The price of bitcoin (BTC) has surged past the $60,000 level to the $67,000 zone due to news of a lower-than-expected inflation rate in the United States.
According to the latest CryptoQuant weekly report, bitcoin’s latest rally has also been sustained by a recent decline in selling pressure. However, demand for the cryptocurrency has yet to pick up.
Bitcoin Selling Pressure Declines
The fall in BTC selling pressure can be seen in the on-chain activity of short-term holders and the balances on over-the-counter (OTC) desks.
The BTC balance on OTC desks has stabilized since late April, indicating less bitcoin supply from market participants. The balance on OTC desks began to rise by 60,000 BTC on March 10 when the asset hit an all-time high of $73,000; however, it has been flat since late last month.
Similarly, the profit margins of short-term BTC holders are currently at low or negative levels following high margins that triggered high selling pressure in early March. Since they have depleted all profits accumulated in 2024, traders are now faced with unrealized losses on the positions. Historically, this has coincided with a local bottom in prices.
The possibility that the market has bottomed is substantiated by miners’ low profitability. CryptoQuant analysts said Bitcoin miners are extremely underpaid at the moment, and their profitability has plummeted to levels last seen since March 2020, a few days after the COVID market crash. Historically, extremely low miner profitability has been associated with price bottoms.
Demand is Yet to Pick Up
On the other hand, Bitcoin demand growth appears to be stabilizing following a month of deceleration. The rise in the BTC balances of permanent holders and large investors indicates higher demand from these market participants.
Nonetheless, BTC demand would need to surge further to enable the market to sustain the latest price rally. The demand could come from the spot Bitcoin exchange-traded fund (ETF) market and other Bitcoin investment funds.
Per CryptoQuant analysts, the crypto market needs a new wave of spot Bitcoin ETF purchases to refresh demand growth. Demand for these products appears to be picking up already, with the funds seeing total inflows of more than $560 million in the last two trading days.
Additionally, stablecoin liquidity growth is surging, signaling potential movement to the upside for BTC.
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