Bitcoin Bear Market Deepens Amid Risk-Off Sentiment

Crypto markets opened the week under significant pressure, with Bitcoin (BTC) briefly dipping toward $86,000 before clawing back some losses to trade around $87,800. Despite this partial recovery, prominent market experts are delivering a sobering message: this is not a temporary pullback but a continuation of a deeper bear trend. Popular crypto analyst Mr. Wall Street stated unequivocally that the market is not in a bull phase and that optimism about a rebound is premature. He framed the recent plunge—to a level not seen since mid-December 2025—as failing to mark a durable bottom, describing current conditions as part of a ‘huge bear market.’

Mr. Wall Street added that further downside remains ahead, pointing to ‘much lower targets’ as the next stage for the leading crypto asset rather than a quick recovery. This grim outlook was echoed by analyst Axel Adler Jr., who described an environment shaped by ‘pressure, fatigue, doubt.’ Adler argued that the crypto winter began in November and is not only ongoing but ‘intensifying.’ He provided a stark perspective on the market’s cleansing function: ‘It is precisely during such periods that the gap forms between those who will survive the cycle and those who will forever remain in the crowd at the highs. Winter cleanses the market. It shakes out speculators, breaks illusions, and leaves only discipline. And therein lies its value.’

Beyond internal crypto dynamics, external macroeconomic factors are applying substantial pressure. One major trigger for the downtrend was renewed tension in currency markets, specifically around the USD/JPY pair. The New York Fed’s ‘rate check’ hinted at official sensitivity to a weaker yen, with the 160 level seen as an implicit warning line for potential intervention. Although USD/JPY remains near two-month highs around 154, this action has significantly shifted investor behavior.

According to asset manager QCP Capital, market positioning has become increasingly defensive as investors unwind short-yen trades to avoid being caught by possible intervention. This risk-off move in traditional forex markets has spilled over into crypto, contributing to the sell-off. QCP Capital also highlighted that U.S. political risk remains a major overhang, with uncertainty building around fiscal negotiations. House Republicans have moved forward with spending bills, while Senate Democrats have signaled they may block them. With government funding set to expire on January 30, QCP warned that failure to reach a bipartisan deal could trigger a partial shutdown.

The market is pricing in a high probability of this outcome. Prediction market platform Polymarket is pricing roughly a three-quarters chance of a shutdown by January 31. This confluence of currency intervention fears and domestic political stalemate has created a potent cocktail of uncertainty, driving investors toward safer assets and away from riskier bets like Bitcoin.

The immediate outlook for crypto markets appears fraught with instability. QCP Capital reported that in the crypto derivatives market, put skew and implied volatility have risen. This indicates that traders are increasingly paying a premium for downside protection, betting on or hedging against further price declines. The asset manager suggested prices may ‘chop around’ in the near term as volatility stays high and markets await clarity on both the geopolitical and political fronts.

This environment of elevated volatility and defensive positioning underscores the analysts’ warnings. The market is not merely experiencing a brief correction but is navigating what is being characterized as an intensifying bear phase. The path forward seems less about anticipating a swift V-shaped recovery and more about managing risk through a period of cleansing and consolidation, where external shocks from traditional finance and politics continue to dictate short-term sentiment.