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Fears of a Bitcoin bear market are rising as ETF outflows accelerate. With market volatility increasing and state-level Bitcoin reserve initiatives failing, bullish sentiment is fading.

Despite this, industry experts like Arthur Hayes believe any downturn will be temporary. He predicts a strong rebound by the end of 2025. However, this would be the first major price correction since ETF approvals, making institutional investor reactions unpredictable.

Is Bitcoin Entering a Bear Market?

Bitcoin’s price has been in steady decline, impacting companies like Strategy (formerly Microstrategy) , which saw its stock drop despite investing nearly $2 billion in BTC.

Several factors suggest that a Bitcoin bear market could be on the horizon:

🔹 Arthur Hayes’ warning: The former BitMEX CEO predicts BTC could drop to $70,000 before rebounding.

#Bitcoin goblin town incoming:
Lots of $IBIT holders are hedge funds that went long ETF short CME future to earn a yield greater than where they fund, short term US treasuries.

If that basis drops as $BTC falls, then these funds will sell $IBIT and buy back CME futures.

These… pic.twitter.com/3PskTxrBPR

— Arthur Hayes (@CryptoHayes) February 24, 2025

🔹 Institutional investors shifting strategies: Many hedge funds that went long on ETFs and short on CME futures could start selling off.

🔹 ETF outflows increasing: In just one day, the top 10 Bitcoin ETFs saw outflows exceeding $500 million. Last week, total outflows reached $585 million, marking a five-month high.

If this trend continues, Bitcoin’s decline could deepen, pushing it into a prolonged bear market.

Failed Bitcoin Reserve Efforts Add to Market Pressure

Hopes for state-backed Bitcoin reserves have also taken a hit. Various U.S. states proposed BTC purchases totaling $23 billion, but political opposition is delaying progress.

Even within the Republican Party, key members are blocking these initiatives, reducing the likelihood of large-scale government-driven Bitcoin adoption.

With these setbacks, the market faces additional downward pressure, making a Bitcoin bear market seem increasingly possible.

What’s Next for Bitcoin?

Although signs point to a Bitcoin bear market, experts like Hayes argue that the downturn will be short-lived. The big question is how institutional investors—who entered the market post-ETF approvals—will react to extreme volatility.

Since Bitcoin ETFs launched in 2024, the market has yet to face a bear cycle on this scale. While crypto veterans are used to these boom-and-bust patterns, new investors may respond differently.

Will Bitcoin recover as it always has, or will this bear market be different?