Bitcoin (BTC) is currently undergoing what seems to be its most intense correction in the ongoing bull cycle. After dropping below $81,000, it has rebounded to around $87,000, marking a decline of more than 35% from its peak earlier this month.

Despite the general belief that the cryptocurrency and Bitcoin may see another rally (potentially in 2026) before the bull run concludes, both technical and fundamental indicators suggest otherwise. The latest weekly report from CryptoQuant highlights on-chain and off-chain metrics that imply the onset of a bear market.

Is the Bull Cycle Over?

According to CryptoQuant, BTC has experienced a drawdown exceeding 35%. The cryptocurrency has dipped below its 365-day moving average (MA) set at $102,000 and crucial support levels between $90,000 and $92,000. Historically, the 365-day MA has been a reliable support threshold, and during this bull phase, BTC has never sunk below it in previous price corrections.

Remarkably, this MA was one of the preliminary signs indicating the beginning of the 2022 bear market. Market conditions today are recognized as the most bearish since this bull cycle commenced in January 2023, with prospects of further deterioration. Additionally, CryptoQuant’s Bull Score Index has dropped to alarming bearish levels of around 20 out of 100.

Demand Needed For New Rally

Unlike previous corrections in this bull cycle, which were bolstered by consistent institutional demand, this phase seems to lack the same support. Analysts at CryptoQuant have stated that much of the cycle’s demand wave has likely peaked.

The Bitcoin holdings of spot Bitcoin ETFs have seen a year-over-year decline, growing at one of the slowest rates since their inception. Bitcoin buying by Treasury companies, which had been a primary demand source earlier this year, has nearly ceased due to a market cap decline of at least 70% over recent months.

While leading Treasury company Strategy is still acquiring BTC, its purchases have dramatically lowered from 171,000 BTC a year ago to just 9,600 BTC today. This decrease is attributed to their inability to issue more shares to raise capital for acquisitions, drastically impacting demand.

Additional Insights

Regardless of the current market conditions, CryptoQuant believes a potent catalyst could emerge to restore sufficient demand to trigger another rally next year. The crucial question remains: what catalyst will be powerful enough to enhance BTC demand in the upcoming months?