Bitcoin Demand Plunges: Is a New Bear Market Here?
The cryptocurrency market is bracing for potential headwinds as indicators suggest a significant slowdown in Bitcoin (BTC) demand. Recent analysis from CryptoQuant, a leading crypto market analysis platform, points towards the possibility of a new bear market cycle for Bitcoin, marking a shift from the bullish momentum experienced throughout much of 2024 and early 2025. This article delves into the factors contributing to this potential downturn, examining the data, expert opinions, and market sentiment surrounding Bitcoin’s current trajectory. We’ll explore the waning demand, institutional behavior, funding rates, and technical analysis that are fueling concerns among investors.
The Three Waves of Demand and the Subsequent Decline
According to CryptoQuant analysts, Bitcoin demand unfolded in three distinct waves during the current market cycle. The first wave arrived in January 2024, largely fueled by the landmark launch of Bitcoin Exchange-Traded Funds (ETFs) in the United States. This event unlocked access to Bitcoin for a broader range of investors, driving substantial inflows. The second wave followed the results of the 2024 US presidential election, bringing a period of relative stability and renewed investor confidence. Finally, the third wave was characterized by a surge in activity from BTC treasury companies, indicating corporate adoption and long-term holding strategies.
However, CryptoQuant’s data reveals a concerning trend: “Demand growth has fallen below trend since early October 2025. This indicates that the bulk of this cycle’s incremental demand has already been realized, removing a key pillar of price support.” This suggests that the major catalysts for demand have largely played out, leaving the market vulnerable to downward pressure.
Q4 2025: A Clear Signal of Weakening Demand
The fourth quarter of 2025 witnessed a noticeable decline in apparent Bitcoin demand. This downturn is particularly significant when contrasted with the robust demand observed in Q4 2024. The weakening demand is a critical indicator, suggesting that the bullish narrative is losing steam. This shift in momentum is prompting analysts to reassess their outlook for Bitcoin’s future performance.
Institutional Investors Retreat: ETF Outflows and Contraction
The contraction in demand isn’t limited to retail investors. Institutional activity, a key driver of Bitcoin’s price appreciation, has also shown signs of weakening. CryptoQuant reports that the total amount of Bitcoin held in ETFs declined by approximately 24,000 BTC in Q4 2025. This represents a “sharp contrast” to the consistent accumulation behavior observed during the same period in the previous year.
This outflow from ETFs suggests that institutional investors are taking profits, reallocating capital, or expressing concerns about the short-term outlook for Bitcoin. The impact of these outflows on price is substantial, as institutional demand has been a significant factor supporting Bitcoin’s value.
Funding Rates Plummet: A Bearish Indicator
Further reinforcing the bearish narrative is the decline in funding rates. These rates represent the fees paid by traders in perpetual futures contracts to maintain their positions. A decrease in funding rates indicates a lack of bullish sentiment and a reduction in leveraged long positions. Funding rates have fallen to their lowest levels since December 2023, signaling a significant shift in market sentiment.
Low funding rates often precede price declines, as they suggest that traders are less willing to bet on further upside. This lack of speculative enthusiasm can exacerbate downward pressure on Bitcoin’s price.
Breaking Below the 365-Day Moving Average: A Technical Breakdown
From a technical analysis perspective, Bitcoin’s price structure has broken down below the 365-day moving average, currently around $98,172. This is a critical and dynamic support level for any asset. A breach of this level is often interpreted as a bearish signal, indicating that the asset is entering a downtrend.
The 365-day moving average acts as a key psychological barrier for investors. When the price falls below this level, it can trigger further selling pressure as traders adjust their positions and reassess their risk tolerance. As of late 2025, Bitcoin continues to trade well below this crucial moving average.
Hope for 2026? A Divided Market
Despite the growing concerns, some analysts remain optimistic about Bitcoin’s prospects in 2026. They anticipate increased demand and potential benefits from lower interest rates. Falling interest rates are generally positive catalysts for crypto prices and other risk assets, as they reduce the opportunity cost of holding non-yielding assets like Bitcoin.
However, the overall crypto market sentiment remains firmly in “fear” territory. According to CoinMarketCap’s Crypto Fear and Greed Index, investor sentiment is overwhelmingly negative. This suggests that many investors are anticipating further price declines and are hesitant to enter the market.
Interest Rate Expectations and Political Influence
The market’s expectations for future interest rate cuts are also playing a role. According to the Chicago Mercantile Exchange (CME) Group’s FedWatch tool, only 22.1% of investors expect the Federal Open Market Committee (FOMC) to lower interest rates at its next meeting in January 2026. This low probability of rate cuts is contributing to the bearish sentiment.
Adding another layer of complexity, US President Donald Trump attempted to pressure Federal Reserve Chairman Jerome Powell to lower interest rates in 2025, even threatening to fire Powell. Powell's term is set to expire in May 2026, and Trump is reportedly reviewing potential replacements who are expected to be more amenable to cutting rates. This political interference adds uncertainty to the economic outlook and could further impact market sentiment.
Navigating the Uncertainty: A Word of Caution
The confluence of these factors – waning demand, institutional outflows, declining funding rates, and a breakdown in technical support – paints a concerning picture for Bitcoin’s short-term outlook. While the possibility of a rebound in 2026 remains, investors should approach the market with caution and be prepared for potential volatility.
Disclaimer: This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision. While we strive to provide accurate and timely information, Cointelegraph does not guarantee the accuracy, completeness, or reliability of any information in this article. This article may contain forward-looking statements that are subject to risks and uncertainties. Cointelegraph will not be liable for any loss or damage arising from your reliance on this information.
#Bitcoin #BitcoinPrice #Investments #PriceAnalysis #MarketRelease #CryptoBearMarket #BTCDemand #ETFs #FundingRates #TechnicalAnalysis