The Bitcoin price has been experiencing a significant downward trend in recent weeks, with a crypto researcher shedding light on the role of demand in the market correction. In a detailed analysis posted on the X platform, CryptoQuant’s head of research, Julio Moreno, delves into how the latest price correction in Bitcoin is closely tied to the decrease in demand for the cryptocurrency. This analysis is based on the Bitcoin apparent demand metric available on the CryptoQuant platform.
Apparent demand calculation is a common practice in financial markets to assess demand by comparing production levels with inventory changes. This metric offers a clear insight into whether demand is on the rise or decline. In the realm of cryptocurrencies like Bitcoin, apparent demand is calculated using the concept of inactive supply, which tracks the amount of Bitcoin that has not been moved or traded over a specific period.
Moreno emphasizes that the chart utilizing the 1-year inactive supply serves as a proxy for inventory, monitoring the amount of BTC that has remained stagnant or untransacted for over a year. According to data from CryptoQuant, approximately 23,000 BTC have exited the 1-year inactive supply in the past 30 days, signaling a decrease in Bitcoin demand. This trend suggests that long-term investors are choosing to sell off and transfer their Bitcoin holdings, impacting the overall demand for the cryptocurrency.
The decline in demand has several implications, particularly on the value of Bitcoin. The low demand serves as one of the driving factors behind the recent price correction, as the influx of significant amounts of BTC from long-term holders into the market increases the available supply, leading to downward pressure on prices. Price dips may occur when the market’s buying pressure is insufficient to absorb the additional supply.
In a weekly report, CryptoQuant highlighted a significant decrease in Bitcoin demand compared to the first quarter of the year, following the introduction of US spot exchange-traded funds. With current prices on the decline, an uptick in BTC demand could potentially fuel the continuation of the ongoing bullish trend.
As of the latest data, the price of Bitcoin hovers around $60,790, reflecting a 1.6% decline over the past week. CoinGecko data shows that the market leader has dropped by nearly 6% in the same period. The BTC price chart indicates a consolidation around the $60,000 mark on the daily timeframe, suggesting a possible range-bound movement in the near future.
Overall, the analysis of Bitcoin’s apparent demand and its impact on the price correction underscores the critical role that demand plays in shaping the cryptocurrency market. Understanding these dynamics can provide valuable insights for investors and traders navigating the volatile landscape of digital assets. By monitoring demand metrics and market trends closely, stakeholders can make informed decisions to navigate the ever-evolving crypto market effectively.
