Bitcoin’s On-Chain Demand Falters: CryptoQuant Flags New Downtrend as Price Momentum Shifts

Bitcoin's price action hits a wall as underlying network activity weakens—signaling a potential trend reversal that has analysts on alert.

The On-Chain Reality Check

Forget the hype. The blockchain doesn't lie. When new coins stop moving into strong hands and exchange reserves creep up, it's a classic signal: demand is cooling. This isn't about daily headlines or Elon Musk's latest tweet—it's about the silent, cumulative flow of capital. The metrics tracking long-term holder accumulation and new address growth are flashing caution, suggesting the buy-side pressure that fueled previous rallies is taking a breather. It's the financial equivalent of a restaurant emptying out before the health inspector arrives.

Decoding the Downtrend Signal

CryptoQuant's warning hinges on a simple, often-ignored truth: price follows adoption. When network fundamentals—like active addresses and transaction volume—stagnate or decline while price attempts to climb, a correction usually follows. This divergence creates what traders call an 'unsustainable premium.' The current setup mirrors historical precedents where weakening on-chain demand preceded significant pullbacks. It's a reminder that in crypto, the most reliable indicator isn't on a charting platform; it's embedded in the blockchain's own ledger.

Navigating the Shift

So what's next for Bitcoin? Periods of consolidation after major rallies are not just normal—they're healthy. They shake out weak leverage and reset the stage for the next leg up, provided core adoption trends resume. For investors, this means shifting focus from short-term price predictions to long-term network health. Watch for a resurgence in new user growth and a stabilization in exchange flows. The real bull market isn't canceled; it's just waiting for fundamentals to catch up to the narrative—a familiar dance in an asset class that still thinks a 20% drop is a Tuesday.

In the end, Bitcoin's story was never about straight lines up. It's about resilience. Every major downturn has been met with stronger infrastructure and broader acceptance. This potential downtrend isn't an obituary; it's a stress test. And if history is any guide, Bitcoin tends to pass those with flying colors—after making a few Wall Street veterans question their life choices along the way.

Bitcoin may have already entered a new downtrend, according to on-chain data from CryptoQuant. The analytics firm argues that the recent market weakness is not driven by supply mechanics like halvings, but by a noticeable slowdown in demand, a factor that has historically dictated Bitcoin’s major cycle turns.

Analyst notes that the demand-driven rally seen over the past two years has largely run its course, removing a crucial layer of price support that previously pushed Bitcoin higher.

What Triggered the Demand Slowdown?

Analysts point to three major forces that fueled Bitcoin’s last expansion phase: the launch of US spot bitcoin ETFs, the outcome of the US presidential election, and the rapid adoption of Bitcoin by corporate treasury strategies. Together, these catalysts absorbed a large portion of the available demand.

However, since early October 2025, on-chain demand growth has slipped below its long-term trend. This shift suggests the market has transitioned from expansion to contraction, a pattern that has historically marked the beginning of bearish phases.

How Low Could Bitcoin Fall?

CryptoQuant sees the $70,000 level as a key downside zone in the months ahead. This area is viewed as the first major support where buyers could attempt to stabilize price action. If that level fails to hold, the downside risk increases. In a more prolonged bearish scenario, Bitcoin could drift toward its realized price near $56,000, a level that has often marked cycle bottoms in past bear markets. Even if this occurs, CryptoQuant emphasizes that the decline WOULD still be relatively mild compared to historical drawdowns.

CryptoQuant’s head of research, Julio Moreno, estimates that a drop toward $70,000 could materialize within three to six months, while a deeper MOVE toward $56,000 would likely require sustained weakness into the second half of 2026.

Adding to this view, analyst Ali Charts highlights intermediate supports below $83,000, with additional downside levels NEAR $79,500, $70,600, and $63,100 if selling pressure accelerates.

Growing Warning Signals Across the Market

Several indicators reinforce the cautious outlook. US spot Bitcoin ETFs have shifted from aggressive accumulation to net selling, with holdings declining by roughly 24,000 BTC in late 2025. This reversal suggests institutional demand is cooling.

Derivatives markets tell a similar story. Long-term funding rates in perpetual futures have dropped to their lowest levels since late 2023, signaling reduced appetite for Leveraged long positions. Bitcoin has also slipped below its 365-day moving average, a technical boundary that has historically separated bull and bear regimes.

Is a Recovery Still Possible in 2026?

Despite the bearish tone, CryptoQuant does not dismiss the possibility of a rebound. The firm stresses that Bitcoin’s cycles are driven by demand recovery, not time-based events like halvings. If demand stabilizes and begins expanding again, a recovery later in 2026 remains possible.

Market sentiment remains split. While some Wall Street firms continue to project six-figure Bitcoin prices in 2026, others acknowledge $70,000 as a realistic downside scenario. This divide underscores ongoing uncertainty, but also suggests Bitcoin’s long-term upside narrative is far from broken, even if the path forward becomes increasingly volatile.