#比特币行情观察 Bitcoin Leads the Drop on Rate Cut Expectations: Bear Market Incoming or Short-Term Volatility?

On December 5, 2025, following the release of US inflation data, market expectations for a Federal Reserve rate cut were significantly strengthened. The S&P 500 index edged up 0.3%, and gold prices hit a monthly high. However, the cryptocurrency market showed an abnormal trend: Bitcoin fell below $89,000 intraday, down over 30% from its October peak, leading the entire crypto market to lose trillions in market value. This "rate cut good news, price drops" divergence has left the market questioning: What is the logic behind Bitcoin leading the decline? Is a bear market really coming?

Bitcoin's leading drop amid heightened rate cut expectations is essentially a resonance of the "liquidity mirage" shattering and a deterioration in market structure. The negative correlation between Bitcoin and Fed policy has long been verified; during the 2022 rate hike cycle, their correlation reached -90%. However, this relationship is based on clear policy signals. While the December 5 inflation data supported rate cuts, Fed Chair Powell’s hawkish stance of "maintaining high interest rates for the long term" made the market realize that the rate cut cycle could be later and weaker than expected.
Bitcoin's earlier gains had already priced in the entire year's rate cut expectations. When "dovish expectations" were corrected, combined with a historic high leverage rate of 18%, long liquidations triggered a chain reaction of selling, with over $600 million in long positions liquidated in a single day, further amplifying the drop.
More critically, the reversal of institutional funds broke the market balance. US spot Bitcoin ETFs saw net outflows for five consecutive weeks, with BlackRock’s IBIT seeing $420 million withdrawn in a single week, completely reversing the inflows seen at the start of the year.

The current cryptocurrency decline is an adjustment, not a bear market. Three core factors indicate the market has not reached a cyclical inflection point.
From a valuation perspective, Bitcoin’s MVRV ratio has dropped to 1.76, at its lowest range since 2023. Historical data shows that when this ratio is below 2, it is often followed by a rebound; the percentage of profitable supply shows that nearly 40% of tokens are now at a loss, similar to the short-term bottoms in 2018 and 2020.
From a market structure perspective, long-term holder selling volume has dropped 32% month-on-month, some "whales" have begun accumulating in the $92,000–$95,000 range, and on-chain data shows signs of bottom fishing, indicating the market's "ballast" has not fully exited.
From an asset attribute perspective, this decline is more of a synchronized adjustment among risk assets. Bitcoin’s correlation with the Nasdaq index has risen to 46%; its drop resonates with tech stock valuation corrections and heightened trade tensions, rather than being a signal of an independent crypto bear market.

A market reversal requires clear signals in three key data areas, with policy and capital indicators being the main weathervanes.
First, watch the December Fed policy meeting decision. If the meeting clearly signals the start of a rate cut cycle or releases an "early cut" message, marginal easing of dollar liquidity will directly repair crypto market valuations. Historical data shows that 1–3 months after the Fed signals rate cuts, Bitcoin rebounds by an average of 15%–20%.
Secondly, monitor US spot Bitcoin ETF fund flows. If weekly net inflows resume and exceed $500 million, it will signal a return of institutional confidence and inject incremental liquidity into the market.
Lastly, pay attention to core inflation and employment data. If December’s core PCE inflation falls below 2.5% and nonfarm payroll growth slows, it will solidify the rate cut logic and reduce the risk of policy reversal, providing a stable macro environment for crypto assets.

Bitcoin’s leading drop on rate cut expectations is a short-term reaction to expectation corrections and leverage washout, not a sign of a bear market beginning. The crypto market has shifted from retail-driven to deep institutional participation; its movements are no longer solely dependent on liquidity expectations, but also linked to regulatory progress, technological applications, and other factors. For investors, rather than worrying about "whether a bear market is coming," it’s better to focus on key data signals:
When the triple signals of a clear Fed policy shift, institutional capital inflows, and valuations touching historical bottoms appear, the market will have a definite reversal opportunity. Until then, short-term volatility is a necessary process to squeeze out bubbles and return to value logic. Awaiting the reversal.