Is Bitcoin Already Experiencing a Bear Market? Concerns from Fidelity's Chief

Bitcoin seems to be ignoring some macroeconomic signals that should support its price. The US CPI dropped to 2.7% in December, which typically strengthens expectations for interest rate cuts, yet Bitcoin has not reacted positively. Instead, its price has stagnated while money has shifted elsewhere.

Key Takeaways

Bitcoin may be entering or is already in a bear market, as indicated by multiple market signals.
Stablecoin inflows, which typically support price rallies, have drastically decreased.
Long-term holders have begun selling, marking a significant shift in market sentiment.
Despite rising Bitcoin dominance, investments in traditional safe havens have outpaced Bitcoin in the past year.
The December monthly close will be a crucial factor determining whether Bitcoin can maintain support levels or transition into a confirmed bear market.

This disconnect has led to a renewed discussion about whether Bitcoin is entering a bear market. Jurrien Timmer, the Director of Global Macro at Fidelity, recently expressed concern that Bitcoin may have finished its latest four-year cycle, both in terms of price and timeframe, in October. Data from the blockchain and market trends since then appear to support this notion.

Indicators Pointing Towards a Potential Bear Market for Bitcoin

Several independent signals suggest that Bitcoin may already be in a bear market. Capital is retreating, long-term holders are selling, and Bitcoin is absorbing risk without genuine demand.

Typically, inflows of stablecoins provide the liquidity needed for crypto rallies. However, this source of capital has significantly dwindled. The total inflow of ERC-20 stablecoins peaked at about 10.2 billion dollars on August 14, but by December 24, inflows had drastically plummeted to roughly 1.06 billion dollars, marking a nearly 90% decline.

Stablecoin Flows

The peak of stablecoin inflows came just before Bitcoin's high of over $125,000 in October, which is when Timmer identified as the probable cycle top. Since that high, there has been no return of new capital, indicating that distribution has replaced accumulation.

Long-term holders' behavior has changed after October, with their net position shift turning negative shortly after the cycle high. Selling activity has surged from approximately 16,500 BTC per day in late October to around 279,000 BTC in recent days—an increase of more than 1,500% in daily selling pressure.

Long-Term Holders Dumping

This trend aligns with Timmer's thesis that the four-year halving cycle may have concluded in October. Long-term holders seem to be reducing their exposure rather than attempting to prop up the price.

Although Bitcoin's dominance has climbed back to around 57-59%, this increase does not suggest a renewed risk-on sentiment.

Bitcoin Dominance

After the lower CPI figures, capital did not funnel into Bitcoin as expected. Instead, it flowed into traditional safe-haven assets. Over the past year, silver has risen by more than 120%, and gold has increased by around 65%, while Bitcoin and broader crypto markets have significantly lagged.

For example, if you had invested $10,000 in various assets at the beginning of 2025, your returns would look like this:

Silver → $23,000
Gold → $16,500
Copper → $13,500
Nvidia → $13,450
Nasdaq → $12,000
S&P 500 → $11,600
BTC → $9,400
ETH → $8,800
Altcoins → $5,800

This trend demonstrates that Bitcoin's rising dominance stems from a flight to safety within cryptocurrency rather than a renewed appetite for risk.

Ray Youssef, founder and CEO of NoOnes, shared insights on why gold has been a leading asset during the 2025 debasement trade while Bitcoin remains stagnant.

“While gold has clearly succeeded in the 2025 debasement trade based on price performance, this comparison conceals a more complex market reality. Gold's recent surge to new all-time highs and 67% YTD returns reflect traditional defensive investor behavior as capital seeks security amid fiscal excess, geopolitical stresses, and macro policy uncertainty. Increased accumulation by central banks, a weaker dollar, and ongoing inflation risks have bolstered gold's status as the market's go-to defensive asset,” he said.

Youssef pointed out that Bitcoin's behavior diverges sharply from the "digital gold" narrative this year.

“Unlike gold, Bitcoin has not fulfilled its role as a hedge. Its performance this year reflects heightened sensitivity to macroeconomic factors rather than a straightforward monetary debasement narrative,” he explained.

In addition, large holders are retreating. The number of Bitcoin addresses with over 10,000 BTC has dropped from 92 in early December to 88. This decline coincides with falling prices rather than accumulation.

Mega Whales Distributing

These addresses typically represent institutional players, and their reducing numbers indicate that institutional capital is not positioning aggressively for upward movement at this time.

Bitcoin remains below its 365-day moving average of about $102,000—an important support level that was decisively breached at the start of the 2022 bear market. This moving average serves both technical and psychological roles. Failing to reclaim it indicates a shift from a trend-following market to heightened risk.

If Bitcoin cannot recover this level, historical data suggests the next support area could be around $72,000, where traders' realized price typically rests.

Taken together, these indicators bolster Timmer's caution that Bitcoin may already be in a bear market or nearing that phase, even if the price has yet to fully reveal this shift. Capital has diminished, conviction holders are selling off, dominance is rising defensively, and macroeconomic relief signals are being disregarded.

However, it is essential to note that not all long-term cycle supports have broken down yet. Counter-signals and specific price levels will determine whether this situation becomes a complete bear market or a prolonged transitional phase.

Reasons Why the Bitcoin Bear Market Case Isn't Final Yet

Despite the increasing signs of a potential Bitcoin bear market, two long-term cycle indicators still suggest that a confirmed breakdown isn't set in stone.

One reason the bear market narrative remains unresolved is how markets are interpreting the CPI dip. Typically, lower inflation benefits risk assets, but current investor behavior reflects a preference for safety and liquidity over growth.

This doesn't mean the CPI signal is incorrect; it may illustrate a lag in Bitcoin's response. Historically, Bitcoin has reacted later than traditional hedges once liquidity expectations become tangible capital flows.

These factors and the following indicators do not invalidate the bearish signals mentioned previously. Instead, they explain why this phase may resolve itself as an extended transition rather than a full-blown bear cycle.

One trusted cycle indicator, the Pi Cycle Top, has not yet indicated a peak. This indicator compares the 111-day moving average to the 350-day moving average multiplied by two. Historically, when these two lines intersect, it signals that Bitcoin is near or at significant cycle tops.

Currently, these metrics remain well apart, indicating that Bitcoin is not in an overheated state, even after the October high.

PI Cycle Top

This view contradicts Timmer’s earlier comments, which suggested that the October peak aligned with previous cycle timings. In prior cycles, actual bear markets commenced only after clear Pi Cycle confirmations, which have yet to occur.

A second counter-argument is structural. Bitcoin is still trading close to its two-year simple moving average (SMA), currently around $82,800. This level has historically served as a dividing line for Bitcoin's long-term trend. Monthly closes above this SMA often indicate cycle survival, while sustained closes below it typically precede deep bearish phases.

So far, Bitcoin has not confirmed a monthly close beneath this critical statistic.

December’s close is crucial. If Bitcoin manages to stay above $82,800 until the year ends, the market likely remains in a late-cycle transition and not confirmed as a bear market.

🚨 Bitcoin is now at a pivotal point regarding the 2-Year SMA Multiplier, which is a crucial cycle chart for Bitcoin—this moment demands careful attention. Currently, Bitcoin is trading very close to the 2-Year SMA of approximately $82,800. Past history shows that whenever…

This outcome keeps the door open for delayed upward trends in 2026 instead of a full downturn.

However, if December closes below the two-year SMA, projections for downward movement towards the $65,000–$75,000 range—referenced by Timmer—receive structural support.

The bearish perspective does have clear invalidation levels; regaining the 365-day moving average near $102,000 would significantly undermine the bear market thesis, aligning with Tom Lee's year-end Bitcoin price forecast. This level marked the start of the 2022 bear market upon breaking and would indicate renewed strength if recovered.

In simpler terms:

Currently, Bitcoin is positioned between conviction selling and long-term cycle support. The market has not confirmed strength yet is not entirely breaking either. The December close will ultimately determine which narrative carries forward into 2026.