Bitcoin, demand 'collapse' risk ahead of $80,000...fear of re-testing $70,000 spreads

▲ Bitcoin (BTC)

Bitcoin (BTC) is facing the possibility of re-testing $70,000 amid bearish pressure. As price movements slow down and analysis suggests a shift in the demand structure among investors and traders, anxiety surrounding short-term direction is growing.

Bitcoinist reported on May 20 (local time), citing an analysis by Julio Moreno, Head of Research at CryptoQuant, that the growth in demand for Bitcoin spot and perpetual futures entered a contraction phase on May 18. This change occurred after an upward trend that began in early March this year, with the rally at the time being driven by speculative demand.

Moreno pointed out that the growth in speculative demand reached its peak when Bitcoin prices approached $80,000, but related activity has significantly slowed down since then. Spot demand is also weakening, and the article explained that spot demand is contracting at a slightly faster rate than speculative demand. As weakening buying pressure and cooling speculative activity occur simultaneously, whether the market is preparing for a larger trend reversal or entering a sideways consolidation phase has emerged as a key variable.

The amount of Bitcoin held at a loss by long-term holders is also attracting market attention. CryptoQuant contributor Darkfost stated that the supply of Bitcoin held at a loss by long-term holders has reached 5.7 million BTC. This is similar to levels observed near the peaks of past bear markets. In 2015, 5.96 million BTC, in 2019, 5.8 million BTC, and in 2022, 6.8 million BTC were held by long-term holders at a loss.

However, it was also mentioned that the current downturn has a relatively smaller price drop compared to past bear markets. Darkfost explained that the recent Bitcoin decline rate is 52%, which is lower than levels observed in previous bear markets. He analyzed that a large-scale Bitcoin reshuffling occurred between $80,000 and $126,000, and losses were likely concentrated among the younger cohort of holders who had just transitioned into long-term holders.

Darkfost stated that the current trend has not been fully confirmed, and some distortion in indicators may have occurred due to the movement of 800,000 BTC on Coinbase on November 21 and 22. An increase of over 740,000 BTC was also observed on April 21 and 22, and adjusting for this movement, the amount of Bitcoin held by long-term holders at a loss could be around 4.93 million BTC. Over the next 3-4 days, long-term holder-related indicators on platforms using a 6-month threshold may move rapidly, and Bitcoin moved near $84,500 is expected to officially transition from short-term holder supply to long-term holder supply.

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