Bitcoin’s market cycle may have already turned, but not in the dramatic way many investors expect. Instead of a sudden crash, on-chain data points to a quieter shift: buyers are no longer stepping in with the same intensity, and the absence of fresh demand is starting to reshape the market backdrop.
Analysts at CryptoQuant argue that this slowdown marks the beginning of a new bear phase for Bitcoin. Their assessment is not based on sentiment alone, but on a combination of demand behavior, institutional positioning, derivatives activity, and long-term technical signals that have all weakened since the final quarter of 2025.
Key Takeawaysa
On-chain data suggests Bitcoin has entered a new bear phase as demand growth stalled after October 2025.
Institutional activity has weakened, with ETF holdings declining and derivatives markets turning defensive.
Analysts say the shift reflects exhausted demand rather than panic selling, keeping near-term pressure on BTC.
When Demand Stops Expanding, Price Support Fades
Rather than focusing on price peaks, CryptoQuant looks at how demand evolves over time. In the current cycle, analysts identified three major surges that carried Bitcoin higher. One was sparked by the approval of U.S. spot ETFs, another followed the outcome of the U.S. presidential election, and the third came from a wave of corporate treasury strategies centered on holding BTC.
Once those forces played out, however, demand stopped growing. Since early October 2025, CryptoQuant says new buying has fallen below its historical trend, meaning the market has already absorbed most of the capital that powered the rally. Without continuous demand expansion, prices tend to lose their structural support, even if selling pressure remains modest.
Institutions Quietly Changed Course
Institutional behavior reinforces that picture. After heavy accumulation earlier in the cycle, Bitcoin ETFs reversed direction late last year. During the fourth quarter of 2025, ETF holdings declined by roughly 24,000 BTC, a sharp shift compared with the same period in 2024 when institutions were net buyers.
This retreat suggests large players are no longer aggressively positioning for upside, at least in the near term. Instead, exposure is being reduced or held steady, removing another source of incremental demand.
Leverage and Long-Term Trends Turn Defensive
The derivatives market is also reflecting a more cautious stance. Funding rates in perpetual futures, which indicate how much traders are willing to pay to stay long, have dropped to levels not seen since late 2023. Historically, prolonged declines in funding rates tend to align with bearish or consolidating market phases rather than sustained rallies.
From a technical perspective, Bitcoin has also slipped below its 365-day moving average, a level many analysts view as the dividing line between bull and bear regimes. Sustained trading below that threshold has often coincided with extended periods of weakness or sideways movement in past cycles.
Fear Dominates Even as Some Look Ahead to 2026
Despite these warning signs, not everyone is pessimistic. Some market participants still believe 2026 could bring renewed upside, especially if interest rates fall and liquidity conditions improve. Lower borrowing costs have historically supported risk assets, including crypto.
For now, however, sentiment remains fragile. The Crypto Fear and Greed Index compiled by CoinMarketCap continues to sit firmly in fear territory, signaling widespread caution among investors.
Interest rate expectations are adding to that restraint. Data from CME Group’s FedWatch tool shows that only a small share of traders expect the Federal Reserve to cut rates at its January 2026 meeting, limiting hopes for an immediate macro tailwind.
Politics and Policy Cloud the Outlook
Monetary policy uncertainty has been amplified by politics. President Donald Trump openly criticized Jerome Powell in 2025 over interest rate decisions and even raised the prospect of replacing him. Powell’s term ends in May 2026, and potential successors are widely seen as more inclined toward easing policy.
Even so, CryptoQuant’s conclusion does not hinge on who leads the Fed. The firm emphasizes that Bitcoin’s cycles are driven primarily by expansions and contractions in demand. When new buyers stop entering the market at scale, price weakness tends to follow, regardless of political noise or long-term narratives.
In that context, the current environment looks less like a sudden breakdown and more like a slow recalibration. Until a new source of sustained demand emerges, analysts warn that Bitcoin may remain under pressure, even as longer-term optimism for future cycles persists.
