CryptoQuant: The supply and demand pattern of BTC is changing, but a strong recovery still faces challenges

CryptoQuant's latest analysis indicates that while Bitcoin has support, the recovery process is uneven. First, regarding exchange reserves, it has risen from about 2.67 million BTC at the beginning of October to about 2.68 million BTC, still far below January levels. Low reserves do not mean that supply is continuously shrinking; transfers may reflect custody changes, and the increase itself does not prove selling pressure. Secondly, the recovery of spot demand has been hindered, with 30-day spot demand once approaching zero before turning negative again. Perpetual contract demand is positive, supporting overall demand.

Finally, the behavior of whales is diverging. Addresses holding 100 to 1,000 BTC have still net accumulated over the past 60 days, but this is below the peak at the end of September; the group holding 1,000 to 10,000 BTC has seen a net decrease approaching zero; and the group holding over 10,000 BTC is negative. Accumulation is not fully underway. CryptoQuant believes that conditions still exist to support Bitcoin's bottoming out. For a solid recovery to occur, sustained spot demand support is needed, buyers must be able to absorb the BTC flowing back to exchanges, and accumulation behavior should spread to more holding groups. Market expectations regarding the U.S. midterm elections and monetary policy must translate into actual buying behavior. The key is whether price increases can attract a growing and lasting group of buyers.