BIT Research: Is the Bear Market Nearly Over? Bitcoin Enters Bottoming Confirmation Phase
- Core Viewpoint: The market is assessing whether the Bitcoin bear market is nearing its end. The Wave C low may have formed near $58,500, but seasonal pressure and hawkish monetary policy expectations constitute short-term disruptions; peaking inflation and fading rate hike expectations could serve as macro catalysts for a market turning point.
- Key Elements:
- Bitcoin's sharp decline from $97,000 to $62,900, hitting a low of $58,500, aligns with an A-B-C wave structure, with the conditions for a Wave C low initially established.
- Technically, the ideal bottoming range lies between $50,000 and $55,000, with the on-chain deep value zone at $47,000; the current decline of approximately 50%, while not reaching the 70%-80% drawdowns of historical bear markets, is sufficient to mark the cycle low.
- Primary resistance stems from insufficient investor participation enthusiasm and sticky inflation, rather than regulatory risks; the average cost basis for ETF investors is $83,000, with floating losses of about 25%, limiting selling intentions at lower prices.
- The Iran conflict is fueling inflation, and hawkish signals from Federal Reserve Chairman Kevin Warsh are adding uncertainty, but CPI and PPI data suggest that the rapid inflation surge may have already peaked.
- The market has priced in approximately 65 basis points of rate hikes, but analysis suggests the Fed's hawkish rhetoric is more about maintaining credibility, with the actual likelihood of rate increases being relatively low.
- It is recommended to increase Bitcoin positions to 50% of the target allocation size at the current stage. If the price falls below $50,000, the remaining portion can be accumulated, resulting in a weighted average cost of approximately $57,000.
The market is currently reassessing whether the current Bitcoin bear market is nearing its end. As of February 9, 2026, Bitcoin plummeted from $97,000 to $62,900 in less than three weeks. Subsequently, Bitcoin rebounded to $82,000 before falling to $58,500 on June 30, marking a new cyclical low. The actual price action broadly conforms to the previously expected A-B-C wave structure. However, the inflation spike caused by the Iran conflict, coupled with clear hawkish signals from new Federal Reserve Chair Kevin Warsh, has introduced new uncertainties to the original assessment.
Based on the current trend, after slightly breaching the February low in late June, Bitcoin did not experience a significant acceleration in its decline and has since reclaimed the area around $62,900. Changes in technicals,持仓 structure, and macroeconomic data are strengthening the view that a cyclical low may have been formed. Nevertheless, seasonal pressures and expectations of further rate hikes could still pose disruptions to the market.
Technical Picture Stabilizing: C-Wave Low May Have Been Established
In late June, Bitcoin only marginally broke below its February low, a move that fulfills the conditions for the formation of a C-wave low. If the decline is not followed by a clear acceleration and prices can sustainably hold above the $62,900–$65,000 range, this would further support the judgment that the final C-wave low is in place.
According to technical analysis, the ideal support zone for this correction would be between $50,000 and $55,000. On-chain indicators suggest that if prices approach $47,000, the market would enter a deep value territory. While Bitcoin's approximately 50% decline from its all-time high hasn't matched the 70%–80% drawdowns seen in previous bear markets, we believe the magnitude of this correction is sufficient to mark a cyclical bottom.
Unlike previous bear markets, the primary headwinds facing the market today are no longer regulatory risks but rather subdued investor enthusiasm and sticky inflation. Meanwhile, the average cost basis for Bitcoin ETF investors is approximately $83,000, implying an aggregate unrealized loss of about 25%. This suggests most investors are reluctant to realize losses at current levels, which also limits selling pressure below $58,500.
Inflation May Have Peaked: Fading Rate Hike Expectations as Key Catalyst
In the short term, Bitcoin still faces seasonal and policy risks. August and September historically exhibit weaker seasonal performance. Furthermore, several FOMC voting members, including Warsh, have recently adopted a more hawkish tone, creating potential headwinds for a Bitcoin rebound. Therefore, caution is advised; at this stage, gradually increasing Bitcoin positions to approximately 50% of the target allocation size, rather than completing the entire allocation at once, is recommended.
However, recent CPI and PPI data suggest that the surge in inflation primarily driven by the initial oil price spike following the Iran conflict may have already peaked. As oil prices recede, the risk profile is shifting from upside inflation risks towards downside inflation risks. The market currently prices in approximately 65 basis points of total rate hikes, equivalent to about 2.6 hikes of 25 basis points each. Nevertheless, we believe the Fed's hawkish rhetoric is more about reinforcing its policy credibility in the bond market, and the probability of actual further rate hikes is relatively low.
Overall, judging that the bear market may be over is not equivalent to declaring that a new bull market has begun. Current technical trends and monthly cycle indicators suggest the market bottom is near, but Bitcoin ETF inflows have not yet recovered, most traders remain in an unrealized loss position, and summer trading volumes remain thin. Against the backdrop of widespread market expectations for multiple Fed rate hikes, this assessment remains a contrarian view.
In the coming weeks to months, as expectations for rate hikes that have already been priced into the market gradually fade, we see this shift as a potential key macro catalyst signaling the end of the Bitcoin bear market. Concurrently, should Bitcoin decline further below $50,000 and enter the deep value zone, we recommend establishing the remaining half of the position. This would bring the weighted average entry cost of the entire position to approximately $57,000, and we expect Bitcoin to deliver significant appreciation relative to this entry level over the next 12 months.
Some of the above views are from BIT on Target, Contact us to get the full BIT on Target report.
Disclaimer: Market risks, invest with caution. This article does not constitute investment advice. Digital asset trading may involve significant risk and volatility. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. BIT is not responsible for any investment decisions made based on the information provided in this content.
