CryptoQuant expert: Bitcoin bear markets are becoming less severe

​The cryptocurrency market has followed familiar cycles for years. But can investors identify warning signs of a crash before it happens? In an interview with Traders Union, CryptoQuant Head of Research Julio Moreno explains which indicators can warn of an approaching price decline and what Bitcoin needs to return to its all-time highs.

How Bitcoin bear markets have changed

Throughout its history, Bitcoin has experienced several major periods of growth and decline. Sharp price rallies have typically been followed by prolonged bear markets, during which investors suffered substantial losses.

But the structure of the cryptocurrency market has changed in recent years. The launch of spot ETFs and growing institutional participation have created new sources of demand. Could these developments disrupt Bitcoin's traditional market cycles? Julio Moreno is skeptical.

“The pattern in general still holds. Bitcoin experienced another expected bear market in 2026 after demand slowed down and started to contract.”

For investors, the scale of losses during prolonged downturns is an important measure of how Bitcoin bear markets have changed over time. Comparing drawdowns across market cycles helps put the severity of the current decline into perspective.

“However, bear markets have become more shallow, with the 2026 bear market drawdown of 53%, compared to previous bear market drawdowns of 76%-83%.”

Bitcoin drawdowns across different market cycles. Source: CryptoQuant.

What threats does the cryptocurrency market face?

Cryptocurrencies remain sensitive to political developments, regulatory changes, and investor sentiment. Even when long-term demand remains strong, unexpected events can trigger sharp price fluctuations.

One of the upcoming sources of uncertainty is the U.S. midterm elections scheduled for November 2026. Moreno believes the country's political situation deserves particular attention from cryptocurrency market participants.

“In the short term, the November US elections could cause some price volatility, especially if Democrats win, as they have had anti-crypto policies in the past.”

However, Moreno does not consider political risks the industry's most serious challenge. In his view, technological developments that could threaten existing security mechanisms for digital assets pose a much greater long-term concern.

“In the longer term, quantum computing is the biggest threat to crypto.”

This refers to the potential ability of sufficiently powerful quantum computers to break certain cryptographic algorithms. Although this threat may still seem distant, blockchain developers need to consider it when improving their networks' security.

Can Bitcoin price crashes be predicted?

One of the advantages of cryptocurrency markets is the availability of blockchain data. Analysts can track transfers between wallets, the activity of large holders, and the volume of assets moving to trading platforms.

These indicators help researchers assess market participants' behavior before changes become visible in prices. Particular attention is paid to Bitcoin inflows to exchanges, as such transfers may precede selling activity.

Moreno highlights two episodes when blockchain data provided early warning signs.

“Price corrections are typically preceded by an increase in exchange inflows. For example, Bitcoin flows into exchanges spiked in March 2024 and November 2024, shortly before the price of Bitcoin experienced declines of 24% and 28% over the following few months, respectively.”

Bitcoin exchange inflows and price movements. Source: CryptoQuant.

However, an increase in exchange inflows does not necessarily mean that a sell-off is inevitable. Large holders may transfer assets for various reasons, while prices are also influenced by demand, liquidity, and broader financial market conditions.

“Of course, exchange flows are one of several indicators that need to be put together to anticipate market corrections.”

Why Bitcoin mining is not disappearing amid the AI boom

Growing demand for artificial intelligence computing capacity is reshaping the business models of major Bitcoin mining companies. More data center operators are considering using their infrastructure to support AI workloads instead of cryptocurrency mining.

This shift raises questions about the future of Bitcoin mining. If large mining companies continue shifting investment and infrastructure toward AI, it could eventually affect Bitcoin's total network hashrate.

CryptoQuant data does not currently indicate a large-scale decline in mining activity. According to Moreno, Bitcoin's network hashrate remains relatively high.

“Even with the shift into AI by all of the biggest Bitcoin mining companies, the Bitcoin network hashrate is only 8% down from its all-time high reached on November 11, 2025.”

A decline in activity among some participants does not necessarily mean their capacity cannot be replaced. Moreno points to changes in network hashrate as a way to assess how the industry is adapting.

“Indeed, the hashrate has increased by 10% since late July, shortly after the price of Bitcoin hit its 2026 low. This suggests other Bitcoin mining entities have stepped up to fill the void left by these large companies.”

Changes in Bitcoin's network hashrate amid price fluctuations. Source: CryptoQuant.

What does Bitcoin need to reach new highs?

Following a significant decline in 2026, one of the biggest questions is whether Bitcoin can recover its previous highs. Although the cryptocurrency has repeatedly rebounded from deep corrections, historical patterns do not guarantee that the same scenario will unfold again.

One of CryptoQuant's key indicators is Bitcoin's apparent demand. It helps assess whether buying activity is sufficient to absorb the available supply of the cryptocurrency. Negative values indicate insufficient demand, while positive readings suggest demand exceeds supply.

Moreno believes Bitcoin can return to its all-time highs, but further changes in this indicator will be crucial.

“Yes. It would take a sustained demand recovery, which has been happening since June. The fourth chart shows Bitcoin apparent demand contracting by 273K BTC at the start of June. That contraction has eased to 47K BTC currently.”

Bitcoin apparent demand and price trends in 2026. Source: CryptoQuant. 

Although Bitcoin's apparent demand has improved significantly, the indicator remains negative. This suggests that pressure on the market is easing, but it is still too early to speak of a full recovery in buying activity.