Bitcoin may continue to experience a bear market for a minimum of six months, according to insights from a cryptocurrency analyst, as on-chain data reveals minimal price fluctuations despite increased capital inflows.
Bitcoin (BTC) has stumbled this April, hitting a three-week low at $77,077. In a post from April 5, the analyst highlighted how the ongoing bear market is mirrored in on-chain statistics such as market cap and realized cap.
Realized cap reflects the actual amount of money flowing into Bitcoin based on wallet transactions, while market cap relies on the latest trading prices on exchanges. Typically, a bear market is characterized by a stagnant or declining market cap even as realized cap increases. This suggests that although there is capital entering the market, the prices are not responding accordingly.
The analyst observes that a bull market occurs when modest capital increases prices. Nevertheless, the prevailing bearish trend suggests that even significant capital investments are failing to elevate Bitcoin’s price. Historical analysis indicates that significant price reversals for Bitcoin usually require at least six months, implying that a short-term rally is improbable.
Data from Coinglass shows that Bitcoin recorded its weakest Q1 performance since 2018, with an 11.8% drop. Losses during the first quarter historically have had varied impacts on Bitcoin’s annual performance. For instance, concerns during the COVID pandemic led to a 9.4% decline in 2020, yet Bitcoin ended that year up over 300%. Conversely, significant Q1 losses in 2014, 2018, and 2022 marked the conclusion of bull runs and heralded bear markets.
This recent downturn follows new tariffs imposed by President Trump, which have incited market volatility across the globe. While Bitcoin initially saw gains post-Trump’s election, its role as a U.S. economic hedge is now uncertain due to these tariffs, heightening recession fears. In the coming months, Bitcoin’s ability to withstand economic instability will be put to the test.