Bitcoin demand still unable to outpace issuance as recovery remains fragile

Compared to the tumultuous price action of early June, Bitcoin [$BTC] has faced less volatility and liquidations at the start of July. However, this does not necessarily mean it is a month for recovery.

There is no getting around the fact that Bitcoin demand has dramatically dropped. The spot ETF flows have been positive for the past three trading days, from July 2, but have been overwhelmingly negative since mid-May, with just three days of net inflows.

Evidence continues to point toward a lack of Bitcoin buyer conviction

Calculated as the difference between new issuance and the supply of Bitcoin that has been inactive for over a year, the apparent demand metric helps track whether accumulation trends among long-term holders are enough to absorb the new supply created by the network.

Crypto analyst Darkfost observed that the metric has been negative throughout 2026. Though it has seen a slight improvement over the past three weeks, it was only at -75,000 $BTC, compared to the year’s lowest value of -275,000 $BTC.

Another analyst, Novaque Research, used the estimated leverage ratio and the positive funding rates to assert that there has been a major leverage reset. Yet, the speculative excesses have not been wholly trimmed to allow clean accumulation trends.

Across all exchanges, the estimated leverage ratio, computed as the ratio of Open Interest to the exchange reserves, has reached 0.241, just above the 100-day moving average.

Funding rates also flipped positive after a few months of remaining mostly in negative territory. Together, these two signals show rising leverage in the market, though spot price trends remained weak.

The weak apparent demand shows that any price bounce would offer only a fragile buying setup. The June sell-off saw excessive long liquidations as market participants eager to catch the market bottom got their fingers burnt.

AMBCrypto reported that, though long-term holders were accumulating, macroeconomic developments could mean the final capitulation phase had not yet occurred.

Final Summary

• The Bitcoin apparent demand has improved slightly but remained negative, as it has throughout 2026.
• Rising speculative interest and funding rates showed market participants were willing to go long, but without spot demand, the bounce was fragile.