Bitcoin’s 90-Day active supply has been noticeably declining in recent weeks, causing speculation about market demand and investor sentiment.
Understanding Active Supply and Market Demand
The 90-Day Active Supply metric tracks Bitcoins transacted at least once within 90 days. High active supply typically indicates a rise in market participation. A drop in active supply could suggest decreased interest or sentiment shifts, as long-term holders are less likely to sell during low activity periods.
What’s Behind the Shift in Market Behavior?
The decline in Bitcoin's 90-Day Active Supply suggests reduced short-term trading activity and less interest from new market participants. Several factors might contribute to this shift. After Bitcoin's price surpassed $100,000, the market faced increased volatility due to policy uncertainties and inflation concerns. The SEC's decision to drop its case against Coinbase also fosters a more favorable regulatory environment.
Historical Trends and Patterns in Bitcoin’s Active Supply
Review of historical Bitcoin cycles shows active supply tends to rise during bull market peaks and contract during early-stage rallies or post-halving periods. The recent downturn in active supply mirrors trends before major breakouts, suggesting market participants are holding assets in anticipation of a price increase.
At press time, Bitcoin was trading at $96,214. The ongoing decline in market activity may suggest investor caution as they wait for stronger catalysts.
