Bitcoin is falling, but don’t call it a bear market yet: analyst

Bitcoin plunged below $95,000 on Friday morning and appeared to have stabilized by early afternoon, only to fall back below that level in the afternoon. Analysts told Declutter that volatility from panicky short-term investors appears to have subsided, at least for now.

“The Bitcoin market is significantly influenced by the profitability of the newest participants, which represent fresh capital and liquidity. A dynamic price increase typically continues as these new investors make profits, boosting market confidence,” popular pseudonymous CryptoQuant analyst CrazzyBlockk told me. Declutter.

They explained that when short-term holders start taking 20% ​​to 40% losses, it ushers in a period of panic selling.

“This level of pain traditionally signals a transition to a full capitulation phase,” they said. “Given this cohort’s current level of losses, we remain far from the classic signals of a macro bear market.”

But if new entrants can realize some gains, support will increase and the dip will be a “mid-cycle correction” rather than the start of a bear market, the analyst added.

Declutter spoke earlier on Friday with other analysts, who differed on whether Bitcoin’s recent fall had signaled the start of a bear market.

At the time of writing, Bitcoin was trading at $95,390, having fallen 2.8% in the past day and 7.5% from last week. Liquidations crossed the $1 billion mark in the past day after Bitcoin fell below $100,000 for the third time in a month. Before that period, the last time Bitcoin traded for less than six figures was in May.

Sentiment about the Federal Reserve’s final meeting of the year — and what it could mean for federal rates — is shifting. Aggregated derivatives data shows that traders believe there is a 56.4% chance that the Federal Open Markets Committee will leave rates unchanged on December 9. Just a month ago, traders estimated there was a 94% chance the FOMC would cut rates again before 2026, according to the CME FedWatch Tool.

Typically, Bitcoin and risky assets like stocks tend to benefit when the FOMC cuts rates, making safe assets like government bonds less attractive to investors.

But investor pessimism is hitting crypto harder than stocks. Wintermute analysts said in a note shared with Declutter that crypto is heavily negatively skewed compared to stock proxies like the Nasdaq 100.

“This macro rotation comes at a time when the market has already tested/defended the $100,000 level twice before, leading to a substantial boost below $100,000 this time,” they wrote.

Pepperstone Research Strategist Dilin Wu said the market is not yet showing signs of a sustainable recovery, so she advised traders to remain cautious in the short term.

“In the medium to long term, Bitcoin retains the potential to challenge new highs, but this depends on sentiment improving, liquidity returning and volatility subsiding,” she said. Declutter. “The four-year cycle still provides some reference, but it is far from a rule. I focus more on actual market participation and financing conditions than on purely cyclical patterns.”