Bitcoin's 3-Year Bull Cycle Shows Signs of Exhaustion – Is the Bear Market Bottom Nearer Than It Seems?

Bitcoin's 3-year bull cycle, once a predictable rhythm tied to halving events and macroeconomic cycles, has shown signs of structural exhaustion in 2025. While on-chain metrics, institutional sentiment, and evolving market dynamics paint a complex picture, the interplay between these factors suggests the market may be nearing a critical inflection point. This analysis synthesizes on-chain behavior, institutional positioning, and historical cycle patterns to assess whether the bear market bottom is closer than it appears.

On-Chain Behavior: Strength Amid Strain

Bitcoin's on-chain activity in 2025 reflects both robust network usage and growing systemic strain. Daily transaction volume has averaged 390–400K transactions, transferring approximately $45 billion on-chain, while the Network Value to Transaction (NVT) ratio has stabilized at a "golden cross" of 1.51-a level historically associated with valuation grounded in utility rather than speculative fervor. The Unspent Transaction Output (UTXO) set also highlights strong holder conviction, with 735K unique addresses active daily and 74% of circulating BTC remaining illiquid (unmoved for ≥2 years).

However, miner activity tells a different story. Despite a global hash rate exceeding 1 Zettahash/s, miner revenues have collapsed to ~$39 million per day, reflecting declining profitability and increased competition. Exchange outflows have also surged to their most negative levels since early 2023, signaling tighter liquidity and heightened volatility risk as retail and institutional participants retreat to private wallets. These metrics suggest a market in transition: while fundamental usage remains strong, the infrastructure layer is under growing pressure.

Market Cycles: The Death of the Four-Year Narrative

Bitcoin's traditional four-year market cycle, historically aligned with halving events, has lost relevance in 2025. According to Grayscale research, institutional adoption, regulatory clarity, and macroeconomic factors now dominate price action, rendering the old "halving bull case" obsolete. For example, the 2025 price surge to $126,000 was driven not by pre-halving scarcity but by institutional demand and U.S. spot ETF approvals. Yet, this cycle has since fractured.

Technical indicators now contradict institutional optimism. Bitcoin's price has fallen below its 365-day moving average-a key threshold distinguishing bull and bear markets-and stabilized around $88,000, down 30% from its October peak. Analysts like Hunter Horsley of Bitwise argue this correction reflects a "bear market in disguise," where prior resilience was fueled by mechanical bids (e.g., ETF inflows) rather than organic demand. Meanwhile, perpetual funding rates have turned negative, signaling bearish sentiment among derivatives traders.

The divergence between technical indicators and institutional bullishness underscores a critical shift: Bitcoin's price is no longer tethered to its historical cycle but to real-time macroeconomic conditions. As Julien Bittel of Global Macro Investor notes, Bitcoin's rhythm is now dictated by public debt refinancing cycles and Fed policy, not block rewards.

Institutional Sentiment: A Fractured Consensus

Institutional sentiment on Bitcoin remains deeply divided. On one hand, 67% of institutional investors anticipate a major rally in the next three to six months, driven by ETF inflows averaging $223 million daily and growing demand for alternative stores of value. Grayscale's 2026 outlook even predicts a retest of the $126,000 all-time high, assuming continued regulatory progress.

On the other hand, bearish signals are mounting. U.S. spot Bitcoin ETFs turned net sellers in Q4 2025, with combined holdings declining by 24,000 BTC ($2.12 billion)-a stark reversal from the previous year's inflows. Key marginal buyers, including Bitcoin treasury companies, have paused purchases, leaving the market exposed to its underlying demand profile. CryptoQuant's data further confirms this bearish shift: Bitcoin's apparent demand has fallen below its long-term trend since early October 2025, a pattern historically linked to extended bear markets.

The disconnect between institutional optimism and on-chain weakness raises a critical question: Are current inflows a sign of confidence, or a last-ditch effort to prop up a faltering cycle?

Is the Bear Market Bottom Nearer Than It Seems?

To determine whether the bear market bottom is near, we must reconcile these conflicting signals. Four conditions, as outlined by analysts, must align for a credible exit from bear territory:
1. ETF stabilization and net accumulation: ETFs must resume buying to signal institutional confidence.
2. Demand recovery: On-chain demand must rise above its long-term trend.
3. Derivatives rebound: Perpetual funding rates must turn positive, reflecting bullish positioning.
4. Technical reclamation: Bitcoin must reclaim its 365-day moving average and key support levels.

While none of these conditions are currently met, certain developments hint at a near-term bottom. For instance, the 74% illiquidity rate in circulating BTC suggests a large portion of the supply is "locked in" for the long term, reducing downward pressure. Additionally, Grayscale's 2026 outlook anticipates a breakout above the previous all-time high, assuming macroeconomic stability and regulatory progress.

However, macroeconomic headwinds-including liquidity constraints and Fed policy uncertainty-remain critical risks. Fidelity's Jurrien Timmer estimates potential support levels between $65,000 and $75,000, while CryptoQuant's bearish model projects a cycle low of $56,000.

Conclusion: A Market at the Crossroads

Bitcoin's 3-year bull cycle has undeniably shown signs of exhaustion, but the bear market bottom may not be as distant as it seems. On-chain metrics reveal a resilient network with strong holder conviction, while institutional sentiment remains split between optimism and caution. The key to navigating this inflection point lies in monitoring the four conditions outlined above.

For now, Bitcoin appears to be in a bull-market correction rather than a full bear market. But as the old cycle fades and a new paradigm emerges, investors must adapt to a reality where institutional flows and macroeconomic forces-not halving events-dictate Bitcoin's trajectory.