Bitcoin (BTC) may be on the verge of another prolonged consolidation phase, similar to the one witnessed in 2024, according to a recent report by CryptoQuant released on Sunday, February 23. Analyst “Avacado onchain” highlighted weakening market sentiment, citing declining network activity as a key indicator.
Over the past few weeks, Bitcoin has been range-bound between $90,000 and $106,000, struggling to establish a clear directional move. Avacado onchain drew parallels to Bitcoin’s previous stagnation between March and October 2024, which only ended following renewed excitement over the U.S. election and Donald Trump’s victory.
Declining Network Activity Raises Concerns
One of the key concerns raised in the report is the sharp drop in Bitcoin network activity. The number of active addresses has decreased significantly, falling from recent highs of over 1.1 million to around 900,000. Additionally, Bitcoin’s transaction count has seen a dramatic decline of over 46%, plummeting from 650,000 to nearly 350,000.
Another bearish indicator noted by Avacado onchain is the decline in positive netflows into exchange-traded funds (ETFs). The analyst attributed this waning enthusiasm to a lack of substantial progress on Trump’s pro-crypto policies, as well as growing geopolitical uncertainties, including fears of a trade war.
“Since previous bullish narratives have already been priced in, further upside momentum will require either the resolution of uncertainties or new bullish catalysts,” the analyst concluded.
A Potential Breakout on the Horizon?
Despite concerns over a prolonged sideways market, not all analysts are convinced that consolidation is inevitable. Veteran trader Peter Brandt suggested that Bitcoin could see a decisive move between February 24 and February 26, citing internal symmetry within the current price range.
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As of now, Bitcoin is trading around the $96,000 mark, awaiting a catalyst to determine its next direction. Whether BTC will break out or enter another months-long consolidation phase remains to be seen, but traders are keeping a close watch on upcoming developments.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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