The cryptocurrency market is once again standing at a psychological crossroads, and Bitcoin long considered the heartbeat of digital assets is sending signals that many analysts believe cannot be ignored. According to leading on-chain analysts from CryptoQuant, the visible slowdown in Bitcoin demand since October 2025 may not be a temporary pause, but the early confirmation of a new Bear Market cycle. This conclusion is not based on emotion or price alone, but on multiple layers of structural, institutional, and behavioral data that together paint a cautious picture for the months ahead.

One of the most striking observations is the sharp decline in demand around the $88,000 level. Historically, strong bull markets are characterized by aggressive dip-buying and sustained accumulation at key price zones. What CryptoQuant highlights is that this behavior has faded. Buyers who once stepped in with confidence are now hesitant, suggesting that the market’s risk appetite has materially weakened. When demand dries up at elevated levels, it often signals that the previous bullish narrative has already been priced in.

To understand why this matters, it’s important to look at the broader context of this cycle. CryptoQuant analysts describe Bitcoin demand in the current cycle as occurring in three distinct waves. The first wave began in January 2024 following the approval of spot Bitcoin ETFs in the United States. This event unlocked institutional access on an unprecedented scale and created a powerful narrative of legitimacy and long-term adoption. Capital flowed in aggressively, prices responded accordingly, and optimism dominated market sentiment.

The second wave emerged after the announcement of the 2024 U.S. presidential election results. Political clarity, expectations of regulatory shifts, and renewed speculation around macroeconomic policy injected fresh momentum into Bitcoin demand. Investors once again positioned themselves in anticipation of favorable conditions, reinforcing the bullish structure that had already formed earlier in the year.

The third and final wave, however, was more speculative in nature. It revolved around the rise of Bitcoin treasury bond companies firms accumulating Bitcoin as a core balance-sheet asset. While this trend generated headlines and short-term excitement, CryptoQuant suggests it resembled a bubble rather than sustainable organic demand. Once that narrative began to fade, there were no strong buyers left to replace it. This is often how market cycles exhaust themselves—not with a crash, but with silence.

Institutional behavior further reinforces this bearish interpretation. Data shows that Bitcoin holdings by ETFs declined by approximately 24,000 BTC in the fourth quarter of 2025. This stands in sharp contrast to Q4 2024, when institutions were aggressively accumulating. Institutional investors are typically slower to enter and slower to exit, so when they begin reducing exposure, it often reflects deeper strategic concerns rather than short-term volatility. Their retreat suggests that confidence in near-term upside has weakened considerably.

Derivatives markets are also echoing the same message. The funding rate for perpetual futures essentially the cost traders pay to maintain long positions has fallen to its lowest level since December 2023. In bull markets, funding rates remain elevated because traders are willing to pay a premium to stay long. A collapse in funding rates indicates declining leverage demand and a lack of conviction among speculators. This cooling of speculative activity is a classic characteristic of bear market environments.

From a technical perspective, the situation becomes even more concerning. Bitcoin has broken below its 365-day moving average, a level widely regarded as a dynamic support line during long-term uptrends. Historically, holding above this average signals strength and trend continuation, while sustained breaks below it often mark transitions into bearish phases. While price can temporarily reclaim this level, losing it structurally changes market psychology. Investors begin to view rallies as opportunities to sell rather than chances to accumulate.

Despite these warning signs, the market narrative is not entirely one-sided. Some analysts continue to argue that 2026 could bring renewed upside, particularly if macroeconomic conditions shift in favor of risk assets. Declining interest rates, in theory, reduce the attractiveness of bonds and cash while increasing the appeal of alternative assets like cryptocurrencies. Bitcoin has historically performed well during periods of monetary easing, making this a key variable to watch.

However, current sentiment data suggests that optimism remains muted. According to CoinMarketCap’s Crypto Fear & Greed Index, the market is firmly entrenched in a state of fear. Fear does not always signal bottoms, but it does indicate uncertainty and hesitation two emotions that suppress demand. Investors are not rushing to buy; they are waiting, watching, and protecting capital.

Adding to this uncertainty is the outlook on U.S. monetary policy. Data from the CME Group’s FedWatch tool shows that only 22.1% of investors expect the Federal Open Market Committee to cut interest rates at its next meeting in January. This low probability reflects skepticism about near-term policy easing. Without clear confirmation of rate cuts, risk assets may continue to struggle for momentum.

Political pressure has further complicated the narrative. U.S. President Donald Trump has publicly threatened to remove Federal Reserve Chairman Jerome Powell in an effort to push for lower interest rates in 2025. While Powell’s term is set to expire in May 2026, discussions around potential successors many of whom are perceived as more dovishhave fueled speculation. Yet speculation alone is not enough to drive markets. Until policy changes materialize, uncertainty remains dominant.

Taken together, these factors suggest that Bitcoin is not simply experiencing a routine correction. The slowdown in demand, retreat of institutional capital, weakening derivatives metrics, and breakdown of key technical levels all point toward a broader shift in market structure. While long-term believers may still see opportunity beyond the horizon, the present environment demands caution, discipline, and realism.

Bear markets do not announce themselves with a single event. They emerge quietly, through fading demand, shrinking conviction, and changing behavior. According to CryptoQuant’s data, that process may already be underway. Whether this cycle proves short-lived or deeply prolonged will depend on macroeconomic shifts, policy decisions, and the market’s ability to rebuild genuine demand. Until then, fear not euphoriaremains the dominant force shaping Bitcoin’s path forward.