- Bitcoin demand has dropped significantly since its peak of $73,000 in March 2024, with daily inflows averaging around $730 million, down from $2.97 billion.
- Long-term investors remain largely inactive, leading to a decline in Realized Profit and minimal coinday destruction.
- The available Bitcoin supply is tightening as more holders opt to HODL, resulting in a significant drop in active supply and on-chain transaction volumes.
According to a recent report from Glassnode, Bitcoin’s market dynamics have shifted dramatically in recent months. The demand side has experienced a notable decline since reaching an all-time high (ATH) of $73,000 in March 2024. As investor enthusiasm wanes, Bitcoin’s price movements have largely remained stagnant, trapping the market in a sideways trend. At the same time, supply conditions are tightening, potentially setting the stage for increased volatility.
Bitcoin’s Waning Demand Side
The inflow of new capital into Bitcoin has significantly dropped, with daily inflows now averaging around $730 million—far below the March peak of $2.97 billion. This shift is evident in the Realized Profit and Loss metrics, which serve as proxies for new capital entering or exiting the market.
Interestingly, a spike in Realized Profit on October 8, attributed to a large internal transfer by the Wrapped Bitcoin (WBTC) cluster, further complicates the picture. While this transaction initially seemed to boost profits, Glassnode’s entity-adjusted data indicates it was a non-economical transfer, emphasizing the importance of accurate transaction analysis.
Using the Binary Coin Days Destroyed (CDD) metric, we see that long-term investors have been largely inactive, reflecting a lack of demand-side pressure. With little coinday destruction, it appears that investor attention remains muted, failing to spark significant new inflows.
Bitcoin’s Supply Tightens
On the supply side, available Bitcoin is becoming increasingly scarce. Measures of ‘active supply’—those coins market participants are willing to trade—are declining as more holders prefer to HODL. This trend highlights a shift toward longer-term holding strategies among investors. In fact, metrics show a multi-month rise in ‘stored supply’ as existing holders opt to retain their Bitcoin rather than engage in transactions.
The tightening supply is illustrated by the decrease in the ‘Warm Supply’ cohort, which assesses coins moved within the last month. With active supply measures effectively halving since March, both on-chain transaction volumes and futures market activity are dwindling, suggesting a retreat from speculative trading.
Bitcoin’s Persistent Intra-Cycle Investors
The balance of wealth between short-term traders and long-term HODLers presents a unique market scenario. While new demand is still higher than during the 2022 bear market, it has not reached levels consistent with previous cycle peaks. The Realized HODL Ratio also points to an equilibrium phase in the market—one where the presence of new investors is evident but not saturated.
Despite recent market turbulence, new investors maintain a relatively neutral confidence level, indicating stability in their holdings. This suggests that Bitcoin’s current market environment is not facing imminent threats of a deep bear market, as investor profitability remains intact.
As both demand and supply continue to evolve, Bitcoin’s market could be poised for a significant shift. Investors will be watching closely to see if tightening supply will catalyze a resurgence in demand or if the current equilibrium will persist.
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