Bitcoin’s recent rally, which saw its price surge approximately 20% in April—from $66,000 to a peak of $79,000—may be setting the stage for a prolonged price decline, according to analysis from the crypto analytics firm CryptoQuant. This rise has been largely attributed to an increase in perpetual futures demand, while spot demand for Bitcoin has concurrently seen a downward trend.
In a report released Thursday, CryptoQuant highlighted that the rapid price increase was “driven entirely by growth in perpetual futures demand.” This indicated that the market’s marginal buyer during this period was primarily speculative rather than anchored in fundamental demand. The company underscored that the noteworthy divergence between rising prices and diminishing spot demand serves as a crucial on-chain signal, suggesting that these price gains are predominantly driven by speculation rather than solid market fundamentals.
As of now, Bitcoin is trading around $77,000, reflecting a 2.1% increase over the past 24 hours. CryptoQuant noted that the recent correction from the $79,000 peak aligns with similar patterns seen in the past, particularly during the 2022 bear market. Analysts observed that a surge in futures demand while spot demand dwindles often precedes extended price declines, contributing to concerns about the current trend.
The analysis from CryptoQuant contrasts sharply with insights from Bitwise’s chief investment officer, Matt Hougan, who suggested earlier this week that other factors, particularly significant purchases by Bitcoin treasury company Strategy and strong buying from exchange-traded funds (ETFs), have played crucial roles in the recent rally. Hougan stated that since March 1, ETFs have contributed around $3.8 billion to the market, and long-term holders have renewed their purchases; he emphasized that Strategy has been the “single biggest factor” in the price increase.
Additionally, CryptoQuant reported that its Bull Score Index, which assesses market and network activity to evaluate market sentiment, has dropped from 50 to 40 in April. This decline indicates that market conditions are beginning to shift toward a bearish outlook, placing the market in a range that has historically been associated with ongoing price weakness.
Overall, while Bitcoin’s price has recently shown resilience, analysts are cautioning against over-optimism given the speculative nature of the latest gains and the prevailing trends in both futures and spot demand.
