Bitcoin Nears Potential Bottom, But Demand Conditions Remain Unfavorable: CryptoQuant

While on-chain data suggests an optimistic outlook, demand conditions and net supply expansion suggest otherwise.

Historical on-chain data suggest that bitcoin (BTC) may be nearing a bottom in this bear market, but demand conditions signal the asset still has a long way to go.

According to this week’s CryptoQuant report, the unfavorable 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.

Is BTC Near a Bottom?

Following the decline to a fresh bear market low of $59,000 last week, BTC now hovers roughly 9% above its realized price of $53,600. Analysts say this valuation level has historically been associated with bear market bottoms across past cycles. The realized price also represents the aggregate on-chain cost basis of all market participants, marking one of the most crucial valuation anchors in Bitcoin’s on-chain framework.

Past bear seasons always ended at prices near or marginally below the realized price. The only time BTC briefly pierced the realized price before a structural rebound was in November 2022 during the defunct crypto exchange FTX saga. So, from a valuation perspective, BTC may be close to a structural floor where accumulation phases began.

While on-chain data suggests an optimistic outlook, demand conditions suggest otherwise. It is a no-brainer that BTC needs strong, sustained demand to handle a structural rebound. With both speculative and apparent spot demand in contraction, the bullish reversal may take time to develop.

Total demand from both speculative futures and apparent spot fell to -652,000 last week, marking the largest contraction since January 2022. Even long-term spot demand, which is the apparent demand growth seen in a year, has turned negative and fallen to its most severe level since February 2024.

Demand Conditions Unfavorable for Bullish Reversal

The spot ETF market, on the other hand, is contracting at the fastest pace since the launch in January 2024. The 30-day ETF demand growth is currently at an unprecedented negative reading, according to analysts. This shows that U.S. institutional demand has stalled and even reversed to net selling, contributing to supply expansion.

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In addition, realized losses from Bitcoin holders have not reached capitulation levels. The absence of a capitulation spike indicates that sellers are not yet exhausted.

“Until total demand stabilizes, ETF flows recover, and realized losses reach capitulation-level peaks, the current price level should be interpreted as a valuation floor candidate, not a confirmed cycle bottom,” CryptoQuant concluded.