The price of Bitcoin (BTC), despite coming off a difficult week, is showing strength and holding above the $114,000 level.
While this drop may scare some investors, on-chain data shows that demand for Bitcoin remains strong, and therefore, it's not time to be concerned yet.
In this regard, analysts at CryptoQuant, an on-chain analysis firm, suggest that “to assess whether the situation could worsen significantly, it is essential to analyze current demand.”
The first indicator reflects that, despite this drop, long-term holders are maintaining their positions and are buying or storing more BTC than is being issued.
To support this argument, the analysts share a chart showing apparent demand for BTC over the past 30 days. This indicator compares two key components: the daily new BTC issuance generated by mining and the change in the amount of Bitcoin that remains inactive for more than a year, meaning it has not moved on the network.
If the accumulation of inactive BTC exceeds the newly issued amount, the excess reflects positive net demand; conversely, if holders begin to mobilize and sell more coins than are created, apparent demand becomes negative.
Supply for BTC exceeds new issuance, indicating buying pressure. Source: CryptoQuant.
In the chart above, the blue line shows the cumulative apparent demand over the past 30 days, expressed in the quantity of Bitcoin. The black line, meanwhile, represents the price of BTC, while the green shaded areas represent periods of positive apparent demand, when more BTC is accumulated than issued, indicating buying pressure.
Conversely, areas in red indicate periods of apparent negative demand, when the supply released to the market exceeds the new issue, reflecting increased selling pressure.
Currently, net accumulation is around 160,000 BTC, suggesting that demand remains positive. On the other hand, analysts highlight that the metric known as "accumulator demand," which tracks addresses that have acquired BTC without selling anything, reflects that they have increased their holdings by 50,000 BTC over the past 30 days. "This shows strong and sustained buying behavior," they explain.
As seen in the following chart, accumulation has steadily increased over the past month (purple areas), reaching levels above 240,000 BTC, a peak that reflects the interest of long-term investors in maintaining their positions, despite the volatility in the market.
BTC accumulation has skyrocketed over the past 30 days. Source: CryptoQuant.
Finally, it's worth noting that BTC is increasingly less available on the OTC (over-the- counter) market. This option allows institutional investors to trade large volumes discreetly, without affecting prices on the most well-known exchanges.
“The BTC held by OTC desks has decreased significantly: in September 2021, there were around 550,000 BTC available, compared to only 145,000 BTC today,” the analysts detail.
There are fewer and fewer BTCs on the OTC market. Source: CryptoQuant.
For specialists, the most important thing is that “the overall trend remains bullish, driven by the conviction of long-term investors, while short-term investors may cause temporary corrective pressure.” Simply put, the outlook remains positive for now, and there are no clear signs that BTC could experience a sharp price correction.
