Bitcoin Bear Market Ends When 3 Signals Flip, and One Is Already Starting to Twitch

Bitcoin has fallen over 40% from its early October peak of $126,000, trading near $74,000 as of Feb. 3, 2026 according to Cryptoslate. Analysts and institutions are increasingly calling it a bear market, with metrics like the 200-day and 365-day moving averages currently unfavorable for the asset according to Cryptoslate. Despite this, 70% of surveyed institutions still believe Bitcoin is undervalued, and many continue to hold or increase their exposure according to Cryptoslate.

The bear market is defined not by mass exodus but by a shift in institutional positioning toward risk management and defensive strategies. Options have overtaken futures as the primary derivatives product, allowing institutions to protect against downside while maintaining long-term conviction according to Cryptoslate. On-chain data also shows a decline in optimism, with metrics like entity-adjusted NUPL dropping to 'Anxiety' levels according to Cryptoslate.

Liquidity and macroeconomic conditions are central to the bear market narrative. Coinbase and Glassnode report that Bitcoin ETFs have seen outflows totaling $272 million in recent days, pushing AUM below $100 billion for the first time since April 2025 according to Cryptoslate. This contrasts with altcoin funds, which have attracted modest inflows, suggesting a broader market divergence according to Cryptoslate.

Why Did This Happen?

Bitcoin's bear market is the result of a confluence of factors, including macroeconomic uncertainty, weak institutional flows, and a shift in risk appetite. The October 2025 deleveraging event, in which $19 billion in leveraged positions were liquidated, marked the beginning of this bearish phase according to Cryptoslate. This was followed by a contraction in stablecoin liquidity, weaker U.S. demand, and a broad decline in on-chain optimism according to Cryptoslate.

Institutional investors are now focusing on managing risk rather than maximizing upside. Options markets show a pronounced bearish skew, with increased demand for downside protection. This shift reflects a defensive positioning strategy rather than outright capitulation according to Cryptoslate.

How Did Markets Respond?

The broader crypto market has reacted with volatility. Total market capitalization has fallen by nearly $468 billion since mid-January, with Bitcoin leading the selloff according to Cryptoslate. Altcoins have also struggled, with XRP and Solana losing over 10% in recent trading sessions according to Cryptoslate.

Despite this, some institutional analysts remain cautiously optimistic. They argue that the bear market is not about the price of Bitcoin per se but rather about structural market conditions. The belief is that Bitcoin remains undervalued in the long term, with institutions viewing it as a store-of-value asset according to Cryptoslate.

What Are Analysts Watching Next?

Analysts are focusing on three key signals that could signal the end of the bear market: trend reclamation, demand inflection, and risk appetite normalization. Trend reclamation would involve Bitcoin regaining and holding above its 200-day and 365-day moving averages for an extended period according to Cryptoslate.

Demand inflection is expected to occur when ETF and ETP flows turn positive and large holder distribution slows. Institutional positioning is already showing signs of stabilizing, with 62% of institutions holding or increasing exposure since October according to Cryptoslate.

Risk appetite normalization would require a shift in options markets away from heavy downside protection and toward balanced positioning. This would indicate a return to more neutral risk-taking behavior among investors according to Cryptoslate.

One of the signals is already showing signs of change. The 365-day moving average has been a key boundary marker, and Bitcoin's current price near $74,000 suggests it is close to reclaiming that level according to Cryptoslate. While it has not yet crossed above this threshold, the trend appears to be stabilizing, offering a glimmer of hope for a potential inflection point according to Cryptoslate.