- Decline in Bitcoin Demand
- Impact on Bitcoin Price
- Holders' Position
According to a report by data analytics firm CryptoQuant on August 20, the demand for Bitcoin has been on a downtrend since April 2024.
Decline in Bitcoin Demand
The CryptoQuant report indicates that apparent demand for Bitcoin has declined from a 30-day growth of 496,000 Bitcoins in April to a current negative growth of 25,000 Bitcoins. Demand is measured as the difference between the daily total block subsidy and the daily change in the number of Bitcoins that have remained steady for one year or more.
Impact on Bitcoin Price
The lower demand has adversely affected the cryptocurrency's price. Bitcoin's price declined from around $70,000 in April to about $51,000 in early August. Despite the correction, Bitcoin is still posting a 33% return year-to-date at the time of writing. The slowdown in demand is partly due to a decline in purchases by spot exchange-traded funds (ETFs) in the US—from 12,000 BTC in March to an average of 1,300 BTC between August 11 and 17. The premium for BTC trading on Coinbase reached 0.25% in early 2024 but has since declined to 0.01%.
Holders' Position
Despite the negative trend on the institutional side, permanent BTC holders have taken advantage of lower prices to purchase Bitcoin at unprecedented rates. The total balance of permanent holders is rising at a record-high monthly rate of 391,000 BTC. Meanwhile, whales—addresses holding 1,000 to 10,000 coins—have reduced their total holdings. According to the analysis, the 30-day percentage change in whale holdings has decreased from 6% in February to just 1% currently, correlating with the declining Bitcoin prices.
The ongoing decline in Bitcoin demand is exerting pressure on its price, yet the activity of permanent holders suggests enduring interest in the cryptocurrency over the long term.
