Bitcoin’s Q1 2026 trend: Will bears stay in control as LTH buying, ETF flows shift?

Bitcoin’s [BTC] price performance has remained under pressure, with the asset down roughly 32% from its all-time high of $126,000 and lower by 5.6% over the past year.Selling pressure intensified on the 10th of October and persisted throughout the fourth quarter of 2025, as prices trended lower before settling into a range-bound zone between $85,000 and $90,000 on the chart.The key question now is whether this downtrend will extend into Q1 2026.While broader market optimism remains limited, several on-chain and institutional signals suggest that sentiment may be nearing a turning point. AMBCrypto examines the factors shaping this outlook.Long-term investors pause distributionThe outlook has started to show early signs of stabilization.Long-term Bitcoin holders—defined as addresses with unspent transaction outputs (UTXOs) older than six months—have begun to shift behavior.This cohort, which had been distributing Bitcoin to the market since July, appears to have paused selling.Data from CryptoQuant showed that long-term holders moved from selling 674,000 BTC worth $59.8 billion to purchasing 10,700 BTC within a single day.While this does not yet confirm sustained accumulation, it marks a notable change in positioning and suggests that long-term investors may now be reducing sell-side pressure.Source: CryptoQuantShort-term and retail behavior supports this view. Exchange Netflow data, which tracks Bitcoin inflows and outflows from centralized exchanges, shows that outflows exceeded inflows throughout December.So far, more than $4 billion has been deployed into Bitcoin purchases, with $294 million worth of BTC withdrawn from exchanges during the week starting from the 29th of December.Together, these movements point to a potential stabilization phase, even as Bitcoin continues to trade within a well-defined range.ETF flows signal shifting institutional sentimentActivity from U.S.-based investors remains a key barometer of broader market direction.According to CoinGlass data, U.S. spot Bitcoin exchange-traded funds (ETFs) recorded consistent outflows between the 17th to the 29th of December, with institutional investors pulling $1.12 billion from the market.However, sentiment shifted when $335 million worth of Bitcoin flowed back into ETFs, marking the third-largest daily inflow since the 21st of October. This reversal suggests that institutional selling pressure may be easing.Source: CoinGlassAt the retail level, sentiment has not yet followed the same trajectory.The Coinbase Premium Index, which tracks the price difference between Bitcoin on U.S.-based exchange Coinbase and global exchange Binance, remains negative.At press time, the index was -0.09, indicating weaker demand from U.S. retail participants and continued caution despite improving institutional flows.Digital asset treasury firms provide longer-term supportDigital asset treasury firms could play an increasingly important role in balancing market sentiment.Since their emergence, this group has accumulated Bitcoin holdings valued at $152.4 billion, representing approximately 1.175 million BTC, according to CoinGecko.Notably, these entities continued to accumulate even as Bitcoin prices declined.Source: CryptoQuantStrategy, which holds the largest corporate Bitcoin treasury valued at $59.7 billion, acquired more than one-third of its total BTC holdings in 2025 alone, spending roughly $22 billion.If this pace of accumulation continues alongside improving market conditions, Bitcoin could see a stronger recovery phase.For now, bearish pressure still dominates near-term sentiment. The Fear and Greed Index remains at 32, reflecting a fearful market environment.A broader shift in sentiment, combined with alignment around supportive macro and regulatory conditions—such as enhancements to the supplementary leverage ratio—could improve market liquidity and provide the foundation for a sustained upside move in Q1.Final ThoughtsBitcoin’s bullish dynamics are gradually taking shape as the new year approaches, with long-term holders slowing distribution.Digital asset treasury firms are emerging as a potential stabilizing force, with regulatory clarity and policy alignment adding longer-term support.