Bitcoin is holding above $88,000–90,000 as of December 22, but the market structure below the price is becoming increasingly fragile. Recent volatility, reduced liquidity, and weakened demand have raised concerns that the crypto market may be shifting from the late stage of the bull cycle to the beginning of a correction phase as it enters January 2026.
Many on-chain indicators and the current market structure point in the same direction. While each of these signals is not sufficient to confirm that a bear market has begun, together they indicate that the risk of a correction is increasing and support is weakening.
The clear growth in demand for Bitcoin is slowing down.
Data on demand growth for Bitcoin shows how much new buying has emerged compared to the currently available supply.
Recent data confirms that demand growth is slowing down after several previous bursts. Although Bitcoin prices remained high for most of 2025, new buying has not actually reached new highs.
This discrepancy shows that price strength is primarily based on momentum and leverage rather than new buying capital in the spot market.
History shows that when demand growth slows down or decreases while prices remain high, the market tends to shift from the accumulation phase to distribution. This is often an early signal for a correction cycle or a prolonged sideways phase.
The inflow of Bitcoin spot ETFs in the US is gradually losing momentum.
Spot Bitcoin ETFs in the US are the largest source of demand in this cycle.
In 2024, ETF capital flows are expected to increase significantly toward the end of the year. However, in Q4 2025, this cash flow begins to level off, and at times even decreases slightly.
This is very important because ETFs often represent long-term capital flows rather than short-term trading.
When demand from ETFs slows down while prices remain high, this signals that large buyers are restricting participation. If institutional cash flows do not continue, the Bitcoin market will be more prone to volatility due to the impacts of derivatives and speculative positions.
Wallets holding between 100 and 1,000 BTC, commonly referred to as 'dolphins', are a group of experienced investors or large funds.
The latest data shows that the amount of BTC held by dolphins is sharply decreasing on a year-over-year basis. A similar phenomenon occurred at the end of 2021 and the beginning of 2022, prior to major market corrections.
This is not a signal of panic selling.
Instead, it reflects risk-reducing actions from experienced investors. Historical statistics show: When this group begins to distribute while prices are still high, they believe that future profits will be lower or the market will continue to move sideways.
Funding rates are trending down on exchanges.
The funding rate indicates the cost that traders have to pay when maintaining leveraged positions.
On many major exchanges, the funding rate for Bitcoin has clearly gone down. This indicates that the appeal for using leverage is decreasing, even though prices remain high.
In strong bull markets, price movements are often supported by increasing funding rates and continuous long position demand.
Conversely, when funding rates decrease, it means that traders are less confident and do not want to pay extra fees to maintain long positions. This is often a stage before the market corrects sideways or prepares to reverse a major trend.
Bitcoin falls below the 365-day moving average.
The 365-day moving average is a long-term trend indicator, often used to distinguish between bull markets and bear markets.
Currently, Bitcoin has dropped below this level and has maintained it for a long time for the first time since early 2022. Sell-offs due to macro factors in 2024 and early 2025 previously tested this threshold but could not close below it.
The continuous maintenance of Bitcoin below the 365-day moving average does not necessarily mean a collapse will occur. However, this indicates that long-term momentum is showing signs of weakness, with the likelihood of stronger resistance appearing each time the price increases.
How much could Bitcoin fall if a bear market appears?
If these signals continue to occur simultaneously, the data from the past is only for reference and does not have a guaranteed predictive meaning.
The actual price of Bitcoin is currently near $56,000, which is the average price at which all holders have bought in. In previous bear markets, Bitcoin often bottomed out around or slightly below this threshold.
This does not mean that Bitcoin must decrease to $56,000. However, if the market falls into a strong decline scenario, long-term investors historically tend to buy near this level.
Currently, the gap between the current price and the actual price is still quite large, meaning the market could move sideways for a long time rather than experiencing a sharp decline.
At the time of writing, on December 22, 2024, Bitcoin is still struggling in a narrow price range with low liquidity and is very sensitive to movements based on leverage. Retail investor participation is also quite cautious, and cash flows from large institutions have decreased significantly.
Altcoins are affected even more strongly than Bitcoin. Altcoins depend more on demand from retail investors, so when liquidity weakens, the level of impact will be faster.
These five charts show that the crypto market may be entering the final distribution phase of the cycle, and the risk of a bear market in early 2026 will be higher if demand does not improve.
The overall trend is weakening but has not yet reached a complete collapse. However, the safety margin is increasingly narrowing.
