Newcomers Fueling Bitcoin's Downturn, as Panic Selling Shapes Market Fate

Bitcoin’s price trajectory remains under close scrutiny as analysts warn of the potential for a significant drawdown in the upcoming bear market. Recent data from 10X Research indicates that approximately 70% of selling pressure in the current downturn has originated from investors who purchased Bitcoin within the last three months, highlighting the prevalence of panic selling among newer market participants. This trend aligns with historical patterns in Bitcoin’s cyclical behavior, where sharp declines are often followed by significant rallies, albeit with varying magnitudes depending on macroeconomic and policy developments.

The uncertainty surrounding the next bear market has been exacerbated by geopolitical and macroeconomic factors, particularly the anticipated policies of U.S. President Donald Trump. Analysts at Swissblock attribute heightened market jitters to Trump’s proposed tariff hikes, which have created economic uncertainty and acted as a “Sword of Damocles” over global markets. The recent announcement of a Bitcoin reserve by the Trump administration has also been classified as a “sell the news” event, with the move already being priced into the market. In addition, Network Economist Timothy Peterson has speculated that the U.S. Federal Reserve may not cut interest rates in 2025, further compounding the risk of a bearish trend.

Diaman Partners has conducted a Monte Carlo simulation to assess the potential depth of the next bear market, factoring in Bitcoin’s historical cycles and volatility trends. Based on the 200-week moving average model, the firm estimates a 5% probability that Bitcoin’s price could fall below $41,000 by December 2026, with a potential support level around $60,000 if the market follows historical patterns. This analysis assumes a continuation of past cycles, where Bitcoin has experienced average drawdowns of 75% or more, although recent cycles have shown slightly reduced volatility. If Bitcoin were to reach a peak before declining, a 69% drop—similar to past cycles—could result in a price target as low as $260,000 by 2025.

In response to these potential market movements, analysts from 10X Research recommend that traders adopt proactive risk management strategies. These include the use of stop-loss orders, reliance on on-chain analytics, and the integration of macroeconomic and technical market trends into decision-making. The firm emphasizes that the current high volatility in the crypto market does not lend itself to passive, long-term holding strategies. Instead, traders are advised to make informed, active decisions based on comprehensive data analysis.

Historical data from Bitcoin’s previous bull and bear cycles further underscores the potential for significant price swings. Since 2013, Bitcoin has experienced an average rally of 3,485% following a 70% or greater decline, with median rallies reaching 1,692%. Pullbacks of 20% or more have occurred regularly during bull markets, averaging 27% in decline. These patterns suggest that while Bitcoin’s price may stabilize after a 70–85% decline, traders should remain cautious and prepared for continued volatility in the near term.

The broader crypto market also reflects signs of shifting dynamics. Ethereum, in particular, has shown outperformance against Bitcoin in the third quarter of 2025, raising questions about the potential onset of Altseason 2025. Technical indicators for Ethereum, such as RSI and MACD, suggest continued bullish momentum, contrasting with Bitcoin’s cooling price action. However, the ETH/BTC ratio, a key metric for assessing Ethereum’s relative strength, has remained below the 0.05 threshold for over a year, indicating that Bitcoin still holds dominant investor sentiment as the market’s “anchor asset”.

In summary, the next Bitcoin bear market could see a potential 70% drawdown based on historical cycles and current market conditions. Analysts stress the importance of active trading strategies, risk management, and macroeconomic awareness in navigating the volatile environment. While Ethereum’s recent outperformance introduces new variables into the crypto market narrative, Bitcoin’s foundational role as a store of value and its historical volatility patterns suggest that traders should remain prepared for significant price fluctuations in the coming months.