Bitcoin’s Rally Stalls – Could Prices Fall Further?

Bitcoin has bounced back after dipping to $93,000, but analysts caution that further downside could see prices drop to $86,000.

A report from CryptoQuant highlights weakening demand, slowing blockchain activity, and a lack of fresh liquidity as key factors weighing on Bitcoin’s outlook. Enthusiasm following Donald Trump’s election win drove demand in late 2024, but that momentum has faded. CryptoQuant data shows that Bitcoin’s demand growth has plunged from 279,000 BTC in December to just 70,000 BTC recently.

Another concerning sign is the declining inflows into spot Bitcoin ETFs, which had been a major catalyst for past rallies. While these ETFs saw daily inflows of up to 18,000 BTC in late 2024, they have since recorded consistent outflows over the past two weeks, reflecting shifting investor sentiment.

On-chain data supports this bearish outlook. CryptoQuant’s Cross-Exchange Flow Pulse, which monitors BTC transfers between exchanges, indicates a drop in Bitcoin moving to Coinbase—a key indicator of U.S. spot demand. These transactions have fallen below their 90-day moving average, suggesting investors are pulling back.

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The broader crypto market also lacks fresh capital inflows. While the stablecoin market cap recently hit an all-time high above $200 billion, its growth has slowed dramatically. The 60-day average expansion of Tether (USDT), the largest stablecoin, has plummeted from $20 billion in mid-December to just $1.5 billion, pointing to reduced buying power.

At the same time, Bitcoin network activity has dropped significantly. CryptoQuant’s Bitcoin Network Activity Index is at its lowest level in a year, down 17% from its November peak. For the first time since China’s mining ban in 2021, this metric has dipped below its 365-day moving average. Falling trading volumes signal declining investor participation and reduced speculative interest, further weighing on Bitcoin’s price.

After hitting an all-time high of $109,000 in January on optimism over Trump’s presidency, Bitcoin has struggled to sustain its momentum. The cryptocurrency is currently consolidating above $90,000, facing resistance as sentiment weakens.

Alexander Stefanov