Bitcoin (BTC) has quickly fallen from its ATH of $124,000, causing market sentiment to be split between concern and expectation.
The group of retail investors continues to accumulate, while large wallets are offloading, creating a tug-of-war around the $105,000 region.
At the current time, BTC is trading around $109,700, down more than 3% in 24 hours. If buyers maintain this level, confidence may be bolstered. Conversely, if it breaks support, a wave of fear-driven selling could erupt, pulling the price down further.
NVT Ratio signals a warning
According to CryptoQuant, the NVT ratio is at 33.8, down nearly 11%, indicating weakening trading strength relative to valuation.
The imbalance between market capitalization and on-chain activity indicates a decline in actual demand on the network. Traders may see this as a warning signal regarding the weakening of fundamental factors.
If NVT continues to decline, Bitcoin may struggle to maintain stability at key support levels, even as some holders persist in accumulating.
Decreasing demand
Bitcoin's on-chain activity also paints a cautious picture. The number of Bitcoin transactions has decreased to 97,000, while network growth has fallen to 72,000.
This indicates that the number of active users and the momentum of Bitcoin adoption are lower, signaling that overall market participation is declining.
The weakening momentum reflects a rapid decline in demand after hitting a peak, and if the indicators do not recover soon, BTC will struggle to maintain a higher valuation as the number of actively participating users continues to shrink.
2 factors increasing fear
According to data from Santiment, market sentiment has also turned negative as the Weighted Sentiment index drops to –1.06, while Social Dominance stands at 25.56%.
Together, these indicate a loss of confidence and a weaker role for Bitcoin in market discussions. Lower dominance often accompanies capital rotations into altcoins or exits from the crypto space.
The combination of negative sentiment and declining dominance may increase volatility. If sentiment does not recover, pressure may continue to drive Bitcoin's price down.
Conclusion
The short-term outlook for Bitcoin is leaning towards a downtrend, despite smaller wallets continuing to accumulate.
The weakness in NVT, network activity, and market sentiment suggests that BTC may struggle to hold the $105,000 mark.
Although short-term rebounds may occur, the overall trend still leans towards deeper corrections before BTC can regain sustainable growth.
