Bitcoin Signals Bear Market Shift as Buyer Demand Fades
New York, Saturday, 20 December 2025.
CryptoQuant analysis warns Bitcoin has entered a bear market after plummeting 30% from its $126,000 October peak. Institutional buyer exhaustion and a looming $23 billion options expiry suggest further downside.
Structural Shift Confirms Bearish Outlook
As detailed in our previous coverage regarding the sharp sell-off in crypto equities [6], the correlation between sinking mining stocks and Bitcoin’s asset price has now been contextualized by broader on-chain data. On Friday, December 19, 2025, blockchain analytics firm CryptoQuant officially signaled that Bitcoin is entering a bear market, citing a decisive slowdown in demand growth [2]. This contraction is attributed to the exhaustion of three primary buyer cohorts that fueled the asset’s ascent earlier in the year: spot exchange-traded fund (ETF) investors, corporations establishing digital asset treasuries, and speculative buyers driven by the political enthusiasm surrounding a pro-crypto presidency [1]. Since the asset’s price correction began in October 2025, spot demand has consistently trailed below its upward trendline, indicating that the bulk of this cycle’s incremental demand has already been realized [3].
Critical Support Levels and Investor Sentiment
The market is currently grappling with a severe correction, with Bitcoin trading approximately 30% below its October 2025 record high of $126,080 [1]. As of late December, the asset is hovering near a critical threshold defined by the True Market Average Price (TMMP), which currently sits at approximately $81,500 [4]. This figure represents the average purchase price for investors, excluding miners, and serves as a vital line of defense for market profitability [4]. Should prices fall below this level, coupled with a tightening of the AVIV ratio—a metric comparing active to realized market capitalization—it would signal a transition into a phase of realized losses and weakening investor confidence [4]. While CryptoQuant analysts suggest a downside risk to $70,000 is possible, they also noted a more severe drop to $56,000 remains unlikely at this stage [1][2].
Looming Volatility: The $23 Billion Expiry
Compounding the structural weakness is an imminent liquidity event scheduled for Friday, December 26, 2025, where approximately $23 billion in Bitcoin options contracts are set to expire [5]. This massive expiry threatens to amplify volatility in an already fragile market, which recently witnessed $130 billion in price swings within a single hour on December 17 [5]. Market data indicates significant defensive positioning, with traders holding $1.4 billion in open interest for put options at the $85,000 level [5]. According to Maxime Seiler, chief executive at STS Digital, these flows are likely to cap any potential upside while increasing downside volatility as the market heads into the New Year [5]. Consequently, Bitcoin is on track to record its worst quarterly performance since the second quarter of 2022 [5].