The year 2025 was initially anticipated to be a groundbreaking “supercycle” for Bitcoin, driven by unprecedented institutional engagement and a supportive regulatory climate in Washington. Yet, as December draws to a close, this optimistic outlook has shifted dramatically. Far from ushering in a new era of growth, Bitcoin is grappling with significant performance challenges. The once vibrant rally has cooled, spot prices are showing signs of weakness, and retail investor interest has dwindled. This comes at a time when the earlier bullish narratives are giving way to the stark realities of a market correction.
Consequently, an increasing body of on-chain data now points to what market analysts are calling a “bear season.” This downturn is primarily fueled by a fundamental shortage in demand for Bitcoin at its current price levels, suggesting a potentially uncomfortable period ahead for the leading digital asset.
The Unveiling of a Bear Market
The unraveling of Bitcoin’s 2025 bull narrative didn't begin with a sudden crash but rather with a growing realization that the year's price highs were more fragile than they appeared. Hunter Horsley, CEO of Bitwise, has voiced his perspective to investors, describing 2025 as a bear market in disguise. He posits that Bitcoin has effectively been in a “bear season” since early 2025, even as its price reached new records. According to Horsley:
“We will look back on 2025 and realize that it's been a bear market since February masked by the relentless bid from DATs and Bitcoin Treasury Companies.”
A significant shift occurred in the fourth quarter of 2025, when US spot Bitcoin Exchange Traded Funds (ETFs) transitioned from net accumulation to net redemptions. This resulted in a collective decrease of approximately 24,000 BTC in their holdings. This trend indicates a weakening of a key buying force that had previously propped up the market.
Furthermore, other significant marginal buyers, such as Bitcoin treasury companies, have either scaled back or completely paused their purchasing activities. With this crucial buying pressure receding, the market is now more dependent on its intrinsic demand profile. This adjustment means that prices are aligning with a new reality where the consistent, mechanical bids that once absorbed every dip are no longer present.
On-Chain Data Confirms Fading Demand
This thesis is strongly supported by data from CryptoQuant. The firm observed that while Bitcoin's price remained robust for much of the year, peaking near $125,000 in October, its demand growth began to dip below its historical trend line starting in early October. This divergence between price stability and declining demand growth offers a critical insight into the market's underlying health.
CryptoQuant highlighted that this breakdown in demand growth suggests the market pulled forward much of this cycle's buying power into a concentrated period. This concentrated buying was largely driven by the launch of US spot ETFs and strategic positioning post-election, rather than a broad, sustainable expansion in demand. Essentially, the market borrowed from its future buying capacity.
Further corroborating this trend are metrics from Alphractal, which indicate a similar rollover in market attention. Alphractal's data reveals a noticeable decline in search interest for Bitcoin, fewer Wikipedia page views, and a reduction in social media activity. These levels of engagement are typically observed during bear market conditions, signaling a broader disinterest from the retail segment.
This backdrop aligns with a familiar pattern in financial markets: retail investors often chase rising prices and withdraw when an asset enters a period of stagnant or declining performance. Simultaneously, Alphractal has identified the strongest wave of selling pressure witnessed since 2022. This points to an environment characterized not merely by a lack of new buyers, but also by active distribution from existing holders who are offloading their positions.
While such episodes can sometimes precede a market bottom, the experience of 2022 also demonstrated that they can lead to prolonged periods of sideways trading before any clear trend reemerges. This uncertainty underscores the current challenging phase for Bitcoin.
Is the Bitcoin Halving Thesis Obsolete?
The sustained selling pressure, occurring well within the period where the 2024 halving event was expected to generate “up-only” momentum, has compelled a fundamental reevaluation of the market's driving forces. CryptoQuant explicitly noted:
“The current downturn reinforces that Bitcoin’s cyclical behavior is governed primarily by expansions and contractions in demand growth, not by the halving event itself or past price performance. When demand growth peaks and rolls over, bear markets tend to follow regardless of supply-side dynamics.”
This perspective has led to the emergence of two contrasting roadmaps for 2026, dividing top market strategists into two distinct camps: those who emphasize liquidity, and those who focus on the element of time.
Conflicting Roadmaps for Bitcoin's Future
Julien Bittel, Head of Macro Research at Global Macro Investor, contends that Bitcoin’s four-year cycle was never solely about the halving. In a client note, Bittel challenged the crypto-native view, proposing that Bitcoin’s market rhythm has consistently been a consequence of the “public debt refinancing cycle.” He argues that the current “bear season” doesn't signify a failure of the asset itself, but rather a delay in the broader macro cycle. Bittel suggests that the cycle only appears broken because the debt maturity wall was postponed in the aftermath of COVID-19. He wrote:
“In our view, the 4-year cycle is now officially broken because the weighted average maturity of the debt term structure has increased.”
If Bittel's assessment is accurate, the current period of sideways trading is merely a temporary lull. He anticipates that the Federal Reserve and Treasury will eventually be compelled to inject liquidity to manage debt servicing, potentially extending the cycle well into 2026, offering a deferred bullish scenario.
Conversely, Jurrien Timmer, Director of Global Macro at Fidelity, presents a more somber outlook, governed by the exhaustion of time within the cycle. He stated:
“My concern is that Bitcoin may well have ended another 4-year cycle halving phase, both in price and time.”
By visually comparing past bull markets, Timmer observes that the October high aligns with the historical characteristics of a blow-off top, suggesting a cyclical peak. Unlike Bittel, who sees a delay in liquidity, Timmer perceives a structural conclusion to the current cycle. He speculates that 2026 could be a “year off” for Bitcoin, with potential support levels falling between $65,000 and $75,000. This range uncomfortably aligns with the demand vacuum that is currently evident in on-chain data.
What's Needed to End the Bear Market?
From the analysis above, it's clear that Bitcoin is navigating a bear season. Whether the market is awaiting Bittel’s anticipated liquidity injection or enduring Timmer’s time-based capitulation, the immediate reality is that the crucial marginal buying support has faltered. Therefore, for this challenging regime to conclude, Bitcoin doesn't just need a fresh narrative; it requires fundamental structural repairs within its market dynamics. Analysts point to four specific shifts that would signal a credible departure from bear territory:
- ETF Flows Must Stabilize: It is imperative for spot ETFs to transition from net selling back to consistent net buying. This is a non-negotiable step to absorb the distribution flagged by Alphractal and provide a steady base of demand.
- Demand Growth Must Reclaim Trend: CryptoQuant’s demand indicators need to show clear signs of fresh incremental buying, moving beyond the current on-chain redistribution of existing holdings.
- Funding Rates Need to Recover: A sustained recovery in perpetual funding rates would indicate that traders are once again willing to pay a premium to hold long exposure. This willingness is a defining characteristic of bullish regimes and is currently absent.
- Price Must Reclaim Structure: Bitcoin’s price reclaiming and consistently holding above its 365-day moving average would serve as the market’s most unambiguous confirmation that the regime is shifting back towards accumulation and away from the current bearish trend.
Until these critical signals turn green, Bitcoin is likely to remain caught in the challenging dynamics of a maturing market, oscillating between periods of consolidation and potential further price adjustments.
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