Recent analysis from CryptoQuant suggests that Bitcoin's demand has significantly slowed since October 2025, indicating we may be entering a new bear market. Analysts point to multiple factors contributing to this trend, including ETF outflows, decreasing demand, and Bitcoin's price falling below key support levels.

Historically, Bitcoin has experienced demand in three major waves during its current market cycle. The first wave occurred in January 2024, coinciding with the launch of Bitcoin exchange-traded funds (ETFs) in the United States. The second wave was driven by the results of the 2024 U.S. presidential election, while the third wave stemmed from a bubble involving BTC treasury companies.

According to CryptoQuant, the current downturn in demand growth has fallen below its historical trend since early October 2025. This decline suggests that most incremental demand for Bitcoin has already been realized, which removes a critical pillar of price support. The apparent demand for Bitcoin saw a significant drop during the fourth quarter of 2025.

Institutional demand has also shown signs of contraction. The total amount of Bitcoin held in ETFs has decreased by approximately 24,000 BTC in Q4 2025, marking a stark contrast to the accumulation observed in the same quarter of the previous year. Additionally, funding rates—the fees that perpetual futures traders pay to maintain their positions—have reached their lowest levels since December 2023, further indicating that Bitcoin has entered a bear market phase.

A crucial aspect of this bearish outlook is Bitcoin’s price structure breaking below the 365-day moving average, a dynamic support level critical for any asset. Currently, Bitcoin trades well below this average, which is around $98,172.

While some analysts remain optimistic about a potential rebound in Bitcoin's price in 2026, the overall sentiment in the crypto market is firmly in the “fear” territory. The Crypto Fear and Greed Index from CoinMarketCap reflects this sentiment, showing that only 22.1% of investors believe the Federal Open Market Committee (FOMC) will lower interest rates in its next meeting in January. This is according to data from the Chicago Mercantile Exchange (CME) Group’s FedWatch tool.

Political factors also complicate the outlook. In 2025, U.S. President Donald Trump pressured Federal Reserve Chairman Jerome Powell to lower interest rates, even threatening to fire him. As Powell's term is set to expire in May 2026, there are discussions about potential replacements who may adopt a more lenient monetary policy.

Despite the prevailing negativity, some analysts foresee a brighter 2026, driven by increasing demand and the prospect of lower interest rates. Falling interest rates typically serve as a positive catalyst for both crypto prices and other risk assets. However, the current market sentiment suggests that investors remain cautious.

In summary, the apparent decline in Bitcoin's demand signals a shift towards a bear market, influenced by a multitude of factors. While there is hope for recovery in the coming year, the prevailing sentiment remains cautious as investors await clearer indicators of market stability.