Recent on-chain data analysis points to a concerning trend in the world of Bitcoin. Despite historical patterns indicating that high demand typically precedes price recoveries and rallies, the current market dynamics tell a different story. Bitcoin demand growth has slowed down significantly since early April, when the cryptocurrency was priced around $70,000.
The 30-day Apparent Demand growth for Bitcoin has plummeted from 496,000 BTC in early April to 25,000 BTC recently, signaling a sharp decline. This slowdown in demand has also been reflected in the diminishing increase of large investor holdings. The total holdings of large Bitcoin holders, such as whales with 1,000-10,000 BTC, have fallen to remarkably low levels.
In February, the 30-day change in whale holdings saw a rapid growth rate of 6%, marking the fastest pace since February 2019. However, this figure has now dropped to a mere 1%. According to CryptoQuant, bitcoin whale holdings need to experience a monthly growth rate of over 3% for a significant price rally to occur.
The average daily purchases of spot Bitcoin ETFs in the U.S. have drastically decreased in recent weeks, from 12,500 BTC in March to 1,300 BTC. Typically, higher spot ETF purchases drive overall bitcoin demand upwards and trigger price rallies. The slowdown in spot Bitcoin ETF demand is reflected in the decreasing BTC price premium on Coinbase.
Despite the concerning trends in Bitcoin demand, there are some positive signs on the horizon. Stablecoin liquidity is on the rise, with the total market capitalization of stablecoins hitting a new all-time high of $165 billion. Additionally, permanent bitcoin holders are accumulating BTC at unprecedented levels, leading to substantial growth in their balances. The increase in stablecoin liquidity and demand from permanent holders suggests a possible rally in the market in the near future.
The current state of Bitcoin demand and price movements presents a mixed picture. While there are clear indications of a slowdown in demand and potential roadblocks to price recoveries, the uptick in stablecoin liquidity and growing interest from long-term holders offer a glimmer of hope for a future market rally. Investors and analysts alike will need to closely monitor these trends to gauge the trajectory of Bitcoin prices in the coming weeks.
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