Key Takeaways
Has Bitcoin entered a bear market?
Not conclusively, and not yet. There is another week for BTC to respond after the latest death cross formation.
What would be a sign of recovery?
A move beyond $110k, the 50DMA, within November would be a good sign, and would show parallels to April.
Bitcoin’s [BTC] price action in recent weeks has similarities to what happened earlier this year in March. Then, and now, Bitcoin broke down beneath a 3-month range formation. Both times, this range formed after making new all-time highs.
In a post on X, analyst EndGame Macro detailed why Bitcoin is likely to find support and bounce in early 2026, based on another financial analysis. This expectation also came with a warning – The bounce would not be the start of the next rally higher, as it had been in April and May.
The reasons for expecting a slump in Q2 2026 were varied. The analyst cited liquidity drying up during tax season and the Treasury beginning to build up the TGA, leading to tightened liquidity conditions, among others.
This would cause a further decrease in risk appetite, which would see BTC struggle and sink deeper into a bear market.
Source: BTC/USDT on TradingView
So, will we see a scenario like the chart above shows? One that mirrors March-April 2025. and the rally proceeds to make another new all-time high?
Or will we see a brief bounce in Q1 2026, one that lulls investors into a false sense of security before the price falls deeper?
Making sense of the signs and what Bitcoin bulls must do next to stay afloat
U.S. Dollar Index
The U.S. Dollar Index (DXY) is a measure of the value of the U.S Dollar against a basket of six foreign currencies. A rising DXY trend implies dollar strength. A falling trend implies weak fiat, which generally means sentiment is more risk-on and correlates to 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 went on a strong uptrend. As it stands, the DXY has retained its bearish structure – A good sign for BTC.
However, this could yet change. The probability of a Federal Reserve rate cut in December, which had been 88% a month ago, has fallen to 44%. The uncertainty around rate cuts means the DXY downtrend could be arrested, which won’t help BTC bulls.
Source: Farside Investors
Finally, exchange-traded funds (ETFs) have seen large outflows since the market crash on 10/10, reflecting weak investor sentiment. While this does not guarantee sustained losses, it does serve to highlight where we are right now.
It would not be wise to overlook the strength of the bearish market sentiment.
Source: Benjamin Cowen on X
In a post on X, CEO and founder of Into The Cryptoverse Benjamin Cowen noted the formation of a Bitcoin death cross. Previous death crosses have marked a market bottom. Hence, if Bitcoin cannot respond bullishly within a week and challenge the 50DMA at $110k, the death cross would forecast a “macro lower high”.
A lack of bullish response would mean that in a few months, another rally towards the $110k area would occur. It would be the macro lower high, or a bounce that is part of a larger downtrend. This would agree with the Q2 2026 expectations outlined earlier.
