Bitcoin demand has seen a substantial decline since April, though some indicators show areas of resilience. Data from CryptoQuant reveals that the demand indicator has dipped into negative territory. However, long-term investor holdings are at their highest levels on record.
What Has Caused Bitcoin Demand to Drop?
Since April, the demand for Bitcoin has noticeably slowed. On-chain metrics highlight a significant decline, with August registering negative growth. CryptoQuant commented that the increase in Bitcoin demand has not sustainably recovered, impacting the price and potential for new peaks. The demand indicator measures the daily total BTC block reward garnered by miners and the daily change in unmoved BTC for over a year.
Miners are often compelled to sell Bitcoin to manage operational expenses, and increased sales from significant investors indicate weak demand. Despite this, Bitcoin’s price has remained relatively stable recently. Market expectations have suffered due to the selling pressure following the launch of several spot ETFs in January.
How Are Long-Term Investors and Stablecoins Faring?
In January, the launch of spot Bitcoin ETFs, coupled with the Bitcoin block reward halving in May, led some optimists to predict an $80,000 price by June. Contrary to these forecasts, the price has dropped 20% since May’s historical peaks. Spot Bitcoin ETFs have seen a net inflow of $17.5 billion since their inception, though there are concerns about whether this is driven by speculative trades or genuine bullish sentiment.
The average daily Bitcoin purchases from US spot ETFs fell to 1,300 last week from 12,500 in March when the price was above $70,000. Similarly, the growth rate of total holdings by large Bitcoin investors has slowed from a monthly rate of 6% in March to just 1% currently.
Key Insights and Trends
– Long-term investors have been accumulating Bitcoin, reaching a record level of 391,000 BTC.
– The market value of stablecoins has surged to $165 billion, indicating heightened liquidity in the cryptocurrency market.
– Despite weak demand, some indicators still reflect resilience in Bitcoin’s potential for future growth.
The rise in stablecoin market value suggests increased liquidity, often considered a precursor to potential price increases in the cryptocurrency market.