Bitcoin Risks Drop to $86K as Demand and Network Activity Decline, but Market Bottom May Be Near
Bitcoin (BTC) bounced back from its dip to $93,000, but selling pressure remains strong, raising concerns about a further decline to $86,000, according to CryptoQuant analysts. Weakening demand, slowing blockchain activity, and dwindling liquidity inflows could push prices lower in the short term.
Bitcoin Demand and ETF Inflows Slowing
Bitcoin demand surged in late 2024 following Donald Trump’s election victory, as optimism grew around potential regulatory easing. However, recent data from CryptoQuant shows a sharp slowdown, with BTC demand growth falling to 70,000 BTC, down from 279,000 BTC on December 4.
ETF inflows, which played a major role in Bitcoin’s rally, have also stalled. After seeing daily net purchases of 18,000 BTC in November and December, spot Bitcoin ETFs have instead recorded steady outflows over the past two weeks.
CryptoQuant’s Inter-exchange Flow Pulse, which tracks BTC transfers between exchanges, shows reduced U.S. investor demand, as Bitcoin movements to Coinbase have dropped below their 90-day moving average.
Stablecoin and Network Activity Show Further Weakness
Stablecoins, often used as a liquidity source for crypto purchases, have also lost momentum. The total stablecoin market cap recently reached $200 billion, but the growth rate has slowed significantly. The 60-day average increase in USDT’s market cap has plummeted over 90% since mid-December, dropping from $20 billion to just $1.5 billion.
Meanwhile, Bitcoin’s network activity has fallen to a one-year low, according to CryptoQuant’s Bitcoin Network Activity Index. The index is down 17% from its November 2024 peak and has fallen below its 365-day moving average for the first time since China’s mining ban in 2021. A decline in transactions suggests reduced investor engagement and fading speculative interest.
Is Bitcoin Nearing a Market Bottom?
Bitcoin hit a record $109,000 in January, but has since struggled to maintain momentum above $90,000. Meanwhile, overall market sentiment has been shaken by high-profile memecoin launches, such as TRUMP and LIBRA, which have absorbed speculative capital.
According to well-known trader Bob Loukas, Bitcoin may be in the final stage of its corrective cycle, suggesting a bottom could form soon.
“The key question is whether the $90,000 support level will hold,” Loukas said in an X post. “But either way, sentiment is going through a necessary reset.”
While a dip below $90,000 remains a possibility, analysts believe the correction could soon come to an end, potentially paving the way for Bitcoin’s next move.
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