Bitcoin Enters Bear Market Territory: Analysis of Market Structure Changes and Risk Asset Correlation

This analysis is based on the MarketWatch report [1] published on November 7, 2025, which documented Bitcoin’s entry into bear market territory. The cryptocurrency declined more than 20% from its record high of $126,272.76 reached on October 6, 2025, to approximately $101,000 [1][3]. This represents the first time Bitcoin has been in bear market territory since April 23, 2025 [1].

The bear market designation occurs within a broader context of market weakness, including significant selloffs in technology stocks and changing investor sentiment toward risk assets [1]. U.S. stock indices were experiencing sharp weekly declines, with the Dow Jones Industrial Average down 1.8%, S&P 500 off about 2.7%, and Nasdaq Composite pulling back 4.4% [1]. However, internal market data [0] shows that over the past 30 trading days, the S&P 500 gained 0.25%, NASDAQ Composite gained 0.84%, and Dow Jones gained 0.89%, suggesting the November 7 decline represents a more recent acceleration of weakness.

The breakdown of traditional market patterns represents a significant structural shift. Mark Hackett, chief market strategist at Nationwide, noted that “any reasonable degree of pullback in bitcoin or this group [of popular tech stocks] would have been aggressively bought, and we’re not seeing that now” [1]. This weakening of the “buy-the-dip” mentality that characterized earlier 2025 market pullbacks signals a potential fundamental change in market psychology [1].

From a technical perspective, Bitcoin’s breach of its 365-day moving average at $102,000 is particularly concerning, as this level had served as “ultimate support” during the current bull cycle [2]. The sentiment index has fallen to 21, indicating “extreme fear” and reaching the lowest level since April 9 [5].

Institutional demand has weakened significantly, with spot Bitcoin ETFs recording net outflows of approximately $1.67 billion since October 11 [6]. More critically, institutional buying has failed to keep up with daily Bitcoin mining output for the first time in seven months [6]. The cumulative Volume Delta Bias across major exchanges has turned negative, indicating sustained net selling pressure [8].

Despite six consecutive days of Bitcoin ETF outflows totaling hundreds of millions, there was a modest $240 million inflow on November 7 [6][9], suggesting some institutional interest at lower levels. However, the supply-demand imbalance remains concerning, with daily Bitcoin mining output (~900 BTC) now exceeding institutional buying pressure [6].

The convergence of crypto weakness with technology stock selloff raises concerns about broader risk asset rotation. Citi strategists have suggested that Bitcoin’s decline may signal liquidity issues, particularly as tech stocks fall [1]. This correlation represents a departure from previous market cycles where crypto often showed more independence from traditional equity markets.

Bitcoin’s year-to-date gains have been reduced to approximately 8%, significantly lagging behind the S&P 500’s 15% gain [5]. The total cryptocurrency market capitalization fell from a record of nearly $4.4 trillion at the October peak, with the asset class up only a modest 2.5% for the year [3].

November has historically been Bitcoin’s best month with an average return of 42.5% [6], which creates a potential conflict between seasonal patterns and current market weakness. The current bear market differs from 2021’s bear market in terms of institutional infrastructure and ETF integration [4], potentially changing how the market responds to traditional seasonal patterns.

The breakdown of the “buy-the-dip” behavior represents more than just price weakness—it signals a fundamental shift in investor psychology. Previous instances of the sentiment index entering “extreme fear” territory triggered rebounds, but the market has already fallen below those levels [5], suggesting this time may be different.

The combination of technical support level failures and institutional withdrawal represents a significant market structure change [1][2].

Citi strategists have suggested that Bitcoin’s decline may signal liquidity issues, particularly as tech stocks fall [1].

1. 365-Day Moving Average
   : Watch for sustained recovery above $102,000 or continued rejection
2. ETF Flow Trends
   : Monitor daily Bitcoin ETF flows for signs of institutional re-entry or continued outflows
3. Support Levels
   : Key psychological support at $100,000 and technical support levels below
4. Correlation Metrics
   : Bitcoin’s correlation with traditional risk assets, particularly technology stocks
5. Volatility Indices
   : Crypto-specific volatility measures and fear/greed indicators

: Continued institutional withdrawal, break below $100,000, and sustained correlation with equity market weakness could lead to further 20-30% declines.

: Consolidation around current levels with institutional buyers re-entering at discounted levels, potentially supported by November’s historical seasonal strength.

: Successful defense of $100,000 support combined with positive ETF flows could trigger a recovery toward previous highs, though this appears less likely given current sentiment indicators.

Bitcoin’s entry into bear market territory on November 7, 2025, represents a significant market structure change characterized by:

• Price Decline
  : Over 20% decline from October 6 peak of $126,272.76 to approximately $101,000 [1][3]
• Technical Breakdown
  : Breach of key 365-day moving average support at $102,000 [2]
• Institutional Withdrawal
  : $1.67 billion in Bitcoin ETF outflows since October 11 [6]
• Market Psychology Shift
  : Weakening “buy-the-dip” behavior that characterized earlier 2025 pullbacks [1]
• Broader Market Weakness
  : Correlation with technology stock selloff and equity market declines [1]

The analysis reveals several critical gaps in information that warrant further investigation, including specific catalyst analysis for the October 6 peak reversal, current regulatory environment impacts, detailed macroeconomic correlation analysis, and institutional position sizing data [1]. These information gaps limit the ability to fully assess the duration and depth of the current bear market conditions.