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Bitcoin (BTC) tapped $83,700 during the early Asian hours on March 12 after reaching a low of $76,600 on March 11 amid a slight improvement in market sentiment. 

BTC/USD facing rejection from the $84,000 level raises questions about whether BTC price could drop further over the next few days.

BTC/USD hourly chart. Source: Cointelegraph/TradingView

Demand for Bitcoin remains weak

Spot Bitcoin exchange-traded funds (ETF) outflows have played a big role in the BTC price drop since late February, surpassing $1.5 billion over the last two weeks.

Related: Why is Bitcoin price up today?

Meanwhile, Bitcoin’s apparent demand remains low, implying a decline in risk appetite from potential investors, according to data from market intelligence firm CryptoQuant, 

What to know:

• Apparent demand is the difference between production and changes in inventory. 

• Production refers to BTC mining issuance, while inventory refers to inactive supply for over a year.

• Apparent demand weakens if production exceeds inventory reduction.

• After a period of acceleration between November 2024 and December 2024, fueled by President Donald Trump’s victory, Bitcoin apparent demand dropped from 279,000 BTC on Dec. 4 to 10,000 on Feb. 26.

• On Feb. 27, the metric turned negative for the first time since September 2024.

• It currently stands at -93,700 BTC at the time of writing. 

• If the trend continues, the price could dip lower, just as it happened in July 2024.

• The chart below shows that Bitcoin apparent demand was at similar levels on July 27, 2024, after which BTC price dropped a further 30% to $49,000 on Aug. 5, 2024.

Bitcoin apparent demand. Source: CryptoQuant

However, this metric does not always guarantee more downside in the future. For example, it was also negative in late May 2024 and late October 2024 before the price rallied 7% and 73%, respectively.

Bitcoin valuation metrics hint at deeper correction 

Data from Cointelegraph Markets Pro and TradingView show Bitcoin price trading 7% above its four-month low of $76,600 reached on March 12.

Despite this rebound, several valuation metrics are still leaning bearish, suggesting a deeper correction is possible, according to CryptoQuant.

• The Bitcoin bull-bear market cycle Indicator is at its “most bearish level" of this cycle.

• The bull/bear market cycle indicator is a momentum metric that measures the difference between the P&L Index and its 365-day moving average.

• Values above 0 show that BTC is in a bull market, while values below 0 indicate a bear market.

• The current value of -0.067 is at the lowest level since May 2023, when Bitcoin’s price embarked on a sustained recovery.

Bitcoin: Bull-bear market cycle indicator. Source: CryptoQuant

• Meanwhile, the MVRV ratio Z-score has crossed below its 365-day moving average, indicating that the upward price trend has lost momentum.

• The MVRV ratio Z-score is a key metric used to assess whether Bitcoin is overvalued or undervalued. 

“Historically, valuation metrics at these levels have signaled either a sharp correction or the start of a bear market.”

Bitcoin price bear flag hints at $68,400

From a technical perspective, BTC price is trading within a bearish continuation pattern that indicates a potential correction ahead.

Key points:

• BTC is trading within a bear flag pattern, indicating the possibility of more downside if key support levels don’t hold.

• The bear flag developed after Bitcoin dropped from $92,000 to a local low of $76,600 between March 6 and 11.

• The consolidation within the bear flag has BTC trading in an ascending parallel channel, with today’s drop testing critical support levels, including the lower boundary of the flag at $82,000.

BTC/USD four-hour chart. Source: Cointelegraph/TradingView

• A breakdown of this level could trigger another price crash.

• The bear flag’s downside target, derived from the height of the previous drop, is approximately $68,400, representing a 17% drop from the current price.

CryptoQuant analysts, meanwhile, say that if the current support zone between $75,000 and $78,000 doesn’t hold, Bitcoin could go even lower to $63,000.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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