The demotion is justified based on Belt's performance; he hit .192/.300/.269 in 60 plate appearances and the Giants can't afford to give him on-the-job training. He's still considered one of the best 20 or so prospects in the game.
There is another benefit to optioning Belt, as MLBTR's Ben Nicholson-Smith explained yesterday. If he stays in the minors for 20 days or more, which seems likely barring an injury at the big league level, Belt's free agency will be delayed until after the 2017 season at the earliest. Had he remained in the Majors all year, Belt would have been eligible for free agency after '16.