Bitcoin remains above $88,000–$90,000 on December 22, but the market structure beneath the price seems increasingly vulnerable. Recent volatility, decreasing liquidity, and declining demand raise concerns that crypto may transition from a late bull phase to the beginning of a bear market towards January 2026.
Multiple on-chain and market structure indicators are now pointing in the same direction. None of these signals confirms a complete bear market on their own. But together they show that the risk of decline is increasing and support levels are weakening.
Apparent demand growth for Bitcoin revolves around
The apparent demand growth for Bitcoin shows how much new buying pressure there is compared to the available supply.
The latest data shows that demand growth is slowing after multiple waves earlier in the cycle. Although the Bitcoin price largely remained high in 2025, demand did not reach new highs.
This divergence indicates that price strength mainly came from momentum and leverage, rather than new spot purchases.
Historically, if demand growth stagnates or decreases while the price remains high, the market often shifts from accumulation to distribution. This usually marks the beginning of a bear market or a long period of consolidation.
American spot Bitcoin ETF inflows are losing momentum
American spot Bitcoin ETFs are the strongest source of structural demand in this cycle.
In 2024, the inflow into ETFs steadily accelerated until the end of the year. But in Q4 of 2025, the inflow flattens out and even decreases in some periods.
This change is important because ETFs represent long-term capital rather than short-term trading.
If ETF demand decreases while the price remains high, it means that large buyers are withdrawing. Without a sustained inflow of institutions, Bitcoin is more vulnerable to volatility driven by derivatives and speculation.
Wallets with 100 to 1,000 BTC, often called 'dolphins', are usually associated with professional investors and funds.
The latest data shows a strong decline in dolphin holdings on a year-over-year basis. Similar behavior was observed at the end of 2021 and early 2022, just before larger market corrections.
This does not mean that there is panic selling.
Instead, it indicates risk reduction by experienced holders. Historically, when this group sells while the price remains high, it indicates that they expect lower returns or prolonged consolidation.
Funding rates are declining on exchanges
Funding rates measure the costs that traders pay to maintain leveraged positions.
On major exchanges, Bitcoin funding rates have clearly entered a downward trend. This shows that there is less demand for leverage while the price remains relatively high.
In bull markets, strong rallies are supported by rising funding and sustained demand for longs.
If funding rates are actually declining, traders are less certain and less willing to pay to remain long. Such a situation often occurs when volatile price movements are approaching or when a major trend reversal is imminent.
Bitcoin below the 365-day moving average
The 365-day moving average is a long-term trend indicator that historically separates bull markets from bear markets.
Bitcoin has now, for the first longer period since early 2022, fallen below this level. In previous macro-driven sell-offs in 2024 and early 2025, this level was tested, but Bitcoin did not close below this line then.
A prolonged breakthrough below the 365-day moving average does not automatically mean a crash. However, it indicates that long-term momentum is changing, and the likelihood of price increases facing more resistance is greater.
How low can Bitcoin go in a bear market?
If these signals continue to align, historical data provides a reference point, not a direct expectation.
Bitcoin's realized price is now around $56,000. This is the average purchase price of all holders. In previous bear markets, Bitcoin was often supported at or just below this level.
This does not mean that Bitcoin must drop to $56,000. But it does suggest that, in a full bear situation, long-term buyers often step in around this area.
Between the current levels and the realized price lies a broad possible spectrum. This can range from prolonged sideways movements to a sharp decline, but it does not have to be a significant drop.
On December 22, Bitcoin is moving largely within a range, with low liquidity and high sensitivity to movements due to leverage. Retail investors are cautious and institutional capital is flowing in more slowly.
Altcoins are more vulnerable than Bitcoin. They are more dependent on retail demand and drop faster when liquidity dries up.
These five charts together show that crypto may be entering a distribution phase at the end of the cycle. The risk of a bear market beginning in 2026 increases if demand does not recover.
The trend is weakening, but it is not irreparably broken. However, the margin of error has become smaller.
