Not a rise?...CryptoQuant "Bitcoin is still on the same bearish path as 2022"

▲ Bitcoin (BTC)/AI generated image

An analysis suggests that Bitcoin (BTC) has been exposed to downward pressure after its April rally. It is pointed out that on-chain data shows a structure similar to the beginning of the 2022 bear market.

Cryptocurrency specialized media Bitcoin.com News reported on May 2 (local time) that CryptoQuant researchers analyzed that Bitcoin's upward trend in April was formed centered on the futures market without spot demand.

According to the report, Bitcoin rose by approximately 20% from about $66,000 to $79,000 during April, but this increase was driven by a surge in perpetual futures demand. In contrast, spot buying demand, based on on-chain data, continued to decline throughout the upward period.

CryptoQuant researchers defined a structure where price increases and spot demand decreases simultaneously as “a typical sign of a speculative rise.” Indeed, throughout the entire upward process, futures demand expanded while spot demand consistently contracted.

This pattern was analyzed to be identical to the structure at the beginning of the 2022 bear market. At that time, a trend of increasing futures demand and decreasing spot demand continued, leading to several months of price decline.

CryptoQuant's Bull Score index also showed a warning signal. The indicator dropped from a level of 50 in mid-April to 40 at the end of the month, re-entering a bearish zone. A score of 40 historically coincides with periods of sustained price weakness.

After its April peak, Bitcoin saw a correction from $79,000 to $75,000, and then showed a tendency to attempt a rebound again.

The researchers explained that an increase formed without a recovery in spot demand is unlikely to be sustainable, and the process of liquidating futures positions could act as a key variable for future price movements.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*