Bitcoin Demand Signals Are Improving, But Bearish Conditions Persist: CryptoQuant

Over two months of market correction may finally be coming to an end as Bitcoin’s on-chain metrics begin to flash positive signals again.

According to a weekly report by the on-chain analytics platform CryptoQuant, the contraction in bitcoin (BTC) spot demand is gradually easing, while the decline in the asset’s apparent demand is slowing down, and crypto liquidity growth is expanding.

BTC Demand Signs Are Improving

In the last 30 days, Bitcoin’s apparent demand has declined by 146,000 BTC, a significant contrast from the 311,000 BTC plunge recorded on March 27. This shows that spot demand for the leading digital asset is still declining, but at a slower rate.

Unfortunately, the negative momentum in demand for BTC has intensified. The demand momentum, which compares BTC purchases by new investors to those by older investors, has fallen to 642,000 BTC, its lowest since October 2024.

Large investors are accumulating BTC at the slowest monthly pace since February, with their holdings declining slightly in the past week. The holdings of this cohort of market participants have plummeted by roughly 30,000 BTC, with their monthly accumulation rate slowing from 2.7% at the end of March to 0.4% currently.

Also, Bitcoin demand in the United States spot exchange-traded fund (ETF) market is relatively low, although the funds recorded over $912 million in positive flows on April 22. On average, flows into these funds have been oscillating between -5,000 and +3,000 daily, compared with inflows of more than 8,000 in November-December when BTC skyrocketed to $100,000.

Moreover, U.S. spot Bitcoin ETFs have net sold 10,000 BTC so far this year, compared to a net purchase of 208,000 BTC by this time in 2024. CryptoQuant insists that Bitcoin demand, demand momentum, and purchases from U.S. spot ETFs need to sustain positive growth for prices to surge.

Bears Are Still Dominant

Additionally, the market analytics platform noted that prices rally sustainably when the market cap of stablecoins, with Tether (USDT) as a proxy, expands by more than $5 billion, and the change hovers above its 30-day moving average. However, that is not the case now.

The market cap of USDT has grown by only $2.9 billion in the last sixty days, and this level of growth is insufficient to support the crypto market liquidity needed for a sustained rally.

Meanwhile, BTC was trading above $94,000 at the time of writing after jumping 6.5% within 24 hours. Regardless, the Bull Score Index remains below 40, indicating that bears are dominant.