Bitcoin (BTC ($96,394.16)) has recovered rapidly after falling to as low as $93,000 on Tuesday, but analysts are warning that downward pressure could push the BTC price as low as $86,000.
According to a report by CryptoQuant, declining demand, faltering blockchain activity, and lack of liquidity inflow into the crypto market are among the major factors contributing to Bitcoin’s potential decline.
Following Donald Trump’s election victory, Bitcoin demand surged in late 2024, fueling optimism about a more favorable regulatory environment. However, that demand has since subsided. CryptoQuant data reveals that BTC demand growth has slowed from a peak of 279,000 BTC on Dec. 4 to just 70,000 BTC recently.
Additionally, inflows into spot Bitcoin exchange-traded funds (ETFs), a key driver of previous rallies, have also disappeared. After experiencing daily purchases of up to 18,000 BTC in November and December, these ETFs have recorded steady net outflows over the past two weeks, signaling a shift in investor sentiment.
On-chain data further supports the bearish view, according to the analytics firm. CryptoQuant’s Cross-Exchange Flow Pulse, which tracks Bitcoin movements between exchanges, shows a decline in BTC transfers to Coinbase, a gauge of U.S. spot demand. These transactions have fallen below their 90-day moving averages, suggesting waning investor interest.
Related News: Nigeria Sues Binance, The Fines They Ask For Are Unprecedented
Stablecoin growth, which usually fuels crypto market rallies, has also slowed. While the total stablecoin market cap recently reached an all-time high of over $200 billion, the pace of expansion has slowed significantly. The 60-day average change in market cap of the largest stablecoin, Tether (USDT ($1.00)), has fallen by over 90% since mid-December, from $20 billion to just $1.5 billion. This slowdown points to a lack of fresh capital entering the market, as stablecoins are often used to purchase crypto assets on exchanges.
Muted blockchain activity is another warning sign. CryptoQuant’s Bitcoin Network Activity Index has fallen to a one-year low, down 17% from its November 2024 peak. The metric has fallen below its 365-day moving average for the first time since China banned Bitcoin mining in July 2021. Lower trading volumes suggest declining investor participation and waning speculative interest, further weighing on BTC prices.
After reaching an all-time high of $109,000 in January amid optimism surrounding Trump’s presidency, Bitcoin has struggled to maintain its momentum. The asset is trading in a narrow range above $90,000, encountering resistance as market sentiment weakens.
*This is not investment advice.
Continue Reading: Analytics Company Issues Warning About Bitcoin: This Level Could Be Seen In A Downturn
