hope, the current environment demands caution. Investors should brace for further volatility and consider defensive strategies until clear signs of capitulation emerge. The path to recovery will require both a shift in monetary policy and a rekindling of on-chain demand-a combination that remains elusive in 2025.