Bitcoin Faces Demand Decline: Short-Term Risks Grow As Long-Term Holders Accumulate More BTC

• Bitcoin’s market dynamics are shifting as demand declines sharply, prompting concerns over potential price drops in the near term.

• The sustained contraction in demand also highlights the cautious sentiment among investors, which historically corresponds with increased short-term volatility.

• As noted by analysts, “Long-term holders, despite accumulating significant BTC, often experience price corrections before the market stabilizes.”

Bitcoin faces challenges with weakening demand and potential price declines, as long-term holders accumulate while short-term volatility looms.

Bitcoin Needs Investors’ Backing

Bitcoin’s apparent demand has taken a significant hit, with spot demand contracting sharply in recent days. This contraction marks the most substantial decline since July 2024 and the first instance in over four months. The drop indicates rising skepticism among investors, leading to reduced buying interest and increased short-term bearish pressure.

A shrinking demand suggests that market participants are hesitant to enter new positions. If demand does not recover soon, Bitcoin could struggle to sustain its current price levels, increasing the risk of further drawdowns.

Bitcoin Apparent Demand. Source: CryptoQuant

Long-term holders (LTHs) have shifted toward accumulation overselling, as shown by the LTH Net Position Change metric. Over the past 30 days, these investors have accumulated more than 107,413 BTC. Historically, LTH accumulation signals long-term confidence, but in the short term, it has often preceded periods of price weakness.

LTHs tend to accumulate at lower prices and begin distributing during bull runs. This pattern suggests Bitcoin might still face some downside before a meaningful recovery begins. While long-term accumulation is positive, the immediate impact could be additional short-term volatility and potential price corrections.

Bitcoin LTH Net Position Change. Source: Glassnode

BTC Price Could Fall Further

Bitcoin’s price, currently at $82,305, is moving within a broadening descending wedge. While this pattern is historically bullish on a macro scale, in the short term, it indicates a higher likelihood of continued downside. BTC may need to test lower support levels before confirming a reversal.

Given the market conditions, the short term price prediction is that, Bitcoin could lose the crucial $80,000 support level and fall to test $76,741. If broader macroeconomic factors worsen, the decline could extend further, potentially reaching as low as $72,000. Such a scenario would put additional bearish pressure on the crypto market.

Bitcoin Price Analysis. Source: TradingView

However, a shift in investor sentiment could change this trajectory. If accumulation increases at the psychological support of $80,000, Bitcoin may regain bullish momentum. A move past $82,761 would pave the way for BTC to surpass $85,000, eventually reaching $87,041. Such a development would invalidate the bearish outlook and signal renewed market strength.

Conclusion

In summary, Bitcoin’s recent decline in demand poses challenges for its near-term price performance. While long-term holders are accumulating, market sentiment remains cautious, potentially leading to increased volatility. Current price levels around $82,305 face critical support at $80,000. Should investor sentiment shift positively, Bitcoin could rebound, while further decline seems plausible if current trends persist. As always, staying informed and responsive to market shifts will be crucial for investors navigating these waters.