Bitcoin's 12% surge in April a fake?...Expert "Speculative rally created by the futures market"

▲ Bitcoin (BTC)

Bitcoin (BTC) rose 12% in April, recording its largest return in a year. However, an analysis suggests it was a speculative overheating not backed by real buying interest.

According to the cryptocurrency specialized media CryptoPotato, market research firm CryptoQuant analyzed in a recent report that Bitcoin's April rebound relied solely on demand from the perpetual futures market. The report raised questions about whether this rally was a structural increase or a temporary speculative phenomenon, as Bitcoin's price saw a slight correction to the $75,000 level at the end of the month. CryptoQuant pointed out that leverage in the futures market drove up prices while spot demand was contracting, diagnosing that the nature of the incoming funds was not healthy.

On-chain indicators suggest that this upward trend contributed more to speculative positions than to new coin accumulation. Bitcoin's apparent demand indicator, which tracks spot buying activity over the past 30 days, remained in negative territory throughout April. In contrast, the perpetual futures demand indicator showed continuous expansion as speculative positions increased. CryptoQuant explained that the discrepancy between rising prices and contracting spot demand is the clearest sign of the price surge's fragility.

The current demand structure aligns with patterns observed at the beginning of the 2022 bear market. At that time, a futures-led rebound was followed by several months of price declines, creating a precedent for significant downside risk for Bitcoin. While past data does not necessarily guarantee future outcomes, such dynamics are considered reliable indicators for early warnings of price vulnerability. If spot demand does not turn positive in the short term, the price rally towards $79,000 will struggle to secure the support needed to maintain its breakout.

CryptoQuant's Bull Score Index declined from 50 to 40 during April, returning from neutral to bearish territory. This indicates that on-chain fundamentals deteriorated after the futures market-led price movement. A rally without fundamental support increases market volatility and exposes investors to high risks. Analysts warned that unless organic buying in the spot market revives, the current upward momentum is like building on quicksand.

For Bitcoin to reclaim the $80,000 mark and establish a stable trend, an influx of genuine demand, not just speculative forces, is essential. Excessive leverage in the futures market carries liquidation risks and acts as a factor amplifying market uncertainty. The direction of the market in May depends on whether spot investors return to a buying majority. Investors should maintain a cautious approach, paying close attention to the imbalance in the demand structure hidden behind the price increase.

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