Bitcoin’s Weakest Start in 8 Years Signals Bearish Shift

Bitcoin will likely experience its worst first quarter in eight years, losing 22% so far this year as of Feb. 16. As of this writing, Bitcoin (BTC) was trading at $65,200, down 2.35% from the prior day, according to CoinMarketCap data. The continued selling pressure in the wider cryptocurrency market is also a reflection of the BTC price drop.

In January, BTC fell 10.17%, and so far in February, it fell an additional 13.18%. If Bitcoin were to experience a second consecutive month of decline, it would be the first time ever. Historically, such a scenario indicated the beginning of a long period of consolidation in the markets.

A Weak Q1

According to CoinGlass, Bitcoin’s current quarterly performance ranks as one of the worst opening quarters in the asset’s history. The only comparable performance occurred in 2018 when BTC lost almost 50% after a long bear phase.

Quarterly heat maps show that Q1 is typically a volatile time for the crypto market. Historically, bull cycles have started with either a positive January or a quick rebound in February.

The fact that there has been no indication of either occurring in 2026 suggests a weaker demand for the cryptocurrency in the short term. Also, a possible shift to a longer consolidation phase.

Bitcoin’s approximate 22% decline since the start of Q1 indicates a lower level of volatility spikes than in previous bull cycles. Although average Q1 returns are still positive in the long run, the median performance is slightly negative. Thus, highlighting the potential for steep declines in Q1 during transition periods in the markets.

Source: X

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Matrixport Says Rising Bear Market Indicators

Matrixport analysts note that the number of 20%+ corrections in the markets, and the time they occur in, can help define bearish vs bullish market conditions. 20%+ corrections are relatively rare in strong bull markets. However, they become more frequent when momentum declines.

The Matrixport analysts further noted that, as of mid-2025, the upward price momentum in BTC began to fade and that long-term holders were starting to take profits. Subsequently, on-chain activity has decreased, and ETF flows have displayed intermittent outflows, which indicate a decrease in institutional participation in the markets.

Open interest has also decreased by approximately 1.9% to $43.9 billion, while funding rates have remained almost neutral. Therefore, there is less leverage being used. The continued deleveraging in the derivatives markets also suggests that investors are exhibiting a reduction in risk-taking behavior as opposed to new capital entering the markets.

Source: CoinGlass

Using a 30-day rate-of-change model, the Matrixport analysts found that the current market conditions are similar to those found in historic bear phases. However, these analysts stated that crypto downturns are rarely linear and that steep counter-trend rallies often occur in the market even though it is experiencing a downward trend.

Why This Matters 

A historically weak Q1 could potentially cause traders to employ a more defensive position, decrease their exposure to leverage, and delay the expectation for a near-term bull cycle in BTC.

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