Bitcoin's Demand Drought: A Precursor to Prolonged Bear Market?

The Bitcoin market in November 2025 is caught in a paradox. On-chain demand metrics paint a picture of fragility, with the Net Unrealized Profit/Loss (NUPL) ratio hitting oversold levels akin to the "Tariff Tantrum" of Spring 2025 and the "Yen implosion" of August 2024. Meanwhile, institutional activity-driven by ETF flows and macroeconomic tailwinds-suggests a more nuanced narrative. This article dissects the interplay between on-chain demand and institutional behavior to assess whether Bitcoin's current correction signals a prolonged bear market or a cyclical bearish phase within a broader bull cycle.

On-Chain Demand: A Tale of Two Holders

Bitcoin's on-chain metrics reveal a market split between capitulation and accumulation. The NUPL ratio, a critical gauge of holder sentiment, has plunged to 0.522, indicating that over half of Bitcoin's supply is now in a loss position. This mirrors historical bearish inflection points, such as the 2022 market crash, where NUPL dipped below 0.4 before rebounding. However, the current context differs: while large holders (10K–100K BTC) have reduced exposure, smaller whales have increased holdings. This divergence suggests that retail and mid-tier investors are stepping in as institutional players rotate out.

The movement of 63,000 BTC from long-term to short-term wallets in a single event further underscores selling pressure. K33's analysis notes that 1.6 million BTC from long-term holders re-entered circulation since 2024, signaling deliberate distribution rather than routine technical activity. Yet, the Coin Days Destroyed metric spiked in late November, hinting that large, longtime holders may have already sold off their positions. This raises a critical question: Is the current on-chain weakness a precursor to a deeper bear market, or a consolidation phase as institutional buyers take the reins?

Institutional Behavior: ETF Flows and Macro Tailwinds

Institutional demand for Bitcoin has surged in 2025, with spot ETFs attracting $57 billion in cumulative assets by November. However, this inflow has been volatile. For instance, a $524 million inflow on November 10, 2025, was followed by a 30% drop in market depth, exacerbating Bitcoin's price decline below $90,000. This volatility highlights a key tension: while ETFs have democratized institutional access to Bitcoin, they also amplify liquidity risks during periods of macroeconomic uncertainty.

The Federal Reserve's rate-cut cycle and bipartisan crypto legislation in the U.S. have bolstered institutional confidence. Yet, ETF outflows in November-reaching $3.5 billion-have pressured prices, with mid-tier "whale" wallets (100 BTC+) increasing by 0.47% as larger holders reduced exposure by 1.5%. This suggests a strategic shift in ownership from long-term institutions to mid-tier investors, a pattern observed during prior bull-market corrections.

The Interplay: On-Chain Metrics and Institutional Flows

The correlation between institutional ETF flows and on-chain demand is complex. For example, Fidelity's Wise Origin Bitcoin Fund (FBTC) captured $391 million in late November, coinciding with a 45,000 BTC accumulation by large investors according to analysis. This indicates that while ETF outflows triggered short-term selling, institutional buyers continued to accumulate at lower price levels.

Put option skew for Bitcoin, at record highs for 3- and 6-month tenors, further illustrates this duality. Investors have hedged against downside risks, suggesting a belief that the current correction is temporary. Meanwhile, the percentage of Bitcoin supply held for over five years remains stable at 30.5%, while short-term active supply has risen to 31%-the highest since July 2021. This shift implies a mix of speculative activity and long-term positioning, complicating the bearish narrative.

Conclusion: Bear Market Precursor or Cyclical Correction?

Bitcoin's demand drought in November 2025 reflects a market at a crossroads. On-chain metrics like NUPL and MVRV ratios signal overextended conditions, while institutional ETF flows and macroeconomic factors hint at resilience. The key differentiator lies in the behavior of large holders: if long-term whales continue to accumulate amid ETF outflows, the current correction could mirror the 2022 bear market-a temporary setback within a broader bull cycle. Conversely, sustained outflows from mid-tier holders and a failure to retest critical support levels (e.g., $74,000) could signal a deeper bear market.

For now, the data suggests a hybrid scenario. Institutional buyers are hedging against volatility, while smaller investors are stepping in to accumulate. As the Federal Reserve's rate-cut cycle progresses and crypto legislation gains momentum, Bitcoin's demand dynamics may yet pivot from drought to revival.