Bitcoin (BTC) demand has been in a “bear market” for a whole year, but a surge is most likely what will spark a new price run-up.

That’s according to prominent economics analyst Lyn Alden, who in a Twitter debate this week bet on demand snowballing and lifting BTC price action.

Back: Watch supply and demand for BTC price cues

Responding to a survey by stock-to-flow model creator PlanB, Alden said that a demand transformation is more likely to cause a BTC price boom than multiple other events favored by bulls.

These include the United States approving a spot price-based exchange-traded fund, a country following El Salvador to make Bitcoin legal tender, advancements in the Lightning Network and the knock-on effect of Bitcoin’s recent Taproot upgrade.

Bitcoin Twitter survey (screenshot). Source: PlanB/Twitter

Instead, Alden agreed with Blockstream CEO Adam Back that significant change will come as a result of a positive feedback loop of supply and demand.

Back described the process as a “supply squeeze as ever more coins move to cold storage, continued buying, price run up then chased by reflexivity.”

“Reflexivity” refers to the mutually beneficial relationship of fundamentals and market expectations once an asset starts moving, which triggers stronger and stronger performance.

Analyzing the current state of supply against demand, however, Alden confirmed that 2021 had done little to change the status quo since the first quarter.

“BTC has been in a bear market in terms of demand since Q1 2021, back when ARKK peaked,” she argued alongside data from on-chain analytics firm Glassnode.

“However, the supply side has been unusually tight for this cycle, holding up price to a surprising degree, even touching slight new highs at one point since then. Dry kindling, no spark.”
Bitcoin active supply annotated chart. Source: Lyn Alden/Twitter

‘Uncertain monetary policy’ hinders trend break

As Cointelegraph reported, Alden is not the only market commentator eyeing supply factors to add fuel to Bitcoin’s unlit fire this year.

Related: Bitcoin will emerge stronger after stocks dip ‘10%–20%’ — Bloomberg analyst

Even on a short-term basis, a modest uptick in demand could transform the trend as exchange reserves dwindle and long-term holders control a proportion of the overall BTC supply, which is near all-time highs.

The result, one analyst said this week, could even be a copycat move similar to October 2020 — the springboard for BTC/USD beating its previous all-time highs from 2017.

Responding to Alden, popular trader and analyst William Clemente said that he “completely agreed” with the perspective.

“Supply-side looks great, holding behavior is strong,” part of his own post read.

“The qualitative view of Bitcoin’s float is very much in bulls’ favor, problem is lackluster of demand, likely because of uncertainty around monetary policy.”