Bear Market Alert: Bitcoin demand momentum wanes; a drop below $70,000 could trigger a chain reaction

On-Chain Data Analysis Firm CryptoQuant Recently Issued a Market Warning: If the demand momentum for Bitcoin cannot be reversed and the price falls below a key support level, it will face deeper downside risks. Currently, BTC is priced at $90.07K, with some buffer before reaching the alert zone, but market signals have already shifted.

In its latest analysis, CryptoQuant pointed out that since 2023, Bitcoin has experienced three clear waves of spot demand, driven respectively by the US spot ETF listing, the US presidential election, and corporate reserve plans. However, the growth momentum of this demand has significantly slowed, indicating that the market cycle may be approaching a major turning point.

Demand Cycle Peaks, Bearish Clouds Loom

Since early October 2025, Bitcoin’s demand growth curve has broken below the long-term trend line, meaning that the buying momentum accumulated in this cycle has largely been digested, and the market has lost the upward drive of the past few months. Julio Moreno, Head of Research at CryptoQuant, revealed that this correction actually began in mid-November, following the largest liquidation event in cryptocurrency history.

CryptoQuant presents a counterintuitive argument: The core engine driving Bitcoin’s 4-year cycle is “demand cycles,” not halving events. When demand peaks and begins to decline, regardless of supply-side changes, a bear market often ensues.

Support Levels Approaching, Risks Multiply if Broken

Based on the current weak market conditions, CryptoQuant considers $70,000 as the first critical support zone. If the market cannot rally bulls again, further decline to $56,000 cannot be ruled out.

According to the report, $56,000 corresponds precisely to the “Realized Price” (reflecting the average cost basis of all holders). If the price tests this level, it would mean Bitcoin has fallen about 55% from its all-time high, potentially making it the least severe correction in history. Moreno further indicated the timeframe: a retracement to $70,000 could occur within the next 3 to 6 months, while reaching $56,000 might happen in the second half of 2026.

On-Chain Data Reveals Three Major Warnings

CryptoQuant listed three key data points supporting the judgment that capital is systematically retreating:

1. ETF Shifts from Buyer to Seller In Q4 2025, US Bitcoin spot ETFs have turned into net outflows, reducing holdings by approximately 24,000 BTC, contrasting sharply with strong buying activity in the same period last year. This shift marks a clear change in the primary source of capital.

2. Slowdown in Large Holder Accumulation Addresses holding 100 to 1,000 BTC (including ETFs and institutions) are growing at a rate below the long-term trend line. This deterioration in demand perfectly aligns with the end of 2021 and the eve of the 2022 major bear market, signaling a repeat of history that warrants caution.

3. Cooling in Derivatives Market The funding rate of perpetual contracts (calculated as a 365-day moving average) has fallen to its lowest point since December 2023. A declining funding rate usually indicates that bullish leverage is waning, a typical feature of bear markets. Meanwhile, BTC price has broken below the 365-day moving average, a technical indicator often regarded as the boundary between bull and bear markets.

Demand Deceleration Theory Challenges Existing Views

CryptoQuant emphasizes that the market has historically attributed Bitcoin’s 4-year cycle to halving events, but in reality, the true driver is “the rise and fall of demand cycles.” When demand peaks and turns downward, any positive news on supply side struggles to reverse the trend, leading to a bear market. This perspective offers a new analytical framework for understanding the current market.

Contradiction Between Wall Street and On-Chain Data

It is noteworthy that CryptoQuant’s warning sharply contrasts with recent mainstream Wall Street views, with intense disagreement among market factions:

Optimistic Camp:

• Citigroup’s base case predicts BTC will rise to $143,000 in the next 12 months, with an optimistic scenario reaching $189,000
• JPMorgan, based on gold valuation benchmarks, maintains a target of $170,000
• Standard Chartered, though more cautious, keeps its 2026 target at $150,000
• Bitwise firmly believes Bitcoin will hit a new all-time high in 2026

All these institutions share a common feature: their forecasts are based on long-term fundamentals and supply-demand structures, but they seem to have not fully incorporated the reality of current demand momentum slowing down. The market is fiercely divided between bulls and bears, and if demand cannot be revived, these bullish predictions will face significant tests.