Introduction
After exactly 100 days, Bitcoin reclaimed the $80,000 level on August 24, and surged further to $81,272 on August 25 (according to Binance data) before pulling back.
Following its retreat from the yearly high, Bitcoin spent nearly three months moving sideways and building a bottom within a narrow $57,000–$68,000 range. Then, within just a few trading days, it exploded higher, posting a monthly gain of more than 28%.
However, just three weeks earlier, in early August, Bitcoin was still hovering around the $64,000–$66,000 range. The 30-day average of active addresses once fell to 609,000, approaching levels seen during the 2018 bear market. Within only a few days, market sentiment shifted from “fear” to “extreme greed” — the Crypto Fear & Greed Index surged from 40 (fear territory) to 83 (extreme greed territory) in just six days.
Fear & Greed Index (Source: CoinMarketCap)
Bullish sentiment across the crypto market was instantly reignited. The phrase “the bull market is back” began spreading across communities. Meanwhile, more cautious investors classified the rally as nothing more than a bear-market rebound or a dead cat bounce, believing another major decline could be approaching after the recent high.
Behind this massive divergence between bulls and bears lies more than simple speculation. This rally is the result of multiple forces converging: the post-halving cycle correction, institutional accumulation and redistribution of Bitcoin holdings, changing expectations around Federal Reserve liquidity policy, and the ongoing battle over U.S. crypto regulation.
So the key question is:
Is this the beginning of a new Bitcoin bull market？
Or is it simply a violent rebound inside a broader bear market？
History tells us one thing:
The most dangerous moment for Bitcoin is not when nobody believes in it — but when everyone suddenly starts believing in it again.
1. Market Review: From a Sharp Crash, 100 Days of Sideways Trading, to a Rapid Break Above $80,000
There are many explanations for this rally, but the mainstream view is that it was driven by a combination of three major forces: expectations of improved macro liquidity, positive regulatory signals, and structural changes in the derivatives market.
The immediate catalyst came on August 19, when U.S. Treasury Secretary Bessent announced that the government would increase its long-term Treasury buyback program by at least two times, raising the amount from $2 billion per operation to “no less than $4 billion.”
Following the announcement, long-term U.S. Treasury yields declined, the U.S. dollar weakened, and both gold and Bitcoin rallied. The “currency debasement trade” regained market attention. Bitcoin also began breaking out of its previous consolidation range from August 19, triggering a sharp upward move.
Almost at the same time, Trump met with several cryptocurrency industry executives at the White House and urged the Senate to pass the crypto market structure bill, the Clarity Act. The U.S. SEC also unveiled a new crypto asset regulatory framework and introduced a safe-harbor mechanism, significantly reducing compliance uncertainty for early-stage crypto projects seeking financing.
These continuous policy tailwinds reduced uncertainty surrounding institutional participation.
The third driving force came from the largest short squeeze in history.
Before the breakout, short positions had accumulated heavily across the market. As Bitcoin prices surged, short sellers were forced to buy Bitcoin to close their positions, creating a self-reinforcing “short squeeze” cycle.
Long/Short Liquidation Amount and Bitcoin Price Over the Past 90 Days (Source: CoinGlass)
On August 19 alone, crypto market liquidations of short positions reached a record level of approximately $2.7 billion. Over the past three days, total market-wide short liquidations reached around $4.5 billion.
A rally driven primarily by forced liquidations can be explosive but often lacks long-term sustainability — which is exactly why concerns about a “dead cat bounce” remain.
Looking back at the process of this Bitcoin halving cycle turning bearish, the market can currently be divided into three stages:
Stage One: Declining Expectations (October–December 2025)
The Trump trade narrative reached its peak and began losing momentum. Expectations that Bitcoin would quickly break above $150,000 failed to materialize. Large-scale profit-taking by bullish investors pushed Bitcoin down from its highs and into a consolidation range around $90,000–$100,000.
Stage Two: Macro Shock + Bitcoin ETF Outflows (January–May 2026)
Changes in Federal Reserve leadership triggered expectations that rate cuts would be delayed. U.S. spot Bitcoin ETFs shifted from continuous net inflows to sustained redemptions, and institutional buying weakened, accelerating the decline.
At the same time, progress on crypto regulatory legislation fell short of expectations, damaging market confidence.
Bitcoin subsequently broke below the $80,000 and $70,000 levels, eventually falling to a low of $57,803.
Compared with the cycle peak, the maximum drawdown reached nearly 54%–55%.
Stage Three: 100-Day Range-Bound Bottom Formation (May–Mid August 2026)
Bitcoin entered a prolonged consolidation period within the $58,000–$68,000 range, lasting approximately 100 days.
During this phase:
Trading volume continued declining;
Volatility dropped to the lowest level of the year;
The market entered a state of “bulls and bears locked in battle, while retail investors stayed on the sidelines.”
However, two important undercurrents emerged during this consolidation phase:
1. OTC Trading Activity Increased Significantly
Long-term investors, including early Bitcoin whales and institutions linked to publicly listed companies, continued accumulating spot Bitcoin around the $60,000 level, quietly rebuilding positions.
2. Short Positions Continued to Build in Derivative Markets
A growing number of traders bet that Bitcoin would break below the lower boundary of the range and continue falling.
This created an increasingly crowded short trade, gradually forming the conditions for a potential short squeeze — laying the foundation for the explosive rally that followed.
2. ETF and Institutional Capital: Real Buying Demand or a Temporary Pulse？
The key difference between this rally and a pure short squeeze is that it has been accompanied by actual inflows into spot Bitcoin ETFs.
From August 17 to August 21, U.S. spot Bitcoin ETFs recorded approximately $1.918 billion in net inflows, marking the strongest weekly performance since October 2025. Among them, August 19 alone saw $517.2 million in net inflows, the highest level in roughly three and a half months, with BlackRocks IBIT contributing $284.7 million. On August 20, another $606 million flowed into Bitcoin ETFs, with IBIT alone absorbing $503 million, accounting for approximately 83% of total inflows.
Bitcoin ETF Inflows and Outflows (Source: CoinGlass)
The current Bitcoin ETF landscape clearly shows an extremely strong head-and-tail concentration effect — the era of broad-based ETF growth is ending, and a new phase of market divergence has begun.
Capital is increasingly concentrated in the leading products. BlackRocks IBIT absorbed the majority of new capital entering during this rebound. Meanwhile, smaller Bitcoin ETFs at the bottom of the market have started facing liquidation cases, with the first U.S. spot Bitcoin ETF, Hashdex DEFI, announcing closure and liquidation.
The ETF market has officially moved away from the phase where “everyone benefits from rising tides” and entered a cycle of stronger players becoming stronger while weaker products are eliminated.
However, compared with Augusts rebound, the broader picture in 2026 remains more complicated.
Year-to-date, Bitcoin ETFs were still experiencing approximately $2.91 billion in net outflows, with May and June alone seeing outflows of $2.43 billion and $4.51 billion respectively.
Whether ETF inflows can continue will become the most important indicator determining whether this rally can extend.
If Bitcoin ETFs return to sustained net outflows, the move above $80,000 will most likely prove to be only a short-term rebound rather than the beginning of a new bull cycle.
Another sign of institutional recovery is whale accumulation.
According to CryptoQuant data, the number of wallets holding 10,000 BTC or more has increased to 90, reaching a six-month high. These so-called Bitcoin whales have accumulated approximately $2.75 billion worth of Bitcoin over the past 60 days.
However, the other side of the story is that long-term holder accumulation has slowed significantly.
The pace of long-term holder accumulation dropped from 42,301 BTC to 15,766 BTC, a decline of 47%. Meanwhile, although Bitcoin ETFs recorded approximately $850 million in net inflows during the first week of August with five consecutive inflow days, the following week reversed into $390 million in outflows.
The sustainability of capital inflows remains the biggest uncertainty facing this rally.
3. What Stage of the Bitcoin Halving Cycle Is the Market Currently In？
The conclusion first:
The current market is in the phase of “mid-to-late bear market bottom formation and rebound after the major top of the halving cycle.”
It has not yet entered a new major bull market.
This rally should be viewed as a mid-cycle bear market rebound rather than a bull market restart. The long process of bottom formation is still ongoing, and the idea that “the bull market has instantly returned” is premature.
We can analyze the current cycle through several commonly used market indicators.
1. Bitcoin Rainbow Chart
The Bitcoin Rainbow Chart divides Bitcoins long-term logarithmic growth curve into seven color bands to estimate different valuation zones.
Currently, Bitcoin is positioned in the “Accumulate” / “Strong Buy” zone.
Historical comparisons show similarities with the 2022 bear market period. However, the current market has only recently entered this zone and has not yet reached the true bottom accumulation area.
In other words:
Bitcoin is no longer in the overheated bull market phase, but it has also not fully completed the final stage of a bear market bottom.
The current position is closer to a recovery and accumulation phase rather than the beginning of a new parabolic bull market.
2. Bitcoin AHR999 Indicator
The AHR999 indicator has returned to around 1, which represents the dollar-cost averaging (DCA) line, but it has not fallen into the green “bottom-fishing” zone.
Current status:The market is currently at a relatively low but neutral level suitable for gradual accumulation through DCA. However, it is not yet the ultimate capitulation bottom.
3. Two-Year Moving Average (2-Year MA Multiplier)
The current BTC price is trading just below the blue two-year moving average.
Looking back at history:
During the bear market bottoms of 2014, 2018, and 2022, Bitcoin prices all experienced deep declines below the 2-Year MA.
Currently, Bitcoin has only spent a relatively short period below this level, and the decline has not been deep enough.
Whether this represents the true market bottom still requires further confirmation.
4. MVRV Z-Score (Market Value / Realized Value Z-Score)
The MVRV Z-Score is one of the most classic on-chain indicators for identifying Bitcoin bull and bear market cycles.
It measures the premium of Bitcoins market value compared with the average cost basis of all holders across the network.
Currently, the MVRV Z-Score has fallen back into the 1–2 range.
During the bear market bottoms of 2018 and 2022, the Z-Score dropped close to zero or even entered negative territory.
The current indicator has already declined significantly from last year‘s highs, meaning the market’s speculative profit bubble has been largely cleaned out.
However, there is still a considerable distance from the extreme capitulation zone typically seen at final bear market bottoms (Z-Score < 0).
5. RHODL Ratio (Long-Term Holder Sentiment)
The RHODL Ratio is designed to identify major bull and bear market turning points by measuring selling behavior among long-term Bitcoin holders and whales.
Currently, the RHODL Ratio has continued declining from elevated levels and has moved far away from the red “bull market selling zone.”
This indicates that the profit-taking phase of early Bitcoin whales during the bull market has largely ended.
However, Bitcoin holdings have not yet entered the extreme long-term accumulation and supply-locking phase typically associated with the final stage of a bear market.
Summary
All major bottom-fishing indicators — including AHR999, MVRV Z-Score, and the Two-Year MA — have not yet reached the extreme capitulation zones seen at previous Bitcoin bear market bottoms.
Therefore, the current market is not the final bottom of a complete bear market cycle.
Position of the Current Bitcoin Halving Cycle
The complete Bitcoin halving cycle can currently be divided into three stages:
April 2024 – October 2025: The Fourth Halving Bull Market Cycle
Bitcoin reached a cycle high of $126,198, marking the end of the bull market phase.
October 2025 – May 2026: The Main Bear Market Decline
Bitcoin entered the primary downward phase of the bear market.
May 2026 – Present: Mid-to-Late Bear Market Bottom Formation Phase
Bitcoin entered a range-bound accumulation zone and began forming a potential market bottom.
Currently, the market is in a mid-stage rebound window during the bottom-building process.
There are two possible future paths:
Bullish Scenario:
Bitcoin successfully holds above $80,000, consolidates through a pullback, then gradually moves higher.
The bear market bottom is completed, and Bitcoin begins preparing for the next major bull cycle.
Base Scenario:
The rebound eventually reaches a local top, Bitcoin falls again, and completes a final capitulation decline before truly entering the next bull market cycle.
4、Macro Environment: Dollar Debasement Trade vs. Federal Reserve Hawkish Pressure
The most unique macro feature behind this Bitcoin rally is that it occurred during the same period when the Federal Reserve was sending relatively hawkish signals.
The FOMC meeting minutes released on August 19 showed a clearly hawkish tone.
During the July 28–29 meeting, policymakers voted 9–3 to maintain the federal funds rate at 3.50%–3.75%, while three voting members supported an immediate 25-basis-point rate hike.
“Many participants” believed that if inflation failed to continue declining, further monetary tightening could still be necessary.
Under normal circumstances, a hawkish Federal Reserve would be negative for risk assets.
However, Bitcoin moved higher despite these signals.
The core reason is that markets are trading a broader macro narrative:
A potential decline in confidence toward U.S. dollar credibility.
When the 30-year U.S. Treasury yield reached its highest level since 2007, and U.S. government debt surpassed $40 trillion, investors began worrying about sovereign debt sustainability.
U.S. National Debt Growth Over the Past Decade (Source: Trading Economics)
At the same time, the Treasury was forced to use buyback operations to suppress long-term yields.
Gold and Bitcoin rising simultaneously under these conditions represents a rare divergence from traditional financial markets.
According to CoinShares, the recent Bitcoin rebound has been driven less by internal crypto market factors and more by increasing expectations of a shift in U.S. monetary policy.
Federal Reserve Governor Waller is scheduled to deliver his first major speech at Jackson Hole on August 28.
If he adopts a hawkish tone, it could put pressure on Bitcoin and other risk assets.
In addition, the Federal Reserves next interest rate decision will be announced at 2:00 AM Beijing time on September 17.
The market currently prices the probability of a September rate hike at approximately 28%–30%, while Goldman Sachs believes a September hike is “highly unlikely.”
The market generally expects that before mid-2027, the Fed will deliver at least one, and potentially two, 25-basis-point rate hikes.
Wall Streets Views Remain Highly Divided:
Bank of America Global Research expects the Federal Reserve to raise rates three times in 2026 — in September, October, and November — each by 25 basis points. This represents one of the most aggressive forecasts on Wall Street.
Morgan Stanley expects the Fed to keep rates unchanged throughout 2026, with the first rate cut potentially arriving in early 2027.
The Federal Reserve dot plot shows that the median policy rate forecast for the end of 2026 has been revised upward from 3.4% to 3.8%.
In the short term, markets are trading expectations of rate cuts rather than actual rate cuts.
As long as long-term Treasury yields continue declining and the U.S. dollar weakens, risk assets including Bitcoin will receive temporary support.
However, if inflation rebounds and rate-cut expectations are disappointed, the market could face a sharp correction at any time.
In the medium to long term, the Fed entering a genuine rate-cut cycle remains the most important macro catalyst for Bitcoins next major trend.
However, Bitcoin has now become deeply institutionalized, with its asset characteristics gradually shifting toward:
“Growth-oriented risk asset + inflation-resistant store of value.”
A prolonged low-rate environment from the Federal Reserve would provide sustained long-term support for Bitcoin.
Conversely, if high interest rates remain in place for an extended period, they will continue limiting crypto market valuations.
Currently, the global macro environment is positioned between:
the end of the high-interest-rate cycle and the beginning of a potential easing cycle.
This creates a favorable window for risk assets — but it is not yet a period of unrestricted market euphoria.
5. Why Do Bear Markets Often See Violent Rallies？ Is It a Strategy Used by Whales to Harvest Retail Investors？
From the perspective of market cycles, this Bitcoin surge is a typical bear market rally.
The phenomenon of “violent rallies during bear markets” has always been a classic feature of Bitcoin markets. Looking back through history, the last two Bitcoin halving cycles both witnessed multiple instances of daily gains exceeding 10% during their bear market phases.
2018–2020 Bear Market
During the April 2018–2020 bear market cycle, Bitcoin experienced 8 major single-day rallies of 10% or more.
Among these eight 10%+ daily surges:
Only the final two occurred near the true market bottom;
The other six were merely intermediate rebounds during the broader decline.
After each rebound, Bitcoin eventually continued lower and created new lows.
2021–2023 Bear Market
During the November 2021–June 2023 bear market, Bitcoin experienced 7 major single-day rallies of 10% or more.
Among these seven rallies:
The first four were followed by further declines and additional bottom testing;
The final three occurred near the end of the bear market, when Bitcoin began forming a sustainable bottom and gradually transitioned into a new bull cycle.
Historical patterns show that:
During bear markets, intermediate rallies can easily reach 30%–50% or even higher.
Bitcoins current rebound of approximately 37% fits this historical pattern.
These violent rebounds often create the illusion that:
“The bull market is back.”
However:
Most bear market rallies are only temporary recoveries, not true trend reversals.
Only a small percentage of rebounds eventually evolve into the starting point of a new bull market.
Why Do Violent Rallies Often Happen During Bear Markets？
The answer is simple:
A bear market is never a straight-line decline.
The typical structure is:
Decline → violent rebound → another sell-off → accumulation → new cycle
The violent rebound itself is one of the most common characteristics of a bear market.
From the perspective of large capital players, these rallies can also become an effective way to exploit retail investor psychology.
The Classic Retail Investor Trap
Many retail investors experience the same painful cycle during bear markets:
Bitcoin declines continuously.
They endure months of losses.
Eventually, they lose patience and sell at a loss.
Then suddenly:
Bitcoin explodes upward by 10%–20% in a single move.
Social media becomes flooded with:
“The bull market is back!”
Crypto communities become euphoric again.
Afraid of missing the next bull run, investors rush back in at higher prices.
But after only a few days of gains:
The market reverses.
Bitcoin breaks support again.
A new lower law is created.
Those who chased the rally become trapped.
This is one of the most classic bear market harvesting cycles.
Bear market rallies are not random.
They are driven by a combination of:
Large investors exploiting market psychology;
Excessive derivatives leverage;
Short squeezes;
Emotional trading behavior.
Why Are Violent Rallies Easier to Create During Bear Markets Than Bull Markets？
Because bear markets have several unique characteristics.
1. Crowded Short Positions Create Fuel for Short Squeezes
During bear markets, traders naturally become bearish.
Short positions accumulate heavily.
When prices suddenly rise:
Short sellers are forced to close positions.
This creates:
Price increases → short liquidations → more buying → further price increases
A self-reinforcing upward cycle.
2. Lower Liquidity Makes Prices Easier to Push Higher
During bear markets:
Many investors leave the market.
Trading liquidity declines.
The amount of available selling pressure decreases.
Therefore:
Large amounts of capital can move prices significantly with relatively less money.
3. Retail Investor Psychology Becomes Extremely Fragile
Bear markets create extreme pessimism.
Investors can tolerate slow declines.
But they cannot tolerate watching prices suddenly surge without them.
The fear of missing out becomes stronger than the fear of losing money.
As the saying goes:
Missing the rally often feels worse than losing money.
That is why violent rallies are one of the most effective tools to pull sidelined investors back into the market.
6. Market Outlook: Where Does Bitcoin Go Next？ What Should Investors Do？
Considering:
Global liquidity conditions;
ETF capital flows;
Historical Bitcoin cycles;
Derivatives leverage;
Macro economic factors;
Bitcoins next move can be divided into three possible scenarios.
Scenario 1: The Intermediate Rally Ends and Another Correction Begins
Probability: More than 60%
This is currently the most likely scenario.
Potential triggers:
ETF inflows turn negative again;
U.S. Treasury yields rise;
The Federal Reserve maintains a hawkish stance or delays rate cuts.
Bitcoin could potentially form a top around:
$80,000–$88,000
As bullish momentum weakens:
ETF inflows slowly;
Buyers lose strength;
Another correction begins.
Possible correction targets:
Moderate correction:
Bitcoin holds above previous support:
$58,000–$61,000
The market continues bottom formation.
Deeper correction:
Bitcoin breaks lower:
$38,000–$45,000
The final bear market accumulation phase continues.
Scenario 2: Bear Market Bottom Is Confirmed and a New Bull Market Begins
Probability: Around 30%
This scenario requires stronger confirmation.
Conditions:
Bitcoin holds above $80,000;
A pullback does not break the key $72,000 support level;
Spot Bitcoin ETFs continue receiving large net inflows;
The Federal Reserve sends a clear signal toward monetary easing.
If these conditions are met:
Bitcoin could gradually move higher:
Challenge previous highs;
Break above $100,000;
Confirm that the bear market bottom is already behind us.
Key confirmation signals:
ETF inflows remain positive for four consecutive weeks or longer;
Inflation continues declining;
The Fed officially begins cutting rates.
Scenario 3: Short-Term Spike Followed by Another Sharp Drop
Probability: Around 10%
In this scenario:
The rally is mainly driven by short squeezes.
Spot demand fails to follow.
Bitcoin rises quickly and then collapses.
The price falls back below:
$70,000
The previous 100-day consolidation range continues.
Warning signals:
ETF inflows rapidly disappear;
No new macro catalysts emerge;
Long positions become excessively crowded;
Large-scale futures liquidations occur.
Investment Strategy: How Should Investors Respond？
Given the current situation:
The market looks like a late-stage bear market rebound;
The direction is still uncertain.
Investors should avoid two extremes:
“The bull market is back, go all-in.”
“This is a dead cat bounce, sell everything.”
A defensive, staged approach is more reasonable.
Position Management Strategy
1. Long-Term Core Position
Maintain:
30%–40% spot Bitcoin holdings
Do not completely sell long-term positions above $80,000.
The current cycle still has long-term upside potential.
2. Short-Term Trading Position
At higher levels:
Take profits gradually;
Avoid chasing sudden pumps;
Reduce leverage exposure.
During bear market rebounds:
High-leverage long positions carry extremely high liquidation risks.
Avoid excessive leverage.
3. Cash Reserve
Maintain:
30%–50% cash allocation
Wait patiently for possible corrections.
Use a staged buying strategy instead of entering it all at once.
Key Indicators Investors Should Monitor
Federal Reserve Policy
Watch:
Rate cut expectations;
Liquidity expansion;
Monetary policy direction.
ETF Capital Flows
Watch whether institutional money continues entering Bitcoin.
U.S. Treasury Yields and Dollar Index
Rising yields and a stronger dollar usually pressure risk assets.
Bitcoins Key Support Levels
Especially:
$72,000 support
A breakdown would weaken the bullish structure.
Make good use of third-party verification tools like WikiBit to conduct risk screening of crypto platforms. During prolonged market downturns, some small and medium-sized exchanges may misuse or reallocate user assets. When the market rebounds and users rush to withdraw their tokens for selling or cashing out, these platforms may face liquidity pressure or even a withdrawal crisis.
On-chain Whale Behavior
Monitor:
Long-term holders selling;
Large BTC transfers to exchanges;
Institutional accumulation trends.
Risk Management Rules
During bear market rebounds:
Do not let short-term excitement control decisions;
Avoid chasing small-cap altcoins after a sudden pump;
Set clear profit-taking and stop-loss levels;
Never use full leverage.
Bear markets often produce:
False breakouts;
Fake breakdowns;
Extreme volatility.
Conclusion
Bitcoin returning above $80,000 is not just a single green candle.
It represents a deeper transformation:
- The ETF era;
- The institutional era;
- The era of Bitcoin as a potential hedge against currency debasement.
However:
A single breakout does not automatically confirm a new bull market.
A true bull market requires:
- Sustained capital inflows;
- Improving macro liquidity;
- Market expansion from Bitcoin into the broader crypto ecosystem.
At the current stage, the market looks more like:
A major rebound in the later stage of a bear market — a classic “bear market rally that can trap late buyers.”
Before the true bottom arrives, the market may experience multiple cycles of:
“the bull market is back” excitement,
followed by:
“it was only a dead cat bounce” disappointment.
The only certainty is:
Every violent rebound during a bear market helps flush out weak hands, build future demand, and prepare the foundation for the next major bull cycle.
For investors, the optimal strategy is not extreme bullishness or extreme pessimism.
It is disciplined risk management, patience, and waiting for clearer trend confirmation.
Risk Disclaimer: This article is for market analysis purposes only and does not constitute investment advice. Cryptocurrency assets carry extremely high risks and significant price volatility. Investors should make independent and rational decisions.
