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Bitcoin began Friday’s Asian session under renewed pressure, trading near $101,000 after breaking below a critical support level. On-chain analytics firm CryptoQuant has warned that the market has now entered an “extremely bearish” phase, with the potential for deeper declines if the price fails to recover soon.
In its latest weekly report, CryptoQuant highlighted that Bitcoin’s drop below the 365-day moving average of $102,000 marked the loss of a major technical and psychological threshold. This level had previously defined the lower boundary of the ongoing bull cycle, and losing it may signal the start of a broader correction.
The firm’s Bull Score Index, which measures overall market strength, has fallen to zero — a reading not seen since June 2022, just before the last prolonged bear market. Analysts said this decline reflects a sharp deterioration in both investor confidence and on-chain activity.
On-Chain Data Points to Lower Targets
CryptoQuant’s on-chain metrics suggest that Bitcoin could face additional downside risks unless a rapid recovery occurs. The firm noted that realized price bands, which track where most coins were last transacted, indicate possible support near $91,000 based on Metcalfe’s network valuation model.
However, if Bitcoin remains unable to reclaim the $100,000–$102,000 zone soon, the next key target could be $72,000 — the level corresponding to deeper historical retracements during prior cycles.
“Failure to recover above the 365-day moving average quickly could trigger a much larger correction,” the report warned. CryptoQuant analysts also noted that ETF outflows, declining network usage, and reduced transaction activity are all contributing to the weakening structure.
The data shows that fund inflows into Bitcoin investment products have slowed sharply since mid-October, signaling cooling institutional demand. In parallel, miner revenues have declined, and realized volatility has risen — often early signs of a bearish transition.
Market Conditions Mirror Late 2021 Patterns
The analytics firm compared the current setup to late 2021, when Bitcoin experienced a similar breakdown below its long-term average, triggering a sustained market downturn. According to CryptoQuant, structural similarities between the two periods — such as flattening network growth, falling liquidity, and tightening investor margins — make the recent correction especially concerning.
“The technical picture now mirrors the early stages of the 2022 bear market,” the firm noted, suggesting that history could be repeating.
However, not all analysts share this gloomy view. While the technical structure has indeed weakened, some believe Bitcoin’s current correction is part of a healthy mid-cycle reset rather than a full-scale reversal.
Glassnode Sees a Mid-Cycle Correction, Not Capitulation
In contrast to CryptoQuant’s bearish tone, blockchain data firm Glassnode offered a more optimistic perspective. In its recent report titled “Defending $100K,” Glassnode argued that the market remains “cautious, oversold, but not yet deeply capitulated.”
According to Glassnode, around 71% of Bitcoin’s circulating supply remains in profit, while unrealized losses account for only 3.1% of the total market capitalization — far below the levels seen during true capitulation phases in previous cycles.
This suggests that long-term holders are experiencing temporary drawdowns rather than panic selling. While short-term investors are exiting positions amid price weakness, the underlying long-term conviction remains intact.
Glassnode added that on-chain spending behavior still supports a mid-cycle correction thesis, where traders take profits near local highs before reaccumulating at lower levels.
Gold Rises as Investors Seek Safety
The latest downturn in Bitcoin coincided with a rally in gold prices, as global investors shifted toward safe-haven assets amid continued pressure in equity markets. Despite strong U.S. jobs data, concerns about slowing global growth and higher yields have driven renewed risk aversion across markets.
The divergence between Bitcoin and gold reflects a temporary decoupling, with the latter benefiting from risk-off sentiment. Analysts note that until macroeconomic conditions stabilize, Bitcoin could remain vulnerable to additional downside volatility.
What Traders Should Watch
For now, market watchers are closely monitoring whether Bitcoin can regain the $102,000 level to reestablish its bullish structure. A failure to recover could open the door to a drop toward $91,000, with $72,000 as the worst-case scenario if bearish momentum accelerates.
Conversely, a strong weekly close above $102,000 could invalidate the bearish setup and signal renewed accumulation. Traders will also be watching ETF inflows, funding rate shifts, and exchange reserve data for early signs of a potential trend reversal.
While the short-term outlook remains fragile, the broader cycle narrative is far from over. As Glassnode concluded, “This correction may be uncomfortable, but it’s likely a mid-cycle reset rather than the beginning of a new bear market.”
