According to a report by Cryptoquant researchers, Bitcoin is currently in a bearish phase with onchain metrics indicating increased downside risks. The report highlights that critical valuation metrics and demand trends suggest heightened volatility. Various indicators, such as the Cryptoquant Bitcoin Bull-Bear Market Cycle Indicator and the MVRV Ratio Z-score, have reached their lowest levels in this cycle, indicating the potential for sharp corrections or an extended bear market. Demand for Bitcoin is contracting, with the apparent demand dropping by 103,000 BTC last week, the largest decline since July 2024. Notably, large investors, or "whales," have slowed their accumulation of Bitcoin. U.S. spot Bitcoin ETFs have turned net sellers, offloading 200 BTC year-to-date compared to net purchases of 165,000 BTC during the same period last year. The reversal in institutional demand has intensified selling pressure, further exacerbated by Coinbase outflows signaling diminished U.S. demand. The report warns that the current downturn differs from previous bull market pullbacks due to deteriorating onchain fundamentals. A breakdown of critical short-term support levels could potentially send Bitcoin to $63,000, the "ultimate support" level during deep corrections. The report concludes that the path of Bitcoin will depend on whether buyers can defend key support levels or capitulate to a broader downturn, as current metrics suggest a potential structural shift.



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