Has the crypto bear market already started?

Given the recent strong declines in the crypto market, the hypothesis that it may have already entered a bear market is circulating more insistently. 

However, the issue is actually quite complex, so much so that it is even necessary to specify what is meant by bear market in order to analyze it. 

The bear market crypto: reality or just fear?

According to the definition by Investopedia, the bear market is “a prolonged decline in stock prices, where major indices fall by 20% or more from their highs”.

However, this definition was explicitly designed for the stock markets, but the crypto markets are different.

In the crypto markets, a -20% is so common that it is not considered a sufficient condition to be able to talk about a bear market. 

Therefore, according to the classic definition, which is however designed for stock markets, crypto markets would have been in bear-market for some time, but according to the commonly used definition for criptovalute they are not necessarily so already.

The key concept is that “prolonged” indicated in the original definition, because if a crypto asset drops by 20% in a week, it would be incorrect to already speak of a bear-market. 

In fact, analyzing for example the recent trend of Nvidia’s stock on the market, from February 18 to the close on Friday, the loss was 21%, but even in this case, it would be wrong to talk about a bear-market. 

The term “prolungato” in financial markets cannot be referred to a period of a few weeks, but must be extended to at least a few months. 

The bear market applied to the crypto sector

In the crypto realm, there is a tendency to distinguish between bull-run and bull-market (or great bull-market). 

The difference is subtle, because both terms refer to a period in which prices rise. 

In general, bull-run is used to identify those periods in which prices essentially do nothing but rise, even if only slightly, and it does not necessarily have to last for a particularly long time. For example, the mini-altseason of November lasted only a little over two weeks, and it is considered a bullrun.

Instead, bull-market refers not only to a truly prolonged period, lasting several months, but also potentially characterized by corrections and rebounds. 

With great bull-market (or great bull run) one refers instead to those bull-markets that last up to a year, during which even in the face of strong corrections the price ends with a peak much higher than the initial values. 

As for the bear-market, however, this type of subtlety is erroneously ignored, and there is a tendency to use the same term to identify different things, so much so that bear-run is practically not used. 

The difficulties of the crypto markets: Bitcoin and Ethereum

In theory, to understand if an asset is in a bear-market, one should analyze them one by one. 

In this article, however, we will analyze only Bitcoin, Ethereum and the Total3.

The price of Bitcoin is currently at -25% from the January highs, so according to the classic definition, it would already be in a bear-market. However, according to the definition commonly used for crypto, it is not yet. 

In particular, comparing the price of Bitcoin with that of gold reveals that only a substantial drop below $70,000 could truly lead it into a bear-market. For now, the descending trend seems to be able to stop above $72,000, should it fall further, so there does not yet appear to be a serious and real risk of entering a bear-market. 

It should not be forgotten that in 2021, in the midst of a bull market, it lost more than 50% of its value in May only to recover it all in the following months and go on to register new all-time highs in November. 

Ethereum is still at -57% from the 2021 highs, and in fact, it seems much more at risk than Bitcoin regarding entering a bear-market. However, in the medium/long term, it tends to follow Bitcoin, so if BTC does not enter a bear-market and bounces back, the same thing could happen to ETH. 

The altcoin

The discourse, however, changes for altcoins, because some are in situations similar to Ethereum (like XRP), others in situations vaguely similar to Bitcoin (like Solana), while others seem to have already plunged into a full bear-market. 

For example, Avalanche is still at -87% from the highs, Shiba Inu at -86%, and BCH (Bitcoin Cash) at -92%.

Since it is impossible to analyze them all one by one, it is advisable to take as a reference the so-called Total3, which is the total market capitalization of all cryptocurrencies excluding Bitcoin, Ethereum, and stablecoins. 

The Total3 reached its peak in early December 2024 above 1.140 billion dollars. Since then, it has lost just over 30%, which for the crypto markets does not mean being in a bear-market at all. 

Note that in many cases the price has dropped more than the market capitalization because other tokens have been introduced into the market, thus increasing the circulating supply, which is one of the two factors used to calculate the market capitalization itself (the other is precisely the price). 

In light of this, it is actually incorrect to talk about a bear-market at this moment. For example, the last major bear-market, the one in 2022, began with a 46% drop from the highs in the first half of the year of the Total3. 

The bear-market risk

All this, however, does not exclude at all that it is still possible to enter a bear-market already during the course of this year.

In fact, the hypothesis that the crypto markets could enter a bear-market in 2025 is already circulating, even though at the current state of affairs it is still just a hypothesis. 

Moreover, sooner or later a bear-market will certainly arrive, even if it is not known when, that is, whether this year, next year, or even in 2027. 

Most likely, it will once again be Bitcoin to make the difference. 

In the event that the price of BTC falls significantly below $70,000, the bear-market risk would become decidedly important. As long as it remains above $72,000, it seems that the current situation could also be just a temporary correction, like the one in 2021, although for now much more contained. 

The altseason index of CMC certifies that for almost three weeks now, the crypto markets have entered Bitcoin season, a phase in which the price trend of BTC dominates over that of all other cryptos. This dynamic is quite common in the crypto markets during times of difficulty and highlights how important it is for Bitcoin to hold to avoid entering a bear-market.