BTC Apparent Demand Is Falling – Cause For Alarm?

The Bitcoin price has been under significant bearish pressure in the past few weeks, and this crypto researcher has explained the role of demand in the market correction.

Demand plays a crucial role in any market, and the cryptocurrency market is no exception. Recently, a crypto researcher has highlighted the role of demand in the ongoing Bitcoin price correction.

? BTC Demand Drops: A Cause For Concern?

In a recent post on the X platform, CryptoQuant’s head of research Julio Moreno has elaborated on how the latest Bitcoin price correction can be linked to the decreasing demand for BTC. This analysis is based on the Bitcoin apparent demand metric on the CryptoQuant platform.

Apparent demand calculation is a concept often used in financial markets to assess demand by comparing production levels and inventory changes. Essentially, this metric provides a clear indication of whether demand is increasing or decreasing.

For cryptocurrencies like Bitcoin, apparent demand is calculated using the concept of inactive supply, which tracks the amount of Bitcoin that has not been moved or transacted over a specific period.

As highlighted by Moreno, the chart below uses the 1-year inactive supply as a “proxy for inventory.” This indicates that it monitors the amount of BTC that has not been moved or transacted for over a year.

According to data from CryptoQuant, about 23,000 BTC have flowed out of the 1-year inactive supply in the last 30 days. This suggests a decrease in Bitcoin demand, as it appears that long-term investors are choosing to sell and move their Bitcoin.

This decrease in demand has several implications, particularly on the value of the premier cryptocurrency. For example, the low demand is noted to be one of the catalysts for the recent price correction.

The entry of large amounts of BTC from long-term holders into the market increases the available supply, putting downward pressure on the prices. Furthermore, dips in prices can occur when the market’s buying strength is not strong enough to absorb the additional supply.

In a weekly report, CryptoQuant revealed that Bitcoin demand has significantly decreased compared to Q1 — following the launch of the US spot ETFs. With prices currently down, it seems that an increase in BTC demand could potentially help continue the current bull run.

Bitcoin Price At A Glance

At the time of writing, the Bitcoin price is around $60,790, showing a 1.6% decrease in the past week. According to data from CoinGecko, the market leader is down by nearly 6% in the past 30 days.