The Bitcoin price has been under significant bearish pressure in the past few weeks, and this crypto researcher has explained the role of demand in the market correction.

BTC Apparent Demand Is Falling – Cause For Alarm?

In a recent post on the X platform, CryptoQuant’s head of research Julio Moreno explained how the latest Bitcoin price correction is linked to the falling Bitcoin demand. This analysis is based on the Bitcoin apparent demand metric on the CryptoQuant platform.

Apparent demand calculation is often used in financial markets to evaluate demand by comparing production levels and inventory changes. Basically, this metric provides a clear picture of whether demand is rising or falling.

In the case of cryptocurrencies, like Bitcoin, apparent demand is calculated by utilizing the concept of inactive supply. This concept tracks the amount of Bitcoin that has not been moved or transferred over a certain period.

As Moreno highlighted, the chart below uses the 1-year inactive supply as a “proxy for inventory.” This implies that it monitors the amount of BTC that has not been moved or transacted for over a year.

Chart showing BTC apparent demand and price | Source: jjcmoreno/X

According to data from CryptoQuant, approximately 23,000 BTC have flowed out of the 1-year inactive supply in the last 30 days. This suggests a decline in Bitcoin demand, as it seems long-term investors are opting to offload and move their Bitcoin.

This decrease in demand has several implications, specifically on the value of the premier cryptocurrency. For instance, the CryptoQuant head of research noted that the low demand is one of the catalysts of the recent price correction.

The influx of significant BTC amounts from long-term holders to the market increases the available supply, thereby putting downward pressure on the prices. Moreover, price dips can result when the market’s buying pressure is insufficient to soak up the additional supply.

CryptoQuant revealed in a weekly report that the Bitcoin demand has significantly declined compared to Q1 — following the launch of the US spot exchange-traded funds. As prices are currently down, it appears that an increase in BTC demand can potentiate the resumption of the current bull run. 

Bitcoin Price At A Glance

As of this writing, the Bitcoin price stands around $60,790, reflecting a 1.6% decline in the past week. According to data from CoinGecko, the market leader is down by nearly 6% in the past week.

The price of BTC thickens around the $60,000 mark on the daily timeframe | Source: BTCUSDT chart on TradingView

Featured image from iStock, chart from TradingView

Bitcoin (BTC) and the broader crypto market are at risk of a further downtrend following a recent development involving the US and German governments. On-chain data suggests that both governments are looking to offload a substantial amount of their BTC holdings. 

US Government Send $240 Million In Bitcoin To Coinbase Prime

On-chain analytics platform Arkham Intelligence revealed in an X (formerly Twitter) post that the US government had sent 3,940 BTC ($240 million) to Coinbase Prime. This has raised fears that the government may be looking to offload these crypto tokens, which would exert more selling pressure on the flagship crypto. 

Arkham also revealed that this BTC formed part of the seizure from narcotics trafficker Banmeet Singh following his trial earlier this year. Interestingly, Singh is known to have sold drugs through the Silk Road marketplace, a dark web platform which the US government is known to have seized a substantial amount of Bitcoin from. 

The US government has, in the past, offloaded some of the Silk Road BTC, which also led to significant selling pressure for the flagship crypto. Their last confirmed sale came in March when they offloaded 9,861 BTC ($216 million). They have yet to confirm the sale of the 3,940 BTC moved to Coinbase, which suggests it has yet to be sold. 

Meanwhile, the US government isn’t the only one looking to dump on the market. Data from Arkham Intelligence shows that the German government recently transferred 125 BTC ($7.71 million) each to crypto exchanges Kraken and Bitstamp. This follows their recent transfer of 400 BTC ($24 million) to Kraken and Coinbase. Meanwhile, the German government also moved 1,000 BTC to an unknown address (139Po), which could be another crypto exchange. 

The potential Bitcoin sale from the US and German governments is more worrisome, considering that Bitcoin is already facing massive selling pressure as it is. Bitcoinist recently reported that BTC miners have sold 30,000 BTC ($2 billion) this month alone, greatly contributing to the crypto’s massive decline since the month began. 

Another Government Chooses To Hold

While the US and Governments continue to offload their Bitcoin holdings, another government, El Salvador, has instead chosen to keep accumulating the flagship crypto. El Salvador is known to have adopted Bitcoin as a legal tender since September 2021 and initiated a ‘1 Bitcoin a day program’ in November 2022, whereby they purchase 1 BTC every day.  

Data from Arkham Intelligence shows that they have stuck to this policy and currently hold 5,794 BTC ($351.82 million). El Salvador has also continued to accumulate through foreign investments and its mining operations. Bitcoinist recently reported the government’s plans to create a Bitcoin bank to lure foreign investors with frictionless Bitcoin investment. 

Featured image created with Dall.E, chart from Tradingview.com

Nubank, a prominent Brazilian neobank, recently announced the integration of Bitcoin’s layer-2 (L2) Lightning Network.

This initiative aims to enhance transaction speed, reduce costs, and improve scalability for its users.

Nubank Partners with Lightspark to Enhance User Experience through Lightning Network

The move is part of a strategic partnership with Lightspark, a company renowned for its blockchain solutions. Integrating with Lightspark’s tools will optimize transaction success rates and liquidity requirements. This provides Nubank with powerful tools to enhance end-to-end transaction experiences via blockchain.

By incorporating the Lightning Network, Nubank enables its customers to conduct everyday payments, transfers, and international purchases with Bitcoin (BTC). This development aligns with Nubank’s continuous efforts to innovate and improve its digital banking services. Thomaz Fortes, Executive Director of Nubank Cripto, emphasized the institution’s focus on efficient customer solutions.

Read more: Beginner’s Tutorial to Start Using the Lightning Network

“The future integration of Lightning Network underscores Nu’s ongoing mission to offer more efficient services with greater speed and lower costs through blockchain technology,” Fortes added.

Echoing Fortes’ sentiment, David Marcus, CEO and co-founder of Lightspark, also expressed his excitement about their part in introducing Lightning Network to Nu’s 100 million customers.

“We’re delighted to enable Nubank to keep evolving their crypto solutions,” Marcus stated.

In addition to the Lightning Network, the partnership with Lightspark will introduce Universal Money Addresses (UMAs), which function like email addresses for sending money. This feature simplifies financial transactions for Nubank’s users. While specific product details remain undisclosed, Nubank promises further announcements in the near future.

Nubank’s latest crypto-related expansions align with the current market in Brazil. According to a report from research firm Kaiko, the Brazilian crypto market has experienced substantial growth this year.

Read more: The Best Bitcoin Lightning Network Wallets In 2024

Brazilian real-denominated crypto trading volumes reached $6 billion from January to early May 2024. This growth positions Brazil as a leading player in the Latin American crypto market and highlights the increasing interest in stablecoins, Bitcoin, and other cryptocurrencies.