Bitcoin has dropped over 35% from its recent high, falling below key support levels and its 365-day moving average. Analysts at CryptoQuant suggest this could signal the start of a bear market, despite expectations of one more rally. Demand from institutions and treasury companies has significantly weakened.
Bitcoin's current market phase marks its deepest correction in the ongoing bull cycle, with the cryptocurrency losing more than 35% of its value since reaching an all-time high in early October. As of the latest reports, BTC briefly fell below $81,000 before recovering to around $87,000. This downturn has pushed the price under its 365-day moving average of $102,000, as well as major support zones between $90,000 and $92,000.
The 365-day moving average has historically served as a critical support during this bull phase, which began in January 2023, and Bitcoin has not breached it in previous corrections. Breaking this level echoes the signal that preceded the 2022 bear market. Market conditions now appear as the most bearish since the cycle's start, reflected in CryptoQuant's Bull Score Index dropping to around 20 out of 100, indicating extreme bearish sentiment.
Unlike earlier corrections bolstered by institutional demand, this pullback lacks similar support. Spot Bitcoin exchange-traded funds (ETFs) show declining holdings on an annual basis, with growth at one of the slowest rates since their introduction. Treasury companies, a key demand driver this year, have nearly halted purchases amid a 70% tumble in their market capitalization over recent months. The leading firm, Strategy, reduced its acquisitions from 171,000 BTC a year ago to just 9,600 BTC currently, as these entities struggle to raise capital through share sales.
While some consensus points to a potential final rally in 2026, CryptoQuant's on-chain and off-chain analysis raises doubts. The firm notes that a strong external catalyst might still revive demand and spur another upward move next year, though its emergence remains uncertain.