After hitting a new all-time high just last Thursday, Bitcoin’s price has plummeted by over $10,000 in a week.
A new analysis suggests the sharp correction stems from a key factor: a slowdown in demand across the Bitcoin market.
Bitcoin Demand Slowing Down
Julio Moreno, head of research at on-chain platform CryptoQuant, shared this view in an X post on Wednesday. He stated, “Bitcoin’s overall demand growth slowdown, including purchases from ETFs and Strategy, is behind the current price pause/correction.”
Bitcoin’s price had briefly bottomed out on August 1st, when concerns about a recession flared up after a weak US non-farm payrolls report. That same day, US spot Bitcoin ETFs saw $812 million in net outflows, according to Soso Value data.
However, from August 6, when the price rally began, the ETFs recorded seven consecutive days of net inflows. This trend reversed last Thursday with the July Producer Price Index’s release, returning to net outflows. The outflow volume wasn’t very large, yet Bitcoin’s price dropped sharply in comparison.
Moreno explained that on-chain demand metrics mirror this exact pattern. He argues that this correction isn’t due to the sudden actions of a single entity like an ETF or MicroStrategy, but rather a widespread decline in demand among most market participants.
For example, CryptoQuant’s Apparent Demand metric showed a reading of 147.3703K on August 1, a similar price level. However, on August 20, the same metric had nearly halved to 64.787K.
While Bitcoin’s price surged and then returned to its starting point over the past 15 days, market demand essentially dropped by half. This suggests that if market sentiment doesn’t recover, Bitcoin could face further corrections.
The market likely needs a macroeconomic catalyst to boost overall demand, such as renewed expectations of a Fed rate cut. According to CME’s FedWatch data, market participants anticipate two rate cuts this year, with an 86% probability of a 25 basis point cut at the September FOMC meeting.
For comparison, last Thursday, when Bitcoin’s price approached $124,000, the market priced in three rate cuts this year and a 98% chance of a cut in September.
The post Bitcoin Sluggish Demand Blamed for $10K Plunge In a Week appeared first on BeInCrypto.
Source: https://beincrypto.com/bitcoin-sluggish-demand-blamed-for-10k-plunge-in-a-week/
