Bitcoin Remains in Profit-Taking Phase as Demand Fades (CryptoQuant)

Bitcoin’s (BTC) momentum has cooled down in recent weeks as investors persist in locking in profits. Slowing demand has also contributed to the cool down, with current figures about two-thirds less than last month’s records.

According to the weekly report from CryptoQuant, the Bitcoin market has moved from an extra bullish to a bullish cooldown phase.

Bitcoin Momentum is Cooling Down

During this cool-down phase, Bitcoin’s apparent demand has fallen from a July peak of 174,000 BTC to 59,000 BTC today. Institutional BTC buyers have slowed down in their accumulation – they are still buying, but not as much as before. The business intelligence firm, Strategy, which is the lead BTC buyer, has seen its purchases tumble from a November 2024 high of 171,000 to 27,000 over the past 30 days.

Spot Bitcoin exchange-traded funds (ETFs) are also seeing their lowest inflows in four months. Their 30-day net purchases currently hover around 11,000 BTC, a level not seen since late April.

“This broad-based decline in demand growth suggests fading momentum, which likely contributed to the recent price correction. Continued softness in demand could keep Bitcoin in a consolidation phase,” CryptoQuant stated.

Moreover, on-chain indicators are flashing weaker signals, which reveal that the market remains constructive, but with fading bullish momentum. The CryptoQuant Bull Score Index moved from the “Extra Bullish” to “Bullish Cooldown” phase after BTC rallied past $120,000. Current market conditions tally with the ongoing price decline.

“The transition to a bullish cooldown typically precedes sideways movement or mild corrections. Without a return to strong demand signals, further upward momentum may remain limited in the near term,” the analytics firm added.

Support at $110K?

Furthermore, new whale investors have been taking profits. This cohort of investors has led a spree that has realized at least $74 billion in profits since July 4. Notably, the market recorded its largest daily profit so far this year ($9 billion) on that same day.

Since then, the investors have not relented in taking profits – August 16 saw new whale investors realize up to $2 billion in gains.

Meanwhile, bitcoin’s price hovered around $116,000 at the time of writing, but with reduced downside risk. CryptoQuant analysts believe the leading digital asset may find support near $110,000, which is the Trader On-chain Realized Price. This level often acts as support during bull cycles, and traders’ unrealized profit margin goes to zero, discouraging more selling.