The Bitcoin (BTC) market now appears to be experiencing a worrying trend, according to the latest report from on-chain data provider CryptoQuant. In the report, CryptoQuant reveals a notable slowdown in the growth of whale holdings, which refers to the accumulation of Bitcoin by large-scale investors.
The report reveals that the consequences of this trend could be very negative for Bitcoin. Indeed, Bitcoin whales, who hold significant amounts of Bitcoin, usually have considerable influence on the market.
When these large holders accumulate Bitcoin, it usually indicates some confidence in the asset, which often leads to price appreciation. However, the current decline in this accumulation suggests that these key market participants may be becoming more cautious, raising concerns about the possibility of further declines in Bitcoin’s price.
Signal of a bearish outlook
According to CryptoQuant, the monthly growth rate of whale holdings has dropped from 6% in February to just 1%. This decline is considered a bearish indicator for Bitcoin price, as historical data suggests that a growth rate of more than 3% in whale holdings is generally correlated with a rise in BTC price.
In addition to the decline in whale holdings, CryptoQuant’s report also touches on the broader concept of “apparent demand” for BTC. This metric is calculated as the difference between the total daily BTC block subsidy and the daily change in the number of BTC that have not been transferred in a year or more.
The report notes that apparent demand has declined significantly since early April, when BTC was trading at $70,000. The 30-day growth in apparent demand reached 496,000 bitcoins, the highest level since January 2021.
However, this growth has turned negative, with a drop of 25,000 Bitcoin. So far, the correlation between the drop in apparent demand and the drop in BTC price is quite evident.
As demand declined, the price of Bitcoin fell from around $70,000 in early June to a low of $49,000 on August 5, the report said.
CryptoQuant further suggests that for Bitcoin to recover, there would need to be a further expansion in apparent demand. Without this increase in demand, the market could continue to experience downward pressure, making it difficult for Bitcoin to regain its previous highs.
A Closer Look at Bitcoin’s Market Premium
The CryptoQuant report also highlights another key metric: the price premium for BTC trading on Coinbase. By early 2024, this premium had reached 0.25%, in line with strong demand for BTC and significant purchases of exchange-traded funds (ETFs).
However, the premium has since dropped to just 0.01%. According to CryptoQuant, this drop in the Coinbase premium is another sign of “weakening demand” for BTC in the US market.
Featured image created with DALL-E, chart by TradingView
