Bitcoin Enters New Bear Phase: CryptoQuant Warns of Resetting Market Momentum and Potential Downturn

Navigating the turbulent waters of a potential Bitcoin bear phase.

🚀 The cryptocurrency market, ever a maelstrom of volatility and opportunity, is once again at a critical juncture. After a period of impressive gains that saw Bitcoin (BTC) touch new all-time highs above $126,000, the air has grown thick with uncertainty. As of late 2025, BTC finds itself struggling well below the pivotal $90,000 threshold, a level many analysts considered crucial for maintaining bullish momentum. This isn't just a temporary dip; leading on-chain analytics firm CryptoQuant is sounding the alarm, suggesting Bitcoin may be resetting its market momentum and potentially embarking on a new bear phase.

BTC Price Trend Last 7 Days

For savvy investors, understanding these shifts isn't just about price action—it's about anticipating structural changes and positioning portfolios accordingly. Let's dive deep into the data and what it means for your crypto strategy.

📌 The Shifting Tides: Decoding Bitcoin's Bear Market Signals

🐻 In the dynamic world of crypto, identifying market cycles is paramount. Analysts constantly seek reliable indicators to gauge sentiment and momentum. CryptoQuant's Woominkyu, a respected voice in the on-chain analytics space, recently flagged concerning trends for Bitcoin. His insights, shared in a report, zero in on the Bitcoin Cycle Momentum Indicator (BCMI), a proprietary tool designed to track market phases.

The Bitcoin Cycle Momentum Indicator (BCMI): A Historical Compass

The BCMI is a crucial metric for understanding where Bitcoin stands in its broader cycle. Historically, a return to the 0.5 zone signifies a "cooling phase" for the market, indicating that the rampant speculation and rapid price appreciation seen during a bull run are subsiding. Crucially, Woominkyu noted the BCMI hitting this mark on October 21, 2025. Unlike a market peak signal, this was interpreted as the beginning of a deceleration.

In the subsequent weeks, Bitcoin's price has declined alongside a corresponding drop in the BCMI. This dual movement is highly significant, suggesting a comprehensive "reset" across both price and on-chain momentum. From an investor's perspective, this isn't merely a healthy correction but a potential re-evaluation of Bitcoin's immediate future trajectory.

To put this in context, historical "cycle bottoms" for Bitcoin—periods of maximum capitulation and eventual rebound—have typically occurred when the BCMI falls within the tighter range of 0.25 to 0.35. These levels are indicative of profound sentiment compression and a necessary structural reset before a new bullish cycle can commence. While the current BCMI remains below equilibrium, it is still above these historical bottom zones, reinforcing the view that Bitcoin is likely entering a bear phase rather than already recovering from one. A more durable bottom, according to Woominkyu, would require the BCMI to revisit these lower, previous cycle levels from 2019 and 2023.

Beyond the BCMI: A Multi-Factor Confirmation

🐻 The BCMI alone, while powerful, is not the sole piece of evidence. A separate, comprehensive analysis from CryptoQuant underscores the bearish shift by pointing to a sharp decline in overall demand for Bitcoin since early October 2025. This broader demand exhaustion is a critical factor reinforcing the bear market thesis.

Visualizing the declining Bitcoin Cycle Momentum Indicator (BCMI) trend.

📌 Unpacking the Bearish Catalysts: Demand, Institutions, and Derivatives

A deeper dive into market mechanics reveals why this period feels different from a typical pullback. The current downturn is characterized by fundamental shifts in demand and investor behavior, particularly from key institutional players.

Institutional Exodus: Spot ETFs Turn Net Sellers

One of the most concerning trends is the behavior of institutional and large-holder demand. The much-heralded US spot Bitcoin Exchange-Traded Funds (ETFs), once a significant source of buy-side pressure, have converted into net sellers during the fourth quarter of 2025. This is a dramatic shift, as these ETFs have collectively offloaded approximately 24,000 BTC, signaling a clear reduction in institutional appetite for spot Bitcoin exposure.

🐻 Furthermore, the growth rate of addresses holding between 100 and 1,000 BTC, a segment often associated with ETFs and treasury firms, is notably below its long-term trend. This pattern mirrors the demand deterioration observed prior to the 2022 bear market, suggesting a repeat of institutional retrenchment. For investors, this institutional selling pressure is a significant headwind, indicating a broad "risk-off" sentiment from larger market participants.

Derivatives Market Doldrums: A Risk-Off Stance

🐂 The derivatives markets provide further corroboration of weakening risk appetite. Funding rates in perpetual futures contracts—a key indicator of trader sentiment—have plummeted to their lowest levels since December 2023. Negative or extremely low funding rates imply that traders are less willing to maintain long positions, often paying to short the asset. This phenomenon is a classic sign of tightening liquidity and reduced bullish conviction, commonly observed during established bear market conditions rather than in a healthy bull market consolidation.

📌 Technical Crossroads: Key Levels and Potential Drawdowns

Beyond on-chain and derivatives data, technical analysis paints a clear picture of structural deterioration, signaling caution for investors.

The 365-Day Moving Average: A Critical Bear-Bull Divide

🐂 Bitcoin's price structure has technically weakened significantly, with the cryptocurrency falling decisively below its 365-day Moving Average (MA). This long-term moving average is a pivotal technical indicator, historically serving as a crucial delineator between bull and bear markets. A sustained break below this level is often interpreted as a confirmation of a shift from an accumulation-driven bull market to a distribution-heavy bear market.

Reflecting on the structural reset indicated by market sentiment compression.

Realized Price and Bottoming Scenarios

🐻 Looking ahead, historical data suggests that Bitcoin's bear market bottoms typically align with its realized price. The realized price represents the average price at which all bitcoins were last moved, providing a strong on-chain support level. Currently, this realized price is estimated around $56,000. Should this historical pattern hold, it implies a potential drawdown of approximately 55% from Bitcoin's recent all-time high of just over $126,000.

🐻 However, there's a nuanced detail for investors: intermediate support is anticipated around the $70,000 level. This suggests that while a deeper correction is possible, the current analysis points towards a relatively shallow bear market compared to some of Bitcoin's more brutal historical drawdowns. This could mean a less protracted period of intense pain for investors, but it nonetheless signals a challenging environment.

🚀 At the time of this analysis, BTC was trading around $87,635, reflecting year-to-date losses of 10% and a 30.5% gap from its all-time highs.

Stakeholder	Position/Key Detail
CryptoQuant Analyst (Woominkyu)	🆕 📉 Identifies BCMI indicating a new bear phase, not a temporary pullback.
👥 🏛️ Institutional Investors (Spot Bitcoin ETFs)	Converted to net sellers in Q4 2025, offloading ~24,000 BTC.
Large Holders (100-1000 BTC Addresses)	📊 Growth rate below trend, signaling demand deterioration similar to 2022.
Derivatives Traders	Funding rates at lowest since Dec 2023, reflecting reduced willingness for long positions.

📌 🔑 Key Takeaways

Bitcoin's Cycle Momentum Indicator (BCMI) suggests the market is entering a bear phase, not merely experiencing a pullback, with further downside potentially needed to establish a stable bottom.
Institutional demand for Bitcoin has reversed, with US spot ETFs becoming net sellers and large holder activity slowing significantly.
Derivatives market sentiment is distinctly bearish, evidenced by falling funding rates and reduced appetite for long positions.
Technically, BTC has broken below its critical 365-day Moving Average, historically a strong demarcation between bull and bear markets.
Potential downside could see BTC retesting the $56,000 Realized Price, implying a 55% drawdown from ATH, though $70,000 offers intermediate support.

🔮 Thoughts & Predictions

The current confluence of on-chain, institutional, and technical signals paints a clear picture: Bitcoin is indeed moving into a distinct bear market phase, a shift that astute investors should not underestimate. While the narrative of a "shallow" bear market offers some solace compared to past brutal cycles, the underlying dynamics of demand exhaustion and institutional distribution cannot be ignored. The ~24,000 BTC outflow from spot ETFs in Q4 2025 is particularly telling, indicating that this isn't just retail fear but a calculated move by larger players to de-risk.

My medium-term prediction is that we will see continued pressure on Bitcoin's price, likely pushing it towards the $70,000 intermediate support. A retest of the $56,000 realized price remains a tangible, albeit less certain, possibility if broader macro conditions deteriorate or further large-scale institutional capitulation occurs. This period will test conviction, but also present unique accumulation opportunities for those with long-term horizons, especially if the market finds a stable bottom around those historical BCMI ranges (0.25-0.35).

The key lesson here is vigilance. This isn't just a market reset; it's a recalibration of expectations following a period of intense hype. Expect enhanced volatility and a flight to quality as weaker projects face increased scrutiny, potentially creating a "survival of the fittest" scenario across the broader crypto ecosystem. The next 6-12 months will be crucial for discerning long-term winners from those merely riding the previous bull wave.

Analyzing the critical levels and indicators signaling a shift in Bitcoin's market cycle.

🎯 Investor Action Tips

Re-evaluate Risk Exposure: Consider trimming positions in highly speculative assets or those with weak fundamentals, prioritizing projects with proven utility and strong development teams.
Monitor Key Support Levels: Keep a close eye on Bitcoin's $70,000 and $56,000 levels. These could present strategic re-entry points for long-term holders or areas to consider dollar-cost averaging.
Track Institutional Flows: Stay updated on spot Bitcoin ETF net flows. Continued outflows signal further institutional de-risking, while a reversal could indicate a shift in sentiment.
Diversify with Caution: While diversification is always wise, in a bear market, focus on assets that have shown relative resilience or offer strong value propositions over purely speculative plays.

📘 Glossary for Serious Investors

⚖️ Bitcoin Cycle Momentum Indicator (BCMI): A proprietary CryptoQuant indicator that tracks Bitcoin's market phase, signaling cooling periods (around 0.5) and potential cycle bottoms (0.25-0.35).

⚖️ Realized Price: The average price at which all bitcoins in circulation were last moved on-chain, often acting as a strong psychological and historical support level for BTC's price.

⚖️ Funding Rates (Perpetual Futures): Periodic payments exchanged between long and short traders in perpetual futures contracts, reflecting the difference between perpetual contract prices and spot prices, indicating market sentiment (positive for bullish, negative for bearish).

⚖️ 365-Day Moving Average (MA): A technical analysis tool that smooths out price data over the past year, commonly used to identify long-term trends and crucial support/resistance levels, often delineating bull from bear markets.

🧭 Context of the Day

Bitcoin's confirmed shift into a bear market signals a critical period requiring strategic caution and selective long-term accumulation for investors.

📈 BITCOIN Market Trend Last 7 Days

Date	Price (USD)	7D Change
12/19/2025	$85,450.33	+0.00%
12/20/2025	$88,103.86	+3.11%
12/21/2025	$88,347.94	+3.39%
12/22/2025	$88,577.42	+3.66%
12/23/2025	$88,491.12	+3.56%
12/24/2025	$87,406.44	+2.29%
12/25/2025	$87,557.12	+2.47%

Data provided by CoinGecko Integration.

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