Key Takeaways
What Caused Bitcoin’s Bearish Turn?
CryptoQuant’s Bull Score Index fell from 80 to 20, while apparent demand fell to 111,000 BTC, marking Bitcoin’s steepest decline since April.
What could cause a recovery?
A breakout above $115,000, coupled with $14.9 billion in new stablecoin inflows and whale accumulation, could restore bullish momentum.
Bitcoin [BTC] extended the recent downturn as escalating trade tensions between the US and China wiped out over $21 billion in Open Interest in the derivatives market, in addition to Ethereum [ETH].
Assets struggled to stay above the $110,000 level, with bearish sentiment still dominating the broader market. As near-term uncertainty continues, AMBCrypto has outlined key factors that could trigger a potential rally.
Why Bitcoin Dropped
The recent recession has driven many investors out of the market, leaving the bears firmly in check.
CryptoQuant’s The Bull Score Index dropped sharply from 80 to 20, at the time of writing, signaling a shift toward bearish on-chain conditions.
The steep decline reflected traders’ waning conviction and amplified the sell-side pressure evident in spot markets.
Source: CryptoQuant
Likewise, the apparent demand metric recorded a 30-day contraction of 111,000 BTC, marking the steepest decline since April.
This contraction, which started on October 8, indicated that the market was entering a bearish phase, with demand in the spot market falling significantly. This meant that investors were less willing to bid for higher Bitcoin prices.
Still, other indicators suggested that recovery could still be possible if investor behavior changes.
What could cause a rebound?
According to CryptoQuant’s latest analysis, a recovery could occur once realized profits start rising again. As holders return to on-chain profitability, overall market confidence is likely to improve.
This shift would likely occur if Bitcoin breaks above the $115,000 level, the current cost base that reflects investor profitability.
Source: CryptoQuant
Farzam Ehsani, co-founder and CEO of VALR, emphasized that broader economic easing could heavily impact any Bitcoin recovery.
“The trade-off between monetary policy easing and renewed trade tensions continues to shape market dynamics and investor behavior in the near term,” he said.
That shift provided optimism for the fourth quarter, a historically favorable period for BTC’s performance. Institutional flows supported this view, with $102.5 million in new Bitcoin purchases in the past 24 hours.
Stablecoin growth and whales support broader optimism
The broader market outlook suggested that the recent dip to $110,000 could be temporary.
Stablecoin’s liquidity continued to grow, signaling a potential return of market demand.
Over the past 60 days, the USDT Market Cap Change showed an increase of $14.9 billion, accompanied by an additional $1 billion added in one day, an encouraging sign for near-term purchasing power.
Source: CryptoQuant
Meanwhile, whales continued to collect Bitcoin.
In effect, large BTC holders are entering a bullish inflection zone, historically prior to the price recovery. This pattern suggested that whales were quietly positioning themselves for another potential rebound.
While the crash affected short-term fundamentals, overall liquidity and accumulation trends pointed to a recovery period as demand returns in the coming weeks.