Bitcoin’s recent bounce from $93,000 may be short-lived. CryptoQuant analysts warn of a potential drop to $86,000 due to weakening market fundamentals. Let’s analyze the key factors behind this bearish outlook.
Declining Demand Signals
The crypto market shows clear signs of cooling demand. Bitcoin demand growth has fallen sharply from 279,000 BTC in December to just 70,000 BTC recently. Spot ETF flows have turned negative after strong inflows in late 2024.
The Inter-exchange Flow Pulse indicates reduced U.S. spot demand. Coinbase transfers have dropped below the 90-day moving average. This suggests waning institutional interest.
Stablecoin Growth Slowdown
The stablecoin market recently hit $200 billion. However, growth momentum has stalled significantly. USDT’s 60-day market cap growth fell by over 90% since December. This indicates limited fresh capital entering crypto markets.
Network Activity Concerns
Bitcoin’s blockchain metrics flash warning signs. Network activity has hit its lowest level in 12 months. The Network Activity Index shows a 17% drop from November peaks. This marks the first time it’s fallen below the yearly average since July 2021.
Market Implications
Bitcoin struggles to maintain momentum after hitting $109,000 in January. The price remains range-bound above $90,000. Recent controversial memecoins like TRUMP and LIBRA have damaged market sentiment.
Trader Bob Loukas suggests we’re nearing a sentiment reset. The $90,000 support level faces a crucial test. A break below could trigger the predicted drop to $86,000.
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The current market structure suggests a potential bottoming phase. However, traders should prepare for increased volatility. Risk management remains crucial during this period of market uncertainty.
Tags: Bitcoin, Market Analysis, CryptoQuant, Price Prediction, Trading
Source: CoinDesk