Shrinking investor appetite, ETF outflows, and technical breakdowns raise concerns over Bitcoin’s market cycle
Bitcoin may be entering a new bear market phase as several on-chain, institutional, and technical indicators show weakening demand. Analysts note that the forces supporting the previous uptrend have largely faded, increasing the risk of prolonged downside pressure despite pockets of longer-term optimism.
Bitcoin’s recent cycle was driven by three major demand waves: the launch of spot exchange-traded products, a surge following major political events, and growing interest from corporate treasury strategies. However, since October 2025, demand growth has fallen below its long-term trend, suggesting that most incremental buying power has already been absorbed by the market.
This contraction removes a critical pillar of price support and historically aligns with the early stages of a bearish cycle.
Institutional demand has also weakened. Bitcoin holdings in exchange-traded products declined by approximately 24,000 BTC in the fourth quarter of 2025, marking a sharp reversal from the accumulation seen a year earlier. This shift indicates reduced confidence from large investors who previously helped stabilize prices during market pullbacks.
Derivatives and Technical Signals Turn Negative
Futures market data adds to the bearish outlook. Funding rates—a key measure of trader conviction—have dropped to their lowest levels in over a year, reflecting diminished appetite for leveraged long positions.
From a technical perspective, Bitcoin has fallen below its 365-day moving average, a widely watched long-term support level. Sustained trading beneath this threshold often signals a broader trend reversal rather than a temporary correction.
Despite some forecasts calling for recovery in 2026, overall sentiment remains in fear territory. With expectations for near-term interest rate cuts fading, Bitcoin faces continued macroeconomic headwinds.
Until demand strengthens and key technical levels are reclaimed, the balance of evidence suggests the market may remain under pressure in the months ahead.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.