ETF Demand Flip Puts Bitcoin in a Bear Phase, Says CryptoQuant

Bitcoin’s slide isn’t just a price story—it’s a demand story. The marginal buyer that powered this cycle has stepped back. In a Friday report, CryptoQuant said Bitcoin demand slipped below its long-term trend in early October and argued that the market has shifted into a bear phase. With BTC hovering around $88,000—about 30% off its early October peak above $126,000—the signal is less about headlines and more about flow.

The fulcrum is U.S. spot ETFs. After a year of net accumulation, those vehicles turned into net sellers in Q4 2025. Combined U.S. spot ETF holdings declined by roughly 24,000 BTC—about $2.12 billion—reversing the Q4 2024 pattern when these funds were steady buyers. That flow regime change matters because it defined the entire demand arc of this cycle.

CryptoQuant traces three spot-demand waves since 2023: the January 2024 launch of U.S. spot ETFs, the Trump presidential election win, and a run-up fueled by “Bitcoin treasury companies.” Each wave recruited new capital and reinforced price momentum. Since early October, though, growth has lagged trend, which the firm reads as the late-cycle demand fade that often precedes deeper drawdowns.

The slowdown isn’t confined to ETFs. Addresses holding 100–1,000 BTC—a cohort that includes ETFs and corporate treasury wallets—are growing below trend, echoing the end-2021 pattern that came before the 2022 bear market. Derivatives indicators have cooled as well, and the spot chart cracked a long-term line in the sand: BTC slipped below its 365-day moving average, a level CryptoQuant views as a historical boundary between bull and bear regimes.

If the marginal buyer has flipped, the path of least resistance looks lower until flows stabilize. CryptoQuant uses realized price as a compass for bear-market endpoints and sees a potential cycle low near $56,000—roughly 55% below the all-time high and 36% under current levels—with intermediate support around $70,000. The backdrop hasn’t helped: October’s record $19 billion liquidation event cleaned out leverage across majors, leaving thinner liquidity and more mechanical selling pressure on retests.

Here’s the read that matters for operators and allocators: ETF flows are not passive background noise; they are the cycle’s heartbeat. When those flows invert, it reshapes incentives across the stack—issuers and APs manage inventory more defensively, treasuries slow deployment, and systematic strategies lean into trend rather than fade it. That reflexivity works both directions, and capitulation rarely resolves while the biggest distribution channel is bleeding coins.

Not everyone is capitulating. Some analysts remain constructive into 2026 and argue the traditional four-year halving cadence is less relevant in an ETF-driven market. Maybe. But until spot ETF outflows abate and the 365-day trendline is reclaimed, the burden of proof sits with the bulls. For now, the data says the demand engine is idling.