Full analysis of bear market signals: What are the key indicators to watch out for

What Signals Is the Current Crypto Market Sending

Crypto investors have recently been focused on one question: Is the market entering a bear cycle? From on-chain data to investor behavior and macroeconomic environment, multiple signals are conveying the same message — cautious sentiment is spreading. Bitcoin is currently priced at $87.13K, with a 24-hour increase of only +0.36%, indicating a lack of upward momentum in the market.

What Are On-Chain Indicators Saying

Composite Indicator Drops to Zero Zone

The composite indicator measuring overall market heat has recently fallen to zero — a level that also appeared during the 2022 bear market. This is not a coincidence but a sign that market psychology has shifted from bullish to cautious. When this indicator hits zero, it means upward momentum has been nearly exhausted.

365-Day Moving Average Becomes a Key Support

Historical data shows that when Bitcoin falls below the 365-day moving average, it often signals the start of a bear market. Currently, Bitcoin is approaching this line, and whether it breaks through or holds will determine the short-term market direction.

Relative Strength Index Enters Oversold Zone

The RSI indicator is currently in oversold territory, which usually suggests a short-term rebound could occur. However, oversold conditions also reflect extreme market pessimism — not a positive sign, but a sign of risk accumulation.

Market Cap to Realized Value Ratio Shows Severe Inversion

When the MVRV ratio turns negative, it indicates most holders are at a loss. Negative values do not necessarily mean opportunity; more often, they reflect a loss of market confidence — a typical characteristic of a bear market.

Patterns Revealed by Historical Cycles

Four-Year Market Rhythm

Bitcoin’s price movements follow roughly four-year cycles, closely related to halving events. Current data suggests the market is transitioning from the late bull phase to the early bear phase, consistent with historical cycle patterns.

Wyckoff Distribution Pattern Indicates Long-Term Adjustment

The Wyckoff distribution pattern in technical analysis hints that Bitcoin may enter a prolonged correction phase. Combined with other bear market signals, this pattern strengthens the probability of further downside.

W-Shaped Bottom Rather Than V-Shaped Rebound

Unlike the rapid V-shaped recoveries seen in past bull markets, the current market shows W-shaped recovery characteristics. This suggests a possible double bottom, extending the overall recovery cycle — not favorable for short-term traders.

Investor Behavior Revealing Anxiety

Long-Term Holders Begin to Reduce Positions

Large holders are selling off accumulated positions, a behavior often seen on the eve of a bear market. Their decision to reduce holdings usually precedes a shift in overall market sentiment.

Short-Term Traders Are in Trouble

Short-term holders are currently at a loss, which can trigger panic selling. When these investors cut losses, it often accelerates market declines.

Stablecoins Reach New Highs

USDT’s market share has reached its highest point since April. This increase indicates investors are moving into cash equivalents, essentially hedging against risk. Increased inflows into stablecoins often mean accelerated de-risking.

The Real Sentiment in the Options Market

Bitcoin options are currently dominated by put options, which allow investors to profit from falling prices. The rise in put options reflects hedging against further declines and indicates market participants are preparing for the worst-case scenario.

Macro Factors’ Cumulative Effect

Uncertainty in Federal Reserve Policies

The Fed’s interest rate decisions have profound impacts on the crypto market. While expectations of rate cuts might offer some support, the current macro environment is not friendly to risk assets, including cryptocurrencies.

Slowing Institutional Entry

The approval of Bitcoin ETFs was once a strong bullish catalyst, but recent slowdown in capital inflows suggests this factor is losing momentum. Institutional investors are turning cautious and adopting a wait-and-see approach.

Ongoing Geopolitical Disruptions

Uncertain international situations and regulatory changes continue to influence market psychology. These external factors are hard to predict but are enough to dampen investor risk appetite.

How Technical Tools Can Respond

Focus on Moving Averages for Support

The 365-day moving average and other key support levels should be closely monitored. These levels represent the market’s “memory points,” and breaking them often triggers chain reactions.

MVRV Ratio as a Reference

Negative MVRV ratios are concerning but can also serve as markers of extreme pessimism. Understanding this indicator helps assess how close the market might be to bottoming.

Warning Significance of Composite Indicators

When multiple indicators simultaneously signal a bear market, the market may be in a risk zone. Instead of trying to bottom fish, it’s prudent to stay alert.

Summary of Key Points

Bitcoin is currently under pressure from multiple dimensions — on-chain indicators show declining enthusiasm, investor behavior reflects waning confidence, and macroeconomic factors add uncertainty. While the future market direction remains uncertain, understanding these signals, utilizing technical tools, and maintaining caution will help investors make more prudent decisions during volatile periods. The core advice is: regularly review these key indicators, adjust positions according to your risk tolerance, and avoid being misled by short-term rebounds.

Disclaimer: This content is for informational purposes only and does not constitute investment advice. Crypto assets are highly volatile and risky; investors should assess their own situation carefully and consult professionals before investing.