CryptoQuant warns of a bear market risk, Bitcoin may directly test $56,000

On-chain data analysis giant CryptoQuant recently issued a major warning, suggesting that the risk of a Bitcoin bear market is emerging. According to the latest analysis by the firm’s research director Julio Moreno, this round of bear market correction could be more severe than market expectations, with a predicted bottom range between $56,000 and $60,000. As of mid-January 2026, Bitcoin’s price hovers around $89,870, down approximately 29% from its all-time high of $126,080, and CryptoQuant estimates that the overall bear market decline could reach as much as 55%.

From technical to on-chain, bear market signals are flashing red across the board

CryptoQuant’s judgment is based on its proprietary “Bull Score Index,” which integrates multiple dimensions of technical and on-chain data. According to the analysis, this indicator turned fully negative in November 2025 and has yet to recover effectively, marking an important confirmation of the bear market signal.

Moreno pointed out that several factors triggered this round of bear market. On the technical side, Bitcoin has broken below its yearly support line, breaking the upward trajectory of the past year. On-chain activity has significantly declined, and trading volume has shrunk notably. More concerning is a major liquidation event in October 2025 that drained market buying momentum, and institutional investors’ enthusiasm has waned accordingly. The combination of these signals reinforces the conclusion that a bear market is already underway.

Compared to historical cycles, this bear market correction has been relatively mild. Moreno noted that if the price ultimately falls to around $56,000, it would represent a roughly 55% retracement from the high, less severe than the 70% to 80% sharp crashes seen in past cycles like 2022. This also suggests that this bear market is one of the lightest corrections in Bitcoin history.

Demand cycle has ended; this bear market correction may be more moderate

Unlike previous supply-side factors, Moreno attributes this bear market’s cause to demand exhaustion. In 2025, there were three main demand waves supporting price increases: institutional inflows driven by the listing of US spot ETFs, macro expectations related to the presidential election, and the rise of Bitcoin savings strategy companies. However, since early October 2025, these demand drivers have fallen below trend levels.

The institutional side shows the most obvious signs. Data indicates that US spot ETFs turned into net sellers in Q4 2025, offloading about 24,000 Bitcoins, contrasting sharply with the active net buying in the previous year. Even more noteworthy is the sharp decline in purchases by Bitcoin savings strategy companies, which have accumulated $1.44 billion in reserves in preparation for potential long-term sideways or downward markets. These signs suggest that the institutional demand that once propelled Bitcoin higher is nearing its end.

From a price perspective, the predicted bottom range aligns with Bitcoin’s “realized price,” which represents the average cost basis of current holders, currently around $56,000. Historically, this level often marks the bear market bottom and is a key cost zone for institutional investors.

Three key time points to seize the bear market layout opportunities

Although the outlook is temporarily bleak, Moreno provides specific time expectations to help investors plan strategies. Based on the analysis, Bitcoin’s downward process may be divided into two phases.

The first phase targets $70,000, seen as an important support level. Moreno predicts that a retracement to $70,000 could occur within the next 3 to 6 months, i.e., between April and July 2026. This price level is critical for determining whether the market can regain bullish momentum. If buying support emerges in this range, further declines may be slowed.

If the market fails to find effective support at $70,000, a deeper bottom at $56,000 to $60,000 could appear in the second half of 2026. This would represent the deepest retracement from the all-time high of $126,080, approximately 55%.

Opportunities within the bear market

Although the Bear Score Index has turned zero for the first time since 2022, signaling a strong bearish outlook, Moreno emphasizes that this is a relatively mild correction, and long-term holders should avoid panic selling. Analysts note that Bitcoin’s annual loss in 2025 is the first since 2022, which indeed poses a challenge to expectations of a rebound in 2026.

However, rebound opportunities may depend on the recovery of institutional buying or an increase in global liquidity. Especially if the Federal Reserve initiates a new round of easing policies or cuts interest rates, it could bring a market turnaround. CryptoQuant highlights that the current market structure is similar to the setup before the 2022 crash, and investors should prepare for volatility while closely monitoring macro policy changes.

For those optimistic about Bitcoin’s long-term prospects, this bear market could be an ideal low-positioning opportunity. The $70,000 level will be a temporary downside target, and if the bear market develops as expected, the bottom range of $56,000 to $60,000 may lay the foundation for subsequent rebounds.