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Bitcoin has entered a new market phase as demand growth drops below trend and major holders reduce exposure. Data shows weakening institutional interest and deteriorating price structure since early October 2025. Three demand waves supported the prior advance. They followed the US spot ETF launch, the US presidential election outcome, and the Bitcoin treasury companies' surge. Each wave has now faded.
As demand slows, price support weakens. According to CryptoQuant analysis, most incremental demand for this cycle already occurred. This shift removes a core driver that sustained higher prices. Is Bitcoin entering a bear market driven by demand exhaustion rather than supply mechanics?
Bitcoin spot demand growth has slowed since early October 2025. This marks a clear break from the expansion phase seen earlier in the cycle. The slowdown follows three completed demand surges. CryptoQuant data shows demand now tracking below long-term trend levels. Past cycles show similar patterns near market peaks. Demand contraction often precedes extended price declines.
Large Bitcoin holders also show weaker growth. Addresses holding 100 to 1,000 BTC are now below the trendline. These addresses represent ETFs and corporate treasuries. This pattern mirrors late 2021 behavior. At that time, demand weakened before the 2022 bear market began. Current data shows comparable deterioration across holder segments.
US spot Bitcoin ETFs turned into net sellers during the fourth quarter of 2025. Holdings declined by 24,000 BTC. This contrasts sharply with strong accumulation in Q4 2024. Institutional demand no longer expands. Instead, it contracts as selling pressure rises. This shift removes another source of sustained buying support.
Derivatives markets confirm this change in sentiment. Perpetual futures funding rates, measured on a 365-day average, fell to their lowest level since December 2023. Lower funding rates show reduced appetite for leveraged long positions. Historically, this behavior appears during bear markets rather than bull markets. Risk-taking continues to fade across futures markets.
Bitcoin has broken below its 365-day moving average. This level has historically separated bull and bear regimes. The breakdown aligns with weakening demand signals. Downside reference points suggest limited historical damage. Past bear market bottoms aligned with realized price levels. The realized price now sits near $56,000.
That level implies a possible 55% drawdown from the recent all-time high. This would represent the smallest bear market decline on record. Intermediate support appears near $70,000. Meanwhile, derivatives positioning shows a narrow trading battlefield. Liquidity clusters form near $90,500 on the upside and $84,500 on the downside.
A move toward $90,500 could force short liquidations. Conversely, a drop near $84,500 risks long liquidations. Until one zone clears, Bitcoin may remain range-bound with sharp swings. This setup creates short bursts of volatility. Liquidity continues to build on both sides of the price movement. Directional resolution likely follows a decisive sweep of one dominant zone.
Also Read: Bitcoin News Today: BTC Could Stay Calmer Than NVIDIA in 2026, Predicts Bitwise Asset Management
The Bitcoin demand slowdown has emerged as spot ETF flows reverse, large holders slow accumulation, and derivatives data show reduced risk appetite. Price has slipped below key long-term support while liquidity clusters tighten. Market direction now depends on which liquidation zone clears first.
