Bitcoin (BTC) demand has experienced a slowdown, and analysts at CryptoQuant have observed a significant increase in selling activity by miners in the past month. This surge in selling has potentially put downward pressure on the price of the largest cryptocurrency.
Miners have been responding to decreasing revenues since the completion of the fourth block reward halving on April 19. As a result of this halving, the block reward for Bitcoin miners dropped by 50% to 6.25, leading to a significant decrease in their earnings. In order to compensate for this revenue drop, 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 decline in price.
Julio Moreno, the research director at CryptoQuant, has highlighted the growing imbalance between BTC supply and demand. He noted that the total BTC balance on over-the-counter (OTC) desks started to increase when the largest cryptocurrency reached its peak of $73,750 in mid-March. Since then, the OTC supply has continued to rise and has reached its highest level since November 2022, while demand has decreased.
Analysts at CryptoQuant have also pointed out a slowdown in demand from permanent investors who buy BTC without the intention to sell. The monthly demand from this sector has dropped by 50% since the end of March, indicating a significant decrease in investor appetite for Bitcoin. Similarly, demand from large investors and Bitcoin whales has also decreased, dropping from a peak of 12% at the end of March to the current 6%. Spot Bitcoin exchange-traded funds (ETFs) in the US have also experienced significant outflows compared to minimal entries, further indicating a decrease in investor sentiment.
In terms of the market outlook and price forecast, BTC has dropped below $60,000, reaching its lowest level in two months. Analysts now anticipate that the largest cryptocurrency will target the $55,000 to $57,000 range in the short term. This range represents a 10% drop from the current cost base of $63,000, and Bitcoin has 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. At the time of writing, it is trading at $63,830. Experts believe that in order to sustain this upward momentum, Bitcoin needs to close above the $60,000 threshold on a weekly basis. If the price demonstrates this strength, a decrease in selling pressure and a resurgence in demand are expected.
Disclaimer: The information provided in this article should not be considered as investment advice. Investors should be aware that cryptocurrencies are highly volatile and carry risks, and should conduct their own research.
