The Current State of Bitcoin: An Analytical Overview of 2025
The year 2025 was initially heralded as a transformative period for Bitcoin, often referred to as the year of the “supercycle.” This optimistic outlook was predicated on unprecedented institutional engagement and a relatively favorable regulatory environment emanating from Washington. Nevertheless, as the year draws to a close, the reality has diverged sharply from these projections.
Rather than ushering in a new paradigm, Bitcoin has encountered significant performance challenges. The momentum of its earlier rally has dissipated; spot prices are experiencing a downward trajectory, and retail investor participation has notably diminished. This shift is occurring concurrently with the transition from narrative-driven support to the more pragmatic realities of a market correction.
Consequently, on-chain data now reflect what analysts characterize as a “bear season,” primarily attributed to a structural deficit in demand for Bitcoin at prevailing price levels.
The Emergence of the Bear Market
The anticipated bullish narrative for 2025 began to unravel not through a sudden market crash but rather through an awakening to the frailty underlying this year’s price peaks. Hunter Horsley, CEO of Bitwise, articulated this sentiment by suggesting that 2025 should be classified as a bear market masquerading as a bull cycle. He posits that Bitcoin has effectively been in “bear season” since early 2025, even amidst record-high prices.
“We will look back on 2025 and realize that it’s been a bear market since February — masked by the relentless bid from Digital Asset Trusts (DATs) and Bitcoin Treasury Companies.”
An important development in this context occurred in the fourth quarter of 2025 when U.S. spot Bitcoin Exchange-Traded Funds (ETFs) transitioned from net accumulation to net redemptions, resulting in an approximate depletion of 24,000 BTC from aggregate holdings.
Moreover, key marginal buyers—including Bitcoin treasury companies—have notably curtailed or altogether paused their purchasing activities. As this flow recedes, the market is increasingly influenced by its underlying demand profile, prompting price adjustments in an environment devoid of a readily available mechanical bid to absorb downturns.
This thesis finds corroboration in data provided by CryptoQuant. Specifically, while Bitcoin’s price remained resilient for much of the year—peaking at approximately $125,000 in October—demand growth has consistently lagged beneath its trend line since early October.
This situation is indicative of a market that has largely front-loaded its purchasing power into a compressed timeframe driven by the launch of U.S. spot ETFs and strategic positioning post-election rather than reflecting a sustainable expansion in demand.
Citing additional metrics from Alphractal further substantiates this perspective. Their data indicates a significant decline in search interest for Bitcoin, reduced Wikipedia page views, and diminished social media engagement—metrics traditionally associated with bearish market conditions.
This behavioral pattern corresponds with historical trends wherein retail investors tend to engage during periods of rising prices but withdraw as market sentiment shifts toward stagnation or decline.
Concurrently, Alphractal has identified the most pronounced selling pressure since 2022. This phenomenon reveals an environment characterized not only by a deficiency of incremental buyers but also by active distribution among existing holders.
Such episodes can foreshadow a bottoming process; however, historical precedents suggest they may also lead to prolonged periods of lateral price action prior to any definitive trend reestablishment.
Reevaluating the Halving Thesis
The ongoing selling pressure observed during this critical juncture—the period wherein the anticipated benefits of the upcoming halving event were expected to generate upward momentum—necessitates a fundamental reevaluation of the underlying mechanisms driving market behavior.
“The current downturn reinforces that Bitcoin’s cyclical behavior is governed primarily by expansions and contractions in demand growth, not by the halving event itself or past price performance. When demand growth peaks and rolls over, bear markets tend to follow regardless of supply-side dynamics.”
In light of these observations, two divergent prognostic frameworks for the year ahead—specifically for 2026—have emerged among leading strategists within the cryptocurrency domain. These frameworks reflect contrasting perspectives centered on liquidity dynamics versus temporal considerations.
Julien Bittel, Head of Macro Research at Global Macro Investor, contends that the traditional four-year cycle associated with Bitcoin is fundamentally misinterpreted and is not inherently linked to halving events. He asserts that Bitcoin’s rhythm is more accurately described as being influenced by fluctuations within the public debt refinancing cycle.
Bittel argues that the current “bear season” should not be perceived as an inherent failure of the asset but rather as an inevitable postponement within the macroeconomic cycle. He elaborates:
“In our view, the four-year cycle is now officially broken because the weighted average maturity of the debt term structure has increased.”
If Bittel’s assertions hold validity, it suggests that present sideways trading may merely represent a temporary interlude before increased liquidity injection becomes necessary for debt servicing—a scenario that could potentially extend market activity well into 2026.
Conversely, Jurrien Timmer from Fidelity adopts a more pessimistic outlook regarding time dynamics. He raises concerns that Bitcoin may have conclusively exited another four-year halving cycle in both pricing and temporal terms:
“My concern is that Bitcoin may well have ended another four-year cycle halving phase, both in price and time.”
Timmer’s analysis correlates historical bull markets with current price patterns; he notes that October’s peak aligns strikingly with characteristics typical of blow-off tops.
Bitcoin Analogs (Source: Fidelity)Timmer’s perspective stands in stark contrast to Bittel’s liquidity-focused outlook; he perceives potential structural exhaustion within the market framework. He anticipates that Bitcoin may confront a “year off” condition in which support levels could oscillate between $65,000 and $75,000—a range that aligns disturbingly well with current observable demand vacuums on-chain.
Conditions Necessary for Exiting Bear Market Territory
The preceding analysis leads inexorably to the conclusion that Bitcoin is currently entrenched within a bear season. Regardless of whether one subscribes to Bittel’s liquidity hypothesis or Timmer’s temporal capitulation viewpoint, it remains evident that marginal buying activity has faltered substantially. In order for this bearish regime to conclude effectively, it is imperative for Bitcoin to undergo substantial structural repair rather than merely relying on new narrative frameworks. Analysts have identified four pivotal transformations necessary for signaling a credible exit from bear territory:
- Stabilization of ETF Flows: A critical prerequisite involves spot ETFs transitioning from net selling back toward consistent net buying. This shift is vital for absorbing distribution dynamics highlighted by Alphractal.
- Re-establishment of Demand Growth Trends: Indicators from CryptoQuant must reflect fresh incremental buying activity rather than mere redistribution tendencies currently evident in on-chain behavior.
- Recovery in Funding Rates: A sustained rebound in perpetual funding rates would indicate renewed trader willingness to incur costs associated with long exposure—a hallmark characteristic absent from prevailing conditions indicative of bullish regimes.
- Price Recovery Above Structural Averages: A successful reclamation and stabilization above its critical moving averages—specifically its365-day moving average—would serve as robust validation signaling shifting market conditions back toward an accumulation phase.
Until such indicators manifest positively within market behavior dynamics, Bitcoin will remain ensnared within the complexities inherent to an evolving marketplace.
