This week in the UTC+8 time zone, several on-chain and macro analysis institutions have intensively updated their judgments regarding the stage of the Bitcoin cycle, triggering fierce debates in the market. On one side are the "bear market stage" labels given by models and data, while on the other, prices remain elevated above historical highs, creating a dissonance that continuously sparks emotional clashes between bulls and bears. In particular, CryptoQuant pointed out in its latest report that Bitcoin has indeed entered a bear market trajectory, but it has not yet dropped into the kind of "extreme bear market" and extreme panic areas seen in previous cycles. This raises a sharp question: when prices are still far from the "floor" and panic has yet to reach the desperate threshold of historical lows, what act are we currently witnessing in this cycle? Is it the prologue to a long winter, or is it a false alarm prematurely declared by the data?
Prices Still Elevated: The Discrepancy Under the Bear Market Label
● Premium still at high levels: According to rough estimates from a single source, Bitcoin's current price is about 25% premium compared to the $55,000 level that some institutions consider a "bottom reference." This data is marked as pending verification, and the calculation logic has not been fully disclosed. However, even using conservative estimates, compared to the final phases of previous real bear markets, Bitcoin typically forms a long-term, deep discounted sideways consolidation near previous highs, while the fact that prices remain at relatively high levels is already enough to make the statement "the bear market is deep" feel less certain.
● Contrast with historical depths of bear markets: In historically deep bear markets, Bitcoin often experiences a long-term discount of several dozen percentage points or even over 80% relative to previous peak values, with prices "lying low" in the bottom range for months or even longer, combined with long-term on-chain losses and extreme despair on the sentiment front. At that time, the mainstream narrative often shifted from "the future belongs to crypto" to "this experiment will ultimately fail," as practitioners exit the market, projects collapse, and daily trading volumes shrink drastically, forming the typical background of a winter. Although the current pullback is significant, it is still markedly different from a systematic retreat and long-term suffocation.
● Bear market rhetoric vs. "floor" reality: This discrepancy brings about a dramatic scene—on one hand, on-chain institutions and traditional research entities issue warnings of a "bear market stage" or even a "potential winter replication," while on the other hand, prices have not yet entered the ultra-deep discount range traditionally viewed as a "floor." Some investors believe that "this cycle is healthier," while others worry that "the true deep water zone is still ahead." Between the labels and the prices, the market finds itself suspended in a blurry zone that is neither charging ahead nor in disarray.
On-Chain Thermometer: Moderate Cooling of MVRV and NUPL
● The role and boundaries of indicators: On-chain indicators like MVRV and NUPL are widely used to measure the profitability of Bitcoin's overall holdings as well as the temperature of market sentiment. The former roughly reflects the premium level of "market capitalization relative to on-chain costs," while the latter attempts to portray the emotional spectrum from "greed" to "fear." However, the current report does not provide specific values and thresholds for these indicators, with relevant critical ranges being marked as pending verification. This means we can only understand the signals they convey from a directional and relative position, rather than relying on a single reading as a "mechanical switch."
● Far from being completely frozen: CryptoQuant suggests that the market has not yet entered the corresponding "extreme panic" zone typically seen in historical bear market bottoms. Combining the general forms of MVRV and NUPL, it can be inferred that the current situation resembles a moderate cooling period transitioning from heat to cool, rather than a fully frozen deep winter. In other words, while high-level exuberance has clearly receded, sentiment has not yet plunged into the abyss of complete disbelief in the future. This "lukewarm" temperature makes it seem reckless to prematurely declare an ultimate bottom and also renders the simple application of past "extreme panic equals bottom" experiences more dangerous.
● Profitable chips and unfulfilled release: The report mentions that approximately 55% of Bitcoin supply is in a profitable state (also pending verification), indicating that over half of the chips still hold book profits available for realization. From a behavioral finance perspective, a high proportion of profitable chips often suggests that potential selling pressure has not yet been fully released, and if macro conditions or sentiment deteriorate again, the impulse to lock in profits may still be triggered. Unlike a "desperate bottom" where everyone is facing deep losses and unwilling to sell, today's structure resembles a scenario where prices have dropped from their peaks, some optimists begin to buy the dip, but many holders remain above the breakeven line, with the game yet to reach its final round.
Historical Winter Review: The Shadow of an 84% Average Drawdown
● The "84% and 225 days" from single statistics: Research has traced several major historical bear markets and concluded that Bitcoin typically experiences an average maximum drawdown of about 84% during a bear market, lasting on average about 225 days. The report has made it clear that this is a statistic from a single source, with the sample period, data criteria, and calculation methods not fully disclosed, its representativeness and rigor yet to be further validated. However, at the narrative level, tangible numbers like "84%" and "225 days" carry significant communicative power and easily settle into a semi-factual, semi-mythical "iron law" in the market psyche.
● The 70%-75% winter hypothesis: Traditional institution Ned Davis Research further suggested that if this adjustment ultimately evolves into a comprehensive "crypto winter" similar to those of the past, Bitcoin could face a 70%-75% drawdown. Here, specific price levels were not deduced, and no timeline was provided; it is more of a scenario projection based on historical samples. However, when such large drawdown figures are frequently cited, pessimistic sentiment tends to be amplified—many investors instinctively interpret the "potential risk range" as "inevitably destined to be reached," leading either to premature liquidation or to base all decisions on the premise of "it must drop enough to reach historical averages."
● The deviation and pitfalls of historical playback: The problem is that the participant structure, regulatory environment, and sources of funds in this cycle have noticeably changed compared to 2018 and even earlier cycles. Simply applying the average drawdowns and durations of past bear markets mechanically to the current situation easily overlooks the critical institutional and structural differences between "this time" and "last time." The impact of history on sentiment often doesn't provide precise scripts but rather paints shadows in the mind through an exaggerated "worst scenario." The real risk is that when the market becomes obsessed with "replicating past scripts," it may end up blind to more genuine, though less dramatic, paths ahead.
Institutional Chips on the Rise: Will New Players Rewrite the Script?
● The rise of institutional allocation: Unlike previous cycles predominantly led by retail and crypto natives, a notable feature of this round of market activity is that the proportion of institutional holdings and allocations has significantly increased. From the launch of U.S. spot ETFs to traditional asset management companies incorporating Bitcoin into diversified portfolios, the composition of "qualified investors + professional risk control" is gradually changing the market's baseline. Bitcoin is no longer just a high volatility speculative asset but is beginning to be seen as a long-term allocation tool by some funds, adding a new variable to the narrative of cyclical fluctuations.
● Long-term capital and risk control constraints: Institutional capital typically has clearer investment horizons, stricter risk budgets, and hard constraints on drawdowns and liquidity. This means that in extreme market conditions, some institutions may be forced to reduce positions, but over most time frames, they will not behave as impulsively as highly leveraged retail investors due to short-term volatility. At the same time, "slow variable funds" brought by products like ETFs may also provide some support during price declines, reducing the frequency and intensity of sudden evaporations of liquidity and cascading crashes. Extreme volatility is softened, and the "shape" of the cycle will naturally change accordingly.
● Discount on historical average drawdowns: If the previous cycle was a "pure emotion amplifier" driven by highly leveraged retail participants and disorderly leverage, the current structure is more akin to a mix of emotions and institutional constraints. Under such a framework, average drawdown statistics based on the premise of "constant market participant structure" inevitably lose some reference value. It is not to say that a 70%-80% drawdown will no longer occur, but it is no longer a "default assumption," more like one extreme scenario among many paths. For investors, understanding how participant structures change volatility characteristics may be more important than rote memorization of a historical average number.
Halving Volatility and Profitable Chips: The High-Pressure Suspense of a Cooling Period
● The signal of volatility "cooling down": The report indicates that Bitcoin's one-year realized volatility has nearly halved (also pending verification), which many observers regard as a sign of the market's phase of "calm." Compared to the previous sharp surges and crashes, prices oscillate in a narrower range with a convergence in daily volatility, seemingly indicating a reduction in risk. However, the decline in volatility may either mean that risk release is nearing its end or it may just be a brief calm before the storm, which does not directly favor either bulls or bears.
● Profitable supply and potential high pressure: Simultaneously, about 55% of the supply is still in a profitable state, meaning that even if volatility temporarily converges, there remains a significant layer of "profit pressure" in the market. Local bearish sentiment, regulatory winds, or even just fears of "replicating historical winters" could trigger selling actions from these holders. In this configuration, prices are no longer surging crazily to new heights as before, but there has not yet been a thorough digestion of profitable chips; the potential selling pressure within the system appears to be sealed rather than completely released.
● The ambiguous image of the transition period: Overall, the current market state resembles a transition period: volatility is clearly lower than during the previous spike phase, sentiment has receded from greed to caution, even bordering on pessimism, but has not fallen to the freezing point of "no one talks about Bitcoin anymore." Prices oscillate between high levels and deep pits, on-chain data and historical narratives each assert their perspectives, forcing investors to choose between the reality of “not cheap enough” and the shadow of “perhaps deep declines will happen again.” This ambiguity itself lays sufficient suspense for whatever happens next, whether it be a second bottoming or a renewed upward assault.
The Unfinished Bear Market Script: How Investors Cope
Current signs point more towards a mid-stage phase transitioning from frenzy to rational correction, rather than the already completed narrative of an ultimate bottom. The "bear market stage" referenced by CryptoQuant serves more as a structural reminder of risk drawdown rather than an announcement that "a bottom has been reached"; the 70%-75% drawdown scenario suggested by Ned Davis Research is a hypothesis reflecting on historical deep winters rather than a script destined to be copied verbatim. In the absence of extreme panic and with prices not deeply discounted, any assertions of a bottom are inevitably hasty. Different institutions arrive at distinctly different path projections based on the same set of on-chain data and historical samples, essentially using varying model assumptions and risk preferences. For ordinary investors, the more critical aspect is not to pick a side based on some "authoritative conclusion," but to clearly see the premises behind those conclusions—what participant structures, macro environments, and policy trajectories they assume. What truly needs to be reinforced is the meticulous management of pace and positions: Before systematic extreme panic and deep discounts emerge, grasp cash flow and leverage limits to leave room for worse scenarios, rather than betting everything on the gamble that "this step is the final bottom call." Whether a bear market has come and whether it will replicate historical drawdowns may only be validated afterward, but how to protect oneself in the uncertain mid-stage is a question that everyone must answer right now.
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