Suddenly, or too quickly, stopping Seroquel = no sleep. It is most certainly a physical reaction.
However, I was on 50mg for sleep, then was able to drop it down to 25mg. A month or so after that, down to 12.5mg. AT 12.5 I was still able to sleep well.
Two months later I stopped the Seroquel entirely. My sleep was not fabulous, but it was tolerable. Melatonin has helped to a decent degree.