Crypto Market Sentiment Lifts From 'Extreme Fear' as Analysts Debate Bear Market Timing

Sentiment Gauge Shows Improvement Despite Persistent Uncertainty

Crypto market sentiment has improved moderately after an extended period of extreme pessimism, though questions remain about whether digital assets have entered a prolonged bear market.

A widely-used market sentiment indicator recorded a "fear" score of 29 in its Friday update, marking its exit from the "extreme fear" zone and reaching its highest level in 21 days ^[1]. This improvement comes even as Bitcoin continues trading below $90,000, with the asset priced at $88,995 at the time of the measurement ^[1].

The sentiment index has remained in fearful territory for eight weeks, a stretch that crypto entrepreneur Brian Rose characterized as "even longer than the April 2025 crash" that followed former US President Donald Trump's announcement of global trade tariffs ^[1]. Rose suggested on social media that the extended period of fear could signal favorable conditions for potential gains, stating that "Risk/Reward is the best it has ever been" ^[1].

Mixed Signals as 2026 Begins

Crypto analytics platform Santiment observed that market participants entering 2026 displayed "mixed emotions," with some mourning personal losses while others celebrated gains and community resilience ^[1]. The platform noted that "the market shows signs of recovery as holders express pride in profits and continued commitment," while events and giveaways have boosted engagement despite recent challenges ^[1].

Other indicators suggest investors remain cautious. The CoinMarketCap Altcoin Season Index registered a "Bitcoin Season" score of 23 out of 100 on Friday, reflecting a low-risk appetite among traders ^[1]. The index measures whether the top 100 altcoins are outperforming or underperforming Bitcoin over a 90-day period.

Bear Market May Have Started in November

According to Julio Moreno, head of research at CryptoQuant, Bitcoin may have already entered a bear market two months ago based on several key metrics ^[2]. Speaking on the Milk Road show Thursday, Moreno explained that most indicators used in his bull score index turned bearish in early November and have not recovered since ^[2].

The bull score index measures market conditions using factors including network activity, investor profitability, Bitcoin demand, and liquidity on a scale from 0 to 100 ^[2]. Moreno cited the price falling below its one-year moving average as a technical confirmation of bearish conditions ^[2].

Bitcoin started 2025 trading around $93,000 and reached a peak of $126,080 in October before finishing the year lower than it began ^[2]. As of Friday, the cryptocurrency was trading around $88,543 ^[2].

Potential Bottom and Historical Comparisons

Moreno predicted that the bear market bottom could fall within the $56,000 to $60,000 range over the coming year, based on Bitcoin's realized price and historical performance patterns ^[2]. The realized price represents the average price at which current Bitcoin holders purchased their assets ^[2].

"Historically, what happened in previous bear markets, you see the price coming down to what is called the realized price," Moreno explained ^[2]. He added that the metric "deviates a lot to the upside in the bull market and then when there's a bear market, that should be the, I would say maybe the base expectation for a bottom" ^[2].

A decline to $56,000 would represent approximately a 55% drawdown from Bitcoin's all-time high, which Moreno viewed as relatively moderate compared to previous cycles that saw 70% to 80% drops ^[2].

Moreno also noted structural differences from past downturns, including the absence of high-profile crypto collapses like those that marked the 2022 bear market, when Terra, Celsius Network, and FTX failed sequentially ^[2]. He pointed to sustained institutional accumulation and the presence of ETFs as factors providing more consistent demand, stating that "structurally, we now have more like institutional or ETFs that don't sell, and also there's some buying there" ^[2].