Bitcoin’s Market Shift: Unpacking the Bearish Turn with On-Chain Data
The current trajectory of Bitcoin’s price action has ignited widespread debate across the cryptocurrency industry, with increasing indicators pointing towards the onset of a bear market. Currently, Bitcoin is trading in the range of $87,700 to $88,000, representing a significant 30% decline from its all-time high recorded in October 2025.
While price fluctuations alone can often lead to varied interpretations, advanced on-chain analysis is now providing a more definitive perspective. Notably, research from CryptoQuant highlights a fundamental shift in Bitcoin’s internal market structure, aligning closely with characteristics observed during early-stage bear market conditions.
The Bitcoin Combined Market Index (BCMI) Signals Deterioration
A pivotal indicator signaling this bearish transition is the Bitcoin Combined Market Index (BCMI). This sophisticated composite metric seamlessly integrates Bitcoin’s price behavior with underlying on-chain momentum to offer a holistic market view.
According to Woo Minkyu, a respected analyst on the CryptoQuant platform, the BCMI initially reverted to the 0.5 level in October. This was initially perceived as a period of market cooling or consolidation following an extended rally, rather than a definitive market cycle peak.
However, this initial optimistic outlook has since been undermined by deteriorating market conditions. Bitcoin’s price has experienced a material decline since late October, with the BCMI falling in parallel. This synchronized downturn suggests a comprehensive market reset, impacting not only time but also valuation and participant engagement.
BCMI Dips Below Equilibrium: A Precursor to Bearish Phases
Crucially, the BCMI has now slipped below its equilibrium zone, a development historically associated with transitions into bearish market phases. During such periods, upward price movements (rallies) tend to be constrained, and the overall risk of downside price action significantly increases.
Historical analysis of previous Bitcoin cycles offers valuable context:
- In both 2019 and 2023, significant cycle bottoms were only established after the BCMI compressed into the 0.25 to 0.35 range.
- These levels reflected profound sentiment compression, a thorough flushing out of leveraged positions, and a structural rebalancing of the market.
At its current reading, the Bitcoin Combined Market Index stands at less than 0.4. While this is below the equilibrium point, it remains considerably above the historical bottom zones. This divergence strongly suggests that the market is not merely undergoing a temporary pullback but is actively transitioning into a sustained bear phase.
The analyst posits that a more enduring market bottom may only materialize if historical patterns repeat, leading the BCMI to revisit the deep compression levels seen in 2019-2023.
Weak Market Sentiment Bolsters Bear Market Evidence
Complementing the on-chain data, prevailing market sentiment further reinforces the notion that Bitcoin is moving deeper into a bearish cycle. Recent weeks have been marked by a noticeable scarcity of optimism, with traders exhibiting minimal confidence in the establishment of a sustainable price floor.
The widely recognized CoinMarketCap Crypto Fear and Greed Index currently registers a reading of 28, firmly placing overall market sentiment within the “Fear” zone.
This pessimistic backdrop is echoed by prominent industry figures. As Changpeng Zhao recently observed, many investors often express regret about not acquiring Bitcoin earlier, paradoxically wishing they had bought at previous all-time highs. In reality, the most opportune accumulation phases historically occur precisely during periods like the present, when fear, uncertainty, and doubt (FUD) profoundly influence market psychology.
Conclusion: A Data-Driven Outlook on Bitcoin’s Bear Market
The confluence of declining price action and compelling on-chain data presents a robust case for Bitcoin’s entry into a bear market. The critical descent of the BCMI below its equilibrium, coupled with historical cycle analysis, strongly indicates a structural shift rather than a transient correction.
<p
About The Author
