Several warning signals are pointing to the early stages of a Bitcoin bear market, with analysts citing ETF outflows, weakening demand, and a breakdown below key technical support levels.
According to analysts at CryptoQuant, Bitcoin’s apparent demand has slowed sharply since October 2025, suggesting the current market cycle may have already peaked. The slowdown indicates that a major source of price support has faded.
CryptoQuant noted that investor demand for Bitcoin surged in three distinct waves during this cycle. The first wave followed the launch of U.S. spot Bitcoin ETFs in early 2024. The second wave came after the 2024 U.S. presidential election, while the third was driven by a brief surge in Bitcoin treasury companies. Since early October 2025, however, demand growth has fallen below its long-term trend, signaling exhaustion in buying momentum.
Institutional demand has also weakened. The total amount of Bitcoin held in exchange-traded funds fell by around 24,000 BTC in the fourth quarter of 2025, a sharp reversal from the strong accumulation seen during the same period in 2024.
Additional bearish signals are emerging from derivatives markets. Funding rates for perpetual futures contracts have dropped to their lowest levels since December 2023, a pattern often associated with declining risk appetite and bear market conditions.
From a technical perspective, analysts highlighted that Bitcoin has broken below its 365-day moving average, a crucial long-term support level. The cryptocurrency continues to trade well under this benchmark, reinforcing concerns about a sustained downtrend.
Mixed outlook for 2026 amid fear-driven sentiment
Despite the current weakness, some market observers remain optimistic about 2026, pointing to the potential for lower interest rates and renewed demand as supportive factors for crypto prices.
However, broader sentiment across the digital asset market remains cautious. The Crypto Fear and Greed Index from CoinMarketCap continues to signal “fear”, reflecting investor uncertainty.
Interest rate expectations also remain subdued. Data from the CME Group’s FedWatch tool shows that only 22.1% of market participants expect the Federal Open Market Committee to cut rates at its January 2026 meeting.
Political pressure on monetary policy has added another layer of uncertainty. U.S. President Donald Trump previously sought to push for lower rates and criticized Federal Reserve Chair Jerome Powell. With Powell’s term set to expire in May 2026, potential leadership changes at the Fed could influence future rate policy and market sentiment.
