| Key Points: – Bitcoin enters Bear Market Phase 1 after slipping below key on-chain valuation. – Fragile demand and thinning liquidity elevate volatility, risk of persistent drawdowns. – Price is down 46% from $126,000 peak; capital preservation dominates behavior. |
Bitcoin’s market structure has tilted into an early bear setup, often dubbed Phase 1. As reported by MSN, the asset slipped below a key on‑chain valuation level in late January, triggering a corrective regime.
Concerns center on fragile demand and liquidity. According to Coingape, volatility spikes and weakening market depth have raised the risk that drawdowns persist if fresh buyers do not step in.
Drawdowns are already material. According to CryptoSlate, price is down roughly 46% from the peak near $126,000 set in early October 2025, underscoring that capital preservation rather than momentum is dominating behavior.
Glassnode demand exhaustion: on-chain markers behind the Phase 1 call
Based on data from Glassnode, early-bear demand exhaustion is evident as spot trades below short‑term holder cost basis and fails to reclaim key thresholds. The firm also describes a shift into a defensive regime, with overhead supply capping rebounds and speculative positioning cooling.
The provider’s dashboards highlight that off‑chain activity on centralized venues dominates flow, while derivatives liquidations have been elevated; for context, average daily futures wipeouts rose to about $28 million in longs and $15 million in shorts in late 2025. Network usage via active addresses remains a core gauge, and the team has previously noted a negative relationship between BTC and stablecoin activity at times, framing demand rotation.
Independent research houses echo the early‑bear characterization. “Every on-chain metric or market metric confirms that we are in a bear market in the early stages,” said Julio Moreno, Head of Research at CryptoQuant.
What to watch next in early bear conditions
On-chain checkpoints: short-term holder cost basis and realized P/L compression
Short‑term holder cost basis is a pivotal pivot; sustained trade back above it would imply renewed marginal demand, while persistent failure tends to prolong distribution. Realized profit and loss compression alongside falling spending activity would confirm cooling momentum and a preference for holding over risk‑taking.
Liquidity tells: active addresses, flows, USD strength, Fed tone
Watch active addresses and settlement throughput for signs of organic demand, alongside exchange inflows/outflows that track sell pressure or accumulation. Spot depth, derivatives funding, and basis can tighten materially in early bear regimes, making rebounds brittle.
Macro remains a swing factor. As reported by CoinDesk, a stronger US dollar, hawkish signals from the Federal Reserve, and persistent selling have capped short‑lived rallies.
At the time of this writing, Bitcoin (BTC) is near $66,958 with a bearish sentiment profile and very high 30‑day volatility around 11.83%. Short‑term momentum is soft, with RSI near 34, while the 50‑ and 200‑day simple moving averages cluster far above spot around $83,383 and $100,081, respectively. Over the last 30 days, 11 of 30 sessions closed higher, indicating choppy conditions. These figures are contextual, not predictive.
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