Bitcoin’s Severe Decline and Dwindling Demand

Bitcoin has recently plunged into its most alarming bearish phase since the exhilarating bull cycle began in January 2023, as revealed in a recent analysis from CryptoQuant. The latest assessment by this on-chain intelligence firm illustrates that the current decline in value diverges fundamentally from previous corrections, marked by troubling shifts in both technical metrics and demand indicators.

The Downward Slide: Technical Indicators

CryptoQuant’s Bull Score Index dropped dramatically to 20 out of 100 last week, signaling a state of extreme bearishness. This shift indicates faltering spot demand, a negative change in price momentum, and a notable slowdown in stablecoin liquidity growth. Furthermore, Bitcoin has slipped beneath its crucial 365-day moving average, a pivotal trend marker that previously indicated the bear market’s confirmation in 2022.

Demand from Treasury Companies Disappears

One of the most alarming transformations is the dramatic decline in purchasing activity from Bitcoin treasury companies—these were previously significant buyers of BTC. Many of these firms have reported a startling 70% to over 90% drop in market capitalization, driving their values below that of their Bitcoin holdings. Because of this, they can no longer issue new shares to raise funds necessary for additional Bitcoin purchases.

Shift in Market Dynamics: From Strategy to Scarcity

Strategy, once the most formidable buyer in the Bitcoin marketplace, has drastically reduced its accumulation efforts. The company’s market valuation has dwindled to the point where it mirrors the value of its Bitcoin reserves. The CryptoQuant analyst asserted, “Strategy can’t do all the lifting in this market, and Treasury companies have effectively disappeared as a demand source.” This underscores the precarious state of Bitcoin as the demand that once buoyed prices evaporates.

Cycle Predictions: Are We Seeing an End or Extension?

Historically, Bitcoin’s bull-bear cycles have oscillated around four years (2014–2017 and 2018–2021), often linked to supply shocks from halvings. The current cycle, stretching from 2022 to 2025, has led many to believe it might wrap up this year. However, some analysts speculate the cycle could extend into 2026, primarily due to the growing presence of institutions and exchange-traded funds (ETFs) influencing market dynamics.

Caution Against Overestimation of Institutional Demand

CryptoQuant warns against presuming stability merely because institutional players are involved. As indicated previously, demand from institutions can wane just as dramatically as it did with the treasury companies. The firm has stressed that cycles hinge more on the waves of demand rather than strictly on halving events. Significant demand drivers, such as Trump’s election win and the Bitcoin treasury companies’ frenzy, are now relics of the past.

Market Support vs. Resistance: The Current Landscape

Despite enduring a 28% drop, Bitcoin retains a foothold near crucial support levels around $90,000–$92,000. However, declining performance isn’t without potential for sudden relief rallies, yet the breach of the 365-day moving average has turned this range into a formidable resistance area, now hovering around $102,600.

Future Outlook: Vulnerability Amidst Uncertainty

The conclusion drawn by CryptoQuant is blunt but revealing: “Bitcoin is vulnerable, but not doomed.” While robust support remains, the path to the next bullish impulse remains shrouded in ambiguity, leaving investors and analysts alike anxiously awaiting the next market-moving catalyst.

Source: finance.yahoo.com/news/bitcoin-enters-most-bearish-phase-161835646.html