Based on historical data, higher demand for futures coupled with shrinking spot demand is associated with unsustainable price gains during down seasons.
April ended with Bitcoin (BTC) recording a 12% increase – the largest such increase in a year. Although the asset corrected slightly to $75,000 by the last day of the month, market participants questioned whether the rise was structural or speculative.
To this end, market research firm CryptoQuant has provided insights into the reasons behind this phenomenon pool The possibility of a similar trend in the price of Bitcoin in May.
Scales on the chain indicate speculative actions
According to the latest weekly CryptoQuant a reportDemand from the perpetual futures market drove Bitcoin’s price action in April. Meanwhile, spot demand remained in contraction. This dynamic indicated an absence of organic buying during the boom, suggesting that it was leverage, not the accumulation of new currencies, that drove prices higher.
Based on historical data, higher demand for futures coupled with shrinking spot demand is associated with unsustainable price gains during down seasons. These types of situations highlight the lack of structural foundation needed to sustain price gains.
Throughout April, Bitcoin’s Clear Demand Index, which tracks the 30-day change in estimated on-chain spot buying activity, has been He stayed In the negative zone. Conversely, metric demand for perpetual futures continued to expand as speculative positions increased.
“The divergence between rising prices and contracting spot demand is one of the clearest on-chain signals that price gains are speculative rather than structural. Virtual demand remained negative throughout the entire April price rise, underscoring the absence of underlying demand support,” CryptoQuant explained.
Are there price drops for several months?
Furthermore, CryptoQuant analysts revealed that the current demand structure is identical to that observed at the beginning of the 2022 bear market. At the time, this dynamic was preceded by a sustained price decline for several months, creating significant downside risks for Bitcoin. It is worth noting that the similarity between past and present demand structures does not guarantee identical results. However, such a dynamic is usually a bearish precedent and a reliable early indicator of price fragility.
If the clear demand for Bitcoin does not reverse from negative to positive in the near term, a price rally towards the $79,000 area will lack the support needed for a sustained breakout.
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Meanwhile, the CryptoQuant Bullish Index fell from 50 to 40 in April, indicating a return from neutral to bearish territory. Such a move shows that on-chain fundamentals have deteriorated following price action driven by demand for speculative futures.
