Bitcoin Metrics Signal Weak Demand Amid Slowing ETF Hype: CryptoQuant

CryptoQuant latest analysis reveals weakening demand for Bitcoin as on-chain metrics show a dip in sentiment and slower ETF inflows. Despite some positive signs from long-term holders, overall demand growth must pick up for a sustainable price recovery.

Recent data from CryptoQuant indicates a notable slowdown in Bitcoin demand, with on-chain metrics reflecting a bearish sentiment amid weeks of stagnant price action. The firm highlighted that apparent demand has decreased significantly since early April, even dipping into negative territory this month.

CryptoQuant’s demand indicator, which tracks the difference between daily Bitcoin block rewards and the daily change in unmoved Bitcoin for over a year, suggests that demand for the asset is waning. While miner rewards are typically sold to cover operational costs, an increase in selling from large holders points to declining demand.

The Bitcoin price has remained relatively muted over the past few months, with billions of dollars in selling pressure impacting market optimism. The excitement surrounding the January launch of several spot ETFs and the May Bitcoin halving event led some bulls to target $80,000 by June, but prices have since dropped 20% from their lifetime highs.

Although Bitcoin ETFs have attracted $17.5 billion in net inflows since their launch, skeptics argue that these flows might be driven by carry trades rather than outright bullish bets. The initial ETF inflows have also slowed, further dampening market enthusiasm.

“The growth in the total holdings of large Bitcoin investors has also slowed, from a monthly pace of 6% in March to just 1% currently,” CryptoQuant reported. This decline coincided with smaller purchases from U.S.-based spot ETFs, where average daily purchases dropped from 12.5K Bitcoin in March to just 1.3K last week.

However, not all metrics are negative. Long-term holders, or wallets holding Bitcoin for over six months, have continued to accumulate the asset at unprecedented levels. This cohort’s total balance reached a record-high monthly rate of 391,000 BTC earlier this week, signaling strong confidence in the asset’s future.

Additionally, the total market capitalization of stablecoins has surged to a fresh record high of $165 billion, historically a bullish sign indicating increasing liquidity in the crypto market that could potentially lead to higher prices.

While the outlook for Bitcoin remains uncertain, the data suggests that demand needs to pick up significantly to fuel a sustainable price recovery and the possibility of new highs.

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