The Bitcoin network has seen a sharp decline in activity, with the number of active addresses dropping to 667,100, the lowest level since November 2024. Analysts warn this slowdown in network engagement could have serious implications for Bitcoin’s price, which currently hovers around $94,500.

Bitcoin Faces Key Resistance and Potential Drop

According to crypto analyst Ali Martinez, Bitcoin faces critical resistance between $97,000 and $99,500, where approximately 1.26 million addresses hold 1.22 million BTC. Breaking above this zone is essential for any upward momentum, but on-chain data suggests weakness.

Short-term holders are now selling at a loss, as the 7-day moving average of the Short-Term Holders’ SOPR has fallen below 1. This signals bearish sentiment among recent investors. Analysts believe if Bitcoin loses the crucial $92,000 support, it could trigger a sharp drop to $70,000, representing a 10-20% correction from current levels.

Macro Pressures Add to Bearish Sentiment

Broader economic factors are also weighing on Bitcoin. Stronger-than-expected U.S. jobs data for December 2024 have delayed the anticipated Federal Reserve rate cuts to June 2025, adding to market uncertainty. Upcoming inflation data, including the CPI and PPI reports, will be closely watched by investors for further clues.

Crypto analyst Benjamin Cowen points to historical trends, noting that Bitcoin typically corrects by up to 30% in January of post-halving years. So far in January 2025, Bitcoin has dipped below $90,000. Cowen suggests that Bitcoin may consolidate for a few months before resuming its bull run, but warns of further price drops in the short term.

As investors navigate these challenges, all eyes are on Bitcoin’s ability to hold critical support levels. A break below $92,000 could intensify selling pressure, but a breakout above resistance could reinvigorate bullish sentiment and set the stage for recovery. For now, the path forward remains uncertain, with both risks and opportunities ahead.