BIT Research: Is the Bear Market Nearing Its End? Bitcoin Enters Bottom Confirmation Phase
- Key Insight: The market is assessing whether the Bitcoin bear market is nearing its end. Wave C's low may have already formed near $58,500, but seasonal pressure and hawkish monetary policy expectations pose short-term disruptions. The peak of inflation and the fading of rate hike expectations could serve as macro catalysts for a market turnaround.
- Key Elements:
- Bitcoin's sharp decline from $97,000 to $62,900, with a low point of $58,500, aligns with the A-B-C wave structure, and the conditions for Wave C's low are preliminarily established.
- The technical outlook suggests an ideal bottoming range between $50,000 and $55,000, with an on-chain deep value zone at $47,000. The current decline is approximately 50%. While this has not yet reached the historical bear market magnitude of 70%-80%, it is sufficient to mark a cyclical low.
- The main resistance stems from insufficient investor participation enthusiasm and persistent inflation, rather than regulatory risk. The average cost basis for ETF investors is $83,000, representing an unrealized loss of about 25%, which limits the willingness to sell at lower prices.
- The Iran conflict fuels inflation, and hawkish signals from Federal Reserve Chairman Kevin Warsh add uncertainty. However, CPI and PPI data suggest the rapid inflation surge may have peaked.
- The market has priced in approximately 65 basis points of rate hikes. However, analysis suggests the Fed's hawkish rhetoric is more focused on maintaining credibility, making actual rate hikes less likely.
- It is recommended to increase Bitcoin positions to 50% of the target allocation at this stage. If the price falls below $50,000, the remaining portion can be accumulated, bringing the weighted average cost to approximately $57,000.
The market is currently reassessing whether this 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 a new cyclical low of $58,500 on June 30. The actual trajectory largely conforms to the previously anticipated A-B-C wave structure. However, the Iran conflict-driven inflation and clear hawkish signals from the new Federal Reserve Chairman, Kevin Warsh, have introduced new uncertainties to the original assessment.
Judging by the current trend, after briefly dipping below the February low in late June, Bitcoin did not experience a significant acceleration in its decline. It has since reclaimed the area around $62,900. Changes in technical indicators,持仓结构 (position structure), and macroeconomic data are strengthening the view that a bottom may have formed. Nevertheless, seasonal pressures and expectations of interest rate hikes could still pose a disturbance to the market.
Technical Picture Stabilizing: C-Wave Low May Be Formed
In late June, Bitcoin only marginally broke below its February low, a move that meets the conditions for forming a C-wave low. If there is no significant acceleration downwards after the break and Bitcoin can consistently hold above the $62,900–$65,000 range, it would further support the judgment that the final C-wave low is in place.
Based on technical analysis, an ideal bottoming range for this correction would be $50,000–$55,000. On-chain metrics suggest that the market would enter a deep value zone if prices approach $47,000. While Bitcoin's approximately 50% decline from its peak hasn't reached the 70%–80% drawdowns of previous bear markets, we believe the magnitude of this correction is sufficient to mark a cyclical low.
Unlike previous bear markets, the primary headwinds are no longer regulatory risks but rather subdued investor enthusiasm and persistent inflation stickiness. Meanwhile, the average cost basis for Bitcoin ETF holders is around $83,000, implying an overall unrealized loss of approximately 25%. It appears most investors are reluctant to realize losses at current prices, which is limiting selling pressure below $58,500.
Inflation May Have Peaked: Dismissing Rate Hike Expectations is Key
In the short term, Bitcoin faces seasonal and policy risks. August and September historically show weaker performance. Several FOMC voting members, including Warsh, have recently adopted a more hawkish stance, creating potential headwinds for a Bitcoin rebound. Therefore, caution is advised. We suggest gradually increasing Bitcoin positions to around 50% of the target allocation size at this stage, rather than completing the full allocation at once.
However, recent CPI and PPI data indicate that the surge in inflation, primarily driven by the initial spike in oil prices due to the Iran conflict, may have already peaked. As oil prices retreat, the risk distribution is shifting from upside inflation risks towards downside inflation risks. The market has currently priced in a cumulative rate hike of about 65 basis points, equivalent to roughly 2.6 hikes of 25 basis points each. Yet, we believe the Fed's hawkish rhetoric is more about reinforcing its policy credibility in the bond market, and the actual probability of further rate hikes is relatively low.
Overall, concluding that the bear market may be over is not the same as believing a new bull market has already begun. Current technical indicators and monthly cycle signals suggest a market bottom is near, but Bitcoin ETF inflows haven't recovered, most traders remain in an unrealized loss position, and summer trading volumes are still thin. Against the backdrop of widespread market expectations for multiple Fed rate hikes, this view remains a non-consensus one.
In the coming weeks and months, as the previously priced-in rate hike expectations fade, we believe this shift could become a key macro catalyst signaling the end of the Bitcoin bear market. Simultaneously, if Bitcoin were to fall further below $50,000, entering the deep value zone, we advise establishing the remaining half of the position. This would bring the weighted average cost of the total position to approximately $57,000. We anticipate that Bitcoin could deliver significant upside from this cost basis over the next 12 months.
Some of the above views are from BIT on Target. Contact us to obtain the full BIT on Target report.
Disclaimer: The market carries 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 a financial professional. BIT is not responsible for any investment decisions made based on the information provided in this content.
