According to South Korean company CryptoQuant, demand for bitcoin has been falling since early April and reached negative levels this month. On Wednesday, bitcoin was trading at $60,700 and failed to reach $70,000.
Growth in the total holdings of large bitcoin investors has also slowed, from a monthly pace of 6% in March to just 1%, the research firm noted.
“This slowdown in bitcoin demand coincided with lower purchases from ETFs in the US. Average daily purchases from bitcoin ETFs in the U.S. fell from 12,500 bitcoins in March, when bitcoin was trading above $70,000, to an average of 1,300 bitcoins last week,” CryptoQuant said in its weekly note.
The noise about bitcoin spot ETFs is waning in the US. The significant drop in ETF activity reflects a reduced appetite for bitcoin.
The decline in demand in the US is also reflected in the reduced price premium for bitcoin on Coinbase, the leading cryptocurrency exchange in the US. Lower premiums generally suggest that demand pressure from buyers has weakened, contributing to bitcoin’s stagnant price momentum.
While weakening demand has raised concerns about Bitcoin’s ability to carry out a sustained price recovery, several other indicators suggest that the market is not entirely bearish. For example, long-term holders continue to accumulate bitcoin at unprecedented levels.
CryptoQuant’s data shows that this group is adding a record high monthly total of 391,000 bitcoins to their holdings . This accumulation suggests that long-term investors remain confident in bitcoin’s future prospects, even in the face of short-term price volatility.
Steep rise in stablecoin market capitalization
The total market capitalization of stablecoin has risen to a new record high of $165 billion. This increase in stablecoin capitalization indicates increasing liquidity in the broader cryptocurrency market, meaning that market participants are potentially preparing for future investment opportunities when demand for bitcoin increases again.
