Bitcoin is currently facing significant challenges as it attempts to break through the $90,000 resistance level, which has proven to be a formidable barrier this week. The situation has been exacerbated by a troubling dip below the 50-week simple moving average (SMA), a critical long-term trend indicator. Analyst Ali Martinez has highlighted that historical patterns suggest an average decline of 54% following such a breach, pointing to a potential price target around the $40,000 mark.
During this time, data from CryptoQuant reveals that attempts at recovery have been hindered by weak demand and a pervasive sentiment of “Extreme Fear” among investors. The 50-week SMA serves as a vital threshold separating bullish trends from bearish phases, and maintaining prices below this level often indicates the likelihood of extended periods of market weakness rather than mere short-term corrections.
Martinez advises caution rather than forecasting an immediate crash, noting that the risk continues to grow. If Bitcoin cannot reclaim the average in the coming weeks, the downward trajectory becomes increasingly plausible. Weekly closes beneath this pivotal indicator reinforce a conservative stance from a technical perspective.
Insights from blockchain analytics firm CryptoQuant suggest that Bitcoin”s corrective phase might be nearing its conclusion, yet demand remains insufficient to spark upward momentum. The prevailing sentiment of “Extreme Fear” indicates a lack of appetite for risk, which further complicates any recovery efforts. While there have been ongoing inflows into Spot Bitcoin ETFs, the lack of a substantial price reaction suggests that the dynamics of spot demand are not entirely supportive of price increases.
Furthermore, blockchain data points to a negative trend in the Coinbase Premium Index, which indicates weak demand from U.S.-based investors. Additionally, a slowdown in the activity of “whales” entering major exchanges hints at a lack of large-scale accumulation. Notably, there has been increased movement among 7–10-year-old Bitcoin, a trend historically associated with distribution phases or shifts in market dynamics. Overall, CryptoQuant”s analysis leans towards a mild downward trend until there are clear improvements in demand indicators.
Key factors to monitor include the potential for Bitcoin to reclaim the 50-week SMA, shifts in sentiment away from “Extreme Fear,” and signs of strengthening spot demand. Compounding this situation, a recent price anomaly on the Binance exchange saw Bitcoin plummet to $24,111 in seconds before quickly rebounding to above $87,500. This unusual movement was isolated to the BTC/USD1 pair, with no similar declines in other major markets. Experts suggest this was a liquidity-driven event that does not fundamentally alter market dynamics. João Wedson from Alphractal noted that such atypical fluctuations are increasingly common during bear market conditions.
