While on-chain data indicates a positive perspective, the conditions of demand and the expansion of net supply present a contrasting view. Historical on-chain data indicate that bitcoin might be approaching a bottom in this bear market; however, demand conditions suggest that the asset still has considerable distance to cover. According to this week’s report, the unfavourable spot and speculative futures demand conditions leave the BTC bottom unconfirmed. Either BTC significantly recovers in the coming weeks or the asset plunges to lower price levels.
After reaching a new bear market low of $59,000 last week, BTC currently sits approximately 9% above its realised price of $53,600. Experts indicate that this valuation level has typically coincided with bear market bottoms throughout previous cycles. The realised price signifies the total on-chain cost basis for all market participants, serving as a vital valuation anchor within Bitcoin’s on-chain framework. Historical bear markets have consistently concluded at levels close to or slightly beneath the realised price. The only instance when BTC momentarily breached the realised price prior to a structural rebound occurred in November 2022 amid the collapse of the FTX crypto exchange. From a valuation standpoint, BTC appears to be nearing a structural floor where accumulation phases typically initiate.
While on-chain data indicates a positive perspective, the demand conditions present a contrasting view. It is evident that BTC requires robust and consistent demand to facilitate a structural rebound. With both speculative and apparent spot demand in contraction, the bullish reversal may require a prolonged period for development. Total demand from both speculative futures and apparent spot decreased to -652,000 last week, indicating the most significant contraction since January 2022. Even long-term spot demand, which reflects the apparent demand growth observed over the course of a year, has declined and reached its lowest point since February 2024.
The spot ETF market, conversely, is experiencing a contraction at the most rapid rate since its inception in January 2024. The 30-day ETF demand growth is currently at an unprecedented negative reading, according to analysts. This indicates that U.S. institutional demand has come to a halt and has even shifted to net selling, which is contributing to an increase in supply. Furthermore, the realised losses from Bitcoin holders have yet to attain capitulation levels. The lack of a capitulation spike suggests that sellers remain active and have not yet reached a point of exhaustion.