The recent downward trend in Bitcoin’s price is linked to a decrease in demand, as explained by a crypto researcher amid market corrections.
Understanding the Falling Bitcoin Demand
In a detailed analysis on the X platform, Julio Moreno from CryptoQuant highlighted the correlation between the latest Bitcoin price correction and dwindling demand, using the apparent demand metric.
Apparent demand estimates are significant in financial markets to gauge demand levels by comparing production and inventory shifts, offering insights into the market trend.
For cryptocurrencies like Bitcoin, apparent demand is determined through inactive supply, indicating the amount of Bitcoin stagnant for a specific duration.
Moreno emphasized that the 1-year inactive supply chart acts as an indicator for inventory levels, showcasing BTC that remains inactive for over a year.
The data from CryptoQuant shows a recent outflow of approximately 23,000 BTC from the 1-year inactive supply, signaling a decline in demand as long-term investors prefer to sell or transfer their holdings.
This decline in demand has consequences on Bitcoin’s value, with lower demand contributing to the recent price correction, as noted by CryptoQuant’s head of research.
Extensive movement of BTC from long-term holders to the market increases the supply, exerting downward pressure on prices. Insufficient buying activity in the market to absorb the surplus supply can trigger price drops.
A Weekly report from CryptoQuant indicates a significant drop in Bitcoin demand post the introduction of US spot exchange-traded funds in Q1. With prices currently on a decline, an upsurge in BTC demand could potentially reignite the ongoing bull run.
Overview of Bitcoin Price
Presently, the Bitcoin price hovers around $60,790, reflecting a 1.6% decrease over the past week. According to data from CoinGecko, the leading cryptocurrency has fallen by nearly 6% in the past week.
Featured image from iStock, chart from TradingView
