Key Takeaways
Has Bitcoin entered a bear market?
Not final, and not yet. There is still a week for BTC to respond after the latest death cross formation.
What would be a sign of recovery?
A move past $110,000, the 50DMA, in November would be a good sign and parallels April.
Bitcoins [BTC] The price action in recent weeks shows similarities to what happened earlier this year in March. Then, and now, Bitcoin broke under a three-month range formation. Both times this range emerged after reaching new all-time highs.
In one message on Xanalyst Endgame macro detailed why Bitcoin is likely to find support and rebound in early 2026, based on another financial analysis. This expectation also came with a warning: the rebound would not be the start of the next rally higher, as was the case in April and May.
The reasons for expecting a downturn in the second quarter of 2026 were varied. The analyst cited that liquidity dries up during tax season and the Treasury Department begins to build up the TGA, which has led to tighter liquidity conditions, among other things.
This would cause a further decline in risk appetite, causing BTC to struggle and sink deeper into a bear market.
Source: BTC/USDT on TradingView
So will we see a scenario like the graph above shows? One that mirrors March-April 2025. and the rally continues to hit another all-time high?
Or will we see a brief bounce in the first quarter of 2026, lulling investors into a false sense of security before the price falls deeper?
Understanding the signals and what Bitcoin bulls need to do next to stay afloat
US dollar index
The US Dollar Index (DXY) is a measure of the value of the US dollar against a basket of six foreign currencies. A rising DXY trend implies a strong dollar. A downtrend implies weak fiat, which generally means sentiment carries more risk and correlates with stronger Bitcoin performance.
The DXY trends can also be used as a macro signal by global investors. In 2021, when the Bitcoin bear market began, DXY was on a strong uptrend. In its current form, the DXY has maintained its bearish structure – a good sign for BTC.
However, this could still change. The probability of one Interest rate cut by the Federal Reserve in December, which was 88% a month ago, has fallen to 44%. The uncertainty surrounding rate cuts means that the DXY’s downward trend could be halted, which won’t help the BTC bulls.
Finally, exchange-traded funds (ETFs) have seen large outflows since the 10/10 market crash, reflecting weak investor sentiment. While this is no guarantee of continued losses, it does underline where we are today.
It would be unwise to overlook the power of bearish market sentiment.
In one message on XCEO and Founder of Into The Cryptoverse Benjamin Cows noticed the formation of a Bitcoin death cross. Previous death crosses have marked a market bottom. So if Bitcoin cannot react bullishly within a week and challenge the 50DMA of $110,000, the death cross would portend a “macro lower high.”
A lack of bullish response would mean another rally to the $110k area would occur within a few months. It could be the macro lower top, or an upswing that is part of a larger downtrend. This would be in line with the expectations outlined earlier for the second quarter of 2026.