By Bitwave 
On-chain data indicates a significant slowdown in Bitcoin demand since early April, with metrics like CryptoQuant’s demand indicator showing negative growth. This reflects increased selling activity, signaling bearish sentiment that is taking hold as the asset prepares for weeks of sideways price action.
Despite the bearish signals from on-chain analytics, some metrics remain robust. Long-term holders are accumulating Bitcoin at record-breaking levels, with their total balance reaching unprecedented monthly highs earlier this week. This cohort’s persistent buying behavior underscores a bearish environment that still needs to see significant momentum shifts for Bitcoin to rebound meaningfully.
The growth in stablecoin market caps has also been notable, with the total market cap hitting an all-time high of $165 billion as of last week. This surge is historically bullish, indicating increased liquidity in the crypto markets—a factor traditionally linked to higher price movements. However, this elevated level of liquidity coincides with a slowdown in ETF inflows and smaller purchases from spot Bitcoin ETFs in the United States.
CryptoQuant’s Perspective: A Closer Look
On Wednesday, CryptoQuant released an update on its demand indicator, which measures the difference between daily Bitcoin block rewards and the daily change in unspent transaction outputs (UTXOs) older than one year. While the demand indicator has shown negative growth since early April, this is attributed to increased selling behavior from large Bitcoin holders.
Bitcoin rewards earned by miners typically circulate within the network to cover operational costs, but an uptick in sales from institutional investors signals a shift in sentiment toward bearishness. This persistent trend suggests that the asset’s price may face further resistance unless significant momentum shifts upward.
Market Sentiment and ETF Dynamics
The Bitcoin price action has remained largely inactive, with broader market sentiment heavily influenced by the start of Bitcoin ETF trading in January and the upcoming Bitcoin halving event in May. While these developments initially fueled optimism among some investors, prices have fallen 20% since reaching lifetime highs earlier this month.
Bitcoin ETFs have attracted $17.5 billion in net inflows since their launch, according to data from CoinShares, but critics argue that these flows may be capturing a carry trade rather than reflecting genuine bullish sentiment. The initial inflows for U.S.-based Bitcoin ETFs have also slowed, with average daily purchases dropping from 12.5k BTC in March to just 1.3k BTC last week.
Institutional Buying and Holder Behavior
While some metrics show weakness, long-term holders are continuing to accumulate Bitcoin at unprecedented levels. This cohort has been a key driver of the asset’s price for years, but their buying patterns remain unchanged despite broader market softness.
The total market cap of stablecoins has surged to an all-time high of $165 billion as of last week, signaling increased liquidity in the crypto markets that typically precedes significant price movements. This surge is historically bullish and should be taken into account when evaluating potential price trajectories.
Conclusion
The bearish narrative emerging from on-chain data suggests that Bitcoin may face resistance unless fundamental momentum shifts upward. While long-term holders continue to drive demand, the broader market sentiment remains fragile. Investors should remain vigilant as key events—such as the Bitcoin halving event and the launch of more Bitcoin ETFs—continue to shape the asset’s trajectory in 2024.
For more detailed insights into Bitcoin’s price action and market dynamics, visit CryptoQuant.