Why this on-chain analyst is short-term bearish on the price of Bitcoin

Several reputable analysts and traders have turned neutral to slightly bearish on Bitcoin in the short term as BTC struggles to regain USD 33,000.

Ki Young Ju, CEO of CryptoQuant and on-chain analyst, says Bitcoin (BTC) is showing a neutral to bearish short-term trend at the moment.

There are two main indicators that have been useful in detecting trend changes in the current bullish cycle.

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First, every time the Coinbase premium appeared, meaning that BTC trades higher on Coinbase than on Binance, for example, BTC experienced upward momentum. Second, Bitcoin’s momentum strengthened when it saw large outflows from Coinbase.

In recent days, however, neither of these two indicators have shown Profit Secret any staying power, as the metric fell into negative territory on 24 January.
BTC: Coinbase premium index (blue). Source: CryptoQuant
When will sentiment in the Bitcoin market improve again?
Bitcoin is most likely to find renewed bullish momentum if the premium on Coinbase consistently appears alongside large outflows from the exchange.

The combination of these two indicators would suggest that high net worth individuals are accumulating Bitcoin once again. Ki explained:

„I will maintain my bearish bias until there is a significant premium from Coinbase and outflows from the exchange. $BTC needs spot inflows of US dollars from institutional investors to start the next bull run.“
The popular narrative around Bitcoin’s recent rally is that institutional investors and high net worth individuals are collecting BTC on every price drop.

In addition to the two Coinbase-related indicators, stablecoin deposits are another important metric that could signal that a new rally is in the making.

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Ki noted that stablecoin deposits on exchanges are often a powerful on-chain signal for a rally because it shows the inflow of marginalised capital into the cryptocurrency exchange market.

Deposits of stablecoins. Source: CryptoQuant
For example, when stablecoin deposits spiked on 22 January, BTC proceeded to rally by around 6% over the next 24 hours. Ki said:

„This indicator is one of the most powerful on-chain signals with a pretty good hit rate. You can predict an instant short-term rise regardless of the overall market trend. It is the amount of stablecoin deposits on all exchanges, which means that investors try to send stablecoins to exchanges to buy cryptocurrencies. For example, if this value reaches 80, we can assume that 80 people are trying to deposit on an exchange in a single block, in 15 seconds“.
How low can BTC go?
For the foreseeable future, if Bitcoin continues to move sideways, some traders expect BTC to fall as low as USD 27,000.

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A pseudonymous trader known as „CJ“ shared a potential scenario in which BTC could mark a floor near USD 26,000 or USD 27,000.
Bitcoin price chart with key lines. Source: TradingView.com and FT
However, even in a worst-case scenario, analysts generally do not see the Bitcoin price revisiting the area below USD 20,000. The trader wrote:

„This channel could be precisely what prevents a retest of USD 20,000. According to this chart, the sweet spot for a fall is between USD 23,000 and USD 27,000.“
Although short-term on-chain indicators point to a slightly bearish outlook, they do not point to the likelihood of a deeper correction.

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Bitcoin falling back to around USD 20,000, the previous all-time high, would mean a 35% drop from current levels. Such an event seems unlikely, but traders should be on the lookout for a possible black swan event, such as a regulatory crackdown or a high-profile lawsuit against a major industry player.