Expert Claims Bitcoin is at Midpoint of Bear Cycle: What’s Next?

In a year many predicted would see a significant Bitcoin (BTC) bull run, market specialist Axel Adler has indicated that the top cryptocurrency finds itself in the middle of a bear cycle.

Key Takeaways

Bitcoin is currently midway through a bear cycle, with a 4% year-to-date decline.
Adler suggests the ongoing correction may be less severe than in previous cycles, with 88% of holdings showing unrealized profits.
The market faces uncertainty as it approaches a critical juncture regarding price stability and potential declines.
If Bitcoin manages to hold under -40% drawdown, it may signal a flattening cycle, while further declines could indicate a stronger bear market.

Bitcoin

Understanding the Current Bear Cycle

Currently, Bitcoin has witnessed a slight year-to-date decrease of 4%. This week, however, Bitcoin has displayed some stability, trading between $89,000 and $94,000, with $94,000 acting as a key resistance level.

Adler explains that this ongoing correction, estimated at around -32%, is less pronounced compared to past bear cycles. Notably, approximately 88% of Bitcoin holdings remain profitable, leaving only about 12% of the total supply in a loss. He highlights that Bitcoin's price movements have held steady around the $90,000 mark, indicating a relatively mild downturn when viewed through a historical lens.

As the year comes to a close, the pressing question is whether this correction will stabilize between -35% and -40% from its all-time high, suggesting a shift toward a "flattened" cycle, or if the market will revert to historical trends, which often result in more pronounced declines of -60% to -70%.

Adler observes that significant bear markets in 2011, 2016, 2019, and 2023 showed a marked increase in the percentage of coins at a loss, often reaching about 60%. Such levels signified capitulation points in the market.

Bitcoin All BTC bear market cycles since 2011. Source: Axel Adler

In contrast, the current market reveals only 12% of holders facing unrealized losses, a stark divergence from patterns observed in earlier bear markets.

Will Bitcoin Avoid Greater Declines?

The expert elaborates that during recent local peaks, merely 17% of coins were in the red, a figure considerably lower than typical capitulation rates. This unusual situation indicates that the current market may be experiencing a correction within a bullish supercycle instead of the tail end of a severe bear market.

Adler maintains that the market seems to be testing the strength of this corrective structure, maintaining a drawdown of -32% from its peak while keeping a high ratio of profitable positions. He posits that if Bitcoin can sustain this maximum drawdown above the -35% threshold, alongside moderate unrealized losses, it may support a shift towards flatter corrections driven by institutional demand and limited supply.

Conversely, if Bitcoin's correction exceeds the -40% level, the odds of entering a classic bear market rise substantially. This scenario could lead to deeper declines, possibly reaching the -60% to -70% range, and may trigger a full capitulation phase regarding unrealized loss metrics.

Bitcoin The daily chart shows BTC’s surge over the past 24 hours. Source: BTCUSDT on TradingView.com

As of the latest update, Bitcoin is trading at $93,000, having gained 5% in the last 24 hours and nearly 9% over the past two weeks.