Crypto News: Bitcoin Slips Back to $87,000 — Is a Bear Market on the Horizon?
Date: January 26, 2026
Bitcoin has recently experienced a downward correction, sliding back to around the $87,000 mark amid growing concerns over market sentiment and fund flows. This drop has sparked discussions within the crypto community and among investors about whether we are witnessing the early stages of a bear market.
Market Movements and Fund Outflows
The crypto market witnessed significant liquidations totaling hundreds of millions of dollars, contributing to Bitcoin’s price decline. Last week, exchange-traded funds (ETFs) recorded the largest weekly outflow since mid-November 2025, totaling approximately $1.73 billion. This sharp reversal follows a week ending January 17 that saw more than $2.17 billion in inflows, highlighting a dramatic shift in investor behavior.
Ethereum, a leading cryptocurrency alongside Bitcoin, posted around $630 million in outflows last week — marking the second-largest weekly outflow on record. In contrast, ETFs linked to Solana and Chainlink showed relative resilience, managing slight inflows of about $17 million and nearly $4 million, respectively.
Overall, a “risk-off” tone dominates the market as broad-based outflows suggest investor confidence has yet to recover fully from previous shocks. This sentiment has been particularly pronounced among U.S.-based investors, according to data from CoinShares. Fragile sentiment has persisted since the October 2025 “flash crash,” and the sector continues to face macroeconomic headwinds.
Key Factors Driving the Decline
Several factors contribute to the recent market weakness:
- Weaker expectations for Federal Reserve rate cuts: Market analysts now assign only about a 3% probability of a rate cut, according to the CME FedWatch tool. This reduces optimism for more accommodative monetary policy ahead.
- Lack of sustained rebound following the October downturn: The market has not yet staged a firm recovery after the sharp fall in October, causing trend-following and risk-managed strategies to remain wary.
- Disillusionment with crypto as a “debasement hedge”: Despite large budget deficits and rising government debt, cryptocurrencies have yet to convincingly reclaim their role as a protective asset against currency debasement. This has prompted some investors to reduce their crypto exposure in the short term.
Until macroeconomic expectations improve, or the sector finds a new catalyst to reignite investor interest, price momentum may remain subdued. This ongoing pressure could increase the likelihood of a deeper bear market phase.
Technical and On-Chain Analysis
Bitcoin is currently down over 30% from its all-time high, while Ethereum has fallen by more than 50%. Bitcoin’s Relative Strength Index (RSI) is at 41, which is still above the “oversold” levels typically seen only after significant capitulation events; Ethereum’s technical indicators tell a similar story. Despite notable price declines, clear signs of capitulation have yet to emerge.
Key on-chain reference points for Bitcoin include:
- $96,500: Cost basis for short-term holders.
- $87,500: Mean price for active investors.
- $81,000: True Market Mean, a benchmark reflecting the actively traded supply.
- $56,000: Realized Price, the average cost basis for the entire market, often used as a cyclical benchmark.
Historically, Bitcoin traded below its Realized Price during major bear markets, such as in 2020 and 2022. The current proximity to these levels will be closely watched by investors for signs of support or further decline.
Market Outlook
The recent weak fund flows, particularly the five consecutive sessions of negative flows into Ethereum, indicate a decline in retail demand. This trend is mirrored across other major cryptocurrencies, including Bitcoin, signaling cautious sentiment across the board.
Investors and market watchers will be monitoring upcoming macroeconomic developments, such as Fed policy shifts and broader financial market stability, for potential catalysts that could stabilize or revive the crypto sector. For now, the market appears to be in a tentative state, searching for direction amid uncertainty.
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This article has been prepared by XTB’s research team using data from Bloomberg Finance L.P. and other sources.