Bitcoin Demand Falls 22% Amid Geopolitical Tensions, Inflation Fears

Bitcoin's apparent demand has significantly decreased as the market grapples with geopolitical tensions and macroeconomic challenges. Recent data indicates that Bitcoin's demand has fallen into negative territory, reflecting investor caution in the current economic climate. A CryptoQuant analyst noted that the lowest apparent demand levels in 2025 are a result of traders' reluctance to engage with risk-on assets due to persistent inflationary concerns.

Bitcoin's price struggles have been exacerbated by macroeconomic challenges, leading to a cautious trading environment. The post-election optimism has waned, particularly after the mixed reactions from the White House Crypto Summit held on March 7. The uncertainty in macroeconomic conditions has become more pronounced as political processes unfold.

In a surprising turn, despite lower-than-expected Consumer Price Index (CPI) inflation figures reported on March 12, Bitcoin's price saw an immediate downturn. This unexpected market response highlights the fragile confidence among investors. Traditional financial investors are turning away from cryptocurrencies, with crypto exchange-traded funds (ETFs) experiencing significant outflows over the past month. This trend underscores a growing aversion to risk across the financial landscape.

Poor market sentiment, coupled with recession fears, has created a panic-selling environment that has adversely affected crypto prices. Since the inauguration of President Trump on January 20, the Total3 Market Cap, representing the broader crypto market excluding Bitcoin (BTC) and Ether (ETH), has plummeted over 27%, falling from more than $1.1 trillion to approximately $795 billion. Bitcoin has not escaped this downward trend, with its price decreasing more than 22% from a peak above $109,000 to current levels. Currently, Bitcoin trades below its 200-day exponential moving average (EMA), a critical indicator of long-term price trends, showing weakness since March 9.

Furthermore, Bitcoin’s volatility, indicated by its Average True Range (ATR) of over 5,035, suggests that price fluctuations are likely as the market continues to grapple with macroeconomic factors. Analyst Matthew Hyland posits that securing a close above $89,000 on a weekly basis is crucial for Bitcoin to avoid a potential correction down to $69,000, adding to the urgency for traders.

The increasing preference for safer assets among investors is discernible through the recent trends in market behavior. Heightened economic anxiety surrounding potential trade wars and ongoing geopolitical tensions is making traditional assets like cash and government securities more attractive than cryptocurrencies. Despite past bullish movements, the current landscape indicates that many investors are adopting a risk-off approach. Analysts suggest that the combination of sustained inflation rates—hovering above the Federal Reserve’s targeted 2%—and uncertainties surrounding economic conditions are forcing traders to reconsider their positions in crypto assets.

This shift reflects a decisive moment in the market, with many crypto participants now weighing their options carefully before committing additional capital. While the potential for recovery remains, immediate sentiment points to a prolonged period of volatility and corrective trends. In summary, the current environment surrounding Bitcoin and the broader cryptocurrency market is characterized by heightened caution and significant demand challenges. As geopolitical tensions and economic instability continue to exert pressure on prices, investors are increasingly seeking shelter in safer assets. The overall outlook hinges on Bitcoin’s ability to reclaim psychological price levels and regain investor confidence in the coming months, but a return to stability appears contingent upon broader economic recovery.