Bitcoin
Bitcoin Selling Pressure Eases as Demand Stabilizes: CryptoQuant
The price of bitcoin (BTC) has surpassed the $60,000 level to the $67,000 zone on news of a lower-than-expected inflation rate in the United States.
According to the latest weekly CryptoQuant report, bitcoin’s latest rally was also supported by a recent decline in selling pressure. However, demand for the cryptocurrency has not yet increased.
Drop in Bitcoin Selling Pressure
The drop in BTC selling pressure can be seen in the on-chain activity of short-term holders and balances on over-the-counter (OTC) desks.
The BTC balance on over-the-counter tables has stabilized since the end of April, indicating lower supply of bitcoin by market participants. The balance on OTC tables began to increase by 60,000 BTC on March 10, when the asset reached an all-time high of $73,000; however, it has been stable since the end of last month.
Similarly, profit margins for short-term BTC holders are currently at low or negative levels following high margins that triggered elevated selling pressure in early March. Since they have exhausted all accumulated profits in 2024, traders now face unrealized losses on positions. Historically, this has coincided with a lower local level of prices.
The possibility that the market has reached its lowest point is based on the low profitability of miners. Analysts at CryptoQuant said that Bitcoin miners are extremely underpaid at the moment and that their profitability has plummeted to levels last seen since March 2020, just days after the COVID market crash. Historically, extremely low mining profitability has been associated with rock bottom prices.
Demand has not yet increased
On the other hand, Bitcoin demand growth appears to be stabilizing after a month of slowdown. The increase in BTC balances from permanent holders and large investors indicates greater demand from these market participants.
However, demand for BTC would need to increase further to allow the market to sustain the latest price rally. Demand may come from the spot market for Bitcoin exchange-traded funds (ETF) and other Bitcoin investment funds.
According to CryptoQuant analysts, the crypto market needs a new wave of Bitcoin ETF spot purchases to renew demand growth. Demand for these products appears to be Catching now, with the funds seeing total inflows of more than US$560 million in the last two trading sessions.
Furthermore, stablecoin liquidity growth is emergingsignaling a potential bullish move for BTC.