CryptoQuant warns Bitcoin faces prolonged decline after futures-led April surge
According to CryptoQuant, Bitcoin may experience an extended period of declining prices following its April surge, which was propelled by futures market activity amid weakening spot demand—a combination that has historically indicated "meaningful downside risk."
An extended multimonth downturn in Bitcoin's price may be on the horizon following April's rally, which was predominantly fueled by futures market participants even as spot market demand weakened, the crypto analytics platform CryptoQuant has warned.
During April, Bitcoin experienced approximately 20% appreciation, climbing from the $66,000 level to reach a high of $79,000 in an upswing that was "driven entirely by growth in perpetual futures demand," according to a Thursday report released by CryptoQuant.
At the same time, Bitcoin's spot market demand experienced contraction during the entire rally period, "indicating that the market's marginal buyer was speculative, not fundamental," the report stated.
The divergence between rising price and contracting spot demand is one of the clearest on-chain signals that price gains are speculative rather than structural.
CryptoQuant
At the time of publication, Bitcoin is changing hands near the $77,000 level, reflecting a 2.1% increase during the previous 24-hour period. According to CryptoQuant's analysis, the pullback Bitcoin has seen from the $79,000 peak reached last month aligns with previous rallies that were supported exclusively by robust futures market demand.
The current demand dynamics for Bitcoin echo a similar pattern observed during the early stages of 2022's bear market, a period when futures demand experienced a surge even as spot demand deteriorated, creating a configuration that "ultimately preceded a sustained price decline."
History suggests this setup carries meaningful downside risk as Bitcoin remains in a bear market regime.
CryptoQuant
CryptoQuant's analysis stands in stark contrast to commentary provided on Tuesday by Matt Hougan, Bitwise's chief investment officer, who indicated that Bitcoin treasury firm Strategy has served as the "single biggest factor" behind Bitcoin's recent price appreciation.
There have been multiple drivers of the recent rally, including strong buying from ETFs [exchange-traded funds], $3.8 billion since March 1, and renewed purchases by long-term holders. But Strategy has been the single biggest factor.
Matt Hougan, Bitwise Chief Investment Officer
CryptoQuant further noted that its Bull Score Index, an analytical tool that evaluates market and network activity to measure market sentiment on a 100-point scale, experienced a decline from 50 to 40 throughout April notwithstanding the price rally.
The Bull Score returning back to 40 indicates conditions are 'getting bearish' and places the market in the same range that historically preceded continued price weakness.
CryptoQuant