Not a rise?...CryptoQuant "Bitcoin is still following its 2022 bear market path"

▲ 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 similar structure 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 April upward trend was formed mainly around the futures market without spot demand.

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

CryptoQuant researchers defined the simultaneous appearance of price increase and decrease in spot demand 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, too, there was a trend of only futures demand increasing and spot demand decreasing, which subsequently led to several months of price declines.

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

Bitcoin showed a correction from $79,000 to $75,000 after its April high, and then showed a trend of attempting to rebound again.

The researchers explained that a rise formed without a recovery in spot demand is difficult to sustain, and the process of liquidating futures positions could be a key variable in 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.*