Bitcoin (BTC) is currently experiencing its deepest correction in this bull cycle. Before recovering some ground to $87,000 as of press time, it had dumped below $81,000 after losing over 35% from its value since the all-time high in early October.
Although the consensus remains that BTC and the broader crypto market still have one more rally to go (possibly in 2026) before the bull cycle ends, technical and fundamental metrics suggest otherwise. The latest weekly report from CryptoQuant has analyzed on-chain and off-chain metrics that indicate the bear market may have begun.
According to CryptoQuant, BTC is experiencing a drawdown of more than 35% so far. The asset has fallen below its 365-day moving average (MA) of $102,000 and major support levels between $90,000 and $92,000. The 365-day MA has acted as the ultimate support level in this cycle, and BTC has never broken below it during price corrections since this bull phase began.
Notably, the MA was one of the last signals that confirmed the start of the 2022 bear market. Market conditions are already the most bearish they have been since this bull cycle started in January 2023, and they could get worse. Also, CryptoQuant’s Bull Score Index has declined to extreme bearish levels around 20 out of 100.
Past corrections in this bull cycle have mostly come with sustained demand from institutions. However, the same cannot be said this time. CryptoQuant analysts said this cycle has likely seen the most of its demand wave.
The BTC holdings of spot Bitcoin exchange-traded funds (ETFs) have been declining in annual terms, growing by one of the slowest paces recorded since their launch. Bitcoin purchases by Treasury companies, which were a major source of demand this year, have almost stopped. This is because their market cap has tumbled by at least 70% over the last few months.
Although the leading Treasury company, Strategy, is still acquiring BTC, its purchases have declined significantly, from 171,000 BTC a year ago to 9,600 BTC as of today. Bitcoin Treasury firms are no longer able to sell more shares to raise capital and buy more BTC, and this has significantly affected demand.
Regardless of the market’s state, CryptoQuant believes a strong catalyst could trigger demand sufficient to drive another rally next year. But the question remains: which catalyst will be strong enough to accelerate BTC demand in the coming months?
