Despite entering a traditionally strong bull run, Bitcoin still faces an uncertain bullish outlook.
Bitcoin (BTC) has entered the fourth quarter, which is generally considered a favorable time, but the possibility of a strong price increase remains uncertain due to weak demand, according to a CryptoQuant report on October 2.
The report suggests that while Bitcoin typically performs well in the fourth quarter of halving years, a lack of strong demand recovery could impact its ability to reach its $85,000 to $100,000 price target.
Since July, Bitcoin demand has stagnated, fluctuating between -23,000 and +69,000 Bitcoins per month, in contrast to the 496,000 Bitcoin increase in April, when the price nearly touched $70,000.
Mixed signals
Recently, exchange-traded funds (ETFs) in the US have shown signs of recovering demand, although there are still mixed signals.
On September 26, ETFs bought a net 7,000 Bitcoins, after selling a net 5,000 Bitcoins on September 2.
This was the largest purchase since July, but still below the first-quarter average.
If demand from ETFs continues to increase, this could support Bitcoin prices in the coming months, but current levels suggest demand still needs to improve.
According to data from CryptoQuant, Bitcoin's short-term supply is following a similar trend to previous halving cycles.
In 2016 and 2020, short-term supply decreased as demand paused after the halving, but increased again as new buyers came into Bitcoin from long-term investors.
The report pointed out that if demand recovers, short-term supply could increase in the fourth quarter, supporting the price rally.
Demand recovery is crucial
While the bull-bear cycle indicator suggests Bitcoin is in a bullish phase, the current momentum is weaker than in previous halving years.
In 2020, Bitcoin was in a clear bull phase, resulting in a 171% gain by the end of the year. However, this year, Bitcoin has been oscillating between bullish and bearish phases since August, showing uncertainty in the direction of the market.
On-chain indicators point to price resistance between $85,000 and $100,000, levels where short-term traders typically take profits.
These levels acted as resistance earlier this year when Bitcoin hit an all-time high of $73,600 in March.
According to CryptoQuant, Bitcoin could head towards these levels if demand recovers, but without strong buying pressure, the rally may fall short of its ambitious targets.
