The head of research at on-chain analytics firm CryptoQuant explained how demand, rather than price performance, is the basis of the Bitcoin cycle.
Apparent demand for Bitcoin has been decreasing recently.
In a new post on X, Julio Moreno, head of research at CryptoQuant, talks about the Bitcoin cycle from a different perspective. “Most companies focus on price performance to define the cycle, even though the focus is on demand,” Moreno said.
Analysts measured the “demand” for cryptocurrencies using an apparent demand metric that compares daily miner issuance and changes in dormant supply over a year.
The first of these, miner issuance, is the amount of money minted on the network each day by miners receiving block rewards. This indicator basically reflects the “production” of an asset. On the other hand, one year of inactive supply can be thought of as a “stock” of a cryptocurrency.
Apparent demand therefore essentially compares the production of Bitcoin to the changes occurring in its inventory. Below is a chart shared by Moreno that shows trends in the 30-day and 1-year versions of apparent demand over the past 10 years.
As seen in the graph, the past few Bitcoin cycles have all transitioned into bear markets where apparent demand has fallen into negative territory on both monthly and annual timeframes.
In the current cycle, 30-day apparent demand has recently entered the red zone, suggesting negative monthly demand for the asset.
On the annual scale, this indicator is still at a positive level, but its values are following a downward trend. If this decline continues, it won’t be long before the index falls into negative territory.
Given the patterns of previous cycles, the current apparent demand structure certainly looks bearish. However, it remains to be seen whether the annual version of this indicator will fall into the red zone or recover, indicating a recovery in demand.
Spot demand is not the only way to measure Bitcoin demand these days. With the advent of exchange-traded funds (ETFs), new off-chain demand is flowing into cryptocurrencies this cycle.
As on-chain analytics firm Glassnode noted in the
BTC price
Bitcoin has recently begun to consolidate as its price continues to fluctuate around the $88,000 level.
