As a seasoned crypto investor with several years of experience under my belt, I’ve learned that market trends and miner selling activity can significantly impact the price of Bitcoin (BTC). Based on the latest CryptoQuant report, I’m concerned about the recent surge in miner selling activity and the slowing demand for BTC.
Analysts at CryptoQuant have observed a rise in Bitcoin mining sales over the past month, coinciding with sluggish expansion in the market’s appetite for the cryptocurrency.
The most recent CryptoQuant report indicates that the demand for Bitcoin has decreased, as shown by reduced interest from large Bitcoin holders (whales), a drop in buying from US-based exchange-traded funds, and the Coinbase buying premium turning negative.
Miners Increase Selling Activity
After the halving event on April 19, miners have transferred a substantial quantity of Bitcoin to major exchanges. This action has disrupted market equilibrium due to the decrease in miner income caused by the 50% reduction in block rewards.
Currently, mining companies are offloading their Bitcoins to meet expenses. Yet, should this trend persist and mining becomes unprofitable for operators, downward pressure on Bitcoin’s price could intensify.
As a researcher studying the cryptocurrency market, I’ve observed an intriguing trend: the increasing supply of Bitcoin (BTC) at over-the-counter (OTC) desks is outpacing the current demand. Recently, CryptoQuant’s Head of Research, Julio Moreno, disclosed that the total BTC balance held by these desks began to surge when the asset reached an all-time high of $73,000 around mid-March. This trend has continued unabated since then, with the OTC supply reaching its highest level since November 2022. However, it is essential to note that the demand for Bitcoin seems to have decelerated in comparison.
Demand for BTC Slows Down
The decrease in the monthly demand for Bitcoins from permanent holders, who acquire Bitcoin but do not sell it, has dropped by half – from approximately 200,000 BTC in late March to currently 96,000 BTC. Analysts have emphasized that a significant increase in demand is essential for prices to stabilize and potentially surge upwards.
As a crypto investor, I’ve noticed a decrease in the demand growth from large investors and Bitcoin whales. This demand has dropped from a high of 12% in late March to the current level of 6%. Furthermore, Spot Bitcoin ETFs in the United States have recently experienced substantial outflows, with little to no new inflows. These outflows represent a significant decline from the mid-March peak of over $1 billion.
As a researcher studying the perpetual futures market, I’ve noticed an intriguing development: the funding rate has reached its lowest point this year. This decline signifies that there are more sell orders than buy orders currently in the market. In other words, traders are less inclined to initiate long positions and instead, prefer short ones. The reduced willingness to pay for opening long positions suggests a growing expectation among traders that prices may continue to fall.
When Bitcoin hovers around the two-month low of $60,000, it could potentially drop to a short-term target between $55,000 and $57,000. This range represents a 10% decrease from the current cost basis traders are holding at $63,000. During bull markets, this level serves as support.
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2024-05-04 14:20