Bitcoin faced a brutal week, shedding nearly $10,000 in just a few days. With demand weakening, macroeconomic pressures, and massive sell-offs, the crypto market is in turmoil. Is this dip just a correction, or signals a more profound turnaround ahead?
According to Julio Moreno, Head of Research at CryptoQuant, the slowdown in overall Bitcoin demand growth, particularly ETF purchases, is likely behind the recent price correction. Indeed, Bitcoin ETFs in the United States recorded significant net outflows on August 1st, precisely when Bitcoin hit its lowest point.
Although this trend reversed subsequently with a week of net inflows, it turned negative again last Thursday. This coincides with the sharp drop in prices. Beyond ETF flows, CryptoQuant’s on-chain demand metrics fell by half between August 1st and August 20th. This reflects a generalized weakening of market demand.
While the Bitcoin price has managed to return to its initial level over the past 15 days, demand still appears to be languishing. This suggests possible additional corrections if market sentiment doesn’t improve. Market participants now anticipate two interest rate cuts from the Federal Reserve this year, down from three previously. This information could weigh on the bullish momentum.
To revive overall demand, the market needs a strong macroeconomic catalyst, such as renewed expectations for Fed rate cuts. With uncertain prospects, crypto investors will need to remain vigilant in the face of persistent volatility.
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