Is Bitcoin Heading Toward a Bear Market in Early 2026?
Bitcoin is holding strong between $88,000 and $90,000 in late December 2025, but market experts are beginning to question the sustainability of this trend. Several key on-chain signals and market indicators are pointing toward a potential bear market phase by early 2026. For crypto enthusiasts and investors, understanding these trends can help navigate the shifting landscape.
Key Indicators of a Bear Market
1. Weakening Demand Growth
Recent data shows that Bitcoin’s demand growth has plateaued. This flattening often indicates a market shift from accumulation to distribution phases. Historically, similar patterns have preceded downturns or extended consolidation periods.
2. Slowing Bitcoin ETF Inflows
In 2024, Bitcoin ETFs became a major catalyst for demand. However, inflows have slowed sharply in Q4 2025. ETFs generally represent long-term investors, and their waning interest creates vulnerabilities in price stability, as speculation starts dominating the market.
3. Decline in Dolphin Wallet Holdings
Wallets holding between 100 to 1,000 BTC, often referred to as “dolphins,” are known for their tactical investments. Recent data shows these wallets are shedding positions, reflecting risk reduction. A similar trend occurred in late 2021, just before a significant market decline.
4. Declining Funding Rates
Funding rates, a key measure of leveraged trading activity, have entered a persistent downward trend. This suggests that traders are less confident in maintaining long positions, which could precede a broader market correction.
5. Break Below the 365-Day Moving Average
The 365-day moving average is often considered a critical indicator of Bitcoin’s overall trend. For the first time since early 2022, Bitcoin has crossed below this level. This shift doesn’t guarantee a crash but indicates bearish momentum building in the long term.
Potential Outcomes for Bitcoin Prices
If a full bear market develops, Bitcoin’s realized price—currently estimated at $56,000—may act as a long-term support zone. Historical trends indicate that Bitcoin tends to stabilize near this average cost basis during prolonged bearish phases. However, this doesn’t necessarily mean a swift crash. A prolonged sideways movement or extended consolidation period is also possible.
Altcoins remain particularly vulnerable in this scenario as they depend more on retail investment and experience higher volatility in low-liquidity markets.
Expert Recommendation
If you’re considering diversifying your portfolio amid Bitcoin’s uncertain market trends, stable digital assets or global financial instruments might be a safer bet for now. However, for Bitcoin investors, continuing to monitor these market conditions is crucial to making informed decisions.
Stay Grounded with Accurate Market Insights
Being proactive and adopting a long-term strategy is vital in unpredictable market conditions. To further enhance your strategy, consider tools like the Trezor Model T Hardware Wallet to keep your crypto assets secure during volatile periods.
Final Thoughts
While Bitcoin remains stable for now, the confluence of key market indicators shows the margin for error is shrinking. Whether you’re a seasoned Bitcoin investor or a new participant, staying attuned to these signals can help you adjust your strategy for a market that might be entering a pivotal phase in early 2026.
