New on-chain data from CryptoQuant shows that there’s an increase in the supply of Bitcoin for sale on the market; however, demand from buyers is shrinking, a potentially bearish sign for the world’s largest cryptocurrency.
Julio Moreno, head of research at CryptoQuant, said in a post on X that long-term holders (LTHs), investors who hold Bitcoin for more than 155 days, have ramped up their selling in recent weeks, a common pattern during bull markets. “LTH take profits as prices reach new highs,” he wrote.
But what stands out this time, according to Moreno, is the absence of strong demand to offset that selling. “What’s important to analyze each time is if there’s growing Bitcoin demand that can absorb the LTH selling at higher prices,” he added.
The data shows that demand, which had been growing between July and September, turned negative in early October. “Since October, LTH selling has increased (nothing new here), but demand is contracting (red areas), unable to absorb LTH supply at higher prices,” Moreno said.
Demand dries up as LTH selling rises
In a chart shared by Moreno, Bitcoin’s short-term demand, measured by apparent demand metrics, has been trending in the red zone for roughly 30 days. This signals that fewer new buyers are entering the market, even as long-term investors take profits.
The 1-year demand metric remains in positive territory, but the decline is becoming more visible. If the trend continues, Moreno noted, the 1-year demand growth could soon dip below zero. As of this week, both positive and negative apparent demand stand at roughly zero, while the 30-day long-term holder spending sits at around 790,000 BTC as of the time of writing.
This means that, on balance, demand and supply are in a delicate standoff, with large volumes of Bitcoin being sold by experienced investors but insufficient fresh capital coming in to absorb the selling pressure.
The data shared by Moreno on CryptoQuant showed that the two major sources of institutional demand, ETFs and Michael Saylor’s Strategy, are both showing weakness. ETF demand growth has dropped sharply into negative territory, while Strategy’s remains flat at zero.
A different market from earlier rallies
During January to February 2025 and again from November to December 2024, long-term holder selling coincided with rising demand, which is identified as “green areas” on the chart. Those periods led to record-breaking prices, with Bitcoin setting new all-time highs.
But this time, conditions appear less supportive, especially after the October 10 event that nearly brought the market to its knees; selling has picked up, but demand has failed to follow.
What comes next for Bitcoin?
Selling by long-term holders can signal a healthy profit-taking cycle that resets the market for the next leg up; however, the current market activity doesn’t agree with this thesis.
Bitcoin prices have dropped by over 5% within the past seven days from about $110,000 to a bit above $103,000. For prices to climb, fresh demand, particularly from ETFs and institutional investors, will need to pick up.
Bitcoin’s apparent demand growth remains positive on a yearly basis, which suggests that the structural demand for Bitcoin as an asset class remains intact. But if contraction continues and dips below zero, it could indicate the market is entering a cooling phase similar to mid-cycle consolidations seen in past bull markets.