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Bitcoin’s Bull Run in Trouble? Price May Fall to $86K, Says CryptoQuant

Bitcoin’s price rally is under threat as CryptoQuant warns of a potential drop to $86K due to weakening demand, ETF outflows, and declining network activity. Will BTC recover, or is a deeper correction coming?

Bitcoin’s meteoric rise to new highs in early 2025 has hit a roadblock, with analysts warning of a potential price drop to $86,000. According to CryptoQuant, weakening demand, slowing liquidity inflows, and faltering network activity could drag BTC lower in the coming weeks.

While Bitcoin had a strong start to the year, recent market trends suggest that the momentum is fading. Several indicators point to a cooling-off period, which could result in further downward movement. Historically, such periods of declining demand and low liquidity have led to sharp corrections before a new uptrend resumes. Many traders are now debating whether this is just a short-term pullback or the beginning of a deeper correction. The coming weeks will be crucial in determining the strength of Bitcoin’s bull market and whether BTC can recover its upward trajectory.

Table of Contents

Bitcoin Faces Downside Pressure

After surging to an all-time high of $109,000 in January, Bitcoin has struggled to maintain its bullish momentum. The cryptocurrency recently dropped to $93,000, recovering slightly, but analysts caution that further downside is likely. The recent decline has left many investors uncertain about BTC’s ability to sustain its long-term bullish trend.

Bitcoin’s price movements have historically followed cycles of sharp increases followed by corrective phases, and this latest downturn appears to be part of that pattern. If BTC fails to hold above the critical support levels, it could trigger panic selling, further accelerating the decline. Additionally, leveraged positions in the market add another layer of risk, as cascading liquidations could push prices down even more. This kind of volatility is not uncommon in crypto markets, but it does raise concerns about whether institutional investors will continue to support Bitcoin at current levels. If institutional demand does not return soon, the downward pressure could intensify, leading to further declines.

Demand for Bitcoin is Slowing

One of the biggest drivers of Bitcoin’s price surge in late 2024 was a renewed wave of investor interest, partially fueled by optimism over Donald Trump’s presidential election victory and expectations of a more favorable regulatory environment. Many investors believed that a more crypto-friendly administration would lead to increased adoption and institutional involvement, pushing prices higher.

However, demand has significantly declined since its peak in December. Data from CryptoQuant shows that after reaching a high of 279,000 BTC in demand, the figure has now dropped to just 70,000 BTC. This drastic fall indicates a major shift in market sentiment, suggesting that the initial wave of optimism may have faded. If demand continues to decrease at this rate, Bitcoin’s price could struggle to maintain even the $90,000 support level.

Another concerning factor is the shift in investor behavior. Retail traders, who were heavily involved in Bitcoin’s previous rallies, now seem hesitant to buy at these elevated price levels. Additionally, whales (large BTC holders) appear to be moving their holdings to exchanges, a sign that they might be preparing to sell. If this trend persists, Bitcoin could face additional downward pressure in the short term.

ETF Inflows Turn Negative

Bitcoin’s rally in late 2024 was also fueled by strong inflows into spot BTC ETFs, which attracted institutional investors. The approval of Bitcoin ETFs was seen as a major milestone for the crypto industry, as it provided traditional investors with easier access to BTC exposure. This led to a surge in demand, contributing to Bitcoin’s rapid ascent.

However, this trend has reversed in 2025:

  • In November and December, BTC ETFs recorded daily inflows of up to 18,000 BTC.

  • Over the past two weeks, ETFs have been experiencing net outflows instead of inflows.

The shift from inflows to outflows suggests that institutional investors may be locking in profits rather than continuing to accumulate BTC. This is a key concern because ETFs were expected to provide long-term buying pressure for Bitcoin. If ETF outflows continue, it could weaken the overall market structure, making it more vulnerable to further declines.

Additionally, ETFs act as a crucial sentiment gauge for traditional investors. A continued trend of outflows may indicate that institutional players are adopting a more cautious approach, possibly waiting for lower price levels before reinvesting. If institutions do not return to the market soon, Bitcoin could struggle to regain its bullish momentum.

Stablecoin Growth Slows – A Red Flag?

Stablecoins play a crucial role in the crypto ecosystem, often serving as liquidity sources for traders looking to buy Bitcoin and other digital assets. These digital assets act as a bridge between fiat currencies and cryptocurrencies, providing traders with a quick and efficient way to move funds across exchanges.

While the total stablecoin market cap recently surpassed $200 billion, growth has slowed significantly:

  • The 60-day average change in USDT’s market capitalization has dropped over 90% since mid-December.

  • USDT’s market cap growth fell from $20 billion to just $1.5 billion in that period.

This sharp decline in stablecoin growth suggests that new capital is not entering the crypto market at the same pace as before. When stablecoin supply grows, it often signals that investors are preparing to buy crypto assets. However, a slowdown in stablecoin issuance implies that fewer investors are positioning themselves to enter the market.

Furthermore, many analysts view stablecoin trends as a leading indicator of overall market health. If this slowdown continues, it could indicate that investors are either exiting the market or waiting for more favorable conditions before re-entering. This lack of fresh capital could be a major barrier to Bitcoin’s recovery.

Bitcoin’s Network Activity Hits One-Year Low

Another warning sign comes from Bitcoin’s blockchain activity, which has dropped to its lowest level in a year. This metric is crucial because it reflects how much Bitcoin is actually being used, traded, and moved across the network.

CryptoQuant’s Bitcoin Network Activity Index shows:

  • A 17% decline from its November 2024 peak.

  • The index has fallen below its 365-day moving average for the first time since July 2021, when China banned BTC mining.

Lower on-chain activity often signals reduced investor engagement and declining speculative interest, both of which are bearish for Bitcoin’s short-term price outlook. If fewer people are transacting with Bitcoin, it suggests a lack of enthusiasm and potential stagnation in market participation.

Additionally, blockchain activity is often correlated with price movements. A decline in transactions can indicate that traders are uncertain about the market’s direction, leading to a period of sideways movement or further downside. If this trend does not reverse soon, it could reinforce bearish sentiment and contribute to additional price declines.

Conclusion

Bitcoin’s rally has lost momentum due to weakening demand, ETF outflows, and slowing stablecoin growth. These factors have created an environment of uncertainty, where both retail and institutional investors are hesitant to commit new capital to the market. If this trend continues, Bitcoin could face a deeper correction, potentially testing the $86,000 support level in the near future.

Despite the current bearish sentiment, some analysts believe that Bitcoin may be nearing a market bottom. Bob Loukas, a well-known trader, suggests that BTC is in the final stretch of its corrective phase. If this analysis is correct, Bitcoin could soon stabilize and prepare for another upward move. However, if key support levels are broken, a further decline could be on the horizon.

FAQs

Why is Bitcoin’s price at risk of dropping to $86,000?

Bitcoin is facing downside pressure due to declining demand, ETF outflows, slowing stablecoin growth, and reduced blockchain activity. These factors indicate that investor interest is waning, which could push BTC lower.

What role do ETFs play in Bitcoin’s price movement?

Bitcoin ETFs allow institutional investors to gain exposure to BTC without directly holding the asset. In late 2024, strong ETF inflows fueled Bitcoin’s rally, but recently, net outflows have been recorded, suggesting that institutions are selling rather than buying, weakening demand.

How does stablecoin growth impact Bitcoin?

Stablecoins, like USDT, are often used to buy Bitcoin on exchanges. When the supply of stablecoins grows, it signals new capital entering the market. However, USDT’s market cap growth has dropped by over 90% since mid-December, indicating that fresh liquidity is drying up.

Why is Bitcoin’s network activity declining?

Bitcoin’s on-chain transactions have fallen to their lowest level in a year, suggesting lower engagement from investors and traders. Historically, declining network activity has preceded market corrections, making this a bearish signal.

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.

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