Bitcoin's Bearish On-Chain Signals: A Downturn or a Buying Opportunity?

The Bitcoin market in late 2025 is a study in contrasts. On-chain fundamentals reveal a tapestry of bearish signals, yet long-term structural factors suggest resilience. For short-term investors, the question looms: Are these metrics a harbinger of further decline, or a setup for contrarian entry? Let's dissect the data.

Bearish On-Chain Metrics: A Closer Look

Bitcoin's on-chain activity in 2025 has painted a mixed but increasingly bearish picture. Active addresses-a proxy for user engagement-have plummeted from 1.4 million in January 2025 to 1.1 million by February 2025, signaling reduced participation during the bearish phase. This decline aligns with historical patterns where bear markets correlate with shrinking network activity.

Spending volume on global exchanges has also contracted, dropping from $2.14 trillion to $1.73 trillion as investors retreated from risk assets. While this reflects caution, it's juxtaposed with a post-halving supply squeeze: 74% of circulating BTC is illiquid, and 75% of coins haven't moved in six months or more. This tight float could theoretically fuel future appreciation, but only if macro conditions cooperate.

Miner activity tells a nuanced story. The Bitcoin hash rate collapsed during the summer of 2025 due to Texas heat-induced curtailments, marking one of the sharpest difficulty drops since the 2021 China mining ban. Despite this, miner revenues remain robust at $50 million daily, underscoring the network's operational resilience. However, the drop in hashrate highlights miner stress, as operators sell reserves to cover costs-a classic bear market symptom.

CryptoQuant's Bearish Warnings: A CEO's Perspective

Bitcoin miners with show significant stress.

CryptoQuant CEO Ki Young Ju has sounded alarms based on key on-chain indicators. The Bull Score Index-a gauge of spot demand-plummeted to 20/100, an extreme bearish level. Meanwhile, Bitcoin triggered a fifth Binary CDD signal, a strong distribution indicator suggesting large holders are offloading positions.

Another critical warning comes from technical levels. Bitcoin's drop below the 365-day moving average-a threshold that confirmed the 2022 bear market-has raised red flags. According to Julio Moreno of CryptoQuant, reclaiming the $102,000 level (aligned with the 365-day MA) is essential to avoid deeper corrections. Without a swift rebound, the market risks a 6–12 month bearish or sideways phase.

Ju also emphasized that Bitcoin's recovery hinges on macro liquidity. Central bank easing cycles often drive capital into risk assets like Bitcoin, but this lifeline remains conditional on global monetary policy shifts. For now, the absence of new liquidity channels-such as institutional digital asset treasuries (DATs) or ETFs-leaves altcoins and Bitcoin vulnerable to prolonged selling pressure.

Short-Term Implications: A High-Probability Downturn?

For short-term investors, the bearish signals are hard to ignore. Large holders have increased deposits to exchanges, with 45% of the volume consisting of 100 BTC+ transfers-a classic sign of distribution. The 50/200-day moving average crossover (the "Death Cross") in late 2025 further reinforces this narrative, a pattern historically linked to market troughs.

CryptoQuant's Ki Young Ju warns that a price drop below $94,000-a critical level reflecting the average purchase price for 6–12 month-old investors-could trigger a full-blown bear market. This threshold is pivotal: breaching it would likely accelerate capitulation, as retail and institutional holders face margin calls or forced sales.

However, the bear case isn't absolute. Institutional ETF inflows and whale accumulation-though currently weak-could stabilize the market if macro liquidity returns. For now, though, the absence of these factors makes a 3–6 month bearish wobble highly probable.

Long-Term Bulls: Is This a Buying Opportunity?

While the short-term outlook is grim, long-term fundamentals remain intact. The Stock-to-Flow (S2F) model still projects a price range of $248K to $369K by 2025, assuming the post-halving supply squeeze persists. On-chain valuation models like the NVT golden cross at 1.51 also suggest Bitcoin's price is supported by real value transfer, not speculative frenzy.

For patient investors, the current bearish phase could be a buying opportunity. History shows that Bitcoin's bull markets often resume after sharp corrections, particularly when institutional demand re-enters the fold. The key is to differentiate between cyclical bearishness and structural weakness-a distinction the on-chain data currently supports.

Conclusion: Navigating the Crossroads

Bitcoin's on-chain fundamentals in late 2025 present a crossroads. Short-term investors face elevated risks from weak liquidity, distribution signals, and technical breakdowns. Yet for long-term bulls, the market's structural strengths-tight supply, institutional adoption, and a robust network-remain intact.

The path forward depends on macroeconomic catalysts. If central banks ease monetary policy or institutional demand surges, Bitcoin could rebound swiftly. But in the absence of these triggers, the bearish signals suggest a period of consolidation. As always, the market rewards those who balance caution with conviction.