The cryptocurrency market has officially entered a bear phase, according to Gate.io Founder and CEO Dr. Han. The assessment is based on a dramatic contraction in total market capitalization, which has fallen from a peak of approximately $4 trillion to around $2.4 trillion—a decline of roughly 40%.
Bitcoin has been at the epicenter of the downturn. After reaching an all-time high near $126,198 in early October 2025, the leading cryptocurrency recently traded near $66,500, representing a drop of more than 50% from its peak. This decline is described as one of the largest capitulation periods in Bitcoin's history, comparable to major sell-offs during previous crypto downturns.
The bearish sentiment has cascaded across the broader market. Trading volumes have cooled, retail participation has thinned, and overall engagement on exchanges has softened. Dr. Han, speaking during a keynote address on February 11, 2026, noted that falling prices inevitably reduce user enthusiasm, a pattern visible across major platforms.
A significant institutional retreat has accelerated the de-risking. The late-2025 rally was partly fueled by aggressive institutional inflows into U.S. spot Bitcoin ETFs, with weekly net flows reaching between $2.7 billion and $3.2 billion at the peak in October. This dynamic has sharply reversed in 2026, with year-to-date flows turning negative, ranging between -$1 billion and -$2 billion. Total assets under management for these ETFs have nearly halved, falling from approximately $170 billion to between $80–$85 billion. Analysts cited $4.57 billion in outflows during late 2025 alone, signaling what many describe as structural de-risking rather than temporary profit-taking.
Dr. Han posits that this shift underscores a fundamental change in market drivers. "The traditional halving narrative has lost dominance," he stated. Instead, digital assets now move in close alignment with global macroeconomic trends, U.S. equity performance, and technological developments like AI. In his view, crypto has matured into a macro-sensitive asset class where liquidity conditions, monetary policy, and traditional market risk appetite increasingly dictate price action.
Despite the challenging environment, Han expressed optimism about the industry's future direction. He highlighted Real-World Assets (RWA) tokenization—of gold, equities, and commodities—as a key catalyst for the next expansion phase, potentially bridging traditional finance and blockchain. He also pointed to Artificial Intelligence as foundational infrastructure for future Web3 ecosystems. In his year-end 2025 letter, he described the industry as entering a stage of "structural maturity," moving beyond speculation toward compliance, infrastructure, and tangible real-world utility.
