Breaking news: Are we facing a prolonged bear market?

The Bitcoin price has fallen hard in recent days and we are noticing a lot of questions. Sentiment feels even worse than during previous major corrections, making it seem like we may be entering another long bear market.

Still, it is important to understand why the market is reacting this way and what is not going on.

1. What is causing the current decline?

The decline is mainly due to a combination of two factors.

1. Selling pressure from long-term investors
   
   Investors who have held Bitcoin for years, sometimes eight years or more, have recently taken profits. That created additional supply in the market. The positive news is that the market managed to absorb this selling pressure for a long time and stayed above 100,000 euros. That in itself is strong.
   
   
2. Uncertain expectations around the four-year cycle
   
   Many investors expected very high price gains based on previous cycles. When that failed to materialize, some still exited the market. That disappointment caused additional panic selling.

In short, the decline is mainly due to human behavior and not something fundamentally broken.

2. What do we see in the data?

On-chain analyst James Check sees that:

• The biggest wave of selling is probably behind us.
  
  
• Experienced long-term holders have sold before, near the top.
  
  
• Less experienced long-term holders are only now beginning to sell, often out of fear.
  
  

• Short-term holders in particular are realizing a lot of losses right now.

  
  
• Losses reaching levels we normally see around local bottoms.
  
  

However, he stressed that the price level around $95,000 was extremely important to hold. That level has now been broken downward, increasing the likelihood of a further decline.

Even in that scenario, however, he expects a correction of months rather than years. His expected bottom is roughly between $75,000 and $85,000 but no one can predict for sure.

3. Technically, there is also a downward trend

Several technical indicators show a downward trend. The price is below the main average lines and those lines are bending downward. That means short-term weakness until these levels are broken again and serve as support.

4. What is not happening: there is no fundamental reason to panic

Despite the drop, there is no question:

• An FTX-like crash
  
  
• A problem in the Bitcoin network
  
  
• A major macroeconomic shock (not yet)
  
  

The fundamentals remain strong. Under the surface, adoption is growing faster than ever.

5. What does happen: structural growth

We are seeing significant developments that are laying the groundwork for future growth:

• Central banks are starting their first Bitcoin allocations.
  
  
• Companies are adding Bitcoin to their balance sheets, just as MicroStrategy did previously.
  
  
• Square has activated Bitcoin payments at four million stores.
  
  
• Banks and financial institutions are offering Bitcoin to a wide audience.
  
  
• In the United States, the shutdown is over, reducing liquidity pressures.
  
  
• The Fed is gradually shifting to a dovish stance (first rate cuts already implemented)
  
  
• Stimulus discussions in the U.S. are returning (Trump promised checks worth $2,000 to Americans as "tariff dividends").
  
  

None of these developments is bearish. These are structural developments that have nothing to do with short-term price action.

*Source: @swan at X

6. Historical context

Since 2017, Bitcoin has had several major declines:

• Ten declines of 25 percent or more
  
  
• Six declines of 50 percent or more
  
  
• Three declines of 75 percent or more
  
  

Yet new record highs followed each time. This volatility is part of Bitcoin and is not a sign that the system is failing.

*source: The Kobeissi Letter at X

7. The big question for investors

Looking at the long-term picture, it comes down to one question.

Do you expect governments and central banks to continue to borrow, create money and accumulate debt in the coming years?

If the answer is yes, then little has changed in Bitcoin's fundamental story.

It all depends on your time horizon. This one is different for everyone.