Bitcoin, Wallets at 2-Year Low Despite Price Surge... Conflicting Outlooks: "$250,000" vs "Crash Again"

▲ Bitcoin (BTC)/ChatGPT generated image

While Bitcoin (BTC) has recovered to $80,000 in three months, interpretations surrounding on-chain indicators are divided, intensifying the debate over the market's direction.

BeInCrypto reported on May 5 (local time) that despite Bitcoin surpassing $80,000, analysts are offering conflicting diagnoses of the rally, seeing it either as a signal for a renewed bull market or a rebound before a further decline. Key issues include network participation, profit-taking trends, and spot market supply and demand.

Santiment stated that the number of daily active Bitcoin wallets remains around 531,000, and new wallet creations are approximately 203,000. Both indicators are at a two-year low. Despite Bitcoin's 22% increase over the past five weeks, network participation has not followed suit. Santiment assessed that if price increases occur without expanded on-chain participation, the upward momentum could be fragile.

However, there is also a perspective that interprets the same indicators in reverse. Santiment suggested that the situation where network activity has reached a two-year low could actually signify the end of a period of indifference. They explained that historically, bottoms in activity have not extended further declines but rather acted as compression periods before larger rallies.

Michael Nadeau, founder of The DeFi Report, pointed out warning signs in the spot market. He stated that Bitcoin's spot trading volume delta turned positive for the second time in this bear market. While this means buyers have started to act more aggressively than sellers in the spot market, he explained that in past bear markets, such a signal was often followed by a strong correction.

Conversely, bullish arguments are also strong. Santiment reported that a net realized profit of approximately $207.56 million recently occurred, marking the largest monthly surge in profit-taking. Generally, if the market absorbs large-scale profit-taking during a price increase, it can be interpreted that the upward trend may continue.

Darkfost presented the lack of significant selling pressure from short-term holders as a bullish indicator. The inflow of short-term holders into profit was approximately 13,000 BTC, and the weekly inflow of short-term holders on Binance was 36,500 BTC, which is low for this cycle. The fact that selling pressure decreased even without strong demand being confirmed was considered a factor increasing the possibility of Bitcoin sustaining above $80,000.

In long-term forecasts, Plan C presented a scenario of a larger increase. He maintains the view of a Bitcoin supercycle that began at the $16,000 low in November 2022, projecting a peak possibility of over $250,000 between late 2027 and early 2028.

Bitcoin's recovery to $80,000 has left the market with a greater debate rather than a clear conclusion. While sluggish network activity reveals the rally's fragility, low participation and limited selling pressure are also interpreted as compression signals before a major surge. BeInCrypto stated that the current $80,000 range is a critical test where prospects for continued bullishness and further declines directly clash.

*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.*