- The Bitcoin demand momentum is already at a historic low, reflecting low interest by new buyers.
- The supply of short-term holders has dropped by 0.8M BTC since May 27 as new capital wears off.
- The declining demand fails to shake Bitcoin price off its important support area around $94K to $97.9 K.
The spot demand momentum of Bitcoin has recorded the most negative value ever, falling below the -2 million BTC mark, CryptoQuant reported. Although the prices remain robust above $100,000, the massive shrinkage in demand reveals a considerable divergence between the price and underlying buying pressure.
On-chain data indicates demand in the near term has rolled over, with the 30-day Bitcoin demand momentum turning sharply negative. This indicator monitors the change in volatility between short-term and long-term holders, and the recent drop indicates investors’ high reluctance to enter the market at such levels. According to the CryptoQuant data, the inflow of new money has been significantly drying up, with the number of new participants purchasing on the spot market decreasing.
Since late May, the supply of the short-term holders has decreased by 5.3 million to 4.5 million BTC, which indicates departure among newer investors. Traditionally, the decline of short-term supply indicates a lack of interest in speculation and a decline in the inflow of new capital. The drop highlights the lack of short-term purchasing demand, even with general market enthusiasm.
At the same time, the supply structure remains controlled by long-term holders. The continued shift of coins from speculative holdings into longer-term storage generally implies a belief in long-term value but antidotes near-term liquidity. Unless there are new inflows to offset the lever against this, the market might be unable to maintain a bullish trend.
Exchange Balances Plunge as Institutions Absorb Supply
The total Bitcoin held in reserves on the exchanges hit a low of 2.4 million BTC, a multi-year low. This decline traditionally points to long-term accumulation, but currently comes alongside momentum in demand deterioration. The net exchange outflows are significant, yet the institutional activity can be discussed further.
The total amount of Bitcoin public companies hold exceeds $87 billion, constituting approximately 3.2% of the total supply. This 170% increase in corporate holdings in the last year supports the theory that institutions are moving Bitcoin out of retail markets.
Support Zones Could Be Critical If Price Cools
Bitcoin support zone is a target area between $94,000 and $97,900 as determined by the 111-day and 200-day averages and the realized price of short-term holders. Such levels have been successfully used in the past to support corrections.
At the moment, Bitcoin is resting well above this area, although as the current negative trend of demand continues, the possibility of a retest is rising. Should the momentum not recover and the short-term holders are still underwater, then the price of $100,000 may come under pressure in the next few weeks.
Traders are cautious. Traders are cautious. As one noted, a break from the current tight trading range may decide the next trend, with liquidity stacked on both sides of the spectrum. Until a clear breakout or breakdown occurs, many are avoiding new positions.
