Declining Demand Signals Market Weakness
- Bitcoin’s demand plummeted from +200,000 BTC in early 2024 to -200,000 BTC by March 2025, coinciding with rising supply pressures.
- Apparent Demand (new buyer interest minus circulating supply) turned negative, indicating excess market supply.
- Long-term holders (LTHs) are selling at profits, exacerbating downward pressure amid muted buyer activity.
👉 Why Bitcoin’s demand metrics matter for traders
Key Factors Driving the Drop:
- Increased Mining Output: Ongoing Bitcoin issuance adds to circulating supply.
- LTH Profit-Taking: Experienced investors liquidating holdings.
- Lack of New Demand: Fewer institutional or retail buyers offsetting sell pressure.
Source Analysis: The current negative demand suggests short-term price uncertainty, with potential for further consolidation.
Liquidation Imbalance Favors Bulls
June 2025 Market Data Highlights:
| Metric | Value | Imbalance |
|----------------------|-------------------|-----------|
| Total Liquidations | $102.35 million | — |
| Short Liquidations | $95.96 million | 1533% |
| Long Liquidations | $6.38 million | — |
- Short positions were liquidated 15× more frequently than longs, indicating strong bullish momentum.
- This pattern typically follows sharp price rebounds, forcing leveraged shorts to exit.
Market Implication: Despite weak demand, the liquidation surge reflects temporary bullish dominance.
FHFA Proposes Bitcoin in Mortgage Assessments
The Federal Housing Finance Agency (FHFA) announced a groundbreaking proposal to evaluate Bitcoin holdings in mortgage qualifications. Key details:
- Objective: Assess how crypto assets impact borrowers’ financial stability.
- Potential Impact: Borrowers could declare Bitcoin holdings without converting to fiat, integrating crypto into traditional finance.
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Industry Reactions:
- Bill Pulte: "This acknowledges digital wealth’s role in creditworthiness."
- Cathie Wood (ARK Invest): Praised the move as a step toward mainstream crypto adoption.
Why It Matters: The proposal could bridge crypto and traditional housing markets, setting a precedent for asset valuation.
Frequently Asked Questions (FAQs)
1. Why did Bitcoin’s demand turn negative?
Negative demand occurs when circulating supply (from mining/LTH sales) exceeds new buyer interest, signaling oversupply.
2. What caused the 1533% liquidation imbalance?
A rapid price rebound forced excessive short-position closures, favoring bullish traders.
3. How might the FHFA’s proposal affect Bitcoin?
Legitimizing Bitcoin in mortgages could boost its acceptance as collateral and stabilize long-term valuation.
4. Is the current market trend bullish or bearish?
Short-term bullish due to liquidations, but long-term bearish pressure persists from weak demand.
5. Should investors worry about LTH sell-offs?
LTH sales often indicate profit-taking, not necessarily a loss of confidence, but they can suppress prices temporarily.
Final Thoughts
While Bitcoin faces demand-supply imbalances and price volatility, developments like the FHFA proposal hint at growing institutional acceptance. Traders should monitor:
- LTH activity for sell-off trends.
- Regulatory shifts impacting crypto’s financial integration.
- Liquidation data for short-term market sentiment.
For real-time updates on Bitcoin’s market movements:
👉 Track Bitcoin’s latest trends here
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