Demand for Bitcoin has been in a downtrend since April, approaching negative levels over the past few weeks.
Bitcoin demand has been on a downturn since April, dropping to negative levels in recent weeks.
According to an Aug. 20 report by data analytics firm CryptoQuant, the apparent demand for the digital asset has declined sharply, going from a 30-day growth of 496,000 Bitcoin ( BTC ) or $59,092 in April to a current negative growth of 25,000 BTC.
Apparent demand is calculated by deducting the daily total Bitcoin block subsidy from the daily change in the amount of Bitcoin that has remained unmoved for one year or longer.
As expected, lower demand has had a negative impact on the cryptocurrency’s price. Bitcoin's price fell from roughly $70,000 in April to a low of about $51,000 in early August. However, the cryptocurrency is still up 33% year-to-sqate at the time of writing.
The slowdown in demand is said to be driven by a decrease in purchases by United States spot exchange-traded funds (ETFs), which fell from 12,000 BTC in March to an average of 1,300 BTC between Aug. 11 and Aug. 17.
Daily change in total Bitcoin holdings. Source: CryptoQuant
The premium for BTC trading on Coinbase reached 0.25% in early 2024, soon after the launch of the ETFs. Since then, the premium has been declining, currently at 0.01%, further indicating slower demand for BTC in the U.S.
“A recovery in spot ETF purchases is key to driving overall Bitcoin demand upwards, potentially leading to a corresponding price rally,” the analysis noted.
Holders keep stacking sats
Despite the institutional slowdown, permanent BTC holders have been taking advantage of the lower prices to buy BTC at never-before-seen rates.
The total balance of permanent holders — addresses that have never spent or sold any Bitcoin — is increasing at a record-high monthly rate of 391,000 BTC. “Demand from permanent holders is accelerating even faster than it did in Q1 2024, when the price of Bitcoin rallied above $70K,” the report adds.
Whale addresses, or those holding 1,000–10,000 coins, on the other hand, decreased their total holdings. According to the analysis:
A monthly growth rate of over 3% in whale holdings correlates with rising Bitcoin prices.
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