Bitcoin Metrics Indicate Weakening Demand
Recent analysis on bitcoin (BTC) suggests a notable slowdown in demand. According to CryptoQuant, demand indicators are showing negative growth since early April. This is a signal that more people are selling bitcoin than buying it. This trend, however, is not entirely bleak, as some metrics show strength.
Understanding Bitcoin Metrics
To understand these signals, it's important to know what they mean. On-chain data refers to information that tracks transactions and holdings directly on the blockchain. One specific metric, the demand indicator, looks at the difference between the number of new bitcoins produced daily (block rewards) and the change in bitcoins that haven't moved for over a year. If more bitcoins are being sold than used, demand is considered low.
ETF Hype and Slowdown
Earlier this year, the launch of Bitcoin ETFs (Exchange-Traded Funds) in January generated excitement, with many predicting prices could reach $80,000. However, since May, prices have dropped by 20%, showing that initial excitement has waned. Even though Bitcoin ETFs attracted $17.5 billion in investments, these inflows are now slowing.
Long-term Holders and Market Liquidity
Despite weak demand, there is strength among long-term holders, who are accumulating bitcoin at unprecedented levels. Long-term holders are those who keep their bitcoin for longer than six months. In simple terms, they are not selling even during price drops, which can be a positive sign for future prices.
Furthermore, the total market cap of stablecoins—cryptocurrencies like USDT or USDC that are pegged to the dollar—has reached a record high of $165 billion. This is seen as a bullish sign, as more liquidity in the market typically precedes price increases.
Conclusion: A Mixed Outlook
While some investors are cautious due to slowing demand and ETF inflow decreases, the resilience of long-term holders and increased liquidity in the form of stablecoins could signal potential for future price recovery. As such, the overall bitcoin market offers a mixed outlook, with both bearish and bullish indicators.
