Bitcoin Metrics Signal Weak Demand as BTC ETF Hype Slows: CryptoQuant

According to a report by the on-chain analytics company, CryptoQuant, there’s been a significant decrease in perceived demand for cryptocurrencies since early April, and this month, the demand has even dropped below zero. They communicated this to CoinDesk on Wednesday.

The company stated that for a stable increase in Bitcoin’s price, along with the potential for reaching new record highs, there should be an escalation in its demand first.

CryptoQuant refers to its demand gauge, which measures the variation between the daily total bitcoin block rewards and the day-to-day adjustment in the quantity of bitcoins that have been stationary for at least a year. Miners usually sell the earned bitcoins to cover expenses, yet an uptick in selling from big investors suggests a decrease in interest towards the asset, implying a possible decline in demand.

The price movement of Bitcoin has mostly been subdued over time. Recently, massive amounts of sell-offs have impacted the market, dampening enthusiasm that emerged after the January introduction of various spot Exchange Traded Funds (ETFs).

Starting from January, the introduction of ETF trading and the Bitcoin halving event in May led some optimists to aim for $80,000 by June due to increased demand. However, prices have dropped approximately 20% since Bitcoin reached its peak in May. Despite Bitcoin ETFs accumulating a net inflow of $17.5 billion since their launch, critics argue that this influx might stem from capitalizing on a carry trade rather than reflecting genuine bullish sentiments.

And the initial flows for the ETFs are slowly decreasing.

The rate at which big Bitcoin investors are accumulating Bitcoins has significantly decreased, dropping from an increase of 6% per month in March to only 1% now, according to the firm. This decrease in Bitcoin demand appears to align with reduced acquisitions from U.S.-based spot ETFs.

“Over the past week, the typical daily Bitcoin purchases through U.S. spot ETFs have dropped significantly compared to March, going from approximately 12,500 Bitcoins when Bitcoin was trading over $70,000, down to around 1,300 Bitcoins now,” the company noted.

However, a few metrics have remained strong during this period of weak prices, CryptoQuant noted.

In other areas, the combined value of all stablecoin holdings has reached an unprecedented peak of $165 billion, a strong indication suggesting growing liquidity within the cryptocurrency market which tends to result in price increases.