Is the bull and bear market cycle about to turn? Bitcoin demand signals raise alarms

In the bull and bear market cycles of the cryptocurrency market, shifts in demand dynamics are often the earliest warning signals. On-chain data analytics firm CryptoQuant recently published a research report warning about Bitcoin’s recent trend, suggesting that cryptocurrencies are facing a demand-side weakness, which could mark the beginning of a new cycle transition between bull and bear markets.

According to CryptoQuant’s analysis, the three waves of spot demand over the past three years—driven by the US spot ETF listing, the US presidential election, and Bitcoin reserve companies—have now gradually lost momentum. Since early October 2025, the demand growth curve has fallen below the long-term trend line, indicating that the new buying momentum in this cycle has been largely absorbed by the market.

Demand Weakening, Bearish Signals Emerge

CryptoQuant research director Julio Moreno directly pointed out in the report: currently, Bitcoin has lost key support levels, and downside risks are gradually surfacing. According to the study, $70,000 will become an important first support zone. If this level cannot hold, the possibility of further decline to $56,000 cannot be ignored.

It is worth noting that if Bitcoin truly retraces to the $56,000 level, this would represent a decline of about 55% from its all-time high, potentially making it the smallest correction in history for a bear market. Historical experience shows that Bitcoin bear market bottoms often closely align with the “realized price” (reflecting the average cost basis of all holders), which is currently near $56,000.

Regarding the timeline, Julio Moreno revealed that a retracement to $70,000 could occur within the next few months, and if it further drops to $56,000, it might be delayed until the second half of 2026. It is understood that this bear market signal actually began to appear in mid-November 2025 (after the largest cryptocurrency liquidation event in history on October 10).

Three Major On-Chain Data Anomalies Indicate Capital Withdrawal

CryptoQuant lists three key indicators supporting its judgment that “the bear market has arrived”:

ETF Holdings Reversal: In Q4 2025, US Bitcoin spot ETFs shifted from buyers to net sellers, reducing holdings by approximately 24,000 BTC. This contrasts sharply with the strong buying momentum in the same period in 2024, reflecting signs of institutional capital withdrawal.

Deterioration of Large Holder Demand: Addresses holding 100 to 1,000 BTC (including ETF and corporate holdings) are growing at a rate below the trend line. This weakening demand mirrors the situation at the end of 2021, just before the 2022 major bear market.

Derivatives Market Cooling: The funding rate of perpetual contracts (365-day moving average) has fallen to its lowest point since December 2023. A declining funding rate usually indicates that bulls are less willing to maintain leveraged positions, a typical bear market characteristic. Additionally, the price has broken below the 365-day moving average, which is regarded as an important technical boundary between bull and bear markets.

New Cycle Drivers: Demand Cycles Over Halving

CryptoQuant offers an insightful perspective: the core engine driving Bitcoin’s four-year cycle is the “demand cycle,” rather than the traditional understanding of “halving events.” This means that when demand peaks and begins to decline, a bear market often follows regardless of supply-side changes. This theory provides an important reference for understanding the true drivers behind bull and bear cycles.

Wall Street Remains Optimistic, Bulls and Bears Engage in Intense Battle

It is noteworthy that CryptoQuant’s bearish outlook sharply contrasts with recent optimistic forecasts from major Wall Street firms, with market opinions highly divided:

• Citigroup: The baseline scenario predicts Bitcoin will rise to $143,000 in the next 12 months, with the most optimistic scenario reaching $189,000.
• JPMorgan: Based on gold comparison valuation, maintains a forecast of Bitcoin reaching $170,000.
• Standard Chartered: Although more cautious, with a halved target price for 2026, still maintains $150,000.
• Bitwise: Firmly believes Bitcoin will hit new all-time highs again in 2026.

Testing the Bull and Bear Cycle

Currently, Bitcoin’s price has risen to $90,070. While there is still room below the all-time high, CryptoQuant’s analysis reveals a deeper issue: the traditional halving-driven cycle theory may need to be reconsidered. The demand cycle theory offers a new dimension for investors to understand the transition between bull and bear markets.

The coming months will be critical for the shift between bull and bear cycles. If CryptoQuant’s predictions prove correct, Bitcoin will face the first support test at $70,000; conversely, if Wall Street’s optimistic forecasts materialize, new highs could still be within reach. The outcome of this battle between bulls and bears will profoundly influence the direction of the next full bull and bear market cycle.