- Bitcoin‘s apparent demand has dropped significantly, currently at -93,700 BTC, potentially signaling further price declines.
- Technical analysis reveals a bear flag pattern with a potential downside target of $68,400, representing a 17% drop from current levels.
- Key valuation metrics including the bull-bear market cycle indicator are at their most bearish levels of this cycle, suggesting a possible deeper correction.
Bitcoin rebounded to $83,700 during early Asian trading on March 12, recovering from its $76,600 low on March 11. However, rejection at the $84,000 resistance level raises concerns about BTC’s short-term trajectory as multiple indicators suggest further downside potential amid deteriorating market conditions.
Weakening Demand Signals Caution
The substantial outflows from spot Bitcoin exchange-traded funds (ETFs) have contributed significantly to Bitcoin’s price decline since late February, with withdrawals exceeding $1.5 billion in just two weeks.
CryptoQuant data reveals Bitcoin’s apparent demand remains critically low, indicating diminished risk appetite among potential investors. This metric, which measures the difference between mining production and changes in long-term holdings, has plummeted from 279,000 BTC in early December to a concerning -93,700 BTC currently.
Apparent demand turned negative in late February for the first time since September 2024, which historically can precede significant price corrections. A comparable scenario occurred in July 2024 when similar demand levels preceded a 30% price drop to $49,000 by early August.
However, negative readings don’t guarantee downward price movement in all cases. Similar negative readings in May and October 2024 were followed by price increases of 7% and 73%, respectively.
Bearish Valuation Indicators Mount
Data from Cointelegraph Markets Pro and Binance“>TradingView shows Bitcoin trading 7% above its recent four-month low, but several critical valuation metrics signal potential further weaknesses.
The bull-bear market cycle indicator, which measures momentum by calculating the difference between the P&L Index and its 365-day moving average, currently sits at -0.067—its most bearish level since May 2023. Values below zero traditionally indicate bear market conditions.
Additionally, the MVRV ratio Z-score has dropped below its 365-day moving average, suggesting the upward price momentum has stalled. "Historically, valuation metrics at these levels have signaled either a sharp correction or the start of a bear market."
Technical Analysis Points to Further Downside
From a technical perspective, Bitcoin has formed a bear flag pattern after dropping from $92,000 to $76,600 between March 6-11. This bearish continuation pattern shows Bitcoin trading in an ascending parallel channel, with recent movement testing the lower boundary at approximately $82,000.
If this support fails, technical projections suggest a downside target of approximately $68,400—representing a potential 17% decline from current levels.
CryptoQuant analysts note that if the critical support zone between $75,000 and $78,000 doesn’t hold, Bitcoin could potentially decline further to $63,000.
This combination of weakening fundamentals, bearish valuation metrics, and concerning technical patterns suggests investors should proceed with caution as Bitcoin navigates this period of market uncertainty.
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