Despite the king coin’s comeback above $17,000, expecting a revival of the Bitcoin [BTC] bull market may seem premature. Cauceconomy, a CryptoQuant analyst, stated this after examining the state of Bitcoin demand.
BTC, which has had more green days than red days since 2023 began, has helped to rekindle investor interest. However, a substantial breakout for Cauceconomy may be unlikely.
Bitcoin’s lack of demand, according to his publication on the crypto data insight platform, can be attributed to its network usage. This is due to the fact that each block confirmation results in an increase in daily transactions.
However, this has not been the case recently, as it has not always been advantageous for miners to boost output by confirming additional blocks. As a result, trade volume has been suppressed.
At press time, the BTC 24-hour trade volume had decreased by 1.75%, according to CoinMarketCap. This corresponded with the analyst’s mention of a drop in Bitcoin network transactions.
Cauceconomy further supported his point of view with historical data. He noted that in prior cycles, there was always a major breakout during the bear market before the bull season, as demonstrated by the above image. Meanwhile, BTC’s present momentum demonstrates nothing of the like. According to the analysis,
“For us to have growth in the fundamentals of the network, we will need to see greater demand for trading and, consequently, higher fees for daily transactions. At this time, we haven’t had that breakout yet and trading volume remains low, indicating low demand.”
Glassnode discovered a modest decline in the number of Bitcoin addresses having non-zero balances from the high in November 2022.
At the time of writing, the number was reported to be 43,170,375. Although this was a little difference, it signalled a bleak outlook on network utilisation and user base expansion.
Furthermore, another post on CryptoQuant forewarned bullish investors of an expected price collapse. Gigisulivan, an on-chain analyst, was the one who raised the alert following his assessment of supply in profit percentage. At the time of publication, the Bitcoin supply in profit % was approaching a peak and developing a divergence.
He, like Cauceconomy, referenced to history, stating that events like that inevitably lead to a short-term BTC pullback. In 2018, and 2019, it just took a few days for the predicted conclusion to occur. Given the current circumstances, this might also be the case.
The analyst did, however, mention that macroeconomic issues would also have an impact on the possible BTC direction. As a result, the Consumer Price Index (CPI) data on 12 January could determine if the supply in profit % meets the projection.