Don't miss the 2026 starting opportunity: Why Bitcoin won't repeat the 2022 bear market dilemma now

Recent discussions in the market have drawn parallels between Bitcoin’s current trend and the 2022 bear market. While such comparisons may seem reasonable, they overlook a crucial point: the underlying logic of these two eras has fundamentally changed. Whether it’s the macro environment, technological patterns, or the composition of market participants, today’s Bitcoin market is inherently different from the 2022 bear market. This article will analyze why Bitcoin is unlikely to fall into the same bear trap as in 2022.

Macro Cycle Reversal: From High Inflation and Rate Hikes to Rate Cuts and Liquidity Inflows

The 2022 bear market occurred under a special macro backdrop. At that time, in March, the US economy was in a typical high inflation and rate hike cycle: excess liquidity from the COVID-19 pandemic was still unwinding, and the Ukraine war further boosted global inflation expectations. In this environment, the Federal Reserve was forced to aggressively raise interest rates, pushing risk-free rates higher and tightening financial conditions. Liquidity was systematically drained, and capital’s only choice was risk aversion. Bitcoin’s decline was a direct reflection of this capital flight.

However, the current macro environment has completely reversed:

Inflation has peaked and is declining. US CPI is trending downward, and consumer price pressures have eased significantly. This shift is partly due to easing geopolitical tensions and also thanks to early policy adjustments by the Fed.

The rate cut cycle has begun. The Fed has entered a rate-cutting phase, with risk-free rates decreasing. More importantly, the AI technological revolution has laid the groundwork for a sustained decline in inflation, reinforcing market expectations for continued rate cuts.

Liquidity is being re-injected. Central banks have started to loosen liquidity, and financial conditions are gradually easing. According to the US liquidity index, this indicator has broken through both short-term and long-term downtrend lines, signaling a new upward cycle.

All these factors indicate that capital sentiment has shifted from “risk aversion” to “risk appetite.” Data since 2020 shows a significant negative correlation between Bitcoin and CPI—when inflation rises, Bitcoin falls; when inflation recedes, Bitcoin rises. In the context of inflation peaking and rate cuts underway, Bitcoin is more likely to attract capital, contrasting sharply with the high inflation and rate hike environment of 2022.

Technical Patterns Differ Significantly: Short Sellers’ Trap vs. Long-Term Top

From a technical perspective, Bitcoin’s chart in 2022 differs fundamentally from today.

In 2022, the market exhibited a weekly M-top pattern. This pattern typically signals a long-term market top, suppressing prices over an extended period and leading to a sustained decline. The downtrend was confirmed step-by-step, with no reason for a rebound at that time.

In early 2026, the market characteristics are entirely different. Currently, Bitcoin on the weekly chart shows a breakdown from an ascending channel. From a probabilistic standpoint, this is more likely a “short sellers’ trap”—after breaking below the channel, prices may quickly rebound back inside rather than continue falling.

Of course, we cannot entirely rule out the possibility of further deterioration. But the key point is that the range between $80,850 and $62,000 has undergone ample consolidation and turnover. The accumulated positions here offer a far superior risk-reward profile for bullish trades—upside potential significantly outweighs downside risk.

The Era of Institutions: A Fundamental Shift from Retail Speculation to Institutional Allocation

The deepest change lies in the investor structure. This is crucial to understanding why the current market won’t fall into a 2022-style bear market.

2020-2022 market was dominated by retail investors and native crypto communities. This period was rife with speculation—high leverage, quick trades, emotion-driven. During downturns, retail panic selling and leveraged liquidations would exacerbate declines, causing cascade crashes. Volatility soared to 80%-150%, with frequent extreme moves.

Since 2023, the market has entered an era of institutional and corporate growth. The launch of Bitcoin spot ETFs marked a turning point. These funds lock in large amounts of capital in Bitcoin: the assets under management (AUM) of ETF products and related vehicles have exceeded $100 billion, holding approximately 1.3-1.5 million BTC, about 6-7% of circulating supply. Meanwhile, corporations are also adopting Bitcoin as a strategic reserve—MicroStrategy holds over 650,000 BTC, and other listed companies and Japanese firms like Metaplanet are following suit.

This “institutional allocation” fundamentally stabilizes the market:

• Supply is locked in: Institutional and corporate holdings are less likely to sell impulsively, reducing liquidity shocks.
• Exchange reserves decline: Bitcoin reserves on exchanges have decreased from around 3 million to 2.76 million BTC, indicating less “hot money” and significantly lowering chain liquidation risks.
• Volatility has decreased: With supply locked and institutional participation increasing, market volatility has dropped from historical levels of 80%-150% to 30%-60%, moving toward a more rational and stable market structure.

Even if a 44% retracement occurs in 2025, it is unlikely to trigger the chain reactions and panic liquidations seen in 2022. This resilience is due to the long-term holdings of institutions providing a solid bottom support.

What Conditions Are Needed for a Bear Market to Recur? None Are Currently Met

To truly replicate the 2022 bear market, three essential conditions must be satisfied:

First, a macro shock. A new inflation surge (e.g., oil crisis, supply chain disruptions) or a geopolitical crisis comparable to the Ukraine war must occur. Currently, global tensions are easing, and inflation is receding—these conditions are far from being met.

Second, a policy reversal by central banks. They must restart rate hikes or initiate quantitative tightening (QT), systematically withdrawing liquidity. In reality, the opposite is happening—central banks worldwide are entering a rate-cutting cycle, and liquidity is being released. These conditions are not present.

Third, technical breakdown of key support levels. Prices must decisively and persistently fall below the $80,850 support. So far, this support remains intact, and no breakdown has occurred. This condition is unmet as well.

As long as one of these three conditions is not fulfilled, claims that a “structural bear market” is imminent lack basis. Currently, none of these conditions are in place. Therefore, any statements predicting an impending structural bear are subjective guesses rather than objective analysis.

The Current Bitcoin Market: A Qualitative Shift in Stability

To summarize the key differences between now and 2022:

The current Bitcoin market has entered a completely different era—from a “retail speculation” phase to an “institutional allocation” phase. This shift not only changes participant composition but also fundamentally alters market dynamics.

Don’t be fooled by short-term price swings, nor blindly compare to history. The logic of the 2022 bear market has been rewritten; the current macro environment, structural setup, and fundamentals are all different. In this context, claiming that Bitcoin will repeat the 2022-style bear market is essentially “fighting the tide” and ignoring the new reality.