Bitcoin experienced a remarkable 20% surge in April, rising from approximately $66,000 to a peak of $79,000. However, a recent analysis from crypto data firm CryptoQuant suggests that the rally may not be as solid as it initially appears.
The latest weekly report from CryptoQuant, released on Thursday, indicates that the increase in Bitcoin’s price was primarily fueled by demand in perpetual futures—a type of leveraged, speculative trading. In contrast, spot demand, which reflects the genuine accumulation of coins in the market, remained in negative territory throughout the month.
CryptoQuant employs an “apparent demand” metric to track the 30-day change in estimated on-chain spot buying activity, and this metric never showed positive movement during the price surge in April. This divergence raises significant concerns, as price increases supported by spot demand indicate real buyers purchasing Bitcoin, whereas those driven by futures suggest speculative bets made by traders who may not hold the underlying asset. Historical trends show that when the positioning in futures contracts unwinds, it often leads to a decline in prices, and sometimes these drops can be sharp.
The report highlights a concerning historical parallel with the onset of the 2022 bear market. At that time, a similar pattern emerged where perpetual futures demand rose while spot apparent demand simultaneously decreased. This configuration foreshadowed a prolonged price collapse that saw Bitcoin lose around 70% of its value from its peak.
Currently, Bitcoin seems to have begun retracting from its April high, with prices settling around $76,400. CryptoQuant describes this decline as consistent with the historical volatility of futures-led rallies that lack confirmation from spot demand.
Adding to the unease, CryptoQuant’s proprietary Bull Score Index—a composite index based on various on-chain and market indicators—dropped from 50 to 40 in April, indicating a shift into bearish territory. This index had reached a neutral score of 50 earlier in the month but fell as speculative trading activity peaked and subsequently faded.
While the firm refrained from issuing a prediction of a full market reversal, the analysis communicated a cautious sentiment. It underscores that without a transition in apparent demand from negative to positive, any efforts to regain the $79,000 peak would lack the necessary on-chain support for a sustainable upswing.
Despite the sobering analysis, users on Myriad— a prediction market run by Decrypt’s parent company, Dastan—remain optimistic about Bitcoin’s short-term potential. They estimate a greater than 70% likelihood that the cryptocurrency’s next move will be an ascent to $84,000 rather than a drop to $55,000.
