Bitcoin bearish signals flash at crossroads between bottoming and further correction

A string of bearish signals in the bitcoin market is drawing attention to whether prices are forming a short-term bottom.

CoinPost, a blockchain outlet, reported on Nov. 11 that CryptoQuant said multiple bitcoin indicators have turned bearish at the same time. It assessed that current price levels could be a short-term low, but could also mark the start of a deeper correction.

CryptoQuant analysed the decline as starting with profit-taking after a rise in September and spreading as the U.S. Federal Reserve adopted a hawkish stance. It also cited a Binance hack and a reduction in Republican seats in the U.S. midterm elections as factors weighing on investor sentiment.

Internal market demand has also weakened. Bitcoin's apparent demand fell by 284,000 BTC over the past 30 days. CryptoQuant said there was a case this year in June to July when demand shrank by a similar amount and a short-term low formed afterward.

Stablecoin liquidity has also declined. USDT market capitalisation fell by $6.6 billion over the past 60 days. That is the biggest drop since mid-2022 and exceeds the scale of redemptions seen after the collapse of FTX. Because stablecoins act as sidelined funds in the crypto market, lower liquidity means new demand flowing into bitcoin must rely on other sources of funds.

Profit and loss for short-term holders has worsened. Returns for investors who bought bitcoin 1 to 3 months ago fell to -6 percent from 33 percent on Sept. 22. CryptoQuant said it sees that figure moving closer to a range that signals a short-term bottom. It added that if returns fall well below -12 percent, it could lead to a deeper downtrend as seen in 2024, 2025 and early 2026.

Bitcoin is trading below its 365-day moving average of $76,400. CryptoQuant sees daily closes below that line as a bearish signal and said bitcoin needs to reclaim that level to recover a bullish structure. The next support is the 200-day moving average of $73,200.

CryptoQuant presented as its base scenario the possibility of a short-term low forming at $70,000 to $76,000 in the coming weeks. It added that a bottom has not yet been confirmed and early signals showing a recovery in demand are also lacking.

It cited a shift of the Coinbase Premium into positive territory, a recovery in the daily close above the 365-day moving average, and the Bull Score Index rising above 40 as indicators to judge a recovery. It said if none of those signals appear, the possibility of a further correction remains open.

For the time being, market attention is expected to focus on holding support in the $70,000 range and whether demand recovers. It said that even if the price decline stops, it will be hard to confirm a bottom unless buying improves.