Weak Network Activity and Lower Demand Could Push Bitcoin Down to $86K, CryptoQuant Reports

Bitcoin Faces Potential Drop to $86K as Demand Weakens: CryptoQuant

Bitcoin (BTC) rebounded from its Tuesday dip to $93,000, but analysts warn that downside risks remain, with a potential drop to $86,000 still on the table. According to CryptoQuant, a combination of declining demand, reduced network activity, and fading liquidity inflows is putting pressure on the cryptocurrency’s price.
Demand for Bitcoin Slows After 2024 Rally

Bitcoin’s strong momentum in late 2024—driven by optimism surrounding regulatory shifts under Trump’s election—has begun to wane. CryptoQuant data shows that BTC demand has significantly dropped, falling from a peak of 279,000 BTC on December 4 to just 70,000 BTC recently.

Adding to the concerns, Bitcoin ETF inflows—which were instrumental in driving BTC’s previous rallies—have turned negative. While ETFs were seeing as much as 18,000 BTC in daily inflows in November and December, the past two weeks have seen a trend of consistent net outflows.

Another warning sign comes from CryptoQuant’s Inter-exchange Flow Pulse, which tracks BTC movement across trading platforms. The metric shows a decline in BTC transfers to Coinbase, a key measure of U.S. investor interest, with levels now below their 90-day moving average.
Stablecoin Growth and On-Chain Activity Signal Market Weakness

Stablecoins, often considered the liquidity backbone of crypto markets, are also showing signs of a slowdown. Despite the total stablecoin market cap hitting an all-time high of over $200 billion, growth has stalled. The 60-day average increase in USDT supply, which stood at $20 billion in mid-December, has now plummeted to just $1.5 billion—a more than 90% drop.

At the same time, Bitcoin’s on-chain activity is at its lowest level in over a year. CryptoQuant’s Bitcoin Network Activity Index has fallen 17% from its November 2024 peak, dropping below its 365-day moving average for the first time since the 2021 China mining ban. Lower transaction volumes suggest that investor participation is declining and speculative interest is fading.
Is Bitcoin Close to a Market Bottom?

After hitting a record $109,000 in January, Bitcoin has struggled to maintain its momentum, trading within a tight range above $90,000. Market sentiment has also taken a hit from high-profile memecoin crashes, including TRUMP and LIBRA, which have absorbed liquidity and heightened volatility.

However, Bitcoin may be nearing the final stage of its correction, according to well-followed trader Bob Loukas.

“The key question is whether BTC can hold $90K,” Loukas wrote in an X post. “If not, the bottom may come lower, but either way, sentiment is resetting.”

While Bitcoin could briefly dip below $90,000, analysts believe that a bottom may soon form, setting the stage for the next potential rally.