Bitcoin Demand Slowdown and Market Sentiment Point to Bear Market Territory, Analysts Warn

Declining Demand Signals Bear Market Entry

Bitcoin has entered into another bear market cycle as demand growth has slowed significantly since October 2025, according to analysts at crypto market analysis platform CryptoQuant ^[2]. The analysis points to several key indicators that suggest the bullish momentum from 2024 has largely dissipated.

Investor demand for BTC came in three distinct waves during the current market cycle, CryptoQuant analysts explained ^[2]. The first wave arrived in January 2024 following the launch of Bitcoin exchange-traded funds (ETFs) in the US, the second wave followed the results of the 2024 US presidential election, and the third was characterized as a BTC treasury company bubble.

"Demand growth has fallen below trend since 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," CryptoQuant stated ^[2].

Institutional Appetite Weakens

Institutional demand has notably contracted in recent months. The total amount of Bitcoin held in ETFs declined by approximately 24,000 BTC in Q4 2025, representing a "sharp contrast" to the accumulation behavior observed in Q4 2024, according to CryptoQuant ^[2].

Funding rates, the fees paid by perpetual futures traders to maintain their positions, have also declined to their lowest levels since December 2023, providing another signal that BTC has entered a bear market ^[2]. Additionally, Bitcoin's price structure has broken down below the 365-day moving average, described as a critical and dynamic support level for any asset ^[2].

Market Bottom Not Yet Established

Despite the bearish indicators, Santiment founder Maksim Balashevich believes Bitcoin could still slide further, potentially to around $75,000 ^[1]. "It looks very tempting to come even closer to it," Balashevich said in a video published to YouTube on Friday ^[1].

A move to that level would represent an approximate 14.77% drop from Bitcoin's price of $88,350 at the time of reporting ^[1]. However, Balashevich suggested such a decline would potentially provide a "very good setup" for traders ^[1].

Balashevich's hesitation to call a market bottom stems from observing significant optimism online that the downtrend will reverse in the near term. "The crowd isn't scared enough for a bottom," Santiment said in a report ^[1].

"In one particular crowd-dominated or retail-dominated channel, they're mostly discussing Bank of Japan cut rates, and bears got caught, and now we'll continue up from here," Balashevich explained. "These kinds of statements are not what I want to see" ^[1].

Conflicting Market Sentiment Indicators

While Balashevich is not convinced the market has reached its bottom, some crypto market indicators suggest otherwise ^[1]. The Crypto Fear & Greed Index, which measures overall crypto market sentiment, has been lingering in "Extreme Fear" territory since December 14, posting an "Extreme Fear" score of 20 on Sunday ^[1].

Separately, CoinMarketCap's Crypto Fear and Greed Index shows overall crypto market sentiment remains firmly in "fear" territory ^[2].

The Altcoin Season Index, which measures the performance of the top 100 altcoins relative to Bitcoin over the past 90 days, posted a "Bitcoin Season" reading of 17 out of 100 on Saturday ^[1].

Interest Rate Expectations Remain Uncertain

Only 22.1% of investors expect the Federal Open Market Committee (FOMC) to lower interest rates at its next meeting in January, according to the Chicago Mercantile Exchange (CME) Group's FedWatch tool ^[2]. Falling interest rates are considered positive catalysts for crypto prices and other risk assets ^[2].

US President Donald Trump attempted to pressure Federal Reserve Chairman Jerome Powell to lower interest rates in 2025 by threatening to fire Powell. Powell's term is set to expire in May 2026, and Trump is reviewing potential replacements who are expected to cut rates ^[2].