CryptoQuant's latest report shows that Bitcoin network activity has fallen to its lowest point in a year. What does this mean? Simply put, key indicators such as Bitcoin's active addresses, number of transactions, and block size are all decreasing.
The network activity index is now at 3,658, the lowest level since February 2024 and below its 365-day moving average, something not seen since China banned Bitcoin mining in July 2021. This suggests that activity on the world’s largest blockchain network has entered a negative trend.
Additionally, since BTC experienced an acceleration period from November to December, the growth in Bitcoin demand has been on a downward trend. After the U.S. presidential election, Bitcoin demand surged to 279,000, but this metric now hovers around 70,000. Factors affecting demand growth include economic uncertainty brought by U.S. trade tariffs, inflation concerns, and potential selling pressure from the bankruptcy repayment of the cryptocurrency exchange FTX.
Moreover, the daily purchase volume of Bitcoin ETFs has plummeted from over 18,000 in early November to less than 1,000 BTC currently. CryptoQuant pointed out that BTC's rise has historically coincided with an increase in ETF purchase volume; however, the current purchase levels do not support a surge in the price of such assets.
Meanwhile, the spot demand for Bitcoin in the United States has slowed down, with the amount of BTC flowing from other exchanges to Coinbase dropping below its 90-day moving average, indicating relatively low demand and that the price is still in a period of adjustment.
In addition, the pace of stablecoin liquidity expansion has also slowed. Although the total market value of stablecoins has reached a new high of over $200 billion, their liquidity expansion rate is slowing down. For example, Tether (USDT)'s market value has dropped by 92% from $20.4 billion in the 60-day change on December 16 to $1.5 billion now.
CryptoQuant finally stated that BTC needs a new wave of stablecoin liquidity expansion to rebound again. If demand growth and liquidity conditions do not improve quickly, cryptocurrencies may drop to $86,000, which is the lowest on-chain realization price for traders.
In summary, under the current economic environment and market sentiment, Bitcoin's price is under significant downward pressure. If demand growth and liquidity conditions do not improve in a timely manner, the possibility of Bitcoin's price dropping to $86,000 cannot be ignored. Investors should remain vigilant about market risks, analyze market dynamics rationally, and make investment decisions cautiously.
Do you agree with CryptoQuant's analysis? What other factors do you think will affect Bitcoin's price? Would you adjust your investment strategy in the current market environment? See you in the comments!