Bitcoin Nears Potential Bottom, But Demand Conditions Weaken Bullish Hopes

The crypto market is abuzz with speculation about Bitcoin's (BTC) current price trajectory. According to CryptoQuant, historical on-chain data suggests that BTC may be nearing a bottom in this bear market, but demand conditions signal the asset still has a long way to go.

In its recent report, CryptoQuant notes that after declining to a fresh bear market low of $59,000 last week, BTC now hovers roughly 9% above its realized price of $53,600. Analysts point out that this valuation level has historically been associated with bear market bottoms across past cycles.

The realized price 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, except for November 2022 during the FTX saga when BTC briefly pierced the realized price before a structural rebound.

However, despite this optimistic outlook from a valuation perspective, demand conditions suggest otherwise. 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 has turned negative and fallen to its most severe level since February 2024.

The spot ETF market is contracting at the fastest pace since its launch in January 2024, with a 30-day ETF demand growth reading of an unprecedented negative value. This indicates that U.S. institutional demand has stalled and even reversed to net selling, contributing to supply expansion.