Bitcoin News Today: Bitcoin Bear Market Looms as ETF Outflows and On-Chain Trends Signal Deteriorating Demand

Bitcoin faces growing bearish risks as on-chain and market indicators suggest a transition into a bear market in early 2026. According to CryptoQuant, a sharp slowdown in bitcoin demand marks a key signal of deteriorating bullish momentum. Institutional buying, particularly through U.S. spot ETFs, has also weakened, reversing a major source of price support that had driven the cryptocurrency to record highs earlier in 2025. If the bearish trend continues, bitcoin could test key support levels near $70,000 or even fall as low as $56,000 according to the firm.

The shift in demand is evident in the declining activity of large investors and ETFs, which had previously been a cornerstone of bitcoin's rally. Addresses holding between 100 and 1,000 BTC—often tied to ETFs and treasury companies—are now growing below historical trends, a pattern seen before the 2022 bear market. Derivatives markets further reinforce the bearish narrative, with perpetual futures funding rates hitting multi-year lows, signaling reduced willingness among traders to maintain long positions.

According to CryptoQuant, bitcoin's recent pullback below its 365-day moving average—a critical long-term technical level—adds to the bearish case. The firm emphasized that bitcoin's cyclical behavior is primarily driven by demand expansion and contraction rather than supply-side factors such as halvings. "When demand growth peaks and rolls over, bear markets tend to follow regardless of supply-side dynamics," the report stated.

Why the Bearish Outlook Has Strengthened

The bearish thesis is reinforced by the reversal in ETF flows. U.S. spot bitcoin ETFs turned into net sellers in the fourth quarter of 2025, with holdings dropping by 24,000 BTC, a stark contrast to the previous year when they were strong buyers. This trend reflects a shift in institutional sentiment as large buyers step back, leaving the market more exposed to volatility from speculative positions and derivatives trading according to analysis.

The decline in demand growth is also evident in the weakening of corporate and institutional bitcoin treasury activity. Companies that previously added large amounts of BTC during the bull run are now seeing diminishing returns, with some firms re-evaluating their investment strategies. This shift mirrors similar patterns observed at the end of the 2021 bull cycle, which led to the 2022 bear market.

Derivatives data further supports the bearish case. In perpetual futures markets, funding rates have declined to their lowest levels since December 2023, suggesting a lack of confidence in maintaining long positions. This historically aligns with bear market conditions, where traders prefer to reduce exposure to volatile assets.

What Analysts Are Watching

CryptoQuant's bearish outlook contrasts with several more optimistic forecasts. For instance, Citigroup's base-case target for bitcoin remains at $143,000 over the next 12 months, with a bullish case pointing toward $189,000. However, the firm also cited $70,000 as a critical support level. Similarly, JPMorgan continues to project a potential $170,000 price target for bitcoin over the next 6–12 months, based on its volatility-adjusted comparison to gold.

Despite these bullish projections, the bearish narrative has gained traction among analysts who see the current price correction as a natural part of the four-year market cycle. Fidelity's Jurrien Timmer predicted that bitcoin could enter a bear market in 2026, with a potential bottom near $65,000. The timing aligns with historical four-year cycles, where price peaks are followed by corrections that typically last about a year according to analysis.

Bitcoin's current trading price near $88,000 is supported by technical indicators such as the RSI and MACD, which suggest a potential short-term rebound. However, the long-term bearish bias remains intact, with key moving averages sloping downward and ETF outflows continuing to pressure the market according to analysis. If the price falls below $83,822, it could trigger a deeper correction toward the $70,000 level as noted in market reports.

Risks to the Outlook

While the bearish outlook is gaining momentum, several factors could limit the extent of the downturn or even reverse the trend. One key variable is the performance of the U.S. Federal Reserve. Softer-than-expected inflation data released in late 2025 has increased speculation that the Fed could cut interest rates sooner than previously anticipated. A dovish monetary policy environment typically benefits risk-on assets such as Bitcoin, providing a potential floor for the price if the bear market develops.

Additionally, corporate treasury activity could reaccelerate if Bitcoin rebounds from key support levels. Strategy, the largest corporate holder of Bitcoin, has continued to add to its BTC holdings despite the recent market weakness. The company's aggressive accumulation strategy suggests that some institutional players remain bullish on the asset's long-term potential, even amid short-term volatility.

The outcome of regulatory developments in the U.S. could also influence the trajectory of the bear market. A potential crypto bill that provides clearer legal and tax frameworks for digital assets could restore investor confidence and attract new capital into the market. However, until these conditions materialize, the bearish case remains well-supported by on-chain data and market behavior.