Is Bitcoin's Bull Run Over?
The Bitcoin (BTC) market is witnessing a worrying trend, as highlighted by the latest report from CryptoQuant, an on-chain data provider. This report draws attention to a slowdown in the accumulation of Bitcoin by whales, or large-scale investors, which may indicate a bearish outlook for BTC.
Understanding Whale Accumulation
Whales hold substantial amounts of Bitcoin and can significantly influence the market. When these major players accumulate Bitcoin, it generally signals confidence in the asset, leading to price increases. However, the current decline in whale accumulation suggests caution, raising concerns about potential price declines.
Whale Accumulation Trends
According to CryptoQuant, the monthly growth rate of whale holdings has plummeted from 6% in February to just 1% now. Historically, a growth rate above 3% in whale holdings correlates with rising Bitcoin prices, making the current trend a bearish indicator.
Apparent Demand for Bitcoin
The report also explores the concept of "apparent demand" for Bitcoin, calculated based on the difference between daily total BTC block subsidy and changes in the number of BTC held for a year or more. This demand has significantly decreased since BTC was valued at $70,000 in early April. The 30-day growth in apparent demand peaked at 496,000 Bitcoin, but this has since turned negative, with a reduction of 25,000 Bitcoin. As apparent demand wanes, Bitcoin's price has fallen from around $70,000 in June to $49,000 by August 5.
Market Premium Challenges
Another key indicator is the price premium for BTC trading on Coinbase. Early in 2024, this premium reached 0.25%, reflecting strong demand and substantial purchases from exchange-traded funds (ETFs). However, the premium has since dropped to just 0.01%, signaling "weakening demand" for Bitcoin in the US market.
Conclusion
CryptoQuant's report suggests that for Bitcoin to recover, a renewed expansion in apparent demand is necessary. Without this increase, the market may continue to face downward pressure, challenging Bitcoin's ability to regain its previous highs.
