Bitcoin Demand Momentum Yet To Recover From Deep Negative Zone, Analyst Says

Ash Tiwari

2 months ago

3 mins read

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Despite Bitcoin (BTC) gaining notable traction over the past week – rising from approximately $85,000 on April 21 to nearly $95,000 today – the top cryptocurrency’s Demand Momentum remains significantly subdued, signalling caution among investors.

Bitcoin Demand Momentum Continues To Be In Negative Zone

According to a recent CryptoQuant Quicktake post by analyst Crazzyblockk, Bitcoin’s 30-day Demand Momentum is still firmly in negative territory. Currently, the 30-day Demand Momentum stands at around -483,860 BTC, while the 30-day Simple Moving Average (SMA) of the same metric is hovering near -310,700 BTC.

To clarify, the 30-day Demand Momentum is calculated by subtracting the 30-day Long-Term Holder (LTH) Supply from the 30-day Short-Term Holder (STH) Supply. This metric effectively measures the net shift in active demand for BTC.

A rise in short-term holder supply relative to long-term holders implies that market participants are increasingly opting to speculate rather than hold Bitcoin for the long haul.

Trading in the negative zone suggests waning demand from short-term investors. This could be attributed to profit-taking – especially after BTC’s recent 10% rally over the past seven days – or lingering market uncertainty amid global economic concerns, including renewed trade tariff tensions.

Furthermore, the market is experiencing a dynamic where long-term holders are absorbing fewer BTC than what short-term holders are distributing. According to Crazzyblockk, such behavior is commonly observed during late-cycle distribution phases or macro-level consolidation periods.

It is worth noting that Bitcoin has previously experienced similar deep negative divergences in Demand Momentum, specifically during mid-2021 and the second quarter of 2022. In both instances, these divergences were followed by sharp price pullbacks.

On an optimistic note, the ensuing market recovery on both the instances coincided with market bottoms. They also marked the resumption of sustainable bullish momentum in the following months.

If Bitcoin can reverse this negative demand trend and push the metric back into positive territory, it could signal a strong resurgence in investor conviction. A return to the “green zone” would likely mark a renewed uptrend, potentially pushing BTC to a new all-time high (ATH) in the near term.

Positive Signs Emerging For BTC

While Demand Momentum remains weak, other market signals suggest that Bitcoin could be nearing a trend reversal. For example, Bitcoin’s Apparent Demand – a separate on-chain metric – has recently shown a sharp rebound, hinting at a possible return of buying pressure.

Additionally, BTC exchange reserves continue to decline rapidly. According to recent data, Bitcoin just recorded its highest exchange withdrawal volume in two years. This ongoing depletion of exchange-held BTC could lead to a supply squeeze, further supporting bullish price action.

Technical indicators also point toward the possibility of BTC testing its current ATH of $108,786. At press time, Bitcoin is trading at $94,773, up 0.3% over the past 24 hours.

Featured image created with Unsplash, charts from CryptoQuant and TradingView.com

Ash Tiwari

Ash is a dedicated crypto researcher and blockchain enthusiast with a passion for diving deep into the evolving world of decentralized technologies. With a background in writing and a natural curiosity for how digital assets are shaping the future, he has immersed himself in various sectors of the cryptocurrency space, including decentralized finance (DeFi), NFTs, and liquidity mining. His journey into crypto started with a desire to fully understand the technology behind it, leading him to explore and engage with these systems firsthand.

Ash’s approach to DeFi goes beyond surface-level research as he actively participates in decentralized protocols, testing their functionality to gain a deeper understanding of how they operate. From experimenting with staking mechanisms to exploring liquidity mining strategies, he is hands-on in his exploration, which allows him to provide practical, real-world insights that go far beyond theoretical knowledge. This immersive experience has helped him develop a comprehensive grasp of smart contracts, token governance, and the broader implications of decentralized platforms on the future of finance.

In the NFT space, Ash’s interest is driven by the technology’s potential to reshape ownership and creativity in the digital age. He has explored various NFT projects, gaining insights into how these digital assets function within different ecosystems. His focus is on understanding the evolving relationship between creators and communities, as well as the innovative uses of blockchain technology to establish authenticity and provenance in the digital world. Ash’s research in this area often touches on the intersection of culture, technology, and community-driven projects.

A key area of his expertise lies in liquidity mining, where he has engaged with various decentralized platforms to understand how liquidity provision contributes to the functionality and security of DeFi ecosystems. Ash’s hands-on involvement has allowed him to analyze the risks, rewards, and broader implications of liquidity pools, giving him a well-rounded perspective on this integral part of DeFi. His understanding of risk management and protocol design allows him to provide insights into how these systems can be navigated effectively, with an emphasis on both opportunity and caution.

When it comes to communicating these complex topics, Ash’s writing is grounded in clarity and depth. He excels at breaking down intricate blockchain concepts into easily digestible information for a wide audience. Whether explaining the workings of decentralized exchanges or outlining the future potential of blockchain technology, Ash ensures that his content is accessible to both those new to the space and experienced participants looking for deeper insights.

Beyond DeFi and NFTs, Ash explores a wide array of emerging blockchain applications. His research spans areas like cross-chain technologies, decentralized governance, and blockchain’s potential to integrate with traditional finance. He is continuously learning and adapting to the latest developments, ensuring that his insights are both timely and relevant. His interest extends to how these technologies are creating new possibilities for decentralization, transparency, and trust in a variety of industries.

Ash’s commitment to engaging with the crypto space firsthand gives him a unique perspective that goes beyond what can be learned from research alone. His practical involvement allows him to stay ahead of the curve, offering readers and enthusiasts a clear and comprehensive understanding of the rapidly evolving world of blockchain. Whether delving into the technical mechanics of DeFi or exploring the cultural impact of NFTs, Ash’s approach is always rooted in curiosity, research, and a desire to make this technology accessible to all.

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