Bitcoin Faces Crucial Test as Price Holds Below $85K

Bitcoin has entered a consolidation phase after weeks of intense selling pressure, trading between $80K and $85K. This phase is critical for bulls as they need to push BTC above $90K to prevent further price declines. The cryptocurrency has seen a significant drop of over 29% since reaching its all-time high in January, leading to speculation about a potential bear market. Traders are cautious, unsure whether BTC has bottomed out or if further declines are imminent.

Data from CryptoQuant indicates that the current phase of negative demand suggests BTC distribution, a pattern that historically leads to temporary corrections but does not always signal a full trend reversal. The decline in demand is approximately -140K BTC, which is significantly lower than previous crisis outflows. While this localized selling pressure adds uncertainty, analysts suggest that the scale of the current decline does not threaten the broader bull market. The coming days will be crucial as Bitcoin must hold its current range and reclaim key resistance levels to confirm a recovery or risk further losses if bears remain in control.

The crypto market, along with the US stock market, is facing challenges due to macroeconomic uncertainty and trade war fears. Bitcoin is down nearly 20% since the start of the month, and the bearish trend appears likely to continue as sentiment remains weak. Despite this negative short-term outlook, market fundamentals remain strong. Institutional adoption continues to grow, and plans to create a strategic Bitcoin reserve could be a major catalyst for future price action. Many analysts argue that while current conditions are bearish, they don’t necessarily signal the end of the bull market.

Top analyst Axel Adler supports this view, suggesting that BTC’s decline is part of a normal market cycle rather than the start of a prolonged downturn. Adler notes that the current phase of negative demand indicates BTC distribution, a trend that has historically led to temporary corrections but has not always signaled a full trend reversal. The decline in demand is approximately -140K BTC, significantly less than previous crisis outflows. Despite the current localized selling pressure, this decline does not threaten the broader bull market. Instead, it appears to be a short-term profit-taking event following Bitcoin’s all-time high and a reaction to macroeconomic factors.

Adding to market uncertainty, the Federal Reserve continues to maintain tight monetary policy, while inflation data has exceeded expectations, prompting markets to adjust their rate forecasts. This has increased pressure on risk assets, including BTC, leading to further volatility and cautious investor sentiment. Bitcoin is currently trading at $84,300, struggling to regain momentum after weeks of selling pressure. The price is now below the 200-day exponential moving average (EMA) at $85,500 but remains slightly above the 200-day moving average (MA) around $84,000. Bulls must hold this support and reclaim the $85K level to prevent further downside.

For a confirmed recovery rally, BTC needs to break through $85K and push above $90K as soon as possible. Reclaiming these levels would signal renewed bullish momentum, potentially reversing the current downtrend and leading to a retest of higher resistance zones. However, if BTC fails to reclaim the 200-day MA and EMA, it could face stronger selling pressure, leading to a possible drop below the $80K level. Losing this key psychological support would likely trigger panic selling, forcing BTC into lower demand zones and extending the current bearish phase. With market conditions still uncertain, bulls must act quickly to push BTC above resistance and prevent further downside risks. The next few trading sessions will be crucial in determining Bitcoin’s short-term direction.