Bitcoin briefly fell to $61,500 as analysts pointed to weak demand and heavy sell pressure to explain why Bitcoin is going down.
Bitcoin price today briefly plunged to about $61,500 before rebounding near $63,920, as analysts warned that demand is shrinking and sell pressure remains unusually strong.
As of press time, Bitcoin is trading around $63,580, down 4.4% on the day, while its market cap sits at about $1.28 trillion.
The drop also brought Bitcoin back near the same price area it traded around two years ago, but analysts say the holder structure looks different.
Read also: Bloomberg Calls Current Crypto Winter the Harshest in History: 12 Reasons and Market Reaction
Ki Young Ju, founder and CEO of CryptoQuant, a blockchain analytics firm, pointed out in an X post that investors who bought BTC▼$64,035.00 within the past six months to two years now hold 53% of Bitcoin’s realized cap, up from 15% two years ago.
“Short-term holders are evolving into long-term holders,” Ju wrote, adding that in the last cycle, Bitcoin bottomed when that six-month to two-year cohort reached 68% of realized cap.
Peter Schiff, a gold bull and longtime Bitcoin critic, suggested that BTC found short-term support near $61,000, slightly above the February low of just under $60,000.
“It makes sense that there would be some initial support there,” Schiff wrote on X, adding that Bitcoin had bounced more than $2,000 from the low. “Let’s see how long it lasts.”
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Bitcoin Price Faces Strong Sell Pressure
The CryptoQuant CEO also said the current phase looks like a large change of hands rather than a clean recovery setup. He explained:
“Historically, bear markets ended only after the price fell below the realized price. I thought that level would be hard to revisit, given institutional inflows and MSTR barely selling any BTC. But current price action suggests unusually strong sell pressure.”
According to Ju, Bitcoin investors’ average cost basis is around $53,000, and past bear markets usually ended only after BTC fell below realized price.
Ju also pointed to Michael Saylor’s Strategy buying 711,206 BTC since January 2023 while selling only 32 BTC, removing 711,174 BTC from circulation.
Since BTC was also around $63,000 in March 2024, ETFs have absorbed 509,102 BTC and Strategy bought 650,706 BTC, meaning about 1.24 million BTC was absorbed while the price still returned to the same level, according to Ju.
For scale, he noted that exchange reserves are around 2.7 million BTC, while Satoshi Nakamoto is estimated to hold about 1 million BTC.
Read more: Bitcoin Price Prediction Markets Turn Bearish as Traders Eye $55K
Demand Drop Looks Like Post-Terra Period
Julio Moreno, head of research at CryptoQuant, also pointed to demand as the core problem. Amid Bitcoin’s decline, Moreno noted in an X post that Bitcoin demand is “contracting at a pace comparable to the post-Terra/Luna collapse period.”
According to Moreno, overall Bitcoin demand, including speculative and spot demand, is down by 501,000 BTC, calling it “the fastest monthly decline since May 22, 2022.”
Glassnode, another blockchain analytics firm, also described the market as fragile in a recent market overview, citing weakness across profitability. The firm said Bitcoin’s rejection near the aggregate ETF cost basis around $83,000 shows that many ETF investors remain stuck above current prices.
The recent $1.6 billion liquidation event helped clear leverage from the system, the firm said, but there is “little evidence yet that a durable demand response has emerged” to absorb the supply.
Will Bitcoin Go Back Up?
The CryptoQuant CEO suggested in another X post that the bear market may still have more time to run. “I think the bear market may have a few more months left,” he wrote, adding that it could last “until late this year or early next year.”
Glassnode chimed in too, but didn’t provide any specific dates. The analysts pointed out that traders are still shelling out for downside protection and expecting high volatility. Yet, there’s no major panic like what one’d expect near the lowest points of a market crash.
Until spot demand improves, ETF investors return to profit and selling pressure slows, Glassnode said Bitcoin remains vulnerable to more downside.
