Bitcoin Bear Market Deepens: Analysts Warn of Prolonged Downturn

The core of CryptoQuant head of research Julio Moreno’s bearish thesis is the firm’s proprietary “Bull Score Index.” This composite index, ranging from zero (most bearish) to 100 (most bullish), aggregates ten metrics spanning on-chain valuation, liquidity conditions, market data, and technical trends. Moreno, speaking on The Milk Road Show, revealed the index has been stuck between zero and 10 for the last month and a half, a reading he described as “extremely bearish territory.” This prolonged weakness across multiple data dimensions signals a fundamental lack of strength in the market.

Moreno emphasized the index’s predictive nature, noting it “tends to become bearish before there’s a big correction in prices,” acting as an early-warning system. He pointed to its dramatic collapse in early October as a precedent. After hitting 80, “well inside bullish territory,” the index plummeted to 20–30 in “a few days.” Moreno interpreted this as a momentum failure that turned a late-cycle rally into a short-lived spike, a pattern that set the stage for the current downturn. The index’s persistent low reading now frames the environment bluntly: Bitcoin is “well in bear market,” and “the data is just not supportive of any meaningful reversal.”

A closer examination of specific demand indicators reveals the depth of the problem. Moreno highlighted the stark reversal in U.S. spot Bitcoin ETF flows, a sector once seen as a perpetual source of institutional demand. He cited data showing these ETFs shifted into net selling in Q4 2024 and remained a drag into early 2026. Year-to-date, ETFs sold over 10,000 BTC in January 2026, a dramatic contrast to the 46,000 BTC they purchased in the same period a year earlier. “If ETFs are net sellers then it’s not supportive for prices,” Moreno stated, adding that any sustained recovery requires this demand to stabilize and grow again.

This U.S. demand vacuum is further evidenced by the Coinbase premium—the price spread between the U.S.-based Coinbase and offshore exchanges like Binance. Moreno described this as a proxy for U.S. demand, noting it flipped negative in November and has stayed negative “most of the time” since. Historically, bull markets are “driven by higher US demand,” he argued. The persistence of a discount on Coinbase suggests the crucial U.S. bid has not returned, even after Bitcoin’s drawdown below $75,000.

Compounding the demand issue is a stall in fresh capital. Moreno tracks the 60-day change in the USDT market cap as a proxy for new money entering the crypto trading ecosystem. He reported that this growth has effectively flatlined since mid-October. Since new stablecoin issuance typically lands on exchanges and “provides dry powder for traders buying crypto,” its stagnation directly impairs market-wide liquidity. Furthermore, CryptoQuant’s longer-term Bitcoin demand growth model is hovering near zero on a year-over-year basis. “What drives bull markets is this growth in demand, the demand waves,” Moreno explained, but since October, that growth has sharply decelerated.

On the technical front, Moreno emphasized Bitcoin’s one-year moving average as a critical regime filter, acting as support in bull markets and resistance in bear markets. Bitcoin crossed below this average in early November and has failed to reclaim it, a pattern Moreno said resembles the early stages of the 2022 bear market. This technical breakdown is reinforced by deteriorating leverage positioning. Moreno noted the one-year average trend for perpetual futures funding rates—a gauge of appetite to hold long positions—is pointing lower, indicating “less appetite to go long.”

Regarding price levels, Moreno identified key overhead resistance around $89,000 and $79,000, tied to the “trader on-chain realized price” or the estimated cost basis of active participants. With those levels acting as ceilings, his analysis points to $70,000 as an intermediate target, with a deeper level around $56,000 based on the same cost-basis framework. At the time of his analysis, BTC was trading at $75,041.

Moreno closed with a psychological warning as much as a technical one. “First of all you have to accept this. We are in a bear market. So plan accordingly,” he advised. He cautioned that while price rallies will occur, investors should not “confuse that with the start of a bull market” or attempt to “catch the falling knife.” On duration, he suggested the first credible window for a market bottom may not emerge until around Q3 2026, based on historical patterns and the early start of this cycle’s downturn. Ultimately, he concluded, a true reversal will depend not on a single bounce but on whether the fundamental indicators of demand, U.S. flows, and stablecoin liquidity stop flatlining and begin a sustained recovery.