Bitcoin: Bear Market or Bear Trap? What Quants Reveal

What happened (short version)

Bitcoin briefly slipped under the iconic $100,000 mark — dipping into the high $90ks — before bouncing back into the low $100ks. The move was sharp enough to rattle traders, erase a chunk of intraday gains and remind everyone that crypto can still be dramatic on short notice.

A big part of the sell-off came from long-term holders cashing out. Analysts tracking on-chain flows noted that this group has been selling hundreds of thousands of coins since summer, and their selling pace picked up recently. That steady supply hitting the market has been enough to blunt demand from ETFs and some corporate treasuries, especially as a portion of companies have favored buybacks over new crypto buys.

Speculative heat also cooled. Funding rates for perpetual futures — a rough proxy for how much leverage traders are using — have fallen substantially since late summer, signaling less willingness to pay to stay long. At the same time, broader dollar liquidity tightened: a prolonged government funding squeeze and heavy Treasury issuance have pulled capital out of risky corners of the market, making it harder for price-hungry buyers to show up in force.

Why some quants are cautious — and why others aren’t panicking

Quant-style analysis highlights two things: where coins last traded (cost basis) and how much selling pressure is hitting markets today. One popular model that prices coins at their last on-chain transaction suggests a big slice of capital is sitting above current levels, meaning many holders are in the red if prices slide further. By the model’s math, a nontrivial portion of invested dollars now sit at a cost-basis above roughly $95,000, making that level a psychological and technical reference point for many market participants.

Unrealized losses are notable but not yet extreme — on the order of a few percent of total market value according to on-chain tallies. Historically, bear phases have become clearer when unrealized losses swell well into double digits as a share of market cap. So, while the current pain is real, it hasn’t crossed the most alarming historical thresholds… yet.

Analysts are split. Some warn that if prices slip below the mid-$90ks, sentiment could sour quickly and amplify selling. Others point out this looks like a mid-cycle shakeout: rotation of coins, profit-taking by long-term holders, and a liquidity-driven wobble rather than structural collapse. Famous market figures have argued both sides — some calling it a temporary dollar-scarcity hiccup tied to cash market mechanics, others saying it’s a healthy distribution phase that institutions are quietly navigating.

On the bullish side, a few experienced investors note that lower volatility and growing institutional acceptance make larger, steadier allocations more justifiable. Translation: you might not get 100x years anymore, but bitcoin could sit as a serious long-term allocation rather than a wild short-term lottery ticket.

So what should you watch? Keep an eye on the mid-$90k area as a key reference line, monitor on-chain sell flows and funding rates for signs of returning leverage, and watch broader dollar liquidity cues (treasury flows, money market conditions) — they still move crypto more than many admit. And yes, have popcorn on standby: whether this is a bear market or a bear trap, the next few weeks will be lively.