Bitcoin (BTC) demand has experienced a slowdown, leading to increased selling activity among miners, according to analysts at CryptoQuant. This surge in selling has potentially put downward pressure on the price of the largest cryptocurrency.
The decrease in revenues for Bitcoin miners can be attributed to the completion of the fourth block reward halving on April 19. This event resulted in a 50% drop in the block reward for miners, from 12.5 BTC to 6.25 BTC. As a result, miners have been selling large quantities of BTC on spot exchanges to compensate for the revenue decline. This influx of supply has disrupted market balance and raised concerns about a price decline.
Julio Moreno, research director at CryptoQuant, highlighted the growing imbalance between BTC supply and demand. He pointed out that the total BTC balance on over-the-counter (OTC) desks has been increasing since the cryptocurrency reached its peak of $73,750 in mid-March. Meanwhile, demand has been decreasing, leading to the highest OTC supply level since November 2022.
CryptoQuant analysts also noted a slowdown in demand from permanent investors, who typically hold onto BTC without the intention to sell. The monthly demand from this group has dropped by 50% since the end of March, indicating a significant decline in investor appetite for Bitcoin. Additionally, demand from large investors and Bitcoin whales has decreased from a peak of 12% at the end of March to the current level of 6%. Spot Bitcoin exchange-traded funds (ETFs) in the US have also experienced significant outflows compared to minimal entries, suggesting a decrease in investor sentiment.
In terms of the market outlook and price forecast, BTC has fallen below the $60,000 mark, reaching its lowest level in two months. Analysts predict that the cryptocurrency will likely 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, pulling back to $56,800.
However, following positive employment data from the US on May 3, Bitcoin quickly rebounded above the $60,000 threshold and is currently trading at $63,830. Experts believe that sustaining this upward momentum will require a weekly close above $60,000, which could lead to a decrease in selling pressure and a resurgence in demand.
It’s important to note that the information provided in this article should not be considered as investment advice. Investors should be aware of the high volatility and associated risks of cryptocurrencies and should conduct their own research.