BIT Research: Is the Bear Market Nearing Its End? Bitcoin Enters the Bottom Verification Phase
- Core Viewpoint: The market is assessing whether the Bitcoin bear market is nearing its end. The low of wave C may have formed around $58,500, but seasonal pressure and hawkish monetary policy expectations constitute short-term disturbances; peaking inflation and fading rate hike expectations could serve as the macro catalyst for a market turning point.
- Key Elements:
- Bitcoin plummeted from $97,000 to $62,900, hitting a low of $58,500. The price action is consistent with an A-B-C wave structure, tentatively confirming the conditions for a wave C low.
- Technically, the ideal bottoming range is between $50,000 and $55,000, with an on-chain deep value range at $47,000. The current decline of approximately 50%, while not reaching the 70%-80% drawdown of historical bear markets, is sufficient to mark a cycle low.
- The main resistance comes from insufficient investor participation enthusiasm and sticky inflation, rather than regulatory risks. The average cost basis for ETF investors is $83,000, resulting in an unrealized loss of about 25%, which limits selling pressure at lower levels.
- The Iran conflict has fueled inflation, and hawkish signals from Federal Reserve Chairman Kevin Warsh increase uncertainty. However, CPI and PPI data suggest the sharp inflation surge may have 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 low.
- It is recommended to increase Bitcoin positions to 50% of the target allocation size at this stage. If it falls below $50,000, the remaining portion can be accumulated, bringing the weighted average cost down 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 $58,500 on June 30, marking another periodic low. The actual trajectory largely aligns with the previously anticipated A-B-C wave structure, but the inflationary pressures from the Iran conflict and the clear hawkish signals from newly appointed Federal Reserve Chairman Kevin Warsh have added new uncertainties to the original assessment.
Looking at the current trend, after briefly breaking below the February low in late June, Bitcoin did not experience an accelerated decline and has since reclaimed the $62,900 level. Changes in technicals, positioning structure, and macroeconomic data are strengthening the view that a bottom may have been formed, though seasonal pressures and expectations of further rate hikes could still cause market fluctuations.
Technical Trends Gradually Stabilizing: C-Wave Low Possibly Formed
In late June, Bitcoin only slightly dipped below its February low, a move that meets the conditions for forming a C-wave low. If there is no significant acceleration in the decline after this break and it can consistently hold above the $62,900-$65,000 range, it would further support the judgment that the final C-wave low has been established.
According to technical analysis, an ideal bottoming scenario for this correction would be in the $50,000-$55,000 range; on-chain indicators suggest that as prices approach $47,000, the market would enter a deep value zone. With Bitcoin down approximately 50% from its all-time high, this retracement, while not yet reaching the 70%-80% drawdowns of previous bear markets, is considered sufficient to mark a cyclical low.
Unlike prior bear markets, the primary headwinds currently facing the market are no longer regulatory risks but rather a lack of investor enthusiasm and sticky inflation. Meanwhile, the average cost basis for Bitcoin ETF holders is around $83,000, resulting in an aggregate unrealized loss of approximately 25%. Most investors seem unwilling to realize losses at current prices, which limits selling pressure below $58,500.
Inflationary Pressure May Have Peaked: Waning Rate Hike Expectations as a Key Variable
In the short term, Bitcoin still faces seasonal and policy risks. August and September have historically been weak seasonal periods, and several voting FOMC members, including Warsh, have recently adopted a hawkish stance, creating potential headwinds for a Bitcoin rebound. Therefore, caution is advised. At this stage, it is recommended to gradually increase Bitcoin positions to about 50% of the target allocation size, rather than completing the entire allocation at once.
However, recent CPI and PPI data suggest that the inflation spike, primarily driven by the sharp rise in oil prices at the onset of the Iran conflict, may have peaked. As oil prices recede, the risk profile is shifting from upside inflation risks to downside inflation risks. The market has already priced in approximately 65 basis points of cumulative 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 likelihood of actual further rate hikes is relatively low.
Overall, judging that the bear market may be over is not the same as declaring a new bull market has begun. Current technical developments 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 are still 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 previously priced-in rate hike expectations gradually fade, we believe this shift could become a significant macro catalyst signaling the end of the Bitcoin bear market. Concurrently, should Bitcoin fall further below $50,000 and enter a deep value zone, it is recommended to build the remaining half of the position. This would bring the weighted average cost basis of the full position to approximately $57,000, with the expectation that Bitcoin could achieve 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: The market carries risks, and investment requires caution. This article does not constitute investment advice. Trading digital assets may involve significant risk and volatility. Investment decisions should be made after carefully considering individual circumstances and consulting with financial professionals. BIT is not responsible for any investment decisions made based on the information provided in this content.
