The head of research at on-chain analytics firm CryptoQuant has explained how demand forms the basis of Bitcoin’s cycle, rather than price performance.
Bitcoin Apparent Demand Has Been Declining Recently
in a new mail At X, CryptoQuant’s head of research, Julio Moreno, talked about Bitcoin cycles from a different perspective. “The majority focuses on price performance to define a cycle, when what they should look at is demand,” Moreno said.
The analyst has measured the “demand” for the cryptocurrency using the Apparent Demand indicator, which compares daily issuance by miners with changes in 1-year idle supply.
The first of them, the mining issuance, is the amount that miners “mint” on the network every day by receiving block rewards. This metric essentially reflects the “production” of the asset. On the other hand, the 1-year idle supply can be considered the “inventory” of the cryptocurrency.
Therefore, Apparent Demand basically compares the production of Bitcoin with the changes taking place in its inventory. Below is the graph shared by Moreno showing the trends in the 30-day and 1-year versions of Apparent Demand over the last decade.
As can be seen from the chart, the last few Bitcoin cycles have transitioned into a bear market as apparent demand has dipped into the negative region on both the monthly and yearly period.
In the current cycle, 30-day apparent demand has recently fallen into the red zone, suggesting that monthly demand for the asset has been negative.
On the annual scale, the metric is still at a positive level, but its value has been following a downward trend. If this decline continues, it won’t be long before the indicator falls into negative territory.
Considering the pattern of previous cycles, the current apparent demand structure certainly looks bearish. However, it only remains to be seen whether the annual version of the metric will cross the red zone or rebound, signaling the return of demand.
Spot demand is not the only way to measure Bitcoin demand these days. With the advent of exchange-traded funds (ETFs), there has been new off-chain demand entering cryptocurrency this cycle.
As the on-chain analysis company Glassnode has spoken in an mailThe 30-day net flow related to US BTC spot ETFs has recently remained in the negative zone, indicating that demand has also slowed on this side of the market.
BTC Price
Bitcoin has been consolidating recently as its price is still floating around the $88,000 level.
