Abstract: CryptoQuant’s weekly market analysis report reveals that BTC’s actual spot demand is still in a contraction zone, and that Bitcoin’s apparent demand has been declining continuously since the growth momentum from November to December 2024.
This week, the crypto market staged another "roller coaster" plot. On March 2, Trump announced that he would establish a strategic cryptocurrency reserve, including BTC, ETH, SOL, XRP and ADA. Everyone thought this was a big positive, but the market reaction was a bit surprising.
When the announcement was first made, the price of cryptocurrencies did rise, with BTC up 14%, ETH and SOL up more than 20%, XRP up 40%, and ADA up 60%. But the good times didn’t last long, and by Monday, all these gains were gone, and prices returned to the level before the announcement.
CryptoQuant analyzed that this was also after Trump announced his cryptocurrency reserves, and traders took advantage of the surge in crypto market prices to quickly sell their assets.
It is worth noting that the inflow of XRP is particularly exaggerated. About 2 billion XRP flowed into the cryptocurrency trading platform last Sunday and Monday, and 193 million XRP flowed into the trading platform every hour, and most of these funds were operated by big whales. At the same time, the inflow of BTC and ETH is not low. The inflow of BTC soared to 6,739 per hour, and the inflow of ETH was close to 300,000.
According to CoinMarketCap data, after Trump announced the establishment of a strategic cryptocurrency reserve, the prices of BTC, ETH, SOL, XRP and ADA fell by an average of at least 3% per day.
When Trump signed an executive order on March 6 local time to plan to establish a strategic reserve of Bitcoin and a digital asset reserve, the prices of BTC, ETH, SOL, XRP and ADA experienced a deep correction of more than 9% on March 6.
Although the executive order only plans to use confiscated cryptocurrencies for strategic reserves, the government will not actively sell these assets or purchase additional cryptocurrencies on the market.
CryptoQuant's report also said that the actual spot demand for BTC is still shrinking, and the overall market has returned to a stagnant or even falling rhythm. Although the US government has established cryptocurrency reserves, CryptoQuant believes that no matter what the US government's economic decisions are, BTC still needs higher market demand to achieve continued growth.
Conclusion:
Trump's announcement of a cryptocurrency reserve was originally seen as a boost to the market, but it turned into a "good news is bad news". Prices rose first and then fell, traders took the opportunity to sell, and the market returned to its familiar rhythm of volatility.
However, this incident also shows us the fragility of the cryptocurrency market: although favorable policies are important, real price support still depends on actual demand.
In the future, as the US government's cryptocurrency reserve plan progresses, how will the market react? Can Bitcoin break through the demand bottleneck and usher in a new round of increases? These are all worthy of our continued attention.
Finally, do you think this market decline is temporary or will it continue? Leave a comment in the comment section to discuss!
