On-chain analytics firm CryptoQuant has issued a sobering warning in its latest Crypto Weekly Report, indicating that Bitcoin's market cycle has entered a new phase characterized by demand exhaustion, signaling a potential transition into bear market territory. The report, released on December 19, 2025, highlights a fundamental shift in market dynamics that could have serious implications for Bitcoin's price trajectory.
The core finding is that Bitcoin demand growth has decisively slowed since early October 2025, falling below its long-term upward trendline. This slowdown suggests that the accumulation demand for the current cycle has likely been absorbed, removing a crucial pillar of price support that sustained Bitcoin's value in recent months. CryptoQuant identifies that the current cycle ran on three major spot demand waves: the launch of U.S. spot Bitcoin ETFs, optimism surrounding the U.S. presidential election outcome (specifically the election of Donald Trump), and strategic accumulation by companies adding Bitcoin to their balance sheets. With these catalysts now largely priced in, incremental demand has diminished.
Institutional behavior is reinforcing the bearish signal. U.S. spot Bitcoin ETFs have shifted from accumulation to distribution in Q4 2025, with net holdings declining by approximately 24,000 BTC. This contrasts sharply with Q4 2024, when ETFs were strong net buyers. On-chain data further shows that addresses holding between 100 and 1,000 BTC—often associated with ETFs, funds, and corporate treasuries—are growing below the historical trend. CryptoQuant compares this pattern to late 2021, when similar demand deterioration preceded the 2022 bear market.
Derivatives markets also signal weakening risk appetite. Funding rates in perpetual futures, measured using a 365-day moving average, have declined to their lowest level since December 2023. Falling funding rates typically indicate reduced willingness among traders to maintain leveraged long positions, reflecting declining conviction. From a technical perspective, Bitcoin has broken below its 365-day moving average, a key long-term indicator that has historically separated bull and bear market conditions.
CryptoQuant stresses that Bitcoin's four-year cycle is driven primarily by demand expansions and contractions rather than the halving event itself. Historically, when demand growth peaks and reverses in this manner, it has marked the end of bullish phases. Despite the bearish shift, the firm's analysis suggests a potentially shallow cycle. Past bear market bottoms have aligned with Bitcoin's realized price, currently near $56,000. This would imply a drawdown of roughly 55% from the recent all-time high, which could be the smallest bear market decline on record. Interim support is expected around the $70,000 level.
