Bitcoin Demand Stabilization and Future Growth

Bitcoin (BTC) -2.24% demand shows signs of stabilization but needs significant growth in Q4 to sustain higher prices, according to a report by CryptoQuant analysts released on Tuesday.

Since July, bitcoin’s apparent demand—calculated as the difference between the daily total bitcoin block subsidy and the daily change in long-held bitcoin—has fluctuated between a monthly net loss of 23,000 and a gain of 69,000 bitcoin. September saw less volatility, with a consistent increase in demand throughout the month.

However, this growth was insufficient for a sustained price rally. The analysts noted that in comparison, bitcoin demand surged by 496,000 bitcoin in April, when prices were around $70,000, suggesting significant room for growth in Q4.

The report also pointed out that bitcoin holder behavior at the beginning of 2024 resembles past halving cycles in 2016 and 2020, where long-term holders sold to new buyers earlier in the year, boosting demand, but this trend slowed during the summer.

“If historical trends continue, we should see demand growth resume, possibly increasing short-term supply,” the analysts suggested.

Spot Bitcoin ETF Demand

In September, U.S. spot bitcoin exchange-traded funds (ETFs) showed renewed strength, shifting from net selling of 5,000 bitcoin at the month’s start to net buying of 7,000 by September 30—the highest daily purchase volume since July.

“Spot ETFs nearly purchased 9,000 bitcoin daily in Q1 2024, which helped drive bitcoin prices to new highs. If this demand continues, it may propel prices in the last quarter of 2024,” the analysts stated.

Despite this positive trend, there were net outflows from spot bitcoin ETFs for the first time since September 3, breaking an eight-day streak of positive flows. Notably, BlackRock’s IBIT, the largest spot bitcoin ETF, was the only top fund to record positive flows yesterday, gaining $40.84 million.

Bitcoin’s price saw a minor increase of 1.2% in the past hour, hovering around $62,139 at 12:15 a.m. ET, according to The Block’s Bitcoin Price Page.