Is Bitcoin (and Crypto) in a Bear Market? (February 2026): Where Things Stand

Bitcoin peaked at $126,000 in October 2025. As of February 2026, it’s trading around $65,000–$70,000. That’s a decline of roughly 45–50% from the all-time high.

If that sounds like a bear market to you, that’s because it is.

But calling it a bear market and understanding what kind of bear market you’re in are two very different things. A garden-variety correction? A structural shift? A temporary liquidity squeeze that reverses when the Fed changes course? Each scenario demands a different response.

What’s making this particular downturn unsettling isn’t the size of the drop — Bitcoin has seen worse. It’s the context. The four-year halving cycle appears to be broken. Gold is dramatically outperforming as the preferred safe haven. Retail investors are fleeing. And the broader crypto market is following Bitcoin into the red.

Let’s look at the actual data.

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Now — here’s where things actually stand with Bitcoin and crypto markets.

What Defines a Crypto Bear Market?

In traditional finance, a bear market is typically defined as a 20%+ decline from a recent high sustained over at least two months. By that measure, Bitcoin entered bear territory in late 2025 when it dropped below $100,000 — and it’s deepened significantly since.

But crypto bear markets behave differently from stock market bears. They’re faster, deeper, and more volatile in both directions. Here’s how previous crypto bears have looked:

Bear Market	Peak	Trough	Max Decline	Duration (Peak to Trough)
2011	$32	$2	-94%	~5 months
2013–2015	$1,150	$170	-85%	~14 months
2017–2018	$19,700	$3,200	-84%	~12 months
2021–2022	$69,000	$15,500	-78%	~12 months
2025–2026	$126,000	~$62,900*	-50%*	~4 months*

*Current cycle — may not have reached bottom yet.

By historical standards, the current 50% decline is actually moderate. Previous crypto bears have bottomed at 78–94% below their peaks. That’s not a prediction that this bear will deepen to those levels — the market structure is fundamentally different now — but it’s important context.

What’s Different About This Bear Market

ETF-driven dynamics

Previous crypto bear markets were dominated by retail panic and exchange failures. This one is being shaped by institutional flows. Spot Bitcoin ETFs, which didn’t exist during previous bears, are now a major force. When institutions reduce risk exposure, ETF outflows create selling pressure that didn’t exist in earlier cycles.

CoinShares reported $1.7 billion in weekly digital asset outflows in early February 2026, heavily concentrated in US products. Bitcoin specifically saw $1.32 billion in exits. This institutional selling is more orderly than retail panic — but it’s also more persistent.

The gold divergence

This is the data point that defines the current bear. The US dollar weakened throughout 2025 and into 2026 — exactly the macro environment where Bitcoin was supposed to shine. Instead, gold surged to record highs while Bitcoin fell. Investors who needed a hedge against fiat debasement chose the asset with 5,000 years of track record over the one with 17 years.

Analyst Willy Woo summarised the dynamic: Bitcoin trades as a risk-on, high-beta asset rather than a safe haven. Its fundamental properties may eventually reflect store-of-value characteristics, but that could take 15–20 years to manifest in how markets price it.

The broken cycle

The traditional four-year halving cycle suggested 2025 should have been a banner year for Bitcoin. Instead, the post-halving year finished in the red for the first time in Bitcoin’s history. Whether the cycle is permanently broken or simply evolving is debated, but the mechanical “buy after halving, sell a year later” strategy that worked three times in a row has clearly failed.

Macro correlation

Bitcoin’s correlation with traditional risk assets (equities, particularly tech stocks) has increased. When the S&P 500 dropped 1.2% and the Nasdaq fell 1.6% in early February, Bitcoin amplified those losses. This correlation means crypto isn’t offering the diversification benefits that some investors expected.

The Broader Crypto Market

Bitcoin’s downturn has dragged the entire crypto market down with it. The total crypto market cap has fallen from highs near $3.5 trillion to approximately $2.3 trillion.

Ethereum (ETH): Down significantly, with $308 million in outflows reported by CoinShares. Ethereum faces additional headwinds from competition with layer-2 solutions and alternative chains.

Altcoins broadly: XRP saw $43.7 million in outflows, Solana $31.7 million. Smaller altcoins have been hit even harder — many declining 60–80% from their 2025 highs. In bear markets, capital consolidates toward Bitcoin and then exits crypto entirely, leaving altcoins as the worst-performing assets.

Stablecoins: The notable exception. Tether (USDT) and other stablecoin market caps have held steady or grown as investors park capital in digital dollars rather than exiting crypto entirely. The stablecoin market cap relative to total crypto market cap is at approximately 8% — a level that has historically preceded eventual recoveries.

DeFi and NFTs: Total value locked in DeFi has contracted, and NFT trading volumes have fallen to multi-year lows. Speculative corners of the crypto market suffer disproportionately during bears.

Key Indicators: How to Read This Bear Market

Rather than guessing, here are the data points institutional analysts watch to gauge bear market severity and recovery timing.

On-chain metrics

Exchange reserves: When Bitcoin exchange reserves decline, it typically signals that holders are moving coins to cold storage for long-term holding — a bullish signal. When reserves increase, holders are preparing to sell — bearish.

Whale accumulation: Large wallet addresses (1,000+ BTC) have been accumulating during this downturn. Historically, whale accumulation during retail selling has preceded market recoveries by 3–12 months.

MVRV ratio (Market Value to Realised Value): When this ratio drops below 1, it means the average Bitcoin holder is underwater — historically a zone of maximum fear and often a buying opportunity. Current readings are approaching that territory.

Macro indicators

Federal Reserve policy: Bitcoin’s biggest catalyst for recovery is monetary easing. Rate cuts and any signal of renewed quantitative easing would increase global liquidity — the oxygen that risk assets (including crypto) need to recover.

US Dollar Index (DXY): A weakening dollar typically benefits Bitcoin. The DXY has been declining, which should theoretically support crypto — but Bitcoin has been falling anyway, suggesting that other forces (risk-off sentiment, ETF outflows) are overwhelming the dollar signal.

Stablecoin reserves: High stablecoin reserves relative to crypto market cap indicate capital waiting to be deployed. At ~8%, this metric suggests significant dry powder exists.

Market sentiment

Crypto Fear & Greed Index: Near all-time lows, deep in “Extreme Fear” territory. While this feels terrible, every previous reading at these levels has eventually resolved upward. Extreme fear readings are historically better buying opportunities than extreme greed readings.

Funding rates: Negative funding rates on futures markets indicate that bears are paying to maintain short positions. When this becomes extreme, it often signals a short-term bottom as shorts get squeezed.

The Corporate Bitcoin Problem

One development unique to this bear market: corporate Bitcoin treasuries under stress.

Strategy (formerly MicroStrategy) is the most prominent example. The company holds over 700,000 Bitcoin — acquired at an average cost basis that now exceeds the current market price. For the first time, Strategy’s entire Bitcoin position is underwater.

While Strategy isn’t facing forced liquidation immediately (their first tranche of convertible bonds isn’t due until early 2027), the situation highlights a structural risk. Companies that loaded up on Bitcoin as a treasury asset during the bull market are now carrying paper losses that affect their stock price, credit ratings, and ability to raise capital.

Other corporate holders face tighter constraints. GameStop, which purchased approximately $504 million in Bitcoin, recently moved its entire BTC position to an exchange — valued at approximately $421 million at the time. Whether this signals a planned liquidation or simple portfolio management, the move had crypto markets on edge.

The concern isn’t any single company. It’s the cascade effect: if one major corporate holder liquidates, it creates selling pressure that pushes prices lower, which puts pressure on other corporate holders, creating a potential negative spiral. This dynamic didn’t exist in previous bear markets because corporate Bitcoin treasuries didn’t exist.

What to Watch for Recovery Signals

Rather than guessing when the bear market ends, monitor these concrete indicators.

Federal Reserve policy shift. The single most important catalyst. Any signal of rate cuts or renewed quantitative easing would increase global liquidity and likely trigger a risk-on rally across all assets including crypto. Watch Fed meeting statements and dot plot projections.

ETF flow reversal. When weekly ETF flows shift from consistent outflows back to net inflows, it signals institutional buyers are returning. This transition typically happens gradually, then accelerates.

Stablecoin market cap expansion. Growing stablecoin market cap suggests new capital is entering the crypto ecosystem, even if it’s parked on the sidelines waiting for deployment.

Bitcoin dominance rising. In bear market recoveries, capital typically flows into Bitcoin first before rotating into altcoins. Rising Bitcoin dominance (currently around 59%) often precedes broader market recovery.

Funding rate normalisation. When perpetual futures funding rates stabilise from deeply negative (extreme bearish positioning) to neutral, it suggests selling exhaustion.

How Long Do Crypto Bear Markets Last?

Based on historical data, complete crypto bear markets (peak to new all-time high) have lasted 2–3 years. The trough typically occurs within 12–14 months of the peak.

If the current cycle follows historical patterns — and there’s no guarantee it will — the bottom could form somewhere in mid-to-late 2026, with a recovery to new highs by 2027 or 2028.

However, several factors could shorten or extend this timeline. A Fed pivot to rate cuts could accelerate recovery. Conversely, a deepening recession or additional macro shocks could extend the bear.

What Happened During Previous Crypto Bear Markets

Understanding the emotional arc of bear markets helps you recognise where we are in the cycle.

Phase 1: Denial (we’ve passed this). “It’s just a dip. Buy the dip.” This phase occurred from October to December 2025 as Bitcoin fell from $126K to $90K. Most holders remained confident.

Phase 2: Fear (we’re here now). “This could actually be serious.” Bitcoin below $70K with retail investors actively selling. Media headlines asking “Is Bitcoin dead?” Panic selling accelerating.

Phase 3: Capitulation (may be approaching). “I can’t take it anymore — I’m selling everything.” This phase is characterised by the final wave of selling that creates the bottom. Volume spikes. Extreme despair. Historically, this is the best buying opportunity — but it’s psychologically the hardest time to buy.

Phase 4: Accumulation (follows capitulation). Price stabilises at a bottom range. Volume drops. Smart money accumulates quietly while public interest is at a minimum. Media stops covering crypto.

Phase 5: Recovery. Gradually, then suddenly. Price begins climbing. Scepticism remains. Then momentum builds, media coverage returns, and the cycle begins again.

What Should You Do in a Crypto Bear Market?

I’m not a financial adviser, and this isn’t investment advice. But here’s how experienced crypto investors typically approach bear markets.

Don’t sell into panic. The absolute worst time to sell is during Phase 2 or Phase 3. You’re locking in maximum losses at maximum fear. If you’re going to sell, do it strategically — not emotionally.

Assess your position size. If your crypto allocation is keeping you up at night, it’s too large regardless of where the market goes. Reduce to a position you can hold through another 30–50% decline without panic.

Consider dollar-cost averaging. If you believe in crypto’s long-term thesis, bear markets have historically been the best time to accumulate. Regular, fixed-amount purchases spread your risk and remove the impossible task of timing the exact bottom.

Diversify beyond crypto. If 100% of your “investment” portfolio is in crypto, a bear market is an expensive lesson in diversification. Traditional assets (stocks, bonds, real estate) and alternative income streams provide stability that crypto doesn’t.

Ignore price predictions. Nobody knows if Bitcoin will hit $40K or $200K next. Predictions are entertainment, not analysis. Focus on fundamentals and your own financial situation.

The Bigger Picture

Bear markets are normal. They’re uncomfortable, expensive if you sell at the bottom, and they feel permanent while you’re in them. They never are.

Every asset class experiences them — stocks, bonds, real estate, commodities, and yes, crypto. The S&P 500 has had 12 bear markets since 1950. Each one ended, and the index went on to new highs. Bitcoin’s historical bear markets have followed the same pattern, though with much greater volatility.

The question isn’t whether we’re in a bear market — we clearly are. The question is what you do during it. And the answer depends entirely on your financial situation, risk tolerance, and investment timeline.

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Frequently Asked Questions

Is Bitcoin officially in a bear market? Yes. By any standard definition (20%+ decline from recent high sustained over two months), Bitcoin has been in a bear market since late 2025. It’s currently down approximately 45–50% from its October 2025 all-time high.

How long do crypto bear markets last? Historical crypto bears have lasted 12–14 months from peak to trough, with full recovery to new all-time highs taking 2–3 years from the peak.

Is the entire crypto market in a bear market? Yes. The total crypto market cap has fallen from approximately $3.5 trillion to $2.3 trillion. Bitcoin, Ethereum, and most major altcoins are all significantly below their 2025 highs.

Should I sell my crypto during a bear market? Selling during fear has historically been the worst strategy. However, if your position size is causing genuine financial stress, reducing to a level you can comfortably hold through further declines is reasonable.

What typically ends a crypto bear market? Historically, crypto bears have ended when the Federal Reserve shifts to easing monetary policy, increasing global liquidity. A pivot from rate tightening to rate cuts would be the strongest catalyst for recovery.

Is this the worst crypto bear market ever? No. Previous bears saw 78–94% declines from peak to trough. The current 50% decline is significant but moderate by crypto standards. However, the bear could deepen from here.