The demand is met with shrinking sell-side liquidity, but analysts suggest short-term further downside.
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Bitcoin’s (BTC) accumulator addresses showed a sharp increase in demand during December, with 225,280 BTC in net acquisitions by these investors as of Dec. 23, according to CryptoQuant.
The movement represents an 82.6% monthly increase.
On the other hand, total sell-side liquidity — the amount of Bitcoin available for selling in exchanges and exchange-traded funds — fell by approximately 590,000 BTC during the same period.
Notably, this decline in selling pressure relates to a steep contraction between Dec. 22 and Dec. 23, when the amount of Bitcoin ready for selling fell by 520,000 BTC.
According to the report, the supply on over-the-counter (OTC) trading desks, which process large trades, is down from over 421,000 BTC to 403,000 BTC. These numbers suggest that investor demand will continue to absorb sell pressure.
Additionally, the liquidity inventory ratio, which measures how fast current supply can fill investors’ demand, fell from 12 months to 5.5 months in December.
CryptoQuant data also revealed that Bitcoin whales, addresses holding more than 1,000 BTC, sold nearly 8,600 BTC this month as of Dec. 23.
However, new investors are absorbing this supply, with the number of short-term holders increasing by 3% over the past week. Short-term holders have accumulated 641,789 BTC over the past year, bringing their total holdings to 3.81 million BTC — just 70,000 BTC below the all-time high recorded on Dec. 15.
Despite Bitcoin showing a correction of up to 14.2% since hitting its all-time high at over $108,000 on Dec. 17, it is on track to analysts’ predictions to regain composure and resume its upward movement.
However, CryptoQuant community analyst Onatt recommended caution, as the supply of Tether USD (USDT) in exchanges is decreasing while the supply of BTC is slightly increasing.
While this may not signal a prolonged bearish phase, it could indicate the potential for further downside in the coming days.
Gino Matos is a law school graduate and a seasoned journalist with six years of experience in the crypto industry. His expertise primarily focuses on the Brazilian blockchain ecosystem and developments in decentralized finance (DeFi).
AJ, a passionate journalist since Yemen’s 2011 Arab Spring, has honed his skills worldwide for over a decade. Specializing in financial journalism, he now focuses on crypto reporting.
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Bitfinex is a digital asset trading platform offering state-of-the-art services for digital currency traders and global liquidity providers.
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CryptoQuant is a South Korean firm specializing in providing cryptocurrency market analytics and on-chain data to investors and industry participants.
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