Bitcoin's Bear Market Dilemma: Why the Crypto Rally Stalled

The crypto bear market isn’t a dramatic crash—it’s a stall. After dramatic volatility in late 2025, Bitcoin has settled into consolidation around the $90,000 mark, and market analysts increasingly expect that sideways trading to persist. The world’s largest cryptocurrency is caught in a peculiar moment: traders know where it’s been (a $126,000 peak in October 2025), but nobody seems certain where it’s going next. This bear market in crypto, while not catastrophic, reveals something deeper about the market’s current dysfunction.

The culprit, according to multiple analysts, isn’t weakness in Bitcoin itself. Rather, crypto markets face a fundamental shift in what drives prices. ETF flows have become the primary price engine, while traditional on-chain activity—the blockchain transactions that once signaled organic demand—has declined sharply. Long-term holders are exiting positions, yet new institutional capital isn’t flooding in to absorb the selling pressure.

ETF Flows Now Dominate, Masking Real Market Health

Exchange-traded funds have democratized Bitcoin access but may have inadvertently distorted market signals. According to Jim Ferraioli, director of crypto research at Schwab’s Center for Financial Research, the shift is unmistakable: “You had low transaction fees, long-term holders selling, and exchange balances falling to lows. It was really being driven by ETF flows.”

This represents a fundamental change in how Bitcoin’s price gets determined. Rather than organic supply-and-demand dynamics on blockchain networks, the crypto bear market is now largely a function of institutional fund flows. The problem: when ETF inflows cool—as they have since the early 2025 surge—there’s limited mechanism to reignite price momentum.

Gerry O’Shea, head of global market insights at Hashdex, acknowledges the constraint: “There may be catalysts to support higher prices in the coming weeks, but right now, we’re in a range-bound market.”

Institutional Money Remains Elusive in Crypto Markets

True institutional adoption of crypto hasn’t materialized. While blockchain technology gained mainstream attention, the flow of substantial institutional capital into digital assets has remained limited. This crypto market gap is crucial because institutional participation typically provides the liquidity and conviction needed to break through consolidation phases.

“True institutional investors are still not really in this space,” Ferraioli noted. “Once we get some legislation, that could be the next driving force for a more sustainable rally.”

Without clearer regulatory frameworks and institutional demand, the bear market sentiment persists. Hyunsu Jung, CEO of Hyperion DeFi, frames it plainly: digital assets have taken a backseat to other asset classes, especially as crypto narrative momentum has dissipated.

Will Reeves, CEO of fintech firm Fold, describes Bitcoin as “deeply undervalued” but stressed that the bear market won’t resolve until “persistent sellers exhaust and a broader wave of buyers enter the market.” His assessment captures the core problem: the crypto market is waiting for structural change, not minor catalysts.

The Natural Rhythm of a Maturing But Stalled Market

Ferraioli provides important perspective on whether this constitutes a true crypto bear market. “Bitcoin is, for sure, in a bear market by the classic definition,” he confirmed. “But given its volatility, a 30% correction is almost expected.”

The 8x return from November 2022’s low to October 2025’s $126,000 peak, achieved over just three years, created an extraordinary bull run. By that measure, current consolidation represents the market digesting extraordinary gains rather than fundamental failure. Still, the extended plateau in crypto prices—particularly as other asset classes continue advancing—raises questions about Bitcoin’s near-term trajectory.

Macro Headwinds: Inflation and Policy Uncertainty

Beyond internal market dynamics, external pressures weigh on crypto sentiment. According to analysis from Adam Posen of the Peterson Institute and Peter Orszag of Lazard, U.S. inflation could exceed 4% in 2026, driven by tariffs, tight labor markets, possible deportations, and large fiscal deficits that may outpace productivity gains from AI.

Higher inflation could constrain the Federal Reserve from lowering borrowing costs as aggressively as markets—and crypto investors—expect. Fewer rate cuts translate to less monetary stimulus, which historically pressures risk assets like Bitcoin.

“There’s always a degree of perceived correlation with equities,” Ferraioli noted. “But bitcoin has its own drivers — money supply, disinflationary supply growth, and adoption. And adoption is the big question mark this year.”

What Could Break the Crypto Bear Market

The path forward for Bitcoin depends on factors largely outside the market’s control. Ferraioli points to two primary catalysts: shifts in U.S. monetary policy and progress on crypto legislation in Congress. Each could theoretically awaken dormant institutional interest.

If inflation surprises to the downside and the Fed pivots to easing, Bitcoin could benefit from falling real yields. Alternatively, if Congress passes substantive crypto regulation, institutional gatekeepers might finally deploy capital into digital assets at scale.

Until one of these scenarios materializes, crypto remains trapped in its current bear market consolidation. The digital asset space has matured in infrastructure and public awareness, yet it’s simultaneously stalled in price discovery and institutional participation. Bitcoin at $90,000 isn’t broken—it’s waiting.