Demand for Bitcoin Falls as Supply Rises

Investors tranfer Bitcoin from cold storage to spot exchanges.
Greater increase in demand is required for the current upswing to continue.
Quantity of stablecoins being traded are diminishing.

As a result of the recent BTC boom, investors have been transferring BTC from cold storage to spot exchanges in order to cash in on the price appreciation. Because of the rise in selling pressure and the dwindling supply of stablecoin available for purchase, any subsequent upswing is likely to be temporary. A greater increase in demand is required for the current upswing to continue.

The quantity of stablecoins that are now being traded is said to be diminishing, as reported by CryptoQuant, as the amount of selling pressure increases. Additional demand is required in order for this recovery rally to continue, and as a result, the current trend may not continue in the foreseeable future.

In addition, data from Santiment suggests that Bitcoin’s profit ratio has reached a new all-time high of 1.09, surpassing the previous record high of 1.08, which was set in February 2021. In October 2021, Ethereum (ETH), the second most popular cryptocurrency, reached its highest price in the previous 15 months, which was 1.34. The research conducted by Santiment indicates that market participants are taking advantage of this window of opportunity.

Investors should be wary of liquidity-driven cryptocurrencies such as bitcoin and Ethereum due to the ongoing indicators of macroeconomic instability. Bitcoin and Ethereum are examples of such cryptocurrencies.

Because of the lack of clarity over the future of the macroeconomic climate, an analysts at NeuroInvest and Santiment advise exercising caution until the situation becomes more stable.

The expert says that the latest cryptocurrency bubble is showing signs of overheating, even though long-term investors are still committed to their holdings even though the bubble might burst.

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Munene Kelvin

Kelvin enjoys writing about cryptocurrency and blockchain. He started blogging in 2019 and switched to cryptocurrency in 2020. Kelvin is interested in technology, football, chess, and Defi. He wants decentralization to benefit everyone on the planet.