Low Demand for Bitcoin Explained by CryptoQuant Research
According to recent insights from CryptoQuant’s research head, Bitcoin is facing reduced demand, which may be contributing to its price decline.
Bitcoin’s Apparent Demand Indicator Turns Negative
In a new update on X, Julio Moreno, the head of research at CryptoQuant, presents a fresh perspective on the recent behavior in the Bitcoin market. “Instead of focusing solely on how long-term holders are distributing or using their Bitcoin, I’m interested in the other side of that transaction,” Moreno noted.
Long-term holders, in this context, are those who have retained their Bitcoin for over 155 days. This group is often assumed to include dedicated “HODLers” with firm beliefs about market trends, making their movements closely monitored by analysts.
Additionally, community analyst Maartunn pointed out that long-term holders have engaged in substantial selling activities throughout the last month.
However, Moreno’s focus is a bit different; he is examining whether there’s sufficient demand to absorb the supply that these long-term holders are selling at elevated prices.
One key metric here is the apparent demand, which assesses the difference between the Bitcoin produced daily by miners and the change in long-term stock. “Production” indicates the daily output from miners, while “inventory” refers to the amount of Bitcoin that has been dormant for over a year.
The chart shared by Moreno illustrates the trends in Bitcoin’s apparent demand over a 30-day and 1-year period.
According to the chart, Bitcoin’s apparent demand has recently dipped into the red on a 30-day scale, indicating a negative short-term demand for the cryptocurrency. Moreno posed the question, “Is there enough demand to absorb the supply at high prices?” He concluded that for several weeks, the answer has been no, which likely explains the price drop.
When looking at the longer-term apparent demand, the situation appears somewhat different. While there has been a slight uptick recently, the growth has been gradual, and it remains below its 90-day simple moving average (SMA).
The last time Bitcoin experienced an extended stretch of 30 days with negative apparent demand was during the bear market in the first half of this year. It’s uncertain whether a similar outcome might occur this time or if demand will bounce back.
Current Bitcoin Price
As of now, Bitcoin is trading around $103,900, reflecting a 9% decline over the past week.
