Over the past thirty days, many institutions have been accumulating their Bitcoin reserves ($BTC ). However, these purchases have had little impact on the price of the leading cryptocurrency, raising concerns among market participants.
Many are wondering why Bitcoin has remained within a narrow range since reaching its all-time high (ATH) in late May.
A recent report from CryptoQuant revealed the reason for the weakness in price momentum despite continued institutional demand, which analysts see as currently insufficient.
Bitcoin's price has declined despite institutional demand
According to CryptoQuant, purchases of Bitcoin from U.S. ETFs and corporate treasury bonds like Strategy have declined this year compared to the period from November to December 2024.
ETF purchases dropped from 86,000 Bitcoin in early December to 71,000 Bitcoin in mid-May, currently standing at 40,000 Bitcoin. This trend represents a decrease of 53% during this period.
At the same time, Strategy's acquisitions also fell from 171,000 Bitcoin in December to 16,000 Bitcoin currently. This shows a decrease of 90% during this period.
Although institutional purchases and ETF inflows have kept Bitcoin's price above $100,000 for a period, further declines may slow price increases. This situation could worsen as ETF and institutional purchases represent only a tiny fraction of the overall demand for Bitcoin, which appears to be shrinking.
At the market peak in December, ETF and institutional purchases accounted for 33% of the total growth in demand for Bitcoin. These entities did not purchase more than 257,000 Bitcoin out of a total of 771,000 Bitcoin. This indicates that the Bitcoin market is experiencing greater and unrecognized demand from other sources.
Overall demand is shrinking
Overall demand for Bitcoin is currently shrinking, having decreased by 895,000 Bitcoin over the past thirty days. This metric needs to expand to achieve a sustainable price increase. However, the level of institutional demand currently is not enough to stimulate this expansion.
CryptoQuant reported that Bitcoin's annual growth chart reflects that ETF and institutional purchases represent only a portion of the demand. Additionally, apparent demand dropped by 857,000 Bitcoin, significantly offsetting the expansion of ETF and institutional demand (377,000 and 371,000 Bitcoin, respectively).
The market analytics company added: "The bottom line is that ETF funds and MSTR's purchases of Bitcoin, while generally positive for Bitcoin's price gains, are insufficient to drive prices to new record levels."
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