Bitcoin Investor Demand Weakens in the US Post-ETF Approval: CryptoQuant

Roughly a week after the United States Securities and Exchange Commission (SEC) approved the first wave of spot Bitcoin exchange-traded funds (ETFs), BTC investor demand in the country has slumped.

According to a weekly report from market intelligence platform CryptoQuant, the weak BTC demand from U.S. investors is evident in crypto exchange Coinbase’s premium turning negative for the first time in 2024 amid high selling activity from short-term holders.

BTC Investor Demand Slumps

CryptoQuant said the spot Bitcoin ETF approval was a sell-the-news event, as expected. Although the products started trading on January 11 with record volumes, Coinbase saw high over-the-counter transfer volumes running into billions of dollars, and the funds are trading at a premium to spot Bitcoin for the first time since March 2021; BTC has witnessed a downward price pressure.

BTC had lost roughly 15% of its value in days, from $49,000 to $41,500. While the asset currently hovers around $42,800 and downward pressure seems to have eased up, on-chain indicators suggest a tendency for more price corrections.

Currently, short-term investors and large BTC holders have turned into a “risk-off” attitude and are on a selling spree. This is seen in the Inter-exchange Flow Pulse (IFP) metric falling below its 90-day moving average for the first time since August 2021. Analysts at CryptoQuant say this is a sign that investors’ BTC flow to derivative exchanges has stopped growing, suggesting caution and the tendency for price corrections.

Unrealized Profit Margins Still High

According to the report, it appears the Bitcoin market will not hit a price bottom soon as unrealized profit margins have not declined enough for sellers to be exhausted. As such, a new rally is presently not on the cards.

From a short-term perspective, BTC has plummeted to more sustainable levels, with short-term holders’ unrealized profit falling from 48% in December 2023 to 16% after the asset’s latest slump. However, the profit margins may need to go below 0% before we can call a price bottom.

Meanwhile, CryptoQuant predicted BTC might eventually plunge to $32,000, the short-term holder realized price, as traders paid too much to open long positions before the ETF approval.