• Demand waves peaked with ETF launches in January 2024, the 2024 US election results, and a BTC treasury company bubble, but growth has now fallen below trend.

• Institutional interest contracted sharply, with ETF holdings dropping in contrast to heavy accumulation in Q4 2024.

• Market sentiment shows fear, with only 22.1% expecting Fed rate cuts in January 2026, per CME Group’s FedWatch tool data.

Discover why Bitcoin’s bear market is underway in 2025, driven by ETF outflows and fading demand. Explore key indicators and expert insights to stay informed on BTC trends—read now for actionable crypto analysis.

Is Bitcoin Entering a Bear Market?

Bitcoin bear market signals have emerged as demand growth slows since early October 2025, according to analysts at crypto market analysis platform CryptoQuant. This shift indicates that the primary drivers of the current cycle’s price support have largely been exhausted. Key factors include contracting institutional inflows and technical breakdowns in price structure.

Apparent demand for Bitcoin fell in Q4 2025. Source: CryptoQuant

Why Has Bitcoin Demand Slowed Significantly?

Investor demand for Bitcoin unfolded in three distinct waves during this market cycle, as outlined by CryptoQuant analysts. The initial surge occurred in January 2024, coinciding with the introduction of Bitcoin exchange-traded funds in the United States. This was followed by a second wave after the 2024 US presidential election outcomes, which boosted market optimism.

The third wave stemmed from a bubble in BTC treasury companies, where corporations accumulated Bitcoin as a reserve asset. However, CryptoQuant notes that demand growth has since dipped below its long-term trend starting in 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,” the analysts stated.

Institutional participation has also waned noticeably. Total Bitcoin holdings in ETFs decreased by approximately 24,000 BTC during Q4 2025, marking a stark reversal from the aggressive accumulation observed in Q4 2024. This outflow reflects diminishing appetite among large investors, further pressuring prices downward.

Funding rates for perpetual futures, which represent the costs traders pay to hold leveraged positions, have plummeted to their lowest points since December 2023. Such low rates typically signal reduced bullish conviction and an environment conducive to prolonged price declines.

From a technical perspective, Bitcoin’s price has fractured below the 365-day moving average—a vital dynamic support level for sustaining upward momentum in any asset class. Currently, Bitcoin trades well under this average of about $98,172, reinforcing the bearish structure.

Bitcoin continues to trade well below its 365-day moving average of about $98,172. Source: TradingView

Frequently Asked Questions

What Factors Indicate the Start of a Bitcoin Bear Market?

The onset of a Bitcoin bear market is evidenced by multiple converging indicators: ETF outflows totaling around 24,000 BTC in Q4 2025, demand growth trailing below historical trends since October, funding rates at multi-year lows, and price action breaching the 365-day moving average. These elements collectively erode the foundational support that previously drove Bitcoin’s cycle highs, per data from CryptoQuant.

How Might Federal Reserve Policies Impact Bitcoin in 2026?

Federal Reserve policies could significantly influence Bitcoin’s trajectory in 2026, particularly through interest rate decisions. Lower rates generally act as a tailwind for risk assets like BTC by encouraging investment in higher-yield opportunities. However, with only 22.1% of market participants anticipating a rate cut at the January 2026 FOMC meeting, according to CME Group’s FedWatch tool, sustained higher rates may prolong the current bearish pressures on Bitcoin.

Interest rate target probabilities for the January 2026 FOMC meeting. Source: CME Group

Key Takeaways

• Demand Exhaustion: Bitcoin’s three-wave demand cycle—from ETF launches to election-driven gains and corporate treasury adoption—has peaked, with growth now below trend since October 2025.
• Institutional Retreat: Q4 2025 saw ETF holdings drop by 24,000 BTC, contrasting sharply with prior accumulation and highlighting waning large-scale interest.
• Technical Breakdown: Trading below the $98,172 365-day moving average offers a clear signal for caution, urging investors to monitor macroeconomic shifts like Fed rate expectations.

Conclusion

The confluence of slowing Bitcoin demand, institutional outflows, and technical indicators below the 365-day moving average points to the firm establishment of a Bitcoin bear market in late 2025. While some analysts eye potential recovery in 2026 fueled by rate cuts and renewed institutional entry, current market fear—evident in low funding rates and sentiment indices—suggests a period of consolidation ahead. Investors should prioritize diversified strategies and stay attuned to Federal Reserve developments for opportunities in the evolving crypto landscape.