Bitcoin’s demand spell that began just over a year ago has cooled off, and market indicators suggest the crypto may be entering a bear phase, according to sentiment analysis from CryptoQuant.
The analytics and chart platform has noted that while Bitcoin is still one of the world’s most traded digital assets, its momentum is waning, and accumulation rates from retailers and institutions pattern shift have dropped to 12-month lows.
Institutional demand contracts amid ETF sell-offs
The Bitcoin institutional players who were more than welcoming to the Donald Trump administration at the start of the year have made the end of 2025 a crypto investment ghost town.
According to CryptoQuant’s analysis, US spot Bitcoin ETFs in the fourth quarter of 2025 shifted from net buyers to net sellers, shedding approximately 24,000 BTC.
The addresses holding between 100 and 1,000 BTC, which are mostly ETFs and treasury companies, have been expanding at below-trend rates. CryptoQuant’s analysts believe these conditions are very similar to the end of 2021 when it clocked an all-time high of $69K in November, then fell to almost half its price in January 2022 bear market.
Bitcoin ETFs attracted net inflows of $457 million on Thursday, the third-largest single-day inflow since early October. Previous peaks were recorded on November 11 and October 21, with inflows of $523.98 million and $477.19 million, respectively, according to SoSoValue data.
However, the month of December had witnessed redemptions of $100 million from these vehicles before the Thursday overhaul. If inflows do not accelerate in the second half of the month, we might be in for another “dark November” that featured $3.7 billion outflows.
Derivative markets spell reduced risk appetite
CryptoQuant noted that declining funding rates could indicate a reduced willingness among traders to hold onto their long positions, which typically occurs during bear market cycles.
Coinglass says that Bitcoin and Ether’s volatility smiles are skewed toward out-of-the-money put options at all tenors. This shows that traders still want protection against losses.
Short-dated volatility may have eased from earlier extremes that pulled BTC down to $80,000. However, the overall price movement is more bearish than bullish, which could mean the market is not expecting a positive run heading into 2026.
Analyst IT Tech wrote that short-term holders of Bitcoin are sitting on average losses of -14.9%, with the crypto currently trading at $86,700 while their average cost basis is around $101,800. This, per the market watcher, has created a “pain zone,” where attempts by the market to rebound toward $101,000 could cause panic selling and profit taking.
Bitcoin’s price has also fallen below its 365-day moving average, the long-term technical support that distinguishes bull from bear markets. And as several chartists on X have insinuated, demand cycles drive Bitcoin’s four-year market behavior more than halving events do.
Despite these signals, historical bear market bottoms for Bitcoin appear on the heels of the king coin’s realized price, currently near $56,000 and 55% from recent all-time highs. The crypto’s intermediate support is currently around $70,000, but if BTC drops below that threshold, investors might as well wait for a $50,000 flash alert.
The crypto market has declined about 13% year-to-date, with Bitcoin down 10% over the same period. The total market capitalization has dipped below $3 trillion, its lowest point since April. Still, some crypto enthusiasts are urging the community not to forget the years of exceptional growth the market has experienced.
“I get that this year is a drag, but consider Bitcoin was up 468% in the two years prior. That’s an annual return of 138%, eight times more than US stocks. It’s like your ice cream sundae now has 55 cherries instead of 60. You’re fine!” argued Bloomberg senior ETF analyst Eric Balchunas.
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