Bitcoin Market Cycle Shifts to Bear Phase: Insights from CryptoQuant

Bitcoin's latest market cycle is entering a new stage, as onchain and derivatives data indicate signs of demand exhaustion and a shift towards a bear market, according to the recent Crypto Weekly Report by CryptoQuant.

Key Takeaways

Bitcoin's market cycle is transitioning into a bear phase due to declining demand.
Demand growth has significantly decreased since October 2025, dipping below historical trends.
Institutional and large-holder participation is shifting from accumulation to distribution.
Derivatives markets show reduced risk appetite among traders.
Although bearish, projections suggest a relatively modest decline compared to past bear markets.

Bitcoin Price

Demand Growth Declines Significantly

According to CryptoQuant, there has been a notable slowdown in Bitcoin demand growth since early October 2025, which has now fallen below its long-term trend.

The current market cycle saw three primary waves of demand: the introduction of U.S. spot Bitcoin ETFs, anticipation around the U.S. presidential election results, and increased interest from Bitcoin Treasury Companies.

Demand Trends

With these catalysts now largely factored into the market, incremental demand has lessened, removing vital support for prices that previously helped maintain upward momentum. CryptoQuant highlights that a rollover in demand growth has historically signaled the conclusion of bullish phases, regardless of broader discussions about supply shocks or halving events.

Institutional and Large-Holder Participation Declines

The behavior of institutional investors is now contributing to bearish indicators. In the fourth quarter of 2025, U.S. spot Bitcoin ETFs transitioned from accumulation to distribution, resulting in a reduction of net holdings by roughly 24,000 BTC. This trend is a stark contrast to the previous year, where ETFs were significant net buyers, driving market strength.

Moreover, onchain data reveals that addresses holding between 100 and 1,000 BTC—often linked to ETFs, investment funds, and corporate treasuries—are demonstrating growth that is below historical patterns. CryptoQuant notes that this situation mirrors late 2021 when a decline in demand preceded the 2022 bear market.

Derivatives Markets Indicate Lower Risk Appetite

Further confirmation comes from derivatives data, which shows that funding rates in perpetual futures, calculated using a 365-day moving average, have dropped to their lowest level since December 2023. Such declining funding rates usually reflect a decreased willingness among traders to maintain leveraged long positions.

Historically, these conditions correlate more closely with bear markets than with bull phases, suggesting a waning risk appetite and diminishing confidence among market participants.

Price Dynamics and Potential Declines

From a technical standpoint, Bitcoin has fallen below its 365-day moving average, a crucial long-term indicator separating bull from bear market conditions. CryptoQuant emphasizes that Bitcoin's four-year cycle is primarily driven by demand fluctuations rather than the halving event.

Despite this bearish shift, downside forecasts suggest the cycle may be relatively mild. Historical bear market bottoms have often coincided with Bitcoin's realized price, which is currently around $56,000. This forecast implies a potential decline of approximately 55% from the recent all-time high, possibly marking the smallest bear market drop ever recorded. A key support level to monitor is around the $70,000 mark, as the market cycle continues to evolve.