Recently, Bitcoin has officially entered a bear market phase. Historical data shows that the cryptocurrency market often undergoes this process. After Donald Trump won the U.S. presidential election last November, Bitcoin’s price surged strongly, breaking through $100,000 for the first time in December 2024 and peaking at around $126,000 in October 2025. However, the trend reversed thereafter. As of November 18, Bitcoin’s price had plummeted by 27% from its peak to $92,000, meeting the definition of a bear market as a decline of over 20% from the bull market high. This marks the seventh time Bitcoin has entered a bear market in the past five years.
The primary driver of this decline lies in the uncertainty of the macroeconomic environment, particularly the outlook for monetary policy. Bitcoin typically performs well in a declining interest rate environment, but persistent inflationary pressures have cast doubts on the Federal Reserve’s decision to cut rates at its December meeting. Meanwhile, the U.S. job market weakened significantly during the summer, and the tariff policies of the Trump administration further exacerbated inflation. These factors collectively led investors to sell off risk assets like Bitcoin and shift towards more conservative investments.
Reviewing data from the previous six bear markets reveals certain patterns. After initially entering a bear market, Bitcoin’s average return over the next six months was 6%, while the average return over the next year was only 1%. On average, it took Bitcoin over seven months from the start of a bear market to reach a new all-time high. Although past performance does not guarantee future returns, this data suggests that Bitcoin is likely to experience a sideways consolidation trend over the next year. However, from a long-term perspective, Bitcoin has still achieved an annualized return of 38% over the past five years, indicating that the strategy of buying the dip holds some value within historical cycles.
Despite short-term market pressure, the long-term investment thesis supporting Bitcoin remains intact. The approval of spot Bitcoin ETFs, along with the relatively lenient regulatory environment under the Trump administration, continues to drive demand for this asset. Data shows that since the U.S. Securities and Exchange Commission approved the first batch of spot Bitcoin ETFs in January 2024, the amount of Bitcoin held on the balance sheets of publicly traded and private companies has increased by 150%. Holdings by companies such as MicroStrategy account for a significant portion of this growth.
Institutional investor participation is also increasing. 13F filings from the third quarter show that the number of large asset management companies holding the iShares Bitcoin Trust has doubled over the past year, with the total number of shares held growing by 154%. Considering that institutional investors manage approximately $130 trillion in assets, even a small allocation of their funds to Bitcoin could significantly impact its price.
This decline has had a broad impact on the digital asset sector. The two key pillars that previously drove Bitcoin to its $126,000 peak—expectations of Fed rate cuts and rising institutional adoption—have both weakened, leading to the withdrawal of momentum-driven capital. Valuations of digital asset reserve companies have been hit hard. At the same time, Ethereum has also fallen back below $3,000, erasing all the gains it made approaching the $5,000 mark in August this year.
Regarding the market outlook, Matthew Hougan, Chief Investment Officer of Bitwise Asset Management, believes that the selling wave may be nearing its end rather than just beginning, but market sentiment remains uneasy. He points out that cryptocurrencies might still need to undergo further declines before establishing a solid foundation for recovery. Investors should be clearly aware that Bitcoin has historically been highly volatile, and if economic conditions worsen, the current bear market could intensify. Therefore, involvement in this high-risk asset class should only be considered if one can withstand potential losses.
