As of December 22, Bitcoin is maintaining a price range between $88,000 and $90,000; however, the underlying market dynamics appear increasingly unstable. Recent fluctuations in price, diminishing liquidity, and waning demand have sparked concerns that the cryptocurrency might be shifting from a late-stage bull run into an early bear market as we approach January 2026.
Multiple on-chain metrics and structural market indicators are converging towards this bearish outlook. While none of these factors alone definitively signal a bear market, their combined presence points to heightened downside risks and weakening support levels.
Bitcoin’s Demand Growth Shows Signs of Decline
The measure of Bitcoin’s apparent demand growth reflects new buying pressure relative to available supply. Recent data reveals that after several surges earlier in the cycle, demand growth has begun to slow down. Despite Bitcoin’s price staying elevated throughout much of 2025, demand failed to reach new peaks.
This divergence suggests that recent price strength has been driven more by momentum trading and leverage rather than fresh spot purchases.
Historically speaking, when demand growth plateaus or decreases while prices remain high, markets tend to transition from accumulation phases into distribution stages—often signaling the onset of a bear market or prolonged consolidation period.
US Spot Bitcoin ETF Inflows Are Losing Steam
The US spot Bitcoin ETFs have been one of the most significant sources fueling structural demand during this cycle. Throughout 2024, inflows into these ETFs steadily increased toward year-end; however, Q4 2025 shows signs of stagnation with inflows flattening or even declining at times.
This development is crucial because ETF investments typically represent long-term capital commitments rather than short-term speculative trades.
A slowdown in ETF inflows amid sustained high prices indicates that major institutional buyers may be retreating. Without consistent institutional support through ETFs, Bitcoin becomes more susceptible to volatility caused by derivatives trading and speculative positions.
Dolphin Wallets Are Cutting Back Their Holdings
Dolphin wallets—those holding between 100 and 1,000 BTC—are generally linked with experienced investors such as funds or sophisticated traders. Current data highlights a notable decrease in holdings within this group over the past year—a pattern previously observed before significant downturns in late 2021 and early 2022.
This behavior does not equate to panic selling but rather reflects strategic risk reduction among seasoned holders who anticipate lower returns or extended sideways movement ahead when distributing assets at elevated prices.
Funding Rates Across Exchanges Show Downward Trend
Funding rates indicate how much traders pay for leveraged positions on exchanges. Across major platforms worldwide today’s funding rates for Bitcoin are trending downward clearly despite relatively stable prices — signaling reduced appetite for leverage among traders.
A healthy bull rally typically sees rising funding rates fueled by persistent long position demands; conversely falling funding costs suggest growing trader caution which often precedes volatile price swings or trend reversals.
Bitcoin Falls Below Its Yearly Moving Average
The widely followed 365-day moving average serves as an important benchmark distinguishing bullish trends from bearish ones over longer timeframes.
Recently bitcoin dipped below this level for an extended period—the first time since early-2022—whereas previous macro-driven sell-offs during parts of 2024 & early-25 tested but did not close beneath it.
A sustained breach doesn’t guarantee collapse but signals waning momentum which increases resistance against upward rallies going forward.
If A Bear Market Emerges How Low Could Prices Go?
If current warning signs persist together historical precedent provides context though no certainties:
The realized price — approximately $56K currently — represents average cost basis across all holders historically acting as strong support zones where buyers re-enter during downturns.
This does not imply mandatory falls down to $56K but suggests if full bear conditions develop long-term investors may accumulate near these levels again.
The gap between present valuations & realized value allows room either for gradual sideways action instead sharp declines depending on broader sentiment shifts.
Market Implications Today
Towards late December bitcoin remains trapped within tight ranges characterized by low liquidity & sensitivity toward leveraged moves while retail participation appears cautious alongside slowing institutional flows.
Altcoins face greater exposure given their reliance on retail interest making them vulnerable amid thinning liquidity.
Taken collectively five key charts point towards crypto entering distribution phase typical near end-cycle stages raising chances bears could dominate starting early next year unless fresh buying emerges.
The overall trend weakens yet isn’t irreparably broken—but margin for error narrows significantly now.
Source: BeInCrypto analysis titled “5 Charts Suggest Bitcoin Could Enter a Bear Market in Early 2026.”