Weakening Demand Metrics Signal Bearish Outlook for Bitcoin

Weakening Sentiment for Bitcoin: Analyzing Demand Metrics

Recent demand metrics derived from on-chain patterns and holding behaviors indicate a notable decline in sentiment towards Bitcoin (BTC). This trend has led to a more bearish outlook for the largest cryptocurrency, especially following several weeks of stagnant price action.

According to an analysis by on-chain analytics firm CryptoQuant, the apparent demand for Bitcoin has significantly slowed since early April, dipping even into negative territory this month. In a note released to CoinDesk on Wednesday, the firm emphasized that:

“Bitcoin demand growth still needs to pick up before we can see a sustainable recovery in price and the possibility of new highs,” CryptoQuant highlighted.

The firm referenced its demand indicator, which measures the difference between daily total Bitcoin block rewards and the daily variation in the number of Bitcoin that has remained unmoved for one year or more. Typically, miners sell their block rewards to fund operational costs; however, an increase in selling activity from large holders suggests a diminishing demand for the asset.

Bitcoin’s price movements have largely been muted in recent months. The market has faced billions of dollars in selling pressure, which has dampened optimism following the January launch of several spot exchange-traded funds (ETFs). The anticipation surrounding the trading of ETFs in January and the upcoming Bitcoin halving event in May had initially led some bullish investors to target the $80,000 price level by June, citing an expected boost in demand. However, Bitcoin’s value has since dropped by 20% from the record highs achieved in May.

Despite this downturn, Bitcoin ETFs have attracted $17.5 billion in net inflows since their inception. Nevertheless, skeptics argue that much of this flow may be driven by attempts to capture a carry trade rather than representing genuine bullish sentiment. Furthermore, the initial inflows into these ETFs are beginning to slow down.

CryptoQuant also noted a significant slowdown in the growth of total holdings among large Bitcoin investors, which has decreased from a monthly growth rate of 6% in March to just 1% currently. This reduction in demand for Bitcoin aligns with diminished purchases from U.S. spot ETFs.

“The average daily purchases from Bitcoin spot ETFs in the USA have dropped from 12.5K in March, when Bitcoin was trading above $70K, to an average of just 1.3K Bitcoin last week,” the firm reported.

Despite the overall bearish sentiment, some metrics have shown resilience during this period of price weakness. Notably, long-term holders—those wallets that have held Bitcoin for over six months—have continued to accumulate the asset at unprecedented rates. This cohort’s total balance reached a record-high monthly accumulation of 391,000 BTC earlier this week.

In addition, the overall market capitalization of stablecoins has surged to a new record high of $165 billion. This increase is historically viewed as a bullish indicator, suggesting enhanced liquidity within the crypto market that often precedes rising prices.