The Bitcoin (BTC) market now appears to be experiencing a worrying trend, according to the latest report from on-chain data provider, CryptoQuant. In the report, CryptoQuant reveals a notable slowdown in the growth of whale holdings, which refers to the accumulation of Bitcoin by large-scale investors.

The report reveals that the implication of this trend could be quite negative for BTC. This is because Bitcoin whales, who hold significant amounts of BTC, tend to have a significant influence on the market.

When these large holders accumulate, it typically indicates confidence in the asset, often leading to price appreciation. However, the current decline in this accumulation suggests that these major market players are becoming more cautious, raising concerns about the potential for further declines in Bitcoin price.

Signaling a bearish outlook

According to CryptoQuant, the monthly growth of whale holdings has dropped from 6% in February to just 1%. This drop is seen as a bearish indicator for Bitcoin’s price, as historical data suggests that a growth of more than 3% in whale holdings typically correlates with rising BTC prices.

In addition to the drop in whale holdings, CryptoQuant’s report also touched on the broader concept of “apparent demand” for BTC. This metric is calculated as the difference between the daily total BTC block subsidy and the daily change in the amount of BTC that has not been transferred in a year or more.

The report notes that apparent demand has declined significantly since early April, when BTC was trading at $70,000. The 30-day growth in apparent demand reached 496,000 Bitcoin, the highest level since January 2021.

However, this growth has turned negative, with a drop of 25,000 Bitcoin. So far, the correlation between the falling apparent demand and the plunge in BTC price is quite clear.

As demand waned, Bitcoin’s price fell from around $70,000 in early June to a low of $49,000 on Aug. 5, the report found.

CryptoQuant further suggests that a renewed expansion in apparent demand is needed for BTC to recover. Without this increase in demand, the market may continue to face downward pressure, making it challenging for Bitcoin to regain its previous highs.

A Closer Look at Bitcoin’s Market Premium

The CryptoQuant report also highlights another key indicator: the price premium for BTC trading on Coinbase. In early 2024, this premium reached 0.25%, which is in line with strong demand for BTC and large purchases of exchange-traded funds (ETFs).

However, the premium has since dropped and now stands at just 0.01%. According to CryptoQuant, this drop in the Coinbase premium is another sign of “weakening demand” for BTC in the US market.

Main image created with DALL-E, chart from TradingView