Bitcoin Faces Possible Drop to $86K as Demand Weakens, but Bottom May Be Near
Bitcoin (BTC) has rebounded from its recent dip to $93,000, but downside risks remain, with analysts at CryptoQuant warning of a potential decline to $86,000 due to waning demand, lower network activity, and reduced liquidity inflows.
According to CryptoQuant’s latest report, Bitcoin’s demand— which surged in late 2024 following optimism around Donald Trump’s election win and easing regulatory concerns—has been slowing sharply. Data shows that demand growth fell to 70,000 BTC, a significant drop from the December 4 peak of 279,000 BTC.
Meanwhile, spot Bitcoin ETF inflows, which previously fueled BTC’s rallies, have dried up. Over the past two weeks, ETFs have recorded consistent net outflows, a stark contrast to the 18,000 BTC daily purchases seen in November and December.
Market Indicators Signal Weakness
CryptoQuant’s Inter-exchange Flow Pulse, which tracks Bitcoin movements across trading platforms, also suggests diminished U.S. investor demand. BTC transfers to Coinbase, a key indicator of spot market interest, have fallen below their 90-day moving average.
Additionally, stablecoin growth—a major driver of crypto rallies—has lost momentum. While the total stablecoin market cap has recently surpassed $200 billion, the pace of growth has slowed significantly. The 60-day average change in USDT’s market cap has plummeted by over 90% since mid-December, dropping from $20 billion to just $1.5 billion. Since stablecoins are widely used for crypto purchases, this lack of fresh capital inflows signals potential market weakness.
Furthermore, Bitcoin’s network activity has dropped to a one-year low, per CryptoQuant’s Bitcoin Network Activity Index. The metric has declined 17% from its November 2024 peak and fallen below its 365-day moving average for the first time since China’s BTC mining ban in July 2021. A drop in transactions suggests lower investor engagement and reduced speculative interest.
Bitcoin Approaching Market Bottom?
Bitcoin’s price, which hit an all-time high of $109,000 in January, has since struggled to hold above $90,000, trading within a narrow range. Meanwhile, sentiment in the crypto market has been impacted by controversial memecoin launches, including the TRUMP and LIBRA tokens, which have drained speculative capital.
However, veteran trader Bob Loukas believes BTC may be nearing the end of its corrective phase. According to Loukas, Bitcoin has entered the final stretch of its weekly cycle, signaling that a market bottom could be forming.
The key question, he noted, is whether the $90,000 support level will hold.
“More a question of if the bottom of the range (90K) can hold or not,” Loukas wrote in an X post. “Doesn’t matter, sentiment resetting occurs either way.”
While a further dip below $90,000 remains possible, a market reset may soon set the stage for Bitcoin’s next move.
