Start of the bear market or mid-cycle correction?

This correction reflects positioning and macro repricing, not structural weakness in the long run. With BTC currently still above $100K and institutional participation expanding, we see temporary turbulence within an intact long–term uptrend. We expect Bitcoin to be range-bound between $100–115K until the end of the year. Once the dust settles, for altcoins with strong fundamentals, this could signal a buying opportunity at attractive valuations, given many altcoins corrected by over 70% from previous highs. 

Market context

Crypto markets have seen a sharp correction since early October, with total capitalization down by almost $1T. Bitcoin has fallen below the $100K mark, while Ethereum slid close to $3K. The Fear & Greed Index now sits at “Extreme Fear”, its lowest since early 2025, often a late–stage flush signal. Recent weakness is part of a broader global risk–off move as Fed Chair Powell pushed back against expectations for a December rate cut, strengthening the dollar and weighing on crypto assets. 

Market setup and short-term risks

Reasons for the drawdown

• Fed hawkishness: Powell’s recent comments that a December rate cut is “not a foregone conclusion” lifted the dollar and yields, triggering risk–off sentiment across crypto. 
• Leverage unwind: Close to $20B in longs liquidated across October; thin liquidity amplified moves. 
• Whale & ETF selling: Long–term Bitcoin holders sold ~405K BTC (~$45B), while spot BTC ETFs saw $800M in weekly outflows. 
• Altcoin fragility: Weak liquidity and token unlocks drove declines across altcoins. DeFi sentiment also weakened following $200M+ in exploits (Balancer, StreamDeFi), weighing on sector confidence.

Historically, 10–20% drawdowns have punctuated uptrends (e.g., 2020 DeFi summer, 2021 post-Elon), each followed by renewed rallies. Notably, this cycle, no downswing has exceeded 30%, pointing to compressing volatility and deeper buy–the–dip participation, evidence of a maturing market structure.

Technical levels to watch

• 50–week moving average(~$102.9K) remains critical support.
• Bitcoin has traded above the $100K mark for more than 180 days – a key psychological level.
• We see the break below $99–$100K as temporary and corrective, not structural. However, a confirmed breakdown might pose a risk of further corrections. 

What markets are telling us

• Positive funding rates: While we’ve seen over $1.7B in daily liquidations, funding rates remain slightly positive, signaling a muted market.
• Options market: Bitcoin options traders on Deribit lean bullish with largest open interest in calls around $110–$120K, while puts cluster near $100K as downside hedges. The market seems to expect potential upside, but is still protecting against short–term dips. 

Silver linings and fundamentals to watch

1. Regulatory clarity ahead: The Clarity Act (expected early 2026) could finally establish U.S. crypto market structure, removing the key institutional barrier.
2. ETF pipeline: Over 100 new crypto ETFs await SEC approval, opening fresh distribution channels and potential inflows. 
3. Liquidity tailwinds: With QT ending in December and $9T parked in money-market funds, even mild easing could redirect flows to digital assets.
4. Gold catch-up trade: Gold is up ~50% YTD, while Bitcoin has lagged – mirroring 2020’s setup before BTC outperformed.
5. Extreme fear = opportunity: Historically, Fear & Greed levels in the “Extreme Fear” zone have signaled a potential buying opportunity.

Bull vs. bear scenarios 

Bull case (60%) 

• BTC holds above $100K, funding remains neutral.
• Gradual policy easing and liquidity expansion.
• Seasonal strength (November avg. +42%) and liquidity tailwinds lift BTC back to $110-115K by year-end. 
• Renewed narrative rotation as Bitcoin catches up to gold’s 2025 rally (~50%), echoing the 2020 pattern where gold and equities rallied first, followed by BTC and long–tail assets.

Bear case(40%)

• BTC breaks below $100K, macro data remain hot, ETF outflows persist.
• Drawdown extends towards $90–95K, triggering a short “crypto winter” – a multi–month, not multi-year consolidation until easing resumes. 
• Post-October 10th liquidation cascade may uncover a significant market participant that has gone underwater, leading to increased fear, uncertainty, and doubt in the market.‍

No matter the outcome, the structural and fundamental outlook for Bitcoin and crypto remains positive. Short–term volatility is healthy after record inflows and leverage buildup. As long as BTC holds above $100K, the structural uptrend remains intact. Fear today often sets up tomorrow’s opportunity.