21Shares: Bitcoin has not entered a deep bear market, and volatility and consolidation may continue until the end of the year

The cryptocurrency asset ETP issuer 21Shares analyst Maximiliaan Michielsen analyzed that the Bitcoin price falling below $100,000 has raised market concerns about a bear market. However, the analysis suggests that this decline is a short-term adjustment rather than the beginning of a deep or long-term bear market. Although volatility and consolidation may continue until the end of the year, the fundamental factors driving this cycle remain solid, supporting its long-term positive outlook.

The recent weakness in Bitcoin is mainly influenced by three factors: forced liquidations, large Bitcoin holders selling off, and ETF capital outflows, as well as liquidity tightening triggered by macro events.

Since October, the market has experienced a total deleveraging process of $32 billion, including $3 billion in liquidations over the past week. Large investors have also been taking profits, having sold approximately $12 billion worth of Bitcoin since October. Meanwhile, the spot Bitcoin ETF saw an outflow of $866 million last Thursday, marking the second-highest single-day outflow on record. Additionally, the U.S. government shutdown has led to the Treasury withdrawing about $150 billion in cash from the financial system, exacerbating liquidity tightness.

Despite this, there are positive signals in the market. The selling pressure from long-term investors has significantly diminished, and assets are shifting to new, more stable holders. At the same time, liquidity conditions are expected to improve, with U.S. quantitative tightening anticipated to end in December and government spending set to resume. Furthermore, the global money supply continues to expand, which typically supports Bitcoin. In the macroeconomic context, the demand for investors to hedge against fiat currency depreciation is increasing, enhancing Bitcoin's appeal as a store of value.

Although Bitcoin has technically entered a short-term bear market, the analysis suggests that this decline resembles a valuation reset rather than a deep bear market with a drop of over 80%. Crucially, there are currently no classic bear market catalysts present: no securities defaults, systemic fraud, regulatory shocks, or macroeconomic tightening cycles. Historical data shows that such a magnitude of correction typically ends within 1 to 3 months and often marks a consolidation phase before the next upward movement. In the long term, Bitcoin's fundamentals remain solid, and the outlook remains constructive.