Bitcoin falls below the production cost line: Is this a clear sign of a bear market?

In early February 2026, Bitcoin’s price hovered around $66,000, while its estimated average production cost was as high as $87,000, making the price about 20% below the cost.

This critical indicator broke below the breakeven point, triggering the most sensitive nerves in the market. Historically, when Bitcoin’s price remains below its production cost for an extended period, it is a typical characteristic of a bear market.

Market Status: Price and Cost Inversion

The current cryptocurrency market is at a crucial crossroads. As of February 6, 2026, Bitcoin’s price briefly fell below $60,000, nearly 40% down from the peak of close to $126,000 in October 2025. This decline far exceeds the 20% threshold traditionally used to define a bear market in conventional finance.

According to Checkonchain data, the average cost to mine one Bitcoin is approximately $87,000. The roughly 20% gap between price and production cost is intensifying the financial pressure across the entire Bitcoin mining industry.

This metric, which links network difficulty with Bitcoin’s market capitalization, provides a reliable estimate of the industry’s overall cost structure.

Changes in total network hash rate further confirm the miners’ predicament. After reaching a historical peak of about 1.1 ZH/s in October 2025, the total hash rate has decreased by approximately 20%, currently rebounding to 913 EH/s and beginning to stabilize.

Miner Pressure: Challenges to Industry Survival

Against the backdrop of Bitcoin’s price remaining below production costs, the mining industry is facing severe tests. Many miners are operating at a loss and are forced to sell Bitcoin holdings to sustain daily operations, pay energy bills, and service debts.

This phenomenon of “miner capitulation” is a typical feature of bear cycles. Less efficient miners are compelled to shut down, leading to a significant decline in total network hash rate.

Adjustments in hash rate are part of the market’s self-regulating mechanism. When some high-cost miners exit the network, Bitcoin’s difficulty adjusts accordingly, reducing the production costs for remaining miners.

Although painful, this process creates conditions for subsequent market recovery. History shows that during the bear markets of 2019 and 2022, Bitcoin’s trading price fell below production costs but eventually rebounded.

Historical Comparison: Reemergence of Bear Market Traits

Reviewing Bitcoin’s market cycles, the current situation bears a striking resemblance to past bear market characteristics. Falling below the production cost line is one of the key signals of a bear market, but not the sole criterion.

According to traditional definitions, a bear market occurs when asset prices decline more than 20% from recent highs and persist for at least two months. In the crypto market, due to higher volatility, these declines are often more severe, and such periods are frequently called “crypto winters.”

In the early 2026 market landscape, multiple indicators point toward the possibility of a bear market. Bitcoin has not only fallen below the 200-day moving average (around $58,000 to $60,000) but also experienced a sharp contraction in trading volume, reflecting liquidity tightening.

A more comprehensive judgment of a bear market requires considering price, position, and liquidity indicators. Currently, Bitcoin is below both the 200-day and 365-day moving averages, and CryptoQuant’s bull market score is only 20 points.

Options markets show a bias toward bearish hedges, ETF net outflows have reached $440 million this year, and whales have sold about $29 billion worth of Bitcoin since October last year, all consistent with bear market traits.

Institutional Behavior: Changes in Market Structure

Unlike previous bear markets, the current market exhibits a clear disconnect between institutional perception and action. Data shows that 26% of institutions consider the market to be in a bear phase, up 24 percentage points from before, yet 62% have held or increased long positions since October last year, and 70% believe Bitcoin is undervalued.

This paradox of “bearish but increasing holdings” is becoming a core feature of the 2026 bear market.

Large-scale institutional capital inflows are altering the traditional dynamics of the Bitcoin market. Firms like VanEck and K33 confirm that the four-year cycle dominating Bitcoin for the past decade has become invalid, replaced by macro indicators such as liquidity, real yields, and stablecoin liquidity.

This suggests that the bear market could last longer but with smaller declines, with institutional funds providing support to prevent prolonged capitulation.

According to Gate Research Institute, Bitcoin’s ownership structure is increasingly concentrated among large institutions and professional custodians, which helps enhance overall market stability. Amid rising inflation and uncertain employment prospects, monetary policy paths remain unpredictable, with future rate cuts highly dependent on economic data developments.

Evolution of Old and New Bear Market Traits

Compared to past market cycles, the current bear market shows distinct differences. Through comparative analysis, we can better understand the structural changes:

Summary

As total network hash rate stabilizes around 913 EH/s and begins a slow rebound, less efficient miners have been eliminated from the market. The four-year halving cycle for Bitcoin has become invalid, with institutional funds now leading the market.

Wall Street trading desks are assessing downside risks, with key support levels at $60,000, $58,000, or even lower. The market’s recovery no longer depends solely on technical indicators or historical patterns but hinges on the arrival of demand and liquidity turning points.

The crypto market is learning to breathe in sync with macroeconomic trends. Every deep correction serves as a stress test for the ecosystem’s resilience.