Bitcoin Demand Declines: On-Chain Data Signals Bearish Cycle Shift

Julio Moreno, head of research at on-chain analytics firm CryptoQuant, has introduced a fundamental shift in how to assess Bitcoin’s market cycles. In a recent analysis, Moreno contends that the cryptocurrency community’s focus on price performance is misplaced. “Most are focusing on price performance to define a cycle, when it is demand what they should be looking to,” he noted. This perspective reframes the market’s understanding of bull and bear phases, suggesting that underlying demand dynamics are the true drivers of long-term trends, not the price fluctuations they produce.

To quantify this demand, Moreno employs the Apparent Demand indicator, a sophisticated on-chain metric. This tool compares two critical data points: daily miner issuance and changes in the 1-year dormant supply. Miner issuance represents the daily “production” of new Bitcoin through block rewards. Conversely, the 1-year inactive supply acts as the cryptocurrency’s long-term “inventory.” By measuring production against inventory changes, the Apparent Demand indicator provides a clear signal of whether the market is absorbing new supply or if it is accumulating in dormant wallets, indicating a lack of fresh buying interest.

The data revealed by CryptoQuant paints a concerning picture for the current cycle. According to the chart shared by Moreno, the 30-day Apparent Demand has recently plunged into negative territory. This means that, on a monthly basis, the demand for Bitcoin is not sufficient to absorb the new supply being produced by miners, leading to a net increase in dormant inventory. Historically, this pattern has been a reliable precursor to bearish phases.

Previous Bitcoin cycles have consistently transitioned into bear markets when the Apparent Demand indicator turned negative on both the 30-day and 1-year timeframes. While the yearly metric remains positive for now, its value is on a clear downtrend. If this decline continues, it will soon mirror the monthly indicator and dip into the red zone. “Considering the pattern from the previous cycles, the current structure in the Apparent Demand is certainly looking bearish,” the analysis concludes. The critical question now is whether the yearly demand will rebound or follow its monthly counterpart downward.

The bearish signal from on-chain demand is corroborated by activity in the institutional sphere. With the advent of U.S. Bitcoin spot ETFs, a new source of off-chain demand emerged this cycle. However, data from analytics firm Glassnode shows that the 30-day netflow for these ETFs has recently remained negative. This indicates that outflows are exceeding inflows, signaling that institutional demand, much like on-chain demand, has been muted. The convergence of negative signals from both traditional on-chain metrics and newer ETF flow data strengthens the case for a broader demand slowdown.

Against this backdrop of weakening demand, Bitcoin’s price action reflects a market in consolidation. The cryptocurrency has been floating around the $88,000 level, lacking the momentum to push significantly higher. This price stagnation aligns with the demand metrics, suggesting the market is digesting the earlier rally and awaiting a clearer directional signal. The focus now shifts entirely to the trajectory of the yearly Apparent Demand. A rebound could reignite bullish sentiment, but a break into negative territory would strongly reinforce the bearish cycle shift signaled by the monthly data and muted ETF flows.