On-chain at its lowest yet surging... Bitcoin 'danger signal' emerges

▲ Bitcoin crash/ChatGPT generated image ©

Although Bitcoin continues its upward trend, surpassing $81,000, warnings are simultaneously emerging that its upward foundation is fragile due to sluggish on-chain indicators.

According to investment media FXStreet on May 5 (local time), Bitcoin (BTC) surged past $80,000 to the $81,000 range, driven by strong capital inflows into US spot Bitcoin ETFs. Specifically, a net inflow of $532.21 million occurred, continuing the capital inflow trend for three consecutive trading days.

Institutional demand remains a key pillar supporting the market. According to SoSoValue data, analysis suggests that further upside potential is open if ETF capital inflows continue. However, structural limitations are pointed out, as this rally is driven by only some funds rather than a broader expansion of market participation.

According to Santiment data, Bitcoin's on-chain activity has fallen to its lowest level in two years. This represents a 'discrepancy' where price increases are not accompanied by network participation. Experts warned that in a situation of insufficient new demand, if large investors start taking profits, there may be insufficient buying power to sustain the price.

The current rally structure is also identified as a risk due to its derivatives-centric nature. While demand in the futures market is driving the rally, the spot market remains subdued, a pattern similar to the beginning of the 2022 bear market, according to analysis. The market is assessed to be moving towards a more speculative structure.

Technically, upward momentum is being maintained. Bitcoin is trading above the 50-day and 100-day EMAs, in the $74,700-$76,000 range, maintaining a short-term uptrend. The Relative Strength Index (RSI) is around 68, nearing the overbought zone, and the Moving Average Convergence Divergence (MACD) also shows a recovery trend. However, the 200-day EMA at $81,917 acts as the primary resistance level; a breakthrough is required for further gains to the $83,437 and $84,410 ranges. Conversely, if it breaks below $80,000, the $78,962 and $75,000 levels are considered key support zones.

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