Kaiko suggests Bitcoin's recent decline could signal the mid-point of a bear market, with key indicators reflecting reduced trading volumes and an increased focus on stablecoins.
According to Kaiko, Bitcoin's recent decline, following its peak near $60,000 in early February, might indicate we are at the midpoint of a bear market phase. This 32% drop represents the largest market correction since the halving event in April 2024.
Analysts from the company observed several indicators confirming the current bearish trend. They reported a significant 30% decrease in total spot trading volume among the ten largest centralized exchanges, which fell from around $1 trillion in October 2025 to $700 billion by November. Additionally, open interest in Bitcoin and Ethereum futures has also seen a decline, dropping from $29 billion to $25 billion within the past week.
Interestingly, Kaiko noted an increase in stablecoins, with approximately $22 billion flowing in over the last three weeks. This trend typically signifies a defensive strategy among investors as they seek safety during market downturns before reallocating to riskier assets when conditions improve.
Reflecting on previous market conditions, analysts referenced the 2022 downturn, where stablecoin dominance peaked at 11.5%, followed by a market recovery. Currently, stablecoin dominance sits at 10.3%, suggesting a nearing defensive strategy. Experts indicate that a stabilization or decline in this dominance would be pivotal for the market's recovery.
Potential Market Bottom and Future Outlook
Kaiko highlighted that Bitcoin's current 52% correction from its all-time high is relatively modest compared to historical averages, which often see declines between 60-68%. This suggests a potential bottom in the $40,000 to $50,000 range. Sean Yang, chief analyst at MEXC Research, commented on Bitcoin's return to its historical four-year cycle tied to halving events but stated that predicting the bear market's depth remains challenging due to the ongoing presence of previous rally catalysts.
Notably, Yang mentioned that current oversold indicators suggest a recovery for Bitcoin might be more about timing than probability. The $60,000 mark is significant as it aligns with Bitcoin's 200-week moving average, historically recognized as a strong support level. However, market volatility is expected to persist in the absence of specific catalysts for the cryptocurrency sector. The debate continues regarding whether Ethereum has also reached its price floor in this bear market.
