Head of research at on-chain analytics firm CryptoQuant has explained how demand is the basis of a Bitcoin cycle, rather than price performance. Apparent demand for Bitcoin has declined lately In a new post on “Most focus on price performance to define a cycle, while the question is what to pay attention to,” Moreno said. Related reading: XRP at risk of falling to $0.80? Analyst makes this clear The analyst has measured the “demand” for the cryptocurrency using the Apparent Demand Indicator, which compares miners’ daily issuance to the changes in the 1-year dormant supply. The first of these, the miner spend, is the amount of money that miners “mint” on the network each day by receiving block rewards. This measure essentially reflects the ‘production’ of the asset. The one-year inactive supply, on the other hand, can be thought of as the “inventory” of the cryptocurrency. So apparent demand actually compares Bitcoin production to changes taking place in inventory. Below is the chart shared by Moreno showing the trends in the 30-day and 1-year versions of apparent demand over the past decade. As visible in the chart, the last few Bitcoin cycles have all turned into a bear market, as apparent demand has moved into negative territory on both a monthly and annual basis. In the current cycle, the 30-day apparent demand has recently dipped into the red zone, indicating that monthly demand for the asset has been negative. On an annual basis, the measure is still at a positive level, but its value is following a downward trend. If this decline continues, it won’t be long before the indicator moves into negative territory. Given the pattern from previous cycles, the current Apparent Demand structure certainly looks bearish. However, it remains to be seen whether the annual version of the metric will reach the red zone or whether it will recover, signaling a return in demand. Spot demand isn’t the only way to measure Bitcoin demand these days. With the advent of exchange-traded funds (ETFs), new off-chain demand for the cryptocurrency has emerged this cycle. Related Reading: Bitcoin Coinbase Premium at Rare Discount as US Demand Weakens As on-chain analytics firm Glassnode discussed in an BTC price Bitcoin has recently undergone a consolidation swing as the price is still hovering around the $88,000 level. Featured image from Dall-E, Glassnode.com, CryptoQuant.com, chart from TradingView.com
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