"Bitcoin correction within a four-year cycle"… Kaiko Research diagnoses entry into mid-bear market

Kaiko Research, a global cryptocurrency market research firm, recently concluded in a report that the correction that began with Bitcoin's plunge was within the predictable range of a four-year cycle. In particular, the firm analyzed that the $9 billion liquidation and the surge in stablecoin dominance indicate that the market has entered a full-blown bear market phase.

Bitcoin has fallen by approximately 52% since its peak of $126,000 in late 2025, reproducing a peak-to-trough retracement pattern that has been observed during historical halving cycles. After falling to the $60,000 level in early February 2026, it is currently trading around $70,000, marking the most volatile decline since the 2024 halving. According to Kaiko Research, this decline could represent a typical midpoint of a cyclical bear market.

Market-wide trading volume has steadily declined since the end of 2023. Centralized exchanges' total trading volume has decreased by approximately 30%, and monthly spot trading volume has fallen from $1 trillion to around $700 billion. Notably, the lack of a surge in trading volume during this downturn suggests that, unlike the 2022 crash, the gradual "retail exodus" rather than the massive forced liquidations that drove the decline is the cause. Consequently, the market's risk aversion has been strongly reflected, and thin order books and lack of buyer confidence leave open the possibility of further declines.

However, not all market participants were affected. While altcoins in general suffered a sharp decline, Hyperliquid (HYPE) and Canton (CC) showed a distinct trend, maintaining relative strength. According to token-specific performance analysis by Kaiko Research, these two tokens have maintained positive returns against Bitcoin over the past 30-60 days, likely driven by their robust ecosystem foundations of protocol yields and institutional adoption, respectively. Conversely, many altcoins, including layer-1 tokens like SUI, have fallen 60-70% from their peaks, threatening a 2023 low.

Leverage reduction is also notable in the market. Open interest in the Bitcoin and Ethereum (ETH) futures markets recently declined by approximately 14%, a decline that accelerated sharply following the collapse of the $60,000 level. The total liquidation volume amounts to approximately $9 billion, which is interpreted as "forced deleveraging" rather than simple position reduction. While there are no clear bottom signals yet, this is interpreted as evidence that the market is voluntarily reducing its risk exposure in response to the volatile macro environment and uncertainty surrounding the Federal Reserve.

Stablecoin dominance has also emerged as a key indicator of market sentiment. The share of stablecoins in the total cryptocurrency market capitalization has surged to 10.3%, surpassing the level seen during the FTX crisis in 2022. This indicates a rapid influx of shelter funds into stablecoins, with an estimated $22 billion in new inflows over the past three weeks. Kaiko Research added that stablecoin dominance has historically coincided with bottoming phases, and therefore, future stabilization could be an important signal of recovery.

Ethereum's price decline has also led to a shift in staking inflows. The net inflow, which continued until 2024, has slowed significantly in 2025, and outflows have recently reached up to $20 million per day. This decline appears to be due to a combination of factors, including a weakened interest rate defense compared to when yields were attractive, and increased price uncertainty. However, the lack of large-scale unstaking and the continued confidence of existing stakers are positive factors for assessing future trends.

Despite increased institutional investment and regulatory clarity, institutional access, including spot ETFs, failed to stem the decline. In fact, ETF outflows exceeding $2.1 billion exacerbated the decline. DeFi also suffered from a decline in TVL (total assets locked) and staking, confirming that structural evolution does not provide a complete shield against market volatility.

Ultimately, this decline demonstrates that Bitcoin is responding in the same way in the same cycle. Based on a four-year cycle, the current bear market is at the early 30% point, and it will likely take another 6-12 months and repeated failed rallies to confirm a complete bottom. The market is currently testing the belief that "this time is different."

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