Bitcoin Price Enters New Downtrend as On-Chain Demand Weakens, CryptoQuant Warns

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Bitcoin may have already entered a new downtrend, according to on-chain data from CryptoQuant. The analytics firm argues that the recent market weakness is not driven by supply mechanics like halvings, but by a noticeable slowdown in demand, a factor that has historically dictated Bitcoin’s major cycle turns.

Analyst notes that the demand-driven rally seen over the past two years has largely run its course, removing a crucial layer of price support that previously pushed Bitcoin higher.

What Triggered the Demand Slowdown?

Analysts point to three major forces that fueled Bitcoin’s last expansion phase: the launch of US spot Bitcoin ETFs, the outcome of the US presidential election, and the rapid adoption of Bitcoin by corporate treasury strategies. Together, these catalysts absorbed a large portion of the available demand.

However, since early October 2025, on-chain demand growth has slipped below its long-term trend. This shift suggests the market has transitioned from expansion to contraction, a pattern that has historically marked the beginning of bearish phases.

How Low Could Bitcoin Fall?

CryptoQuant sees the $70,000 level as a key downside zone in the months ahead. This area is viewed as the first major support where buyers could attempt to stabilize price action. If that level fails to hold, the downside risk increases. In a more prolonged bearish scenario, Bitcoin could drift toward its realized price near $56,000, a level that has often marked cycle bottoms in past bear markets. Even if this occurs, CryptoQuant emphasizes that the decline would still be relatively mild compared to historical drawdowns.

CryptoQuant’s head of research, Julio Moreno, estimates that a drop toward $70,000 could materialize within three to six months, while a deeper move toward $56,000 would likely require sustained weakness into the second half of 2026.

Adding to this view, analyst Ali Charts highlights intermediate supports below $83,000, with additional downside levels near $79,500, $70,600, and $63,100 if selling pressure accelerates.

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Growing Warning Signals Across the Market

Several indicators reinforce the cautious outlook. US spot Bitcoin ETFs have shifted from aggressive accumulation to net selling, with holdings declining by roughly 24,000 BTC in late 2025. This reversal suggests institutional demand is cooling.

Derivatives markets tell a similar story. Long-term funding rates in perpetual futures have dropped to their lowest levels since late 2023, signaling reduced appetite for leveraged long positions. Bitcoin has also slipped below its 365-day moving average, a technical boundary that has historically separated bull and bear regimes.

Is a Recovery Still Possible in 2026?

Despite the bearish tone, CryptoQuant does not dismiss the possibility of a rebound. The firm stresses that Bitcoin’s cycles are driven by demand recovery, not time-based events like halvings. If demand stabilizes and begins expanding again, a recovery later in 2026 remains possible.

Market sentiment remains split. While some Wall Street firms continue to project six-figure Bitcoin prices in 2026, others acknowledge $70,000 as a realistic downside scenario. This divide underscores ongoing uncertainty, but also suggests Bitcoin’s long-term upside narrative is far from broken, even if the path forward becomes increasingly volatile.

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