Researcher Explains How The Decline in Bitcoin Demand Is Behind the Recent Price Correction

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

Virtual Demand for BTC Falling – Cause for Alarm?

In a recent post on the X platform, CryptoQuant’s head of research Julio Moreno explained how the recent Bitcoin price correction is connected to the fall in Bitcoin demand. This analysis is based on the Bitcoin virtual demand metric on the CryptoQuant platform.

The apparent demand equation is often used in financial markets to assess demand by comparing production levels and inventory changes. Basically, this metric gives a clear picture of whether demand is increasing or decreasing.

In the case of cryptocurrencies, such as Bitcoin, apparent demand is calculated using the concept of inefficient supply. This concept tracks the amount of Bitcoin that has not been delivered or transferred over a period of time.

As Moreno pointed out, the chart below uses the 1-year unemployment supply as a “list proxy.” This means that it monitors the amount of BTC that has not been withdrawn or made for more than a year.

Chart showing BTC apparent demand and price | Source: jjcmoreno/X

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

This decrease in demand has several effects, especially on the value of the main cryptocurrency. For example, the head of CryptoQuant research noted that low demand is one of the reasons for the recent price correction.

The influx of significant amounts of BTC from long-term holders to the market increases the available supply, thus putting downward pressure on prices. In addition, price declines can result when the market’s buying pressure is insufficient to absorb additional supply.

CryptoQuant revealed in a weekly report that demand for Bitcoin has dropped significantly compared to Q1 – following the introduction of US exchange-traded funds. With prices currently low, it appears that increased demand for BTC may result in a resumption of the current bull run.

Bitcoin Price At A Glance

As of this writing, the price of Bitcoin is around 60,790 dollars, showing a decrease of 1.6% in the last week. According to data from CoinGecko, the market leader fell by almost 6% last week.

The price of BTC thickens around the $60,000 mark on the daily timeframe | Source: BTCUSDT chart on TradingView

Featured image from iStock, chart from TradingView