The Declining Demand for Bitcoin Since April
The demand for Bitcoin has experienced a significant downturn since April, with recent weeks indicating a downward trend. A report from data analytics firm CryptoQuant reveals that the evident demand for the digital asset has decreased from a 30-day growth of 496,000 Bitcoin. This decrease in demand has also negatively impacted the cryptocurrency’s price, with Bitcoin plummeting from approximately $70,000 in April to a low of about $51,000 in early August. Nevertheless, as of the time of writing, the cryptocurrency still retains a 33% year-to-date return.
The reported decline in demand has been attributed to a reduction in purchases by spot exchange-traded funds (ETFs) in the United States, dropping from 12,000 BTC in March to an average of 1,300 BTC between Aug. 11 and Aug. 17. Additionally, the price premium for BTC trading on Coinbase has also dwindled, from 0.25% in early 2024 to its current 0.01%. This decreased premium further bolsters the evidence of waning demand for BTC in the United States.
A potential resurgence in spot ETF purchases is considered pivotal in driving overall Bitcoin demand upward, potentially leading to a corresponding price surge, as highlighted by the analysis.
Conversely, permanent BTC holders have been capitalizing on the lower prices to acquire BTC at unprecedented rates. The total balance of permanent holders, which pertains to addresses that have never spent or sold Bitcoin, is escalating at a record-high monthly rate of 391,000 BTC. This indicates that demand from permanent holders is increasing even more rapidly than it did in Q1 2024, when the price of Bitcoin surpassed $70K. However, whales, which are addresses with 1,000–10,000 coins, have decreased their total holdings. The 30-day percentage change in whale holdings has declined from 6% in February to just 1% presently. Historically, a monthly growth rate exceeding 3% in whale holdings has been correlated with increasing Bitcoin prices.
In conclusion, the decline in demand for Bitcoin since April has been linked to various factors, including a decrease in purchases by spot ETFs in the United States. Nevertheless, the burgeoning demand from permanent holders at unparalleled rates is a positive indicator for the cryptocurrency market. With the market’s ongoing evolution, it will be intriguing to observe how these demand trends will shape the future of Bitcoin.
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