Bitcoin (BTC) has recently experienced a noticeable drop in its 90-day active supply, a key metric used to assess market demand and investor sentiment. This decline is raising questions about Bitcoin’s price movement, and traders are closely watching this shift for signs of what might come next.

Understanding Bitcoin’s Active Supply

The 90-day active supply metric tracks Bitcoin that has been transacted at least once within the past 90 days. A high active supply typically signals increased trading activity, often reflecting growing demand from short-term or new market participants. On the other hand, a decline in active supply can indicate reduced interest or a shift in market sentiment, particularly as long-term holders are less likely to sell during periods of lower activity.

Historically, significant changes in the 90-day active supply have often been a precursor to notable price shifts. When this metric declines, it can signal that the market is entering a consolidation phase or that a correction may be on the horizon. With Bitcoin’s active supply continuing to fall, many are wondering whether this signals a period of price stagnation or further dips in the near future.

Reasons Behind the Decline in Active Supply

Several factors may be contributing to Bitcoin’s declining 90-day active supply. One key factor is the volatility the market has experienced in recent months. After Bitcoin surged past the $100,000 mark following former President Donald Trump’s election, the market saw increased price fluctuations driven by inflation concerns and uncertainty surrounding global economic policies.

This volatility has made many traders cautious. Instead of actively buying and selling, many investors have opted to hold their Bitcoin, hoping for better market conditions. Moreover, the regulatory environment has also played a role in this shift. The U.S. Securities and Exchange Commission (SEC) recently dropped its case against Coinbase, signaling a more favorable regulatory climate. As a result, more investors are holding Bitcoin for the long term rather than engaging in short-term trading.

Additionally, with growing institutional interest in Bitcoin, many market participants are taking a “wait-and-see” approach, further contributing to the reduced short-term trading activity.

Historical Trends and Patterns

Looking at Bitcoin’s historical cycles, the active supply tends to rise during bull markets and fall during corrective phases or post-halving periods. In previous bull runs, such as those in 2013, 2017, and 2021, active supply surged as new traders jumped into the market, eager to capitalize on rising prices. However, after these surges, active supply typically contracted during consolidation periods, signaling a slowdown in market activity before the next leg up.

Currently, Bitcoin’s active supply is mirroring trends seen before previous price breakouts. This suggests that many market participants are holding their assets, possibly anticipating a future upward move. If this pattern holds true, Bitcoin could be in the middle of a consolidation phase before its next significant price increase.

Bitcoin’s Current Price and Market Sentiment

At the time of writing, Bitcoin is trading at around $96,214, showing a slight 0.27% decline in the last 24 hours. The Relative Strength Index (RSI) is at 45.03, indicating that Bitcoin is in neutral territory—not oversold or overbought. Additionally, the On-Balance Volume (OBV) is trending downward, signaling weakening buying pressure, which aligns with the decline in active supply.

Bitcoin has struggled to break above the $100,000 mark, consolidating below this key psychological level. The recent drop in short-term trading activity suggests that investors are becoming more cautious, likely awaiting stronger catalysts to drive further price movement.

What’s Next for Bitcoin?

If the decline in Bitcoin’s 90-day active supply continues, it may indicate that Bitcoin’s price could either remain range-bound for a while or experience a slight dip. A pullback toward $90,000 remains possible if the current trend persists. However, if demand picks up and investor sentiment shifts, Bitcoin could attempt another push toward $100,000.

In any case, Bitcoin’s next move largely depends on external factors, including regulatory developments, institutional interest, and overall market sentiment. Traders should stay alert for signs of renewed demand or further caution in the coming weeks.