Key takeaways:
BTC demand fell below daily mining supply for the first time in seven months.
Spot Bitcoin ETFs saw $1.67 billion in net outflows since Oct. 11.
Bitcoin treasury firms trading below NAVs signal eroding confidence, potentially pressuring BTC prices further.
Institutional demand for Bitcoin (BTC) has dropped below the daily amount mined, raising concerns about BTC’s long-term stability, according to an analyst.
Bitcoin supply-demand dynamics shift
While Bitcoin mining output has remained relatively constant, demand from institutional buyers has “dropped below the daily mined supply for the first time in seven months,” according to head of Capriole Investments, Charles Edwards.
Related: Retail investors ‘retreat’ to $98.5K: 5 things to know in Bitcoin this week
Edwards shared a chart illustrating key Bitcoin metrics that track three institutional activities: Bitcoin mined (red), spot ETF and similar institutional buying (light green), and BTC Digital Asset Treasury (DAT) corporate activity (orange).
The total amount of Bitcoin purchased by institutional investors is represented by the blue line.
The analysis shows a staggered decline in demand from DATs and ETFs since mid-August, with the combined demand dropping below the daily mining supply on Nov. 3. The last time this institutional demand trailed the daily amount of BTC mines was in March.
Initially, the subsequent inflows from spot Bitcoin ETFs compensated for the reduced corporate pressure, thereby upholding overall institutional demand.
However, demand through spot ETFs also began to contract sharply following the market crash on Oct. 11. Since then, these investment products have seen $1.67 billion in net outflows.
On Oct. 31, spot Bitcoin ETFs saw a total daily net outflow of $191 million, with none of the twelve ETFs recording inflows.
This implies that institutional appetite for exposure to BTC via traditional market vehicles has weakened after a period of aggressive buying earlier this year that helped prop up BTC prices.
Expressing his concerns, Edwards said, “Won’t lie, this was the main metric keeping me bullish the last months while every other asset outperformed Bitcoin,” adding:
“Not good.”
An unsustainable trend for BTC?
Meanwhile, BTC’s rally has cooled, dropping toward $107,000 after hitting a record high of over $126,000 on Oct. 6.
Zooming out, the market has been consolidating within a broad range above $105,000 since July, reflecting a tug-of-war between bullish optimism and profit-taking.
The DAT trend, pioneered by Strategy, is based on a conventional concept of borrowing fiat to acquire Bitcoin.
So far, there are “188 treasury companies carrying heavy BTC bags with no business model,” Edwards added.
The DAT trend, therefore, is a bet that prices will continue to rise, generating capital gains. The Market Value to Net Asset Value (mNAV) ratio is a metric used to assess the valuation of firms that hold Bitcoin as a treasury asset.
A higher mNAV can indicate that investors are assigning a premium to the company based on its future growth prospects, while a lower mNAV may suggest concerns about debt or other risks.
Data reveals that Bitcoin treasury firms have seen their NAVs collapse, wiping out billions in paper wealth.
If this trend persists, it could erode the premium these companies command, as declining institutional demand may signal reduced confidence, which in turn could increase selling pressure.
As Cointelegraph reported, Bitcoin’s price recovery will remain limited until spot ETFs and institutions, led by Strategy, restart their large-scale acquisitions.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
