Bitcoin Demand Fades: CryptoQuant Signals Bear Market

The volatile trajectory of Bitcoin throughout the past year encapsulates a narrative of dynamic market shifts and evolving investor sentiment. Following a period marked by significant price swings, notably oscillating between the $86,000 and $90,000 thresholds, the premier cryptocurrency now faces a critical juncture. Recent market evaluations suggest that Bitcoin's price future may extend beyond mere sideways consolidation, potentially heralding a more profound cyclical shift. A prominent analysis by blockchain analytics firm CryptoQuant indicates that Bitcoin's established price cycle has turned, signaling an imminent entry into a bear market phase.

Unpacking Bitcoin's Cyclical Behavior: The Dominance of Demand Cycles

In its latest comprehensive market report, CryptoQuant has meticulously connected the recent steady decline in Bitcoin's price to a discernible "fading demand boom." Data from the on-chain platform provides compelling evidence that the growth in Bitcoin demand has experienced a notable deceleration throughout 2025, acting as a crucial precursor to the potential commencement of a bear market. This perspective challenges conventional wisdom that often overemphasizes halving events as the sole determiners of Bitcoin's four-year cycles, instead advocating for the primacy of demand dynamics—specifically, expansions and contractions in demand growth—as the true orchestrators of market turns.

CryptoQuant's research highlights that since the bull cycle's inception in 2023, Bitcoin has experienced three distinct, significant spot demand waves. These waves were primarily catalyzed by pivotal events: the highly anticipated launch of US spot ETFs, the decisive outcome of the US presidential election, and a speculative "Bitcoin Treasury Companies bubble." Each of these events injected substantial new capital and enthusiasm into the market, driving significant price appreciation. However, a critical inflection point was observed in early October 2025, when the momentum of demand growth conspicuously began to wane.

The October Market Bloodbath and Subsequent Price Struggles

It is perhaps no coincidence that this reversal in demand growth trajectory directly preceded and coincided with the market bloodbath of October 10. This event, now etched into crypto history as one of the largest liquidation episodes, saw Bitcoin's price experience a sharp and substantial correction. Since then, the cryptocurrency has demonstrated a persistent struggle to achieve any meaningful or convincing recovery, at one point descending to a low of $82,000 in late November. This inability to rebound robustly after a significant downturn is a characteristic often observed as market sentiment shifts from bullish accumulation to bearish distribution.

CryptoQuant's hypothesis posits that a fundamental pillar of price support has been systematically eroded, largely because the majority of this cycle's incremental demand has already been realized and absorbed by the market. This realization is particularly salient when examining the behavior of institutional and large-scale investors. Data indicates a clear downturn in demand emanating from these critical market participants, with US-based Bitcoin exchange-traded funds (ETFs) notably transitioning into net sellers during the fourth quarter of 2025.

Institutional Retreat and Derivatives Market Weakness

Further substantiating this claim, CryptoQuant's analysis reveals a significant decline in US spot ETF holdings. These holdings reportedly decreased by approximately 24,000 BTC in Q4 2025. This figure represents a stark contrast to the robust and consistent accumulation patterns witnessed during Q4 2024, signaling a profound change in institutional investment strategy and conviction. The firm further elaborates, "Similarly, addresses holding between 100–1K BTC—a cohort often associated with ETFs and treasury companies—are exhibiting growth rates below their historical trend. This mirrors the demand deterioration observed at the end of 2021, which served as a precursor to the 2022 bear market." This parallel with a previous bear market cycle provides a potent warning sign for current investors.

Beyond the weakening spot market, the Bitcoin derivatives market also provides crucial insights into the broader shift in market sentiment. A notable reduction in activity and a palpable decrease in risk appetite are now pervasive. CryptoQuant highlights that Bitcoin's funding rates—a key indicator of speculative positioning and trader willingness to maintain long exposure—have plummeted to their lowest levels since December 2023. Such a decline in funding rates is an on-chain signal that frequently accompanies bear markets, suggesting a diminished willingness among traders to hold leveraged long positions, preferring instead to reduce exposure or even establish short positions.

Navigating the Path Ahead for BTC Price

In light of the observed demand weakness, CryptoQuant's report asserts that Bitcoin's price structure has demonstrably deteriorated. The flagship cryptocurrency is currently trading below its 365-day moving average. This particular moving average is widely regarded by technical analysts as a critical long-term support level, historically acting as a clear delineator between sustained bull and bear market phases. A sustained breach below this threshold often precedes or confirms a prolonged bearish trend.

Despite the challenging outlook, CryptoQuant's analysis offers some nuanced perspectives regarding the potential depth of the forthcoming bear market. The report suggests that the downside reference points indicate that this Bitcoin bear market might not be as severe as previous cycles. Historically, the "realized price"—an on-chain metric representing the average price at which all bitcoins last moved—has served as a robust potential bottom during bear markets. Currently, this realized price hovers around $56,000, which, if reached, would imply a potential 55% correction from Bitcoin's recent all-time high. Intriguingly, such a drawdown would represent the smallest recorded correction for Bitcoin during a bear market phase, suggesting a potentially shallower downturn compared to historical precedents. In the interim, an intermediate support level for the market leader is identified around the $70,000 mark.

As of the latest market update, Bitcoin's price stands at approximately $88,170, registering a modest 3% increase over the past 24 hours. While short-term fluctuations are inherent to cryptocurrency markets, the underlying demand dynamics and institutional shifts highlighted by CryptoQuant underscore a pivotal moment for Bitcoin investors. The transition from a demand-driven boom to a period of contraction necessitates a reevaluation of strategies and a keen eye on key on-chain and technical indicators to navigate the evolving landscape.