The Paradox of the Absent Exodus: Bitcoin in a Bear Market with a 20% Drop and Institutions Still Buying

When Bitcoin plummeted from $126,000 in October to $67,610 in February—a brutal retracement of nearly 46%—analysts expected to see what always characterizes true crypto crises: mass exodus. Capitulation. Unrestrained fleeing. But it didn’t happen. Instead, a paradox emerged: the quietest bear market the sector has faced, where institutions continue absorbing Bitcoin while publicly declaring we’re in recession territory.

Julio Moreno from CryptoQuant, along with a growing chorus of institutional voices—including Matt Hougan from Bitwise—now freely use the label “bear” to describe the current regime. But here’s the problem: if a true bear market doesn’t produce the expected exodus, and institutions are actually increasing exposure, what are we really talking about? The answer lies in three specific signals that define the regime—and in how one of them has already started to move.

Three Signals That Define the Recession Phase (Without the 20% Exodus)

The traditional definition of a bear market—a 20% or more decline over two months—has already been widely surpassed. Bitcoin crossed that threshold weeks ago. But fixating only on that number ignores a more complex reality. Institutional analysts work with a three-dimensional framework: price trend, defensive positioning, and demand-liquidity dynamics.

Signal 1: Price Trend Below Critical Moving Averages

Bitcoin is currently trading below the 200-day and 365-day moving averages (around $101,448). This is the territory analysts watch to confirm regime change. CryptoQuant’s Bull Score Index is at 20 out of 100—explicitly described as “extreme bear.” When these long-term markers break, the regime shifts regardless of sentiment or narrative. Price is validating the recession thesis, even if institutional behavior isn’t.

Signal 2: Protection Against Drops, Not Capture of Rises

This is where the “exodus didn’t happen” logic becomes clearer. Recent analyses from Glassnode document a specific rotation: traders are paying premiums on options to hedge against further declines, rather than building long positions. Dealer gamma has fallen below zero—indicating increased sensitivity to drops. This is defensive, not offensive positioning. Derivatives are pricing protection, exactly as a genuine bear market would—yet simultaneously, large institutions are merely reducing allocations, not fleeing.

Signal 3: Liquidity Contraction and Negative Flows (At Least for Now)

CoinShares estimates that large holders have sold roughly $29 billion in Bitcoin since October. Exchange-traded products experienced outflows of $440 million at the start of the year. Stablecoin liquidity remains contracted. These are classic bear market ingredients: structured selling pressure, demand still not recovered.

But here’s the inversion. The latest global research from Coinbase Institutional and Glassnode, conducted from December to January, found that 26% of institutions describe the market as “bear”—up from just 2% before. At the same time, 62% of institutions have maintained or increased their net long exposure since October, and 70% consider Bitcoin undervalued. It’s as if the 20%+ exodus has disappeared from the playbook. There’s no capitulation, only regime recognition while structurally accumulating.

What Needs to Change for This Bear Market to End

If it’s not an exodus, then how does it exit this phase? Analysts identify three practical triggers:

Trend Recovery: Bitcoin needs to regain and sustain above the 200- and 365-day moving averages for weeks, signaling a structural inflection. Not a short-term rally—sustained regime shift.

Demand Reversal: ETF flows need to shift from contained/negative to sustained positive entries. Large holder selling—those $29 billion—must significantly slow down.

Risk Appetite Normalization: Options markets must stop pricing protection as the primary premium. Leverage must form sustainably, not speculatively.

A few weeks’ rally isn’t enough. It’s a regime change validated across multiple dimensions.

40% Drop But No Exodus: The Scenarios Ahead

Paradoxically, the current 46% correction is small compared to traditional crypto winters (which often hit 70%+). But multiple analyst scenarios revolve around $55,000 to $60,000 as potential lows—implying a total drop close to 50%, still less than historical extremes.

Scenario 1: Classic Winter (3-6 Months or More)

Julio Moreno suggests $70,000 in three to six months, with a possible test of $56,000 in the second half of 2026. This assumes weak ongoing demand, persistent negative flows, and repeated failures to reclaim moving averages. Rallies occur but reverse. In this case, the exodus never arrives because institutional patience (even if defensive) maintains a floor.

Scenario 2: Shallow Bear Market (3-6 Months)

CoinShares explicitly expects a choppy period of three to six months, followed by improvement in the second half when whale selling exhausts. Here, the regime is less about deep lows and more about time: limited rallies until demand reverses, but the floor remains supported by institutional flows.

Scenario 3: Demand as the Trigger (Not Calendar-Based)

The inflection occurs when liquidity and demand shift direction—regardless of halving cycles. Aligns with CryptoQuant’s demand-driven framework and abandons deterministic cycle-based models.

The 4-Year Cycle Is Dead: Liquidity and Flows Now Govern

VanEck, K33 Research, and 21Shares recently argued that the four-year cycle— which governed Bitcoin for a decade—is effectively dead. Its replacement: a cycle driven by global liquidity, real yields, ETF flows, stablecoin liquidity, and hedge demand.

This structural shift completely redefines the exodus question. If before bear markets coincided with total capitulation (massive exodus), now they can occur with institutions clearly buying while calling it “bear”—because the regime is changing, not because money is fleeing.

The implication: bear markets may become more frequent but less severe. Instead of multi-year winters, the sector might experience shallower, quicker regime corrections. The 20%+ exodus may never be the norm again. Instead, expect more sideways time, liquidity-dependent.

The Checklist That Matters More Than the Calendar

In 2026, labeling something as a “bear market” isn’t a metric—it’s a checklist:

• Trend: Is Bitcoin below long-term moving averages? ✓ Confirmed
• Positioning: Defensive options, demand for protection? ✓ Confirmed
• Liquidity: Negative flows in ETFs, contracted stablecoins? ✓ Confirmed

The market meets these criteria. When it ends isn’t about halving dates but when this checklist reverses. CoinShares forecasts 3-6 months. CryptoQuant considers potential for deeper tests if liquidity doesn’t rebound.

Both could be correct at different times. If demand remains weak but the floor holds—if there’s no exodus—the regime may oscillate rather than fully revert.

Until then, the market is in a phase where rallies are limited and patience is required—even as institutions continue buying while calling it a bear.