Institutions Accumulate Bitcoin, Yet Prices Remain Stagnant: Reason Discussed
In a recent report by market intelligence firm CryptoQuant, it has been revealed that the Bitcoin market is currently experiencing a contraction in demand, despite persistent institutional buying. This contraction is primarily due to the slowing down of institutional purchases, which are no longer sufficient to offset the significant drop in broader market demand.
At the market's peak in December, ETF and institutional purchases represented only 33% of total Bitcoin demand growth. However, over the last 30 days, the overall demand for Bitcoin has contracted by a staggering 895,000 BTC, while ETF and institutional demand combined has expanded by only 748,000 BTC (377,000 BTC from ETFs and 371,000 BTC from institutions).
This contraction is driven by an increase in Bitcoin supply from miners and long-term holders who are now selling or profit-taking at current price levels. The "Apparent Demand" metric, which measures net buying after accounting for newly mined coins and coins entering the market from dormant holders, has turned negative, indicating waning buy-side momentum and rising sell-side pressure.
One of the most notable examples of this slowdown in institutional buying is MicroStrategy, whose purchases have dropped from 171,000 BTC in December to just 16,000 BTC currently. Purchases from U.S.-based exchange-traded funds (ETFs) have also decreased significantly, with flows halving within seven months.
Despite this institutional accumulation, the market is stuck in a consolidation phase without enough diffuse demand from retail and other buyers to push prices higher. Bitcoin has been stalling within a tight range since hitting an all-time high in late May, causing concerns among market participants.
The report also suggests that macro factors, such as a contraction in global money supply, may be adding downward pressure on demand. For instance, Bitcoin’s 30% price drop in early 2025 coincided with a significant contraction in global money supply, hinting that macroeconomic conditions may also be constraining overall demand beyond institutional interest alone.
In summary, the overall demand contraction despite ongoing institutional purchases is because:
- Institutional buying is slowing and is insufficient to compensate for selling by miners and long-term holders. - Demand from retail and other market participants is weak, leading to an imbalance where supply outpaces new buying. - Macro factors (e.g., global money supply contraction) add downward pressure on demand. - This dynamic results in Bitcoin price consolidation, with no strong bullish momentum despite institutional activity.
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- The contraction in demand for Bitcoin, despite ongoing institutional purchases, can be attributed to insufficient institutional buying compared to the selling by miners and long-term holders.
- The weak demand from retail and other market participants, along with macro factors such as a contraction in global money supply, contribute to an imbalance where supply outpaces new buying, creating downward pressure on demand and Bitcoin price.
- As a result of these factors, the Bitcoin market is currently experiencing a consolidation phase, with no strong bullish momentum despite ongoing institutional activity.
