On-chain analytics firm CryptoQuant has issued a stark warning to the cryptocurrency community, declaring that Bitcoin (BTC) has likely transitioned into a new bear market. In a recent report, analysts pointed to weakening demand growth as the primary signal, marking a potential end to the multi-year bull cycle that propelled BTC to an all-time high above $126,000 in early October 2025.
As of late December 2025, Bitcoin is trading around $88,000-$89,000, reflecting a roughly 30% decline from its peak. This pullback has erased much of the gains from earlier in the year, raising concerns among investors about prolonged downside pressure.
Key Indicators Signaling a Bear Market
CryptoQuant's analysis highlights several critical metrics that historically precede bearish phases:
Demand Exhaustion: Bitcoin's apparent demand growth has fallen below its long-term trend since early October 2025. The current cycle was driven by three major "demand waves": the launch of U.S. spot Bitcoin ETFs in 2024, post-election enthusiasm following the 2024 U.S. presidential results, and a surge in corporate Bitcoin treasury adoptions. These drivers have now faded, with most of the cycle's demand expansion appearing complete.
Institutional Shift: U.S. spot Bitcoin ETFs, once a major accumulation force, turned into net sellers in Q4 2025, offloading approximately 24,000 BTC (valued at around $2.1 billion at current prices). This reverses the strong buying seen in previous quarters.
On-Chain Patterns: Addresses holding 100-1,000 BTC (often linked to ETFs and corporate treasuries) are growing below historical trends, mirroring behavior seen in late 2021 before the 2022 bear market.
Derivatives Weakness: Perpetual futures funding rates have dropped to their lowest levels since December 2023, indicating reduced risk appetite among traders.
Technical Breakdown: Bitcoin has fallen below its 365-day moving average, a long-term threshold that CryptoQuant views as separating bull and bear regimes.
CryptoQuant emphasizes that Bitcoin's four-year cycles are more tied to demand expansions and contractions than to halving events alone.
Price Outlook: Potential Declines Ahead
If the downtrend persists, CryptoQuant outlines the following downside scenarios:
Short-Term (Next 3-6 Months): Bitcoin could test levels around $70,000, representing an intermediate support zone.
Longer-Term (Into 2026): In a more severe scenario with sustained selling pressure and unfavorable macro conditions, BTC might decline further toward its realized price near $56,000--a level that has marked cycle lows in past bear markets.
The firm describes this potential bear market as "relatively shallow" compared to previous cycles, but warns of increased sensitivity to external shocks, such as tighter financial conditions or macroeconomic volatility.
Market Context
Bitcoin's recent struggles come after a volatile 2025, marked by record highs and sharp corrections. While institutional adoption has grown significantly--with companies like Strategy (formerly MicroStrategy) continuing to hoard BTC--the shift from accumulation to distribution among key players like ETFs has tipped the balance toward sellers.
Investors should monitor upcoming catalysts, including U.S. Federal Reserve decisions and broader risk asset sentiment, which have increasingly influenced Bitcoin's price action this year.
This analysis from CryptoQuant serves as a cautionary note for holders, suggesting preparation for extended volatility rather than an immediate return to all-time highs. As always, cryptocurrency markets remain highly unpredictable, and past patterns do not guarantee future outcomes.
