- Bitcoin demand weakened right before the halving.
- A revival is predicted, but investors must remain patient.
Bitcoin [BTC] saw a drop in demand growth as ETFs inflows in April. Julio Moreno, head of research at CryptoQuant, posted a chart showing the drop in demand on X (formerly Twitter).
Over the weekend, geopolitical tensions flared up in the Middle East.
From the early Monday’s high at $66.8k, BTC withdrew by 6% in a day, trading at $62.7k at press time. With the halving just three days away, are participants waiting till the dust settles before buying?
The strength has been waning throughout April
The trading volume behind Bitcoin began to drop steadily in the final week of March. The Open Interest also began to fall after the 1st of April, based on data from Coinglass.
The Tether (USDT) Dominance chart showed that the crypto market participants have increasingly been converting their assets to USDT in April.
A rise in USDT Dominance means the stablecoin makes up more of the crypto market capitalization. This happens when more USDT is minted.
More interestingly to us, this also happens when traders and investors decide the markets are risky and shift to holding stablecoins.
In other words, the market witnessed a rise in selling pressure born from a high amount of supply and a relative lack of demand. The strongly bullish sentiment in late March wavered in April and was in the doldrums over the past ten days.
The uncertainty around whether miners might dump some of their BTC holdings likely contributed to the lull in demand.
Will the Tether Dominance resemble the 2020 halving?
Source: USDT.D on TradingView
AMBCrypto examined the USDT Dominance chart. From the 4th of May to the 18th of May, the USDT.D rose higher. Thereafter, it moved sideways at the 3.47% mark till the 20th of July, eight weeks later.
The chart right now also saw a large bounce from 4% to 4.88%. If the similarities play out, we could see crypto prices remain rangebound for the next month or two.
Source: ETH/BTC on TradingView
However, there is also a case to be made for the dominance rising. This comes from the ETH/BTC chart. Founder of Into The Cryptoverse, Benjamin Cowen, observed on X that ETH/BTC has lost an HTF support level.
Read Bitcoin’s [BTC] Price Prediction 2024-25
The last time this happened was in July 2019. It began to climb higher in September 2019. The intervening two months saw both the Bitcoin Dominance and Tether dominance climb higher. Together they highlighted altcoin capitulation.
It was possible that the same could occur in the next two months, and is something investors should be prepared for.