How Severe Is This Bitcoin Bear Market and Where Is Price Headed Next?

Bitcoin recently experienced a sharp sell-off that nearly dragged the price down to the $60,000 level before a swift bounce followed. Dip buying helped BTC stabilize near current levels, but this rebound alone does not confirm a trend reversal. 

Instead, the move appears more like a temporary pause within a broader corrective phase, leaving investors questioning whether further downside lies ahead.

This Is What Bitcoin Signals Suggest

One defining characteristic of bear markets is elevated Relative Unrealized Loss, which measures the dollar value of underwater coins relative to total market capitalization. During Bitcoin’s drop toward $60,000, this ratio surged to roughly 24%.

That level sits well above the typical bull-bear transition zone, placing the market firmly in bearish territory.

While the metric signals an intense bear regime, it remains below extreme capitulation levels historically seen above 50%. This suggests Bitcoin is undergoing an active capitulation process rather than reaching its final bottom. Selling pressure is widespread, but not yet exhausted, implying further volatility as the market seeks equilibrium.

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Bitcoin Relative Unrealized Loss. Source: Glassnode

Another lens into investor behavior is the distribution of Bitcoin supply among wallet sizes. Data shows wallets holding less than 0.01 BTC have been steadily increasing their share of supply. This group represents small retail participants who often react emotionally to price swings but are currently accumulating.

At the same time, wallets holding between 10 and 10,000 BTC have shown mild net distribution during the dip. This divergence is notable because public sentiment on social platforms remains overwhelmingly bearish.

Despite negative commentary, small traders are quietly adding exposure, signaling belief that current prices offer value.

Bitcoin Smart vs Small Retail Money. Source: Santiment

This imbalance suggests optimism has not fully reset. Ideally, deeper bear phases see retail capitulation align with bearish social metrics.

Until small retail supply begins declining, rebounds may struggle to gain lasting traction, limiting the upside of near-term recovery attempts.

Bitcoin Continues To Witness Support

Despite price weakness, network activity presents a contrasting signal. Bitcoin has seen a sharp rise in new addresses over the past week. The number of investors conducting their first on-chain transaction increased by roughly 37%, indicating fresh participation entering the network.

Such growth reflects continued interest in Bitcoin as prices correct. New entrants often emerge during periods of volatility, attempting to position early for potential recoveries.

While not a guarantee of immediate upside, rising address activity suggests confidence in Bitcoin’s longer-term value proposition remains intact.

Bitcoin New Addresses. Source: Glassnode

This influx of new users can provide support during consolidation phases. However, if macro pressure persists, even strong network growth may struggle to offset broader risk-off conditions across financial markets.

BTC Price Levels To Watch

Bitcoin price is trading near $69,077 at the time of writing after rebounding from the $63,007 support during the recent crash. Aggressive dip buying prevented a deeper slide toward $60,000. This defense highlights strong demand at lower levels, at least in the short term.

Despite this bounce, downside risk remains elevated. The broader macro outlook suggests Bitcoin may still face further breakdowns in the coming weeks. A loss of the $63,007 support would reinforce a bearish continuation, with the next major downside target near $55,500 based on historical support zones.

Bitcoin Price Analysis. Source: TradingView

A short-term recovery remains possible if fresh capital inflows persist. Rising new address activity could help Bitcoin consolidate and reclaim $71,672 as support. Securing that level would invalidate the immediate bearish setup and signal stabilization, though it would not fully negate the broader bear market structure.