Core Insights - Bitcoin may be entering a prolonged bear market, signaling the end of its three-year rally according to CryptoQuant's report [1][2] - Demand growth for Bitcoin has significantly slowed, indicating a transition into a bear market [2][3] - The cyclical behavior of Bitcoin is primarily influenced by demand growth rather than halving events or past price performance [3] Demand Dynamics - Buyer exhaustion could lead Bitcoin's price to drop as low as $56,000, which would represent the sharpest drawdown in a bear market on record [2] - The price surge in 2025 was driven by three main demand waves: spot ETF buyers, optimism surrounding a pro-crypto president, and digital asset treasury funders [5][6] - The approval of spot Bitcoin ETFs in January 2024 attracted record flows from previously cautious investors [5] Market Influences - The influx of capital into Bitcoin was partly fueled by expectations surrounding President Donald Trump's pro-crypto stance [6] - Many public companies have adopted digital asset treasuries, purchasing cryptocurrencies to support their stock prices [6] - The report indicates that the majority of this cycle's incremental demand has already been realized, diminishing a key pillar of price support for Bitcoin [7] Price Movements - Bitcoin reached a record price of $126,080 per coin in October but faced significant losses due to fears of a renewed US-China trade war, resulting in a loss of $19 billion in open interest on crypto exchanges [7]