The crypto market (learn more about crypto market) is currently in a tough phase called a bear cycle. During a bear cycle, prices go down, and people feel less positive about the market. However, experts from a company called CryptoQuant say this drop might not be as bad as earlier ones.
According to a recent report by CryptoQuant, Bitcoin (BTC) (understand Bitcoin here) could fall by up to 55% from its highest price ever. If this happens, Bitcoin’s price might reach $56,000 at its lowest point. This would be the smallest drop in price during a bear market that Bitcoin has ever seen.
What Does $56,000 Mean for BTC?
In the past, Bitcoin’s price during a bear market has often matched something called the realized price. Realized price is the average price Bitcoin was last bought or sold. Right now, the realized price is about $56,000 and is slowly increasing. Because of this, experts think that the bear cycle this time won’t be as deep as before. Many also believe that Bitcoin might find temporary support at $70,000 before going lower.
These predictions come as Bitcoin’s good times – known as the bull market – turn tougher due to negative conditions in the market. People are not buying as much as before. Additionally, traders are showing less enthusiasm to take risks in an area called derivatives markets. In simple terms, Bitcoin’s cycles often depend on how much people want to buy it, which changes every few years. Right now, the prices dropping confirms that Bitcoin’s behavior is tied to changes in whether people are buying more or less.
Past Events Driving Bitcoin Demand
Since 2023, three key events have increased interest in Bitcoin:
- The launch of a Bitcoin Spot Exchange-Traded Fund (ETF) market in the United States. ETFs let investors buy Bitcoin more easily.
- The effects of the U.S. presidential election.
- Companies storing Bitcoin as a reserve in their treasuries.
However, demand has been falling since October 2025. This suggests we’re already reaching the end of this period where demand was growing sharply.
Why Do Bear Cycles Happen?
Bear cycles often start when the demand for Bitcoin increases to its peak and then starts to fall. This happens no matter what’s going on with Bitcoin’s supply.
When Did This Bear Cycle Start?
Looking at ETFs, which are funds that track Bitcoin’s price directly, we see hints of this bear phase. These ETFs sold off more Bitcoin in the last part of 2025 compared to the previous year. In late 2024, ETF holdings went up significantly, from 293,000 Bitcoin to 496,000 Bitcoin. However, this year, holdings have dropped by 24,000.
On the other hand, large wallets holding between 100 to 1,000 Bitcoin also show reduced activity. This pattern is similar to what happened at the end of 2021, which led to the 2022 bear market.
What’s Happening in Derivatives Markets?
Another sign of a bear market is seen in the perpetual futures market. Perpetual futures allow traders to bet on Bitcoin’s price without needing to settle a contract on a specific date. Recently, the average funding rate for perpetual futures (calculated over 365 days) has dropped to its lowest in two years. This shows that traders are not willing to keep long-term bets on Bitcoin anymore, which usually happens during bear markets.