Bitcoin demand is still weak, but stablecoin liquidity is increasing: CryptoQuant

Historical on-chain data shows that high bitcoin (BTC) demand often precedes price recoveries and rallies; However, this is not the case at the moment. Current market dynamics suggest that BTC demand growth remains at a low level and such price movements are unlikely in the near future.

A recent report by CryptoQuant shows that interest in Bitcoin has fallen sharply since early April, when the crypto asset hovered around $70,000. This is reflected in the slow daily growth of Bitcoin and the dwindling holdings of large investors.

Bitcoin demand metrics are still weak.

Bitcoin's 30-day open demand growth has recently fallen from 496,000 BTC in early April to 25,000 BTC. The increase in April was the highest since January 2021, and prices fell to $50,000 as demand slowed.

The growth of the total holdings of large Bitcoin holders such as whales (addresses with 1,000-10,000 BTC) has been very low. The 30-day change in whale stocks stood at 6% in February, the fastest pace since February 2019, but the figure fell to 1%. CryptoQuant says bitcoin well holdings need a monthly growth rate of more than 3% to accumulate value.

Additionally, spot Bitcoin exchange-traded funds (ETFs) have seen average daily purchases of 1,300 BTC in recent weeks, down significantly from the 12,500 BTC recorded in March. Higher position ETF purchases often drive up overall bitcoin demand and in turn trigger price rallies.

Stablecoin liquidity is growing.

CryptoQuant said the sluggish interest in spot Bitcoin ETFs is also evident in the low BTC price premium on Coinbase. This measure rose to 0.25% earlier this year when Bitcoin witnessed strong demand and large purchases from ETFs, but has since declined and currently sits at 0.01%. This shows that demand for Bitcoin in the US is weakening.

On the bright side, stable coin liquidity is now increasing. This wasn't even weeks ago. CryptoQuant says its total market capitalization has grown to a new all-time high of $165 billion.

Regular Bitcoin holders are also hoarding BTC at unprecedented levels, causing their balances to grow at a rapid monthly rate. The increase in stablecoin liquidity and interest from stable holders correlates with higher bitcoin prices, suggesting that there is a good chance that the market will witness a rally in the coming weeks.