Bitcoin’s value has plummeted significantly, dropping to below $95,000 on Friday amid a confluence of waning demand and increased sell pressure. This decline represents an 8% drop for the day and a staggering 24% decrease since its peak of $126,200 just five weeks earlier, according to CoinGecko data. The current sentiment in the market has prompted analysts and investors to speculate whether the cryptocurrency is entering a bear market.
Data from derivatives markets indicates that sellers are dominating, with the Coinbase premium turning negative, reflecting diminished demand from U.S. investors. Additionally, recent market conditions, including massive outflows from exchange-traded funds, a decline in both institutional and retail spot appetite, and increased selling activity from larger holders, or “whales,” have raised concerns about the overall state of the cryptocurrency market.
In the past 24 hours alone, more than $1.24 billion in crypto long positions were liquidated as part of this selloff. This downturn is not confined to the crypto market; broader equity markets are also feeling the pressure, with the S&P 500 index falling nearly 1% in pre-market trading and gold prices slipping 2.76%.
The bearish sentiment is further underscored by a notable decline in investor confidence. On the prediction market Myriad, users’ assessments of Bitcoin hitting $115,000 before falling to $85,000 have plummeted from 71% to just 46% within four days.
Market analysts are voicing concerns over the current trends. Adam Chu, chief researcher at options analytics platform GreeksLive, concluded from market movements over the past three months that the cryptocurrency is indeed experiencing a bear market. He noted that the recent breach of Bitcoin’s $100,000 mark has switched the balance toward put options, indicating a lack of bullish sentiment.
Moreover, indicators from on-chain analysis suggest a bleak environment, with CryptoQuant’s Bull Score pointing to eight out of ten key metrics being bearish. Maarten Regterschot, a verified analyst at CryptoQuant, emphasized that the drop in stablecoin liquidity, alongside diminished network activity and capital outflows from derivatives markets, mirrors conditions seen in late 2021 and early 2022.
Dissecting perpetual markets reveals steady rising open interest and declining cumulative volume delta, implying that sellers maintain significant control. The drop in the Coinbase premium, now in negative territory, reinforces the waning demand from U.S. participants in the crypto sphere.
Institutional appetite appears to be retreating as well, influenced by persistent macroeconomic and geopolitical uncertainties. Experts have pointed out that the focus is shifting to existing damage rather than potential recovery, particularly in light of recent weeks that have seen critical economic data go unreported.
Looking ahead, the outlook for Bitcoin and the broader crypto market remains grim, with concerns for continued poor performance in the fourth quarter. The cryptocurrency’s decline from its all-time high has led to the formation of what is known as a “death cross,” a commonly recognized bearish indicator where the short-term moving average falls below the long-term moving average, signaling weakening momentum.
Shivam Thakral, CEO of the Indian crypto exchange BuyUCoin, articulated that the current phase signifies a transition from an overheated market into a more regulated environment, essentially framing it as a corrective phase within a broader cycle. Whether this correction turns into a protracted bear market will depend on pivotal factors such as upcoming economic data, regulatory shifts, and Bitcoin’s on-chain resilience.
