Analysis: Bitcoin enters mild correction, unlike past bear markets

Bitcoin has entered a period of mild, range-bound correction rather than a distinct bull market or a panic-driven bear market, according to an analysis by XWIN Research Japan, a contributor to CryptoQuant. The firm noted that its Apparent Demand indicator, which measures the net balance between BTC supply and demand, registered -19,000 BTC in late January. This suggests new demand is nearly non-existent and supply pressure is outpacing market inflows. Additionally, the Realized Cap metric has stagnated. The analysis states that a structural divergence exists between the current price level and demand indicators, making it difficult to interpret the situation as bullish even if BTC remains in the high $70,000s. The research firm highlighted that current Apparent Demand figures are less extreme compared to the bear markets of 2014-2015, 2018-2019, and 2022. Intermittent price recoveries suggest that selling is primarily driven by profit-taking rather than fear-based capitulation. Slowing inflows into spot BTC ETFs and reduced buying from Strategy are impacting demand, with selling from early holders becoming more prominent. However, no large-scale selling at a loss by long-term holders has been observed. Consequently, a prolonged correction is considered more likely than a sharp decline, with range-bound trading expected to continue for the time being. The market outlook could shift, the analysis concludes, if Apparent Demand turns positive and the Realized Cap begins to increase.