Bitcoin's demand boom has faded decisively since early October, with spot demand waves rolling over and ETFs shifting to net sellers, triggering bearish market conditions that analysts compare to the 2021 peak.
Bitcoin's once-roaring demand engine has stalled, triggering alarm bells across the crypto market. After three powerful waves of institutional buying propelled prices to record highs, the digital asset now faces its most challenging period since early 2023, with key indicators pointing toward prolonged weakness.
According to CryptoQuant.com on X, the demand boom that sustained Bitcoin's rally has decisively faded. The analytics platform revealed that since early October, demand has dropped below trend levels, creating bearish conditions that could persist. The firm stated that this cycle operated on three distinct spot demand waves, but the latest wave now appears to be rolling over.
The three demand catalysts that powered Bitcoin's ascent included the launch of US spot ETFs, optimism surrounding the presidential election outcome, and enthusiasm from Bitcoin treasury companies. With these drivers largely exhausted, incremental demand has vanished, stripping away critical price support that previously sustained upward momentum.
ETF Exodus Mirrors 2021 Peak
US spot Bitcoin ETFs have undergone a dramatic reversal in Q4 2025, shifting from aggressive accumulation to net distribution. The funds offloaded approximately 24,000 BTC during the quarter, marking a stark contrast to their buying behavior throughout 2024 when they served as primary market drivers.
Addresses holding between 100 and 1,000 BTC, predominantly linked to ETFs and corporate treasuries, are expanding at rates significantly below historical trends. CryptoQuant draws parallels to late 2021, when Bitcoin reached an all-time high of $69,000 in November before plummeting to nearly half that value by January 2022.
The comparison sugests similar demand deterioration preceded the 2022 bear market. Funding rates in perpetual futures have declined to their lowest levels since December 2023, indicating reduced willingness among traders to maintain leveraged long positions.
Price Action Tests Critical Support Zones
As cyrilXBT tweeted on X, Bitcoin bounced sharply from lows and traded around $87,959 after printing $85,114 during the session. The digital asset appears to be establishing a base in the mid-to-high 80s range, though repeated failures below the $100,000 zone suggest continued choppy price action and false breakouts ahead.
The technical picture remains precarious, with Bitcoin trading below its 365-day moving average, a long-term support level that historically distinguishes bull markets from bear markets. This technical breakdown reinforces the fundamental weakness identified in demand metrics.
CryptoQuant projects downside risk toward the $70,000 level as an interim support zone. Should Bitcoin fail to regain momentum and breach that threshold, analysts anticipate potential declines toward $56,000, aligning with the realized price that has marked previous bear market bottoms.
Despite the bearish outlook, historical patterns suggest this could represent the shallowest bear market on record. A drawdown to $56,000 would constitute approximately a 55% decline from recent all-time highs, smaller than previous bear cycles that often exceeded 70% corrections.
The crypto market has declined roughly 13% year-to-date, with total market capitalization dipping below $3 trillion for the first time since April. Bitcoin itself has dropped 10% over the same period, falling more than 30% from its peak above $126,000 reached in October.
Recent ETF data shows conflicting signals. While December witnessed $100 million in redemptions, a single Thursday session attracted $457 million in net inflows, marking the third-largest single-day inflow since early October. Previous peaks occurred on November 11 and October 21, with inflows of $523.98 million and $477.19 million respectively.
However, unless inflows accelerate significantly in the second half of December, the month could mirror November's challenging $3.7 billion outflow period. Derivatives markets reflect heightened caution, with volatility smiles skewed toward out-of-the-money put options across all tenors, indicating traders are actively seeking downside protection.
CryptoQuant emphasizes that demand cycles, not halving events, drive Bitcoin's four-year market behavior. The current downturn reinforces that cyclical patterns stem primarily from expansions and contractions in demand growth rather than supply-side dynamics or past price performance.
When demand growth peaks and reverses, bear markets typically follow regardless of supply constraints created by halving events. The firm argues that with most incremental demand from the current cycle already absorbed, a key source of price support has been eliminated.
As cyrilXBT noted on X, bulls need to reclaim the $88,000 to $92,000 range first to regain market momentum. Until Bitcoin successfully reclaims the psychological $100,000 level, downside risks remain elevated, and the asset will likely continue experiencing volatility and choppy price action in the near term.
Key Takeaways:
- Bitcoin demand dropped below trend since October as three major spot waves exhausted, removing key price support.
- US spot Bitcoin ETFs became net sellers in Q4 2025, offloading 24,000 BTC after aggressive accumulation in 2024.
- CryptoQuant projects downside to $70K support, potentially $56K if momentum fails to recover from current levels.
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Bitcoin Demand Crisis: Three Waves Collapse
Bitcoin demand falls below trend since October as ETFs shed 24,000 BTC. CryptoQuant warns of bear market with potential drop to $70K-$56K support zones.