The on-chain data and analysis platform, CryptoQuant, released its perspectives on the bitcoin (BTC) market. “A rebound in demand growth is crucial for prices to stabilize and potentially increase,” he said. Regarding the current price drop, went deeper which “reflects a continued slowdown in demand after record first quarter growth.” However, it should be noted that the decline does not erase all the rise that it had at the beginning of the year. Currently trading at $57,000 (USD), bitcoin It is 22% below the all-time high (ATH) it registered in Marchmaintaining a 35% increase so far in 2024. CryptoQuant detailed that monthly growth of permanent headlines has halved in the last month. As shown below, this went from over 200,000 BTC at the end of March to just 96,000 BTC now.
The black line shows the price of bitcoin and the purple stripe the demand of investors. Source: CryptoQuant. This scenario takes place two weeks after Julio Moreno, CEO of CryptoQuant, warned that it is not the halving that alone produces the rise of bitcoin. Although this event influences, since it reduces the issuance of the currency, limiting the sales pressure of the miners, he stressed that the strong appreciation it historically had afterwards came from a large increase in demand, which is not happening at the moment. In turn, like other specialists, he has highlighted that the impact of the halving on supply is increasingly less. Miners are compensated with half the coins (compared to the number before the halving), so they do not have a large volume to immerse in the market. Furthermore, almost the entire supply has already been issued, even though there is still BTC to be mined until the year 2140. In this sense, For bitcoin to rise again this year, something is required to drive demand. A possible catalyst is that there is greater awareness about the scarcity of BTC and that stimulates large investors not to want to be left out. Historically, this characteristic has attracted market interest, as it does with gold. Another possible catalyst is the macroeconomic context. Stock markets in the United States, which reached all-time high prices a month ago like bitcoin, have retreated in the face of persistent inflation (CPI), displayed below.
Annual inflation in the United States, recorded month by month. Source: Investing. Kristina Hooper, global market strategist at asset management firm Invesco, said evidence of a disinflationary trend will motivate risk assets. In this sense, bitcoin could be driven higher, so it is key to follow the economic data and the next CPI report in the United States on May 15. In tune, the Game of Trades research firm communicated: “We expect markets to recover as soon as the disinflation narrative returns.” Although it is necessary to consider that, Even in a macroeconomic context that discourages demand for risk assets, bitcoin could benefit. This was suggested this week by the asset management company ARK Investment Management, since the currency has gained demand in both positive and negative periods for the markets. For example, the scarcity and self-custody power of bitcoin have motivated its demand during last year's banking crisis, as well as the war conflict in Russia-Ukraine and the Middle East.
Bitcoin shows a normal pullback within its uptrend
As far as technical analysis is concerned, bitcoin shows a percentage decline in normal price within the current bullish cycle. Analysts such as Scott Melker maintain that be prepared for even deeper drops of 30-40%, as you have experienced in the past. In the current cycle, the retracement periods have lasted a maximum of 63 days, as a temporary scenario for taking profits and testing support. If this were to happen again, the market would find the bottom of the decline within the next two weeks and then continue rising. This is something that may also be what is missing, as it is a healthy phenomenon. For an uptrend to be sustainable, there must be pullbacks that show strength by experiencing higher and higher lows. As BitcoinDynamic reported, this is not the first time that bitcoin has experienced a setback after the halving. In fact, it resembles the behavior that occurred in 2016 when, after a fall, the market gained strength to break upwards.