Bitcoin demand weakens, all signs point to a coming bear market

On-chain data is telling a less optimistic story. According to the latest observations from the CryptoQuant analysis team, the demand waves that once drove up Bitcoin (BTC) prices are waning, which could indicate that the market is about to face a correction.

Three Waves of Demand Have Passed

Bitcoin has experienced three distinct demand surges over the past year and a half. The first wave occurred in early 2024, driven by the hype around the launch of spot Bitcoin ETFs. The second wave followed the US elections, especially after Trump’s election, as market expectations for crypto-friendly policies pushed prices higher, leading to a rally in altcoins by the end of the year. The third wave was characterized by corporate treasury allocations, with large institutions entering the market, and Ethereum reaching new highs accordingly.

But now, the problem is—momentum is slowing down. Key factors affecting demand for Bitcoin and other cryptocurrencies—including macroeconomic conditions, policy changes, and market sentiment—are beginning to show signs of weakness.

Institutions Are Retreating

The most telling indicator is the change in institutional investor behavior. According to the latest data:

• Spot Bitcoin ETFs have become net sellers: By Q4 2025, these funds shifted from continuous net buying to net selling, contrasting sharply with the strong accumulation in Q4 2024, during which they reduced holdings by 24K BTC.
• Large holder positions are slowing down: Addresses holding 100-1,000 BTC (representing ETFs and corporate treasuries) are growing at a much slower rate than expected, mirroring the pattern seen before the 2021 bear market.
• Derivatives market anxiety: Futures funding rates (365-day moving average) have fallen to their lowest levels since December 2023, historically indicating waning willingness among investors to maintain long positions.

Technical Indicators Are Also Warning

Currently, Bitcoin’s price has broken below the 365-day moving average, a key long-term support level. Historically, this line has often marked the boundary between bull and bear markets. Simultaneously, deteriorating market structure and declining demand further reinforce expectations of an upcoming correction.

Even Fidelity predicts that cryptocurrencies may face sideways or downward movement in 2026.

Target Prices and Risks

Based on current market conditions, analysts expect Bitcoin’s realized price target to be around $56,000, with intermediate support near $70,000. It’s important to note that Bitcoin is currently trading at $91.55K, already quite distant from these targets.

Ethereum is also under similar pressure, currently trading at $3.14K, still below its all-time high of $4.95K.

Final Thoughts

Bitcoin’s four-year cycle has always been driven by demand cycles rather than halving events. When demand waves begin to contract rather than expand, market growth may slow down or even reverse. All signs currently point in one direction: that demand-driven upward cycle may be nearing its end.