Bitcoin: Demand weakens, but holders remain optimistic!

While the bitcoin market is experiencing a turbulent period, with overall demand down, one group of investors remains optimistic. These are the long-term holders. They continue to accumulate the iconic crypto and are showing a confidence that contrasts with the general market sentiment.

Weak demand for bitcoin

For several months now, the demand for bitcoin has been showing increasingly obvious signs of weakness. According to a recent analysis by Cryptoquant, this decline is accentuated in recent weeks. The situation is exacerbated by the notable slowdown in growth of the portfolios of large investors, often called “whales.” In March, these portfolios were growing by 6%, but this has recently fallen to just 1%.

The drop in demand is also visible in the Bitcoin exchange-traded fund (ETF) market in the United States. Daily purchases of bitcoin by these ETFs have fallen from 12,500 BTC in March to just 1,300 BTC last week, according to data from Cryptoquant. Meanwhile, the premium on Coinbase, an indicator of demand on that platform, has dropped from 0.25% to 0.01%, further highlighting the current weakness in the market.

The effects of this weakened demand are directly evident in the price of Bitcoin, which has fallen from around $70,000 to $49,000 in recent weeks. Currently, the price of the crypto asset has recovered slightly, fluctuating around the $61,000 mark. However, this significant decline underlines the need for a recovery in demand to hope for a sustainable recovery of the market.

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A stark contrast: BTC accumulation by long-term holders

Despite these alarming signals, there are some indications that the market may be resilient. According to Cryptoquant’s report, long-term holders, or “holders,” continue to accumulate Bitcoin at record levels, with an additional 391,000 BTC added to their portfolios each month. This continued accumulation could strengthen the market’s long-term foundations, providing some support to a weakening price.

In addition, the total capitalization of stablecoins has reached a new high of $165 billion. This significant increase in liquidity could indicate a readiness of investors to reinvest in cryptocurrencies, thus suggesting a potential future rebound. The combination of these factors shows that, despite weakened overall demand, strong fundamentals remain, offering hope for a recovery.

In summary, the Bitcoin market is currently in stark contrast. On the one hand, immediate demand is flagging, driven by weak market signals and eroding confidence. On the other, the commitment of long-term holders and the rise of stablecoins paint a more optimistic picture for the future. These opposing dynamics highlight the importance of not just looking at appearances, but also considering the underlying trends that could transform the market.

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