Has Bitcoin’s Demand Really Slowed Down as BTC ETF Hype Fades?
According to on-chain data from CryptoQuant, there has been a significant slowdown in bitcoin demand since early April, with some metrics even showing negative growth. The decline in demand has led to a bearish outlook on the largest cryptocurrency, despite some robust metrics such as long-term holders accumulating bitcoin at record levels. The growth in ETF inflows and large investor holdings has also notably slowed down.
One of the key indicators of weakening demand is CryptoQuant’s demand indicator, which tracks the daily total bitcoin block rewards and the daily change in the number of bitcoins that have not moved in one year or more. The increase in selling from large holders signifies a waning demand for the asset, which has contributed to the bearish sentiment.
The price action of bitcoin has remained relatively muted, with selling pressure denting optimism from the January launch of several spot ETFs. Despite initial bullish targets of reaching $80,000 by June, the price of bitcoin has dropped by 20% since its lifetime highs in May. ETFs have attracted $17.5 billion in net inflows since their launch, but skeptics argue that this flow could be for capturing a carry trade instead of representing outright bullish bets. Moreover, the initial flows for the ETFs are slowly decreasing.
In addition to the decline in ETF purchases, the growth in the total holdings of large Bitcoin investors has also slowed. From a monthly pace of 6% in March, the growth has dropped to just 1% currently. This decline in demand coincided with smaller purchases from spot ETFs in the USA, which have decreased from an average of 12.5K in March to 1.3K Bitcoin on average last week.
Despite these bearish signals, there are still some strong metrics indicating a positive outlook for bitcoin. Long-term holders have continued accumulating bitcoin at unprecedented levels, and the total market capitalization of stablecoins has surged to a record high of $165 billion. This surge indicates increasing liquidity in the market, which historically leads to higher prices for cryptocurrencies.
In conclusion, although some metrics point to weakening demand for bitcoin and a slowdown in ETF inflows, there are still indicators of strength in the market. It remains to be seen whether the decline in demand will have a sustained impact on the price of bitcoin, but for now, the cryptocurrency market continues to display resilience despite the challenges it faces.
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