Bitcoin (BTC) has entered the fourth quarter, a time historically favorable for price increases, yet the potential for a robust rally remains ambiguous due to weak demand growth, according to a report by CryptoQuant released on October 2.
Historical Performance in Question
The report highlighted that while Bitcoin usually performs well during the fourth quarter in halving years, the lack of substantial demand recovery could impede its chances of achieving projected price targets ranging from $85,000 to $100,000. Since July, Bitcoin’s demand has stagnated, fluctuating between -23,000 and +69,000 BTC monthly. This is notably different from the surge observed in April, when demand surged by 496,000 BTC, pushing prices close to $70,000.
Mixed Signals from ETF Activity
Despite the traditionally positive seasonality during halving years like 2016 and 2020—when prices rose by 59% and 171%, respectively—the current flat demand raises concerns about Bitcoin’s performance in the fourth quarter.
Recent activity in US-based spot exchange-traded funds (ETFs) provides a glimmer of hope for renewed demand, though it has sent mixed signals over the past few months. On September 26, spot ETFs net purchased 7,000 BTC, reversing their previous net selling of 5,000 BTC on September 2. This marked the largest daily purchase since July; however, it remains below the first-quarter average of 9,000 BTC bought daily, which helped drive prices higher.
If demand from ETFs continues to rise, it could significantly bolster Bitcoin prices in the coming months. Nonetheless, current levels indicate that demand still has considerable room for growth.
Short-Term Supply Patterns
Additionally, CryptoQuant’s “Total Supply by Age” data reveals that Bitcoin’s short-term supply has followed patterns reminiscent of previous halving cycles. In both 2016 and 2020, short-term supply decreased as demand slowed post-halving but later surged as new buyers purchased Bitcoin from long-term holders.
The report suggested that if demand increases, short-term supply could spike sharply in the fourth quarter, potentially facilitating a price rally.
The Need for Demand Recovery
While Bitcoin’s bull-bear cycle indicator suggests the cryptocurrency is entering a bull phase, the momentum appears weaker than in past halving years. In 2020, Bitcoin experienced a clear bull phase, culminating in a 171% price gain by year-end. This year, however, Bitcoin has been oscillating between bull and bear phases since August, reflecting uncertainty in market direction.
On-chain valuation metrics indicate price resistance between $85,000 and $100,000—levels at which short-term traders often realize profits following a rally. These price bands had previously acted as resistance when Bitcoin reached its all-time high of $73,600 in March.
According to CryptoQuant, Bitcoin could potentially approach these levels if demand picks up. However, without a significant increase in buying pressure, the rally may not reach these ambitious targets.
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