Why does "Carving a boat to seek a sword" lead to incorrect BTC analysis in 2026—The fundamental difference from the 2022 bear market

In the current market, there is an increasing number of analysts comparing the current Bitcoin price trend to the 2022 bear market. Indeed, the short-term patterns on the chart may appear similar. However, this comparison is a classic example of the “cutting the boat to find the sword” fallacy. Just as marking the shoreline to find a sword that fell from a boat is a misguided approach, applying past scenarios directly to the present is a dangerous analytical method.

A common cognitive trap for market participants is to focus solely on the superficial similarity of short-term price patterns while completely ignoring long-term structural changes. From the following three perspectives, it becomes clear that the 2022 and current Bitcoin markets are fundamentally different environments.

Reasons Why You Should Not Be Deceived by Short-Term Chart Similarities

Market psychology is often dominated by apparent “commonalities” in the immediate view. When lining up weekly charts, the current correction phase indeed resembles the pattern seen in 2022. However, this superficial similarity is meaningless in the face of deeper structural analysis.

Long-term price formations, macroeconomic backgrounds, investor composition, and asset supply structures—all examined from any angle—show that the two environments are entirely different. Failing to understand this fundamental gap and simply predicting history repeating itself is not a rational investment approach.

Reversed Macro Environment—Transition from Inflation to Deflation

Recall the situation in March 2022. At that time, the US was in the midst of a severe inflationary cycle and interest rate hikes. Several factors contributed to this:

Excessive liquidity supply during the pandemic, geopolitical risks from the Ukraine conflict causing a surge in energy prices, and rising risk-free interest rates as central banks systematically tightened liquidity. As financial conditions rapidly tightened, capital’s top priority was “risk aversion.” During that period, Bitcoin exhibited a typical “outflow from high points” pattern seen in tightening cycles.

In contrast, the current macro environment is the opposite. Geopolitical tensions in Ukraine have partially eased, and inflationary pressures have significantly diminished. Consumer Price Index (CPI) and US risk-free interest rates are on a clear downward trend.

More importantly, the AI technological revolution is increasing the likelihood of a long-term deflationary cycle. Several economic thinkers, including Elon Musk, support this view, and major cycles are already entering a phase of interest rate cuts. Central banks are once again injecting liquidity into the financial system, and market sentiment is shifting toward “risk appetite.”

Data since 2020 shows a clear negative correlation between Bitcoin and the year-over-year change in the Consumer Price Index. During inflationary periods, Bitcoin prices tend to be suppressed, while expectations of deflation tend to cause rebounds. Under the AI-driven industrial revolution, such long-term deflation scenarios are highly probable.

Furthermore, since 2020, the movements of Bitcoin and the US liquidity index have shown a very strong positive correlation. Currently, the liquidity index has broken both short-term and long-term downtrend lines, indicating the formation of a new upward trend.

Different Scenarios Indicated by Technical Patterns

From a chart pattern perspective, 2022 and the present also show completely different signals.

The market from 2021 to 2022 formed a typical weekly “M-top” pattern. This pattern generally indicates a long-term market top and tends to exert long-term downward pressure on prices afterward.

In contrast, the current situation in 2025 to early 2026 shows weekly charts approaching the lower boundary of an upward channel. Statistically, this pattern is more likely a bear trap, with a sufficient formation of potential rebounds afterward.

Of course, we cannot entirely rule out the possibility that this market could develop into a 2022-style bear market. However, the most important point is that the zone from $80,850 to $62,000 has already experienced enough correction and capital reshuffling. This pre-absorbed capital provides an extremely favorable risk-reward profile for bullish scenarios. The upside potential significantly outweighs the downside risks.

“Hard Conditions” Required for a Repeat of the Bear Market

For a 2022-style bear market to occur again, several strict conditions must be met. Without these, declaring a structural downtrend is premature, speculative, and lacking in basis.

First, a new inflation shock or a major geopolitical crisis comparable to 2022 must occur. Second, central banks must resume rate hikes or pivot toward large-scale balance sheet reduction. Third, Bitcoin must decisively and sustainably break below the support level of $80,850.

Until these “hard conditions” actually materialize, confidently asserting a bear market scenario remains unwarranted.

Dramatic Shift in Investor Composition—From Individuals to Institutions

A structural change in the market is most clearly reflected in the qualitative transformation of participants.

The 2020–2022 market was dominated by demand and sentiment from individual investors. Institutional participation was limited, and large-scale long-term capital inflows were insufficient. Under this environment, psychological panic and chain reactions of leverage liquidations rapidly expanded, amplifying market declines.

Since 2023, the situation has fundamentally changed. The introduction of spot Bitcoin ETFs has enabled institutional investors—long-term holders—to enter the market in a structural way, transforming market liquidity. Supply has been effectively locked, intraday trading turnover has significantly decreased, and volatility has inherently shrunk.

2023 marks the turning point where Bitcoin transitioned from a mere speculative asset to a “regulated asset.”

Bitcoin as an Asset and the Characteristics of the “Institutional Era”

The volatility mechanism of Bitcoin has changed markedly with the shift in investor composition. Historically, annual price swings of 80–150% were common, but now they have shrunk to 30–60%. This is not just a numerical change but signifies a fundamental shift in its behavior as an asset.

The most significant structural difference between early 2026 and 2022 is the shift in investor base—from “retail-driven high-leverage speculation” to “institution-led structural long-term holding.”

The 2022 Bitcoin market exhibited the classic “crypto-native bear market” characteristics, driven mainly by panic selling among retail investors and chain reactions of leverage forced liquidations.

In contrast, today’s Bitcoin operates within a more mature, institutionalized market environment. Its features include stable demand from institutional investors, effectively locked supply stocks, and managed volatility at the institutional level. Under this structure, the panic-selling mechanisms seen in 2022 are much less likely to operate at the same scale.

Data from on-chain analysis tools like Glassnode, Chainalysis, and reports from institutions such as Grayscale, Bitwise, and State Street (as of mid-January 2026, with Bitcoin prices around $90,000–$95,000) confirm this structural transformation beyond doubt.

In conclusion, attempting to superimpose past scenarios onto the present in a “cutting the boat to find the sword” manner causes us to overlook fundamental market changes and leads to irrational judgments.