Bitcoin (BTC) has been moving in an uncertain market since the beginning of this month. The price seems to be stalling and waiting for a clear impulse. If this impulse does not materialize, the risk of a further price decline increases.

According to analysts at CryptoQuant, the Bitcoin price could even fall back to a price of $86,000. This possible decline is mainly attributed to three fundamental factors: falling demand, declining network activity, and drying up liquidity in the market.

Falling demand for Bitcoin depresses the price

One of the most worrying signals for the Bitcoin market is the sharp decline in demand for Bitcoin ETFs. While there was still a significant inflow of capital at the end of 2024, driven primarily by optimism surrounding US policy under President Donald Trump, this positive trend has now completely reversed. Demand for Bitcoin fell from a high of 279,000 BTC on December 4 to just 70,000 BTC recently.

While around 18,000 BTC were bought daily in November and December, we have seen increasing net outflows in recent weeks. This indicates that institutional investors are losing interest, which is negatively affecting price performance.

Weak network activity and stagnant stablecoin growth

Not only is the demand for Bitcoin decreasing, but activity on the blockchain is also showing a clear downward trend. The Bitcoin Network Activity Index, a key measure of overall network activity, has dropped a whopping 17% since its peak in November 2024. The current activity level is even below the 365-day average, a situation last observed during the Chinese mining ban in July 2021.

The growth of stablecoins such as USDT has also come to a near-complete standstill. Stablecoins play an essential role as a source of liquidity in the cryptocurrency market, so stagnation here can negatively impact trading.

Although the total market capitalization of stablecoins recently reached a record high of $200 billion, the growth rate has slowed drastically. The 60-day average market capitalization of USDT has dropped by more than 90% since mid-December. This sharp decline can be attributed in part to the increasing regulatory pressure that USDT is currently facing.

Author
Recent Posts

Margharet Tess

Editor, Developer at Cryptheory Labs

I have been active in the cryptocurrency world for over 6 years, during which I have written countless articles about this sector. What fascinates me most about cryptocurrencies is their technological aspect and the problems they aim to solve. In the past three years, I have ventured into app development and am currently working on a larger project called P2E Buzzer. Stay tuned for the surprise. 🙂 My previous experiences: Business2Community.com, TradingPlatforms.com

Latest posts by Margharet Tess (see all)