Bitcoin’s price has been under significant bearish pressure in recent weeks, and this crypto researcher explained the role of demand in the market correction.
Apparent demand for BTC is falling – should we be alarmed?
In a recent article on the X platform, CryptoQuant’s head of research, Julio Moreno explain How the latest Bitcoin price correction is related to the decline in Bitcoin demand. This analysis is based on the measurement of apparent demand for Bitcoin on the CryptoQuant platform.
The apparent demand calculation is often used in financial markets to assess demand by comparing production levels and inventory changes. Basically, this metric provides a clear picture of whether demand is rising or falling.
In the case of cryptocurrencies, such as Bitcoin, apparent demand is calculated using the concept of idle supply. This concept tracks the amount of Bitcoin that has not been moved or transferred over a certain period of time.
As Moreno pointed out, the chart below uses 1-year idle supply as a “proxy for inventory.” This implies that it monitors the amount of BTC that has not been moved or traded in over a year.
Chart showing BTC apparent demand and price | Source: jjcmoreno/X
According to data from CryptoQuant, around 23,000 BTC have left the one-year inactive supply over the past 30 days. This suggests a decline in demand for Bitcoin, as it appears long term investors choose to unload and move their Bitcoins.
This drop in demand has several implications, including on the value of the leading cryptocurrency. For example, CryptoQuant’s head of research noted that low demand is one of the catalysts for the recent price correction.
The influx of large amounts of BTC from long-term holders into the market increases the available supply, putting downward pressure on prices. Additionally, price drops can occur when the market’s buying pressure is insufficient to absorb the additional supply.
CryptoQuant revealed in a weekly report that demand for Bitcoin has declined significantly compared to the first quarter – following the launch of the spot exchange traded fundsWith prices currently falling, it appears that an increase in demand for BTC could potentiate the resumption of the current uptrend.
Bitcoin Price Overview
At the time of writing, the price of Bitcoin stands at around $60,790, reflecting a 1.6% decline over the past week. According to data from CoinGecko, the market leader has fallen by nearly 6% in the past week.
The price of BTC thickens around the $60,000 mark on the daily timeframe | Source: BTCUSDT chart on TradingView
Featured image from iStock, chart from TradingView
