The price of Bitcoin has been under significant downward pressure over the past week, and declining spot demand could be one of the factors driving the decline, according to CryptoQuant research director.
Bitcoin apparent demand falls to -40K BTC
In a May 22 post on the These on-chain observations come as the top cryptocurrency appears to be suffering from significant bearish pressure.
The relevant metric here is the apparent demand metric, which tracks demand by comparing newly mined BTC to the amount of coins that have not been moved over a period of time. On-chain indicators provide insight into investor preferences and can be used to decipher various market phases, especially over the long term.
Moreno said that based on this metric, Bitcoin spot demand is declining at the fastest rate since January 10th. When apparent demand indicators weakened in early January, the price of Bitcoin fell to around $90,000, then rebounded (along with demand) to $98,000.
However, apparent demand slumped significantly for most of the first quarter before recovering in early April. With the rise in Bitcoin prices, demand for coins in the spot market has improved for most of the previous month.
Source: @jjcmoreno on X
As you can see in the chart above, on-chain metrics have fallen to their lowest levels since early January. According to CryptoQuant data, the 30-day apparent demand total is approximately -40,000 BTC.
Although it is difficult to determine the exact cause of the recent decline in BTC spot demand, the poor performance of U.S. exchange-traded funds (ETFs) can be a good starting point. Nonetheless, when asked about the contribution of spot Bitcoin ETFs to this trend, Moreno responded that exchange-traded funds only account for a small portion of the increase in BTC demand.
Coinbase premium falls to lowest level since February
At the same time, Coinbase Premium Gap, which provides insight into institutional investor preferences in the US, also supports the thesis of declining demand in the Bitcoin spot market. Coinbase, the largest U.S. cryptocurrency exchange, is seeing its biggest selling pressure since February, according to CryptoQuant data highlighted by Maartunn.
This apparent decline in demand coincides with the recent decline in the price of Bitcoin. Therefore, it goes without saying that investor preferences in the spot market must improve for the prices of top cryptocurrencies to recover. As of this writing, the BTC price is hovering around $75,600, reflecting a 2.5% decline over the past day.
Featured image from iStock, chart from TradingView
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