For the first time since September 2022, Bitcoin’s demand seems to have diminished, and this recent development signals a shift in market sentiment. Fresh data from Glassnode shows that exchange inflow volumes have dropped sharply, which is usually a sign that on-chain activity is also dropping. Lower on-chain activity generally means lower network utilization, and it seems like the network is being utilized less and less these days. This shift in demand could denote a shift in investor sentiment toward Bitcoin. If it does, then this could have significant implications for how we price the asset going forward. Bitcoin Apparent Demand has dropped negative for the first time since September 2024. pic.twitter.com/MR6I5DGuOg — CryptoQuant.com (@cryptoquant_com) February 24, 2025 The volume of Bitcoin flowing into exchanges—which is a prime indicator of demand—has been decreasing. This signals that there is now a lower number of people sending Bitcoin to exchanges in order to buy or sell it. Generally, when people are not sending their Bitcoin to exchanges, there is not much buying or selling happening on said exchanges. And if there is not much happening on the exchanges, that is usually not a good sign for the overall cryptocurrency market. Strategy’s $2 Billion Bitcoin Purchase Amid Declining Demand In spite of these worrisome trends, one leading player is defying the market’s overall mood. Strategy, formerly MicroStrategy, has made a splash by reporting another large Bitcoin buy this week. The firm told us that it acquired an additional 20,365 BTC for around $2 billion, expanding its already record-setting Bitcoin treasury. With this latest buy, Strategy has more Bitcoin than just about any country on Earth, an astounding feat that really cements its place as one of the largest institutional holders of the cryptocurrency. #Bitcoin $BTC exchange inflow volume is shrinking, signaling lower on-chain activity, reduced investor interest, and declining network utilization. pic.twitter.com/51rFICly2A — Ali (@ali_charts) February 24, 2025 This $2 billion acquisition announcement came on Monday and has raised a few eyebrows in the crypto and financial communities. Where other investors might be pulling back and reevaluating their positions because of demand that seems to have cooled, Strategy seems to be plowing ahead. With the company’s eye fixed on the long-term—toward what Bitcoin’s prospects may well be half a decade from now—their bullishness seems to be, at worst, an outlier and, at best, a reason to think that maybe all is not as dire as some in the media have suggested. Indeed, the Strategy’s unyielding Bitcoin accumulation is part of a larger trend that has seen the firm add many thousands of BTC to its balance sheet in recent years. Presently, the company holds over 500,000 BTC, with an average cost basis of around $30,000 per Bitcoin. This strategy, which sees the organization purchase Bitcoin at various price points, underscores a belief that Bitcoin’s function as a valuable store of wealth will only intensify as inflation and global economic tumult show no signs of abating. Bitcoin Spot ETF Faces Significant Outflows Although Strategy’s acquisition is a clear sign that institutions are betting on Bitcoin, other corners of the market are starting to express concerns. The Bitcoin spot ETF experienced a net outflow of $559 million last week—from February 18 to February 21 (US Eastern Time). That was the second largest outflow in the Bitcoin spot ETF’s history. Unsurprisingly, the outflows from the ETF suggest that retail and institutional investors are pulling back from Bitcoin exposure. As the ongoing volatility in cryptocurrency markets continues to shake investor confidence, the outflows from the ETF could be interpreted as a shift toward diversification into other assets. Last week (February 18 to February 21, US Eastern Time), the Bitcoin spot ETF had a net outflow of US$559 million, and the Ethereum spot ETF had a net inflow of US$1.61 million. https://t.co/Tvs2oCS03I — Wu Blockchain (@WuBlockchain) February 24, 2025 The on-chain activity, exchange inflows, and Bitcoin-linked supply from large-scale financial products like ETFs have all been declining lately. Does this mean Bitcoin demand is falling, too? Despite the downward indicators taken together, I believe the opposite is true. I believe Bitcoin demand is only strengthening. And I believe the guys at Strategy, who are long Bitcoin, are correct when they say the fundamentals driving that demand are as strong as they’ve ever been. Long-Term Outlook for Bitcoin Amid Market Challenges The immediate market prospects for Bitcoin are unclear. Investor sentiment may remain fragile as concerns about inflation, regulatory scrutiny, and a potential tightening of monetary policy hover in the background. But some analysts believe that the recent decline in demand could simply be a market correction, with more speculative investors stepping back while the long-term, conviction-driven players that populate our base case continue to accumulate. To sum up, even if Bitcoin’s demand seems to be declining for now, with ETF outflows in particular suggesting that the market isn’t very active at the moment, Strategy’s $2 billion Bitcoin purchase that they just made last month is helping to highlight a serious divide between what sentiment appears to be in the short term and what very confident institutions seem to be betting on in the long term. And the only fact that this purchase is emphasizing is how intensely divisive opinions on Bitcoin seem to be right now. Some people think it’s a “digital gold” type of bet. Other people think it’s a risky way to lose a bunch of money. Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services. Follow us on Twitter @nulltxnews to stay updated with the latest Crypto, NFT, AI, Cybersecurity, Distributed Computing, and Metaverse news ! Image Source: fellowneko/ 123RF // Image Effects by Colorcinch
