Is Bitcoin a pullback or a new Bear Market?

Compilation: Vernacular Blockchain

Bitcoin has started to show significant weakness, with its recent drop below the six-figure (100,000 USD) level prompting a reassessment of the near-term outlook. With some important technical and on-chain levels being breached, I have adjusted my fundamental scenario, indicating that the probability of retesting new all-time highs in the coming weeks has fallen below 50%. If the key levels are restored, this situation could change quickly, but until then, market conditions seem to have shifted from a trend-driven bullish phase into a correction stage.

“Buying The Dip”

Bitcoin has experienced a significant pullback, but buying the dip is not always the best strategy unless it is within a confirmed bullish trend. In a bear market environment, budding pullbacks can still lead to substantial price declines. Short-term and imminent pullbacks are typical in a declining market, so it becomes increasingly important to react based on data rather than preemptively predicting the bottom.

From our analysis of the chart on the Short-Term Holder Realized Price in the previous cycle, we can see this pattern of multiple pullbacks. It is equally clear that this indicator acted as a key resistance during this phase, and only after BTC recovered to the short-term holder realized price level did it experience a sustained rebound.

Figure 1: As observed in the previous cycle, multiple pullbacks occurred before reaching the market bottom.

But there is a warning: if the price effectively recovers key levels, the entire picture will change. This is why it may make sense to make small allocations during this pullback, while delaying further purchases until we see macro consistency at the levels, thus taking a more defensive approach.

Key Observation Level

MVRV Z-Score and Bitcoin Realized Price (Bitcoin Realized Price) more clearly indicate where the broader market cost basis lies. Currently, the network's realized cost basis is concentrated in the range of over $50,000, but this number is increasing every day.

Figure 2: Historically, bear market bottoms usually occur when BTC price is below its actual price.

200-Week Moving Average has also shown a similar situation, as it is currently positioned in the $50,000 range. Historically, the points where this indicator meets the price provide strong long-term accumulation opportunities.

Figure 3: The 200WMA also suggests that $55k is an accumulation point, even though it is rising every day.

These are slowly rising every day, which means a potential bottom may form at $60,000, $65,000, or higher, depending on how long the Bitcoin trend continues. An important point is that when the spot price trades close to the network's historical average cost, value tends to level off, and key buy support levels provide consistency.

Supply and Demand Signal

Value Days Destroyed (VDD) Multiple remains an important indicator for identifying pressure points of long-term and experienced holders. Very low readings indicate that a large amount of long-held coins have not been moved, which often coincides with market bottoms. However, short-term spikes may indicate capitulation pressure, which often accompanies or precedes significant market turning points.

Figure 4: The current VDD multiplier reading indicates that larger and more experienced participants in the market are still very active.

Currently, as prices decline, this indicator continues to rise, which suggests that many holders are fatigued from selling. This does not align with the characteristics of a cycle bottom, which typically features extreme forced selling and a short-term compression. At this stage, the market seems to be gradually releasing, rather than being exhausted. Meanwhile, the supply of Long Term Holders ideally should stabilize and begin to increase again before confirming any significant bottom, as the bottom is formed when the most patient participants start to hold (accumulate) rather than exit.

( Funding Rate

Periods of extreme fear are often clearly manifested through large short positions, as indicated by negative funding rates in Bitcoin Funding Rates and huge realized losses. These conditions suggest that weak hands have capitulated, while strong hands are absorbing this supply.

![])https://img-cdn.gateio.im/webp-social/b6b0aab4b5f750bfdea793d978af9729.webp###Figure 5: The timing of the severely negative funding rate for Bitcoin is about to focus on significant market lows, which is usually followed by a price rebound.

The market has not yet shown the iconic panic selling and shorting typically associated with significant cyclical lows. Without pressure from the derivatives market and no rush to realize losses, it is difficult to say that the market has completely cleared.

( The level that must be recovered

Assuming the bearish scenario is wrong, this is certainly the preferred outcome. In this case, Bitcoin needs to start recovering key structural levels, including the $100,000 psychological barrier, short-term holder realized price, and 350-day moving average, as depicted in the Golden Ratio Multiplier chart.

![])https://img-cdn.gateio.im/webp-social/28bb20e1037b56a0ca16567a46fc2fa1.webp###Figure 6: BTC must continuously recover from the 350-day moving average to resume a bullish trend.

The continuous closing price at these levels, along with the strength of global risk assets, will indicate that the trend is changing. However, before that, the data temporarily leans towards robustness.

( Conclusion

Since breaking below several important levels, the outlook has become more defensive. Bitcoin's long-term fundamentals do not have structural flaws, but the short-term market structure is not a healthy bull trend.

Currently, the suggested strategies include buying on dips without fail, waiting for consistency to appear before making large-scale positions, respecting macro conditions and trends, and only becoming aggressive when strength is proven. Most investors can never pinpoint the top or bottom of a target; the goal is to position near areas with high probability and have sufficient confirmation of the market's excess remaining for months.

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