Bitcoin price, trading near $96,000, faces a potential deeper decline to $86,000 according to CryptoQuant analysts. Factors like waning demand, muted blockchain activity, and low liquidity inflows contribute to the bearish outlook.
Bitcoin has been trading within a tight range around $96,000, but several technical indicators suggest a potential for a deeper decline toward $86,000, according to CryptoQuant analysts. Current market conditions, including sluggish demand, declining network activity, and limited liquidity inflows, point towards further downward pressure on Bitcoin's price.
The sentiment shift within the market appears nearly complete as Bitcoin approaches the final phase of its weekly cycle, as observed by well-known trader Bob Loukas.While Bitcoin briefly rebounded from a Tuesday dip to $93,000, the persistent downward pressure raises concerns about a more significant pullback to $86,000. CryptoQuant attributes this potential decline to waning demand, faltering blockchain activity, and a lack of fresh capital entering the cryptocurrency market. Notably, Bitcoin's demand, which surged in late 2024 fueled by optimism surrounding the easing of regulatory hurdles following Donald Trump's election victory, is now retreating. CryptoQuant data reveals a sharp decline in demand growth, plummeting to 70,000 BTC recently from a peak of 279,000 BTC on December 4th.Furthermore, inflows to spot Bitcoin exchange-traded funds (ETFs), a common trend during Bitcoin's previous rallies, have ceased, experiencing consistent net outflows over the past two weeks. This contrasts sharply with the previous surge in November and December, when daily purchases reached as high as 18,000 BTC. Additionally, CryptoQuant's Inter-exchange Flow Pulse, which monitors Bitcoin transfers between exchanges, also indicates weakness. Specifically, transfers to Coinbase, a key indicator of U.S. spot demand, have fallen below their 90-day moving average. Stablecoin growth, a traditional propellant for cryptocurrency market rallies, has also lost momentum. Although the total stablecoin market capitalization recently surpassed $200 billion, the rate of expansion has significantly slowed. The 60-day average change in USDT's market capitalization, the largest stablecoin, has plunged by over 90% since mid-December, dropping to $1.5 billion from over $20 billion. This slowdown suggests a diminished inflow of fresh capital into the market.Muted activity on the Bitcoin network further amplifies warning signs. CryptoQuant analysts note that Bitcoin's network activity has reached its lowest point in a year, as per CryptoQuant's Bitcoin Network Activity Index. This metric has declined by 17% from its November 2024 peak and fallen below its 365-day moving average for the first time since July 2021, coinciding with China's ban on Bitcoin mining. The reduced number of transactions indicates declining investor engagement and waning speculative interest.After reaching a record high of $109,000 in January, driven by optimism surrounding Donald Trump's presidency, Bitcoin has struggled to maintain its position and has been confined to a narrow range above $90,000. Meanwhile, sentiment within the broader cryptocurrency market has been negatively impacted by recent controversial memecoin launches. Notably, trader Bob Loukas observes that the sentiment reset is nearing completion as Bitcoin enters the final stage of its weekly cycle. While Bitcoin may find a bottom in the near future, it could potentially break below the $90,000 support level during this corrective phase.
BITCOIN CRYPTOCURRENCY MARKET ANALYSIS PRICE PREDICTION DEMAND LIQUIDITY BLOCKCHAIN ACTIVITY
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