Bitcoin's holding around $88-90K but the structure underneath looks pretty fragile. Multiple onchain and market indicators (as shown in CryptoQuant / SoSoValue-style charts) are pointing towards a late-cycle distribution phase which historically comes before bear markets start.
First, Bitcoin's demand growth is rolling over. New buying pressure has been slowing even while price stayed elevated through 2025. When demand flattens but price stays high, thats usually when markets shift from accumulation to distribution.
Second, US spot Bitcoin ETF inflows are losing momentum. In 2024 they accelerated into year end but Q4 2025 shows them flattening and, in some periods, declining. These ETFs represent long-term institutional capital so when that slows down it removes a major support pillar.
Third, dolphin wallets holding 100-1,000 BTC are reducing exposure. This cohort dropped sharply on a yearly basis similar to what happened in late 2021 before deeper drawdowns. These are sophisticated investors doing risk reduction.
Fourth, funding rates across exchanges are trending lower showing traders are less willing to pay to stay long. In bull markets you see rising funding and persistent long demand but thats not happening now.
Fifth and probably most significant, Bitcoin broke below the 365-day moving average for a sustained period. This level historically seperates bull from bear markets and previous tests in 2024-2025 didnt close below it.
If a full bear market develops, historical data points to Bitcoin's realized price around $56K as potential long-term support. Thats where the average cost basis of all holders sits. Doesnt mean it has to fall that far but its a reference point based on past cycles.
None of these signals confirm a bear market alone but together they show rising downside risk heading into 2026. The margin for error is definitely shrinking.
5 charts suggest Bitcoin could enter bear market in early 2026…demand weakening across multiple indicators
byu/hodorrny inbtc
Posted by hodorrny
2 Comments
Fracking chart voodoo
I keep seeing the narrative that Bitcoin at ~$88–90K is “late-cycle distribution” and that the market is sliding toward an inevitable bear phase. That conclusion goes too far and leans on selective or outdated interpretations of the data.
Yes, demand growth has cooled. That part is true. But cooling demand is not the same thing as structural breakdown. One of the most important under-discussed metrics right now is realized capitalization, which remains near all-time highs north of $1.1 trillion. That tells us the aggregate cost basis of the network has been building, not collapsing. Bear markets don’t usually begin with record-high realized caps.
On ETFs, the framing matters. Flows are no longer a straight-line tailwind, but they are not “exiting” either. What we’re seeing is choppy, two-way institutional behavior consistent with risk management, not abandonment. In fact, we just saw one of the largest daily net inflows in weeks in mid-December. The pillar hasn’t vanished. It’s behaving like capital that can pause and re-engage.
The “dolphins are selling” argument is also much weaker than it used to be. The 100–1,000 BTC cohort now includes custodians, corporates, and ETF-related wallets. Treating that group as a clean proxy for sophisticated discretionary investors is increasingly unreliable. Address composition matters more than headline wallet counts.
Funding rates drifting lower is not inherently bearish either. In many cycles, declining funding reflects leverage being flushed out, which can reduce downside reflexivity rather than accelerate it. Frothy funding breaks markets. Flat funding often stabilizes them.
As for the 365-day moving average, yes, it’s a widely watched level. But this cycle is structurally different. Spot ETFs, corporate treasuries, and a larger share of long-term holders change how classical MA regime signals behave. One indicator alone doesn’t define the regime.
The biggest factual issue, however, is the repeated claim that Bitcoin’s realized price is around $56K. That’s outdated. Current on-chain data places realized price much closer to the high-$80Ks, with short-term holders sitting above $100K and long-term holders far lower. That dynamic explains overhead supply and why meaningful bids continue to show up on dips.
None of this means downside risk doesn’t exist. It does. But the data supports a market in consolidation and digestion, not one that’s already rolling into a full-cycle bear. The margin for error may be narrowing, but the structure underneath Bitcoin is far more resilient than the bearish narrative suggests.
Markets don’t usually break when cost basis is rising, leverage is being cleaned up, and long-term capital remains engaged. They break when those things unwind. We’re not there yet.