Bitcoin (BTC) demand has experienced a slowdown, and analysts at CryptoQuant have observed a significant increase in miners’ selling activity in the past month. This surge in selling potentially puts downward pressure on the price of the largest cryptocurrency.
Miners have responded to decreasing revenues since the completion of the fourth block reward halving on April 19. Following the halving, the block reward for Bitcoin miners decreased by 50% to 6.25, resulting in a significant drop in their revenues. In order to compensate for this decline, miners have increased their sales and sent large amounts of BTC to spot exchanges. This influx of supply has disrupted the market balance and raised concerns about a potential decline in price.
Julio Moreno, CryptoQuant’s research director, has highlighted the growing imbalance between BTC supply and demand. He noted that the total BTC balance on over-the-counter (OTC) desks began to increase when the largest cryptocurrency reached its peak of $73,750 in mid-March. Since then, the OTC supply has continued to rise, reaching its highest level since November 2022, while demand has decreased.
Additionally, there has been a slowdown in demand from permanent investors, who buy BTC with no intention of selling. The monthly demand from this sector has dropped by 50% since the end of March, indicating a significant decrease in investor appetite for Bitcoin. Demand from large investors and Bitcoin whales has also decreased, dropping from a peak of 12% at the end of March to currently 6%. Spot Bitcoin exchange-traded funds (ETFs) in the US have experienced significant outflows compared to minimal entries, further signaling a decrease in investor sentiment.
As a result, BTC has dropped below $60,000, reaching its lowest level in two months. Analysts predict that the largest cryptocurrency will target the $55,000 to $57,000 range in the short term, which represents a 10% drop from its current cost base of $63,000. Bitcoin has already come close to meeting this expectation by pulling back to $56,800.
However, following the release of employment data from the US on May 3, Bitcoin quickly surged back above the $60,000 threshold and is currently trading at $63,830. Experts believe that maintaining this upward momentum will require a weekly close above the $60,000 threshold. If the price demonstrates this strength, a decrease in selling pressure and a resurgence in demand can be expected.
Disclaimer: The information provided in this article should not be considered investment advice. Investors should be aware of the high volatility and risk associated with cryptocurrencies and should conduct their own research.
