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Summary
Analysts suggest that the Bitcoin surge in April was largely speculative, as demand for futures increased while actual spot buying decreased throughout the month. This scenario resembles the onset of the bear market in 2022, and Bitcoin has already started to correct from its peak of $79K. CryptoQuant’s Bull Score has dropped back into bearish territory (40), indicating ongoing downside risks.
In April, Bitcoin experienced a remarkable increase of 20%, rising from approximately $66,000 to a monthly high of $79,000. However, recent insights from crypto analytics firm CryptoQuant indicate that this rally may not be as solid as it appears.
The latest weekly report published on Thursday revealed that this price surge was primarily fueled by an increase in perpetual futures demand—a type of leveraged trading—while genuine spot demand remained negative throughout the month.
The “apparent demand” metric used by CryptoQuant—which measures changes in estimated on-chain spot buying activity over a 30-day period—never registered positive during April’s price rise.
This discrepancy serves as an important warning signal. Rallies based on actual spot demand signify real buyers acquiring Bitcoin, whereas those driven by futures reflect traders making leveraged bets without necessarily holding onto the asset itself. When these future positions unwind, prices often decline sharply.
This pattern is not unprecedented; analysts at CryptoQuant draw parallels with the beginning of the bear market in 2022 when a similar trend emerged: increasing perpetual futures demand alongside decreasing apparent spot demand.
This situation preceded a prolonged price collapse where Bitcoin ultimately lost about 70% of its value from its peak.
Currently, Bitcoin has begun retreating from its April high and is hovering around $76,400—a movement described by CryptoQuant as consistent with historical trends showing vulnerability in rallies led by futures without confirmation from spot-demand data.
Additively concerning is CryptoQuant’s proprietary Bull Score Index—a composite score derived from various on-chain and market indicators rated between zero and one hundred—which fell from 50 to 40 during April. This decline pushed it below neutral levels into what they define as bearish territory. The index had briefly reached neutral status at mid-April but receded following peaks and declines in speculative activity.
The firm refrained from forecasting an outright market reversal but conveyed caution: Without evidence showing apparent demand shifting positively rather than negatively, any efforts to reclaim the $79K mark would lack sufficient foundational support for sustainable growth.
User sentiment on Myriad—a prediction platform run by Dastan, parent company of Decrypt, remains optimistic regarding short-term prospects for Bitcoin; users estimate over a 70% likelihood that its next move will be upward towards $84K instead of dropping down to $55K.
FAQ
- What caused Bitcoin’s rise in April?
The rise was mainly attributed to increased speculation through perpetual futures trading rather than genuine purchases via spot markets. - What does ‘apparent demand’ mean?
‘Apparent Demand’ refers to metrics tracking changes in estimated purchasing activity within blockchain networks over time. - If there’s no shift towards positive apparent demand, what might happen?
A lack of positive shift could lead any attempts at reclaiming previous highs like $79K lacking necessary support for sustained growth. - Please explain what is meant by ‘Bull Score Index.’
The Bull Score Index aggregates various indicators related both directly or indirectly with cryptocurrency markets measured between zero (bearish) up through one hundred (bullish). - User predictions seem bullish; why do some analysts remain cautious?
Caution arises due to potential vulnerabilities associated with speculative-driven rallies which often lack robust backing through real buyer engagement.
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