Bitcoin Risks Dropping to $86K Amid Weakening Demand and Market Activity: CryptoQuant
Bitcoin (BTC) briefly rebounded from its Tuesday drop to $93,000, but downward pressure remains, with market analysts at CryptoQuant warning that a further decline to $86,000 could be on the horizon. Falling demand, slowing blockchain activity, and declining liquidity inflows are key factors weighing on BTC’s price, the report stated.
Bitcoin Demand Slows After 2024’s Bull Run
After a strong surge in late 2024, fueled by optimism surrounding Trump’s election victory, Bitcoin demand has started to lose momentum. According to CryptoQuant data, the number of BTC purchased has dropped from a December 4 peak of 279,000 BTC to just 70,000 BTC recently.
One major indicator of this slowdown is shrinking inflows into spot Bitcoin ETFs. These funds, which previously saw up to 18,000 BTC in daily inflows in November and December, have now recorded consistent outflows over the past two weeks.
Another concerning trend is CryptoQuant’s Inter-exchange Flow Pulse, which tracks BTC movements across exchanges. The metric shows that BTC transfers to Coinbase—a key gauge of U.S. demand—have dropped below their 90-day average, signaling weakening investor interest.
Stablecoin Market and On-Chain Activity Show Signs of Stress
Stablecoin expansion, often seen as a liquidity driver for crypto markets, has also slowed dramatically. Despite the total stablecoin market cap surpassing $200 billion, growth has significantly decelerated. The 60-day average change in USDT’s market cap has fallen over 90% since mid-December, plunging from $20 billion to $1.5 billion.
On-chain activity is another bearish signal. CryptoQuant’s Bitcoin Network Activity Index shows that BTC’s network activity has dropped to its lowest level in a year, with the index down 17% from its November 2024 peak. This marks the first time it has fallen below its 365-day moving average since China’s 2021 mining ban, indicating declining investor engagement and lower speculative activity.
Bitcoin Could Be Nearing a Bottom
Following its all-time high of $109,000 in January, Bitcoin has been stuck in a tight trading range above $90,000. Market sentiment has also been hit by controversial memecoin launches, including TRUMP and LIBRA, which have absorbed liquidity and fueled volatility.
According to well-known trader Bob Loukas, Bitcoin may be approaching the final phase of its correction.
“The key level to watch is $90,000,” Loukas noted in an X post. “A break below could confirm the bottom, but either way, the market is undergoing a much-needed sentiment reset.”
While a short-term drop below $90,000 remains possible, analysts suggest that Bitcoin could soon find a solid base for its next move.
