Bitcoin Flirts With $90K but On-Chain Metrics Warn the Rally Is Running Out of Steam

Bitcoin is heading for its third consecutive day of consistent increases. It recently attempted its seven-day high but faced rejection.  

The apex coin flipped $90k for the first time this week, peaking at $90,352. However, it is currently declining and trades slightly above its opening price. Currently printing a doji, there are fears that the upward momentum is gradually waning. 

Aside from Wednesday’s price action, a look at how prices trended over the last two days suggests that the bulls are showing the early signs of exhaustion. On Monday, BTC gained almost 2% and reclaimed $88k. The next day, it retraced lower but rebounded, ending with no notable price change. 

Trading activity during the current session shows lower volatility and reduced upward momentum, suggesting that the bulls are becoming exhausted. 

Nonetheless, the recent hike above $90k has elicited no response from traders, as they remain unconvinced. Onchain data suggest their apprehensions are valid. 

Bitcoin Supply Loss Flips Positive

Analysts have relied on several metrics to determine when the recent market downtrends will end. They’ve all failed to tell when it will end accurately. However, several bearish indicators suggested further decline, and that played out. 

One such metric recently flipped positive, and its accuracy is almost 100%. The Bitcoin supply loss chart shows how much asset in supply is currently in losses. During the bull run, the BSL chart trends downward, and does the opposite in a bear run. 

In the 1-year timeframe, the metric had trend reversals on three occasions, and each of these events resulted in the start of a bear run.

The chart above shows that the first happened in 2014, resulting in a downtrend that spilled into 2016. Another occurred in 2018, which ended the next year, and another in 2022, which ended in late 2023. In a nutshell, a reversal in this metric has signaled the start of the bear cycle. Interestingly, two of the last three rebounds were confirmed by a double bottom. 

The same trend reversal has taken place on the metric. It has also formed a double bottom, as seen in the previous rebounds that signaled the near market. The chart above shows that it is currently in the final phase of the chart pattern, and further price declines are almost inevitable. 

Bearing in mind how long the previous downtrend lasted, the most recent event may cast a dark foreboding over the rest of 2026. 

There are other indicators that the apex coin is entering a bearish period. 

Bitcoin Demand Collapses 

Another metric to watch is the Bitcoin Retail Demand. The chart below shows the 30-day change in the metric, indicating a possible shift in and depicting when demand increases or plummets. 

At the time of writing, the onchain demand for Bitcoin is plummeting, indicating that investors are becoming increasingly bearish. However, a closer look at the chart above indicates that the most recent decline in demand did not start this week. The metric flipped negative in late December and has not surged above zero amid the short-term price recoveries. 

Caueconomy blamed the current lack of demand on scarce liquidity and warned that the trend would worsen in the coming days. One key event he pointed to was the impending US government shutdown, which may happen at the end of the week. 

The analyst noted that the shutdown and the current situation with Japan will most likely worsen the demand scarcity as these events will lead to a further liquidity crunch. 

The implications for the crypto market, and Bitcoin in particular, will be adverse. As demand plummets and liquidity becomes scarce, investors may become inclined to remove more funds from the market.  

Nonetheless, the fund outflow is ongoing. Two days ago, Darkfost called attention to a drop in the stablecoin market cap. He noted that, for the first time in this cycle, the ERC-20 stablecoin market cap saw a sharp decline, dropping by over $7 billion. The plunge occurs only when money flows from the crypto market into other sectors.

While this is a typical sign of the bear market, some analysts argue that the 4-year cycle has ended and that the current decline will be short-lived. In either case, the government shutdown will accelerate the decline in the stablecoin market cap as traders move funds.  

In summary, Bitcoin is gearing up for further decline once the current upward trend fades. 

Will the Rate Cut Extend the Uptrend?

It is worth noting that the Federal Reserve has not made any recent statements suggesting plans to cut rates. As a result, investors are not expecting much from the announcement in the coming hours. However, they are open to surprises. 

If rates remain the same, the market will plummet. One reason for this conclusion is that when Bitcoin surges in the days leading up to the Fed decision, investors dump their bags when there are no surprises. 

Although the chance of the authorities raising the interest rate is almost zero, surprises are still possible. The market will plummet as well if this happens. 

The only scenario where Bitcoin will go parabolic is if the feds announce a cut. In that case, BTC will continue upward for the rest of the week. Previous price movements suggest that, since flipping the $90k resistance a few hours ago, the next target is $92k. 

Nonetheless, the moving average convergence divergence is currently flipping bullish in response to the ongoing surge. Its histogram prints shorter bars as the gap between the 12- and 26-EMA tightens. The metric indicates a higher likelihood of a further price increase. 

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