Bitcoin’s demand dynamics have shown signs of weakening since early April, with growth rates dipping into negative territory this month, according to a report by South Korean analytics firm CryptoQuant. As of Wednesday, Bitcoin was trading at around $60,700, failing to reach the anticipated $70,000 mark.
Sluggish Growth in Bitcoin Holdings Among Large Investors
The report highlights a notable slowdown in the accumulation of Bitcoin by large investors. In March, these investors were increasing their holdings at a robust monthly pace of 6%. However, by the most recent data, this growth has sharply decelerated to just 1%, signaling a weakening demand for the cryptocurrency.
CryptoQuant attributes this decline in demand to reduced purchasing activity by U.S. Bitcoin spot exchange-traded funds (ETFs). The firm’s analysis shows that average daily Bitcoin purchases by these ETFs have plummeted from 12.5K Bitcoin in March, when Bitcoin prices were above $70,000, to an average of just 1.3K Bitcoin last week. This reduction has coincided with the overall slowdown in Bitcoin demand.
U.S. Bitcoin Spot ETF Hype Wanes
The diminished activity in Bitcoin spot ETFs reflects a broader decline in U.S. demand for Bitcoin. This waning appetite is also evident in the reduced price premium for Bitcoin on Coinbase, a leading U.S.-based cryptocurrency exchange. Lower premiums typically indicate weaker demand pressure from buyers, contributing to Bitcoin’s stagnant price momentum.
While the declining spot demand has raised concerns about Bitcoin’s ability to sustain a price recovery, not all market indicators are bearish. CryptoQuant’s data shows that long-term holders continue to accumulate Bitcoin at record levels. These investors are adding to their holdings at a historic monthly rate of 391,000 Bitcoin, indicating confidence in Bitcoin’s long-term prospects despite short-term price fluctuations.
Stablecoin Market Cap Hits Record High
In contrast to the sluggish Bitcoin demand, the total market capitalization of stablecoins has surged to a new all-time high of $165 billion. This increase in stablecoin market cap suggests rising liquidity in the broader cryptocurrency market. The influx of stablecoins could signal that market participants are positioning themselves for future investment opportunities, potentially indicating a resurgence in Bitcoin demand once market conditions stabilize.
Conclusion
The CryptoQuant report underscores the current challenges facing Bitcoin, particularly the slowdown in demand from large investors and U.S. spot ETFs. However, the ongoing accumulation by long-term holders and the rising stablecoin market cap provide a silver lining, suggesting that while short-term demand dynamics may be weak, there is still confidence in Bitcoin’s long-term potential.
Powered by Crypto Expert BD
Follow us on Twitter: https://x.com/CryptoExpert_BD
Join our Telegram channel: https://t.me/CryptoExpert_BD
