Bitcoin demand experienced a decline in the period leading up to the halving event, as confirmed by cryptocurrency analytics firm CryptoQuant. The firm observed that investors were taking profits in anticipation of the event, which occurred on Friday night and reduced Bitcoin’s block rewards from 6.25 BTC ($398,134) to 3.125 BTC ($199,067).

According to CryptoQuant, traders in the perpetual futures market were capitalizing on increased volatility and geopolitical concerns by locking in their gains. The firm suggests that Bitcoin investors may be waiting on the sidelines for the ongoing geopolitical uncertainty in the Middle East to de-escalate.

Amidst market turmoil caused by tensions in the Middle East, traders with long positions have reduced their exposure to Bitcoin and cryptocurrencies in general. This is evident in the taker Buy Sell Ratio, which has fallen below one. A ratio below one implies that sell orders outweigh buy orders. Typically, prices rally when the Buy Sell ratio is above 1, indicating dominance of buy orders.

CryptoQuant also highlights that large holders and exchange-traded funds (ETFs) have been acquiring less Bitcoin. The firm attributes this to market uncertainties and structural changes resulting from the halving event.

However, CryptoQuant identifies one bullish metric. The recent sell-off has reset traders’ unrealized profits, historically signaling a potential market bottom in bull cycles. Market participants are recalibrating their positions, leading to a decrease in immediate demand and price stabilization.

As of writing, Bitcoin is trading at $63,655.

Please note that the opinions expressed in this article are not investment advice. Investors should conduct their own research before engaging in high-risk investments in Bitcoin, cryptocurrency, or digital assets. Transfers and trades are done at your own risk, and any losses incurred are your responsibility. The Daily Hodl does not endorse the buying or selling of any cryptocurrencies or digital assets, nor is it an investment advisor.