Bitcoin Enters Bear Market as Demand Wanes
Bitcoin’s recent market cycle has shifted gears, with signs of demand exhaustion indicating a move into bear market territory, according to a report by CryptoQuant.
Weakening Foundations
Since 2023, Bitcoin has experienced several rallies driven by demand, but the foundations supporting these price increases are now weakening. Demand growth has slowed significantly since early October 2025, falling below the long‑term trend.
Key Drivers Behind Past Rallies
Three major factors contributed to the demand waves:
- The introduction of U.S. spot Bitcoin ETFs.
- Positive sentiment around the U.S. presidential election.
- Increased interest from Bitcoin treasury companies.
With these catalysts already factored into the market, additional demand has decreased, removing a crucial support for prices.
Institutional Influence
Institutional investors are also contributing to the bearish sentiment. U.S. spot Bitcoin ETFs have shifted from net accumulation to net distribution in the fourth quarter of 2025, with a decline of approximately 24,000 BTC in net holdings.
On‑chain data reveals that addresses holding between 100 and 1,000 BTC are growing at a rate below the historical trend, a pattern similar to late 2021 before the 2022 bear market.
Derivatives Market Signals
Derivatives market data further confirms the weakening risk appetite. Funding rates in perpetual futures have dropped to their lowest level since December 2023, suggesting a decreased willingness among traders to hold leveraged long positions.
Technical Outlook
From a technical standpoint, Bitcoin has fallen below its 365‑day moving average, a key indicator that historically separates bull and bear market conditions.
Potential Downside
Despite the bearish shift, the potential downside may be relatively limited. Past bear‑market bottoms have aligned with Bitcoin’s realized price, currently near $56,000, implying a drawdown of roughly 55 % from the recent all‑time high.
Interim support is expected around the $70,000 level.
Conclusion
While Bitcoin’s market cycle shows clear signs of demand exhaustion and a shift into bear market territory, the potential downside may be less severe than in previous cycles. Investors should keep an eye on key support levels as the market continues to reset.
