Bitcoin Slips Below 365-Day Average: Market Faces Bull vs. Bear Uncertainty
Bitcoin’s recent downturn below the $99,000 mark has triggered heated discussion among investors and analysts, with many questioning whether the market is entering a bearish phase or simply undergoing a healthy correction. The decline saw BTC fall beneath its 365-day moving average — a widely monitored technical indicator used to gauge long-term trends — raising concerns about the market trajectory.
On Tuesday, Bitcoin briefly touched $98,900, marking its lowest level in several months before recovering slightly to trade around $101,800. This dip beneath the 365-day moving average has historically been interpreted as a bearish signal, as seen in previous market cycles. According to Julio Moreno, head of research at CryptoQuant, this technical breach served as a decisive signal during the onset of the 2022 bear market. He emphasized the importance of BTC reclaiming the average quickly to avoid further downside momentum.
The 365-day moving average aggregates Bitcoin’s daily prices over the past year, offering a smoothed-out trendline that helps traders distinguish between long-term bullish and bearish phases. A sustained break below this level is often considered a strong indicator that the market may be weakening.
However, opinions remain split. While some market professionals argue that the current correction may signal the early phase of a bear market, others believe this is simply a routine retracement within a broader bullish cycle. Bitrue research analyst Andri Fauzan Adziima noted that Bitcoin has dropped more than 20% from its all-time peak above $126,000 in early October, a figure that meets the traditional definition of a bear market. Yet, he emphasized that this type of pullback has been observed in past bull runs and often precedes strong rebounds.
Adziima referenced historical data suggesting that during bull markets, declines of 20% are often followed by recoveries of up to 40% within a two-month window. Calling the current situation the “fourth correction in the 2025 bull cycle,” he insisted that such fluctuations are part of the market’s natural rhythm and not necessarily a harbinger of a prolonged downturn.
Tom Cohen, head of investments at Algoz Technology, echoed this cautious optimism. He identified the $100,000 level as a psychological and technical “line in the sand.” According to Cohen, unless Bitcoin convincingly breaks and holds below this threshold, it’s premature to declare the onset of a bear market. He also floated the possibility of a year-end rally — often dubbed the “Santa Claus rally” — that could reverse recent losses and restore bullish sentiment.
Despite the anxiety triggered by the recent dip, some analysts view this as a necessary reset. Corrections can serve to purge excessive leverage and speculative enthusiasm from the market, paving the way for more sustainable growth. Historically, such corrections have often acted as launchpads for future rallies, especially when fundamental demand for Bitcoin remains strong.
It’s also worth noting that this isn’t the first time Bitcoin has slipped below the 365-day moving average in 2024. In April, a similar drop occurred, but the market quickly bounced back, suggesting that one-time breaches of this technical level do not always result in extended downturns.
Investor behavior during this period is also telling. On-chain data shows an increase in Bitcoin withdrawals from exchanges, hinting that some long-term holders may be using the dip as a buying opportunity rather than panicking. This could indicate confidence in Bitcoin’s long-term prospects, despite short-term volatility.
Moreover, macroeconomic factors continue to play a role in shaping market sentiment. With central banks maintaining cautious monetary policies and inflation concerns lingering globally, Bitcoin’s appeal as a hedge asset remains intact for many investors. As such, institutional demand could serve as a stabilizing force, even as retail sentiment wavers.
Additionally, ongoing developments in Bitcoin’s infrastructure — such as the expansion of the Lightning Network and increasing interest in Bitcoin ETFs — suggest that the underlying fundamentals remain robust. These advancements may help attract fresh capital and support higher valuations over the medium to long term.
Looking ahead, traders will closely monitor whether Bitcoin can regain and sustain levels above the 365-day moving average. A decisive move back above this threshold could restore confidence and reinvigorate bullish narratives. Conversely, continued weakness below this level may confirm growing bearish momentum and shift strategies toward risk-off positioning.
In conclusion, while Bitcoin’s dip below the 365-day moving average has sparked fears of a bear market, the overall picture remains nuanced. Historical context, technical indicators, and macro trends all play crucial roles in shaping the current market outlook. Traders and investors alike would do well to remain vigilant, balancing caution with long-term perspective as Bitcoin navigates its next phase.