The Bitcoin price has been facing significant bearish pressure in recent weeks, with many wondering about the role of demand in the market correction. Crypto researcher Julio Moreno from CryptoQuant recently delved into this issue, explaining how the apparent demand for Bitcoin is falling and what it means for the market.
In financial markets, apparent demand is a metric used to evaluate demand by comparing production levels and inventory changes. In the case of Bitcoin, apparent demand is calculated using the concept of inactive supply, which tracks the amount of Bitcoin that has not been moved or transferred over a certain period.
Moreno highlighted that the 1-year inactive supply is used as a proxy for inventory, monitoring the amount of BTC that has not been moved or transacted for over a year. According to data from CryptoQuant, approximately 23,000 BTC have flowed out of the 1-year inactive supply in the last 30 days, indicating a decline in Bitcoin demand as long-term investors are choosing to offload and move their Bitcoin.
This decrease in demand has several implications for the value of Bitcoin. The low demand has been identified as one of the catalysts for the recent price correction. When significant amounts of BTC are moved from long-term holders to the market, it increases the available supply, putting downward pressure on prices. Price dips can occur when buying pressure in the market is not enough to absorb the additional supply.
In a weekly report, CryptoQuant revealed that Bitcoin demand has significantly declined compared to Q1, following the launch of US spot exchange-traded funds. With prices currently down, an increase in BTC demand could potentially reignite the current bull run.
As of the latest data, the Bitcoin price is hovering around $60,790, reflecting a 1.6% decline over the past week. CoinGecko data shows that the market leader is down by nearly 6% in the same period. The price of BTC has been consolidating around the $60,000 mark on the daily timeframe, as shown in the TradingView chart.
Overall, the analysis of Bitcoin’s apparent demand and its impact on the market correction sheds light on the importance of monitoring demand trends in the cryptocurrency space. Understanding the dynamics of supply and demand can provide insights into price movements and help investors make informed decisions in the volatile crypto market.
In conclusion, the falling apparent demand for Bitcoin is a cause for concern as it indicates a decline in investor interest and potential selling pressure in the market. Keeping a close eye on demand metrics and market trends can help navigate the ever-changing landscape of cryptocurrencies and make informed investment decisions.
