Bitcoin: Demand is Key to New All-Time Highs
A recent report by CryptoQuant, an onchain analytics firm, suggests that the rate at which Bitcoin whales are accumulating coins has seen a significant decrease. This slowdown in whale accumulation has resulted in a decrease in overall demand for Bitcoin, which is a crucial factor in achieving new all-time highs.
The report indicates that the 30-day percentage change in whale holdings has dropped from 6% in February to just 1% currently. Historically, a monthly growth rate of over 3% in whale holdings has been linked to increasing Bitcoin prices. However, the current situation indicates that large BTC investors are not providing the momentum necessary for a price breakout.
Consequently, the report underscores the importance of a recovery in spot Bitcoin exchange-traded funds (ETFs) purchases to drive overall Bitcoin demand upward and potentially lead to a corresponding price rally. Unfortunately, daily net inflows to spot ETF products have significantly decreased since March, signifying a lack of interest from institutional investors.
Despite the overall slowdown in Bitcoin demand, the report notes that “permanent holders” – entities that only buy and never sell BTC – have continued to accumulate Bitcoin at unprecedented levels. The total balance of these holders is growing at a record-high monthly rate, indicating strong demand from this cohort.
On the other hand, speculative investors may be more cautious due to recent price events. The report mentions that a majority of recent buyers are currently underwater as the price of BTC dropped to six-month lows at the start of August. This has led to unrealized losses for many speculators, prompting a more cautious approach to investing in Bitcoin.
While the market faces a period of “summer doldrums,” the report emphasizes the importance of Bitcoin’s demand in driving the price upward. It concludes by stating that readers should conduct their own research when making investment and trading decisions, as this article does not contain investment advice or recommendations.
In conclusion, the report highlights the significance of demand in driving Bitcoin prices to new all-time highs. As whale accumulation slows down and speculative investors nurse unrealized losses, the focus on increasing overall demand becomes essential for the future price movements of Bitcoin.
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