Bitcoin could be facing a multimonth price decline following an April rally driven primarily by futures traders while spot demand contracted, according to crypto analytics firm CryptoQuant. The firm warned that this pattern has historically preceded sustained price drops.
Bitcoin gained approximately 20% in April, climbing from $66,000 to peak at $79,000 in a rally “driven entirely by growth in perpetual futures demand,” CryptoQuant said in a Thursday report. Meanwhile, spot demand for the leading cryptocurrency contracted throughout the rally period.
“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 stated in its analysis. The firm emphasized that this indicates “the market’s marginal buyer was speculative, not fundamental.”
Bitcoin is currently trading around $77,000, having risen 2.1% over the past 24 hours. CryptoQuant noted that Bitcoin’s correction from the $79,000 peak last month aligns with patterns seen in rallies led exclusively by strong futures demand.
The current demand structure for Bitcoin mirrors a concerning pattern observed at the beginning of the 2022 bear market. During that period, futures demand surged while spot demand dropped, creating a setup that “ultimately preceded a sustained price decline,” according to the analytics firm.
“History suggests this setup carries meaningful downside risk as Bitcoin remains in a bear market regime,” CryptoQuant cautioned. The warning comes as the cryptocurrency market continues to navigate uncertain macroeconomic conditions.
CryptoQuant’s assessment contrasts with analysis from Bitwise chief investment officer Matt Hougan, who argued in a Tuesday note that Bitcoin treasury company Strategy has been the “single biggest factor” driving Bitcoin’s recent rally. Hougan pointed to multiple drivers including strong buying from exchange-traded funds, which saw $3.8 billion in inflows since March 1, and renewed purchases by long-term holders.
“There have been multiple drivers of the recent rally, including strong buying from ETFs and renewed purchases by long-term holders. But Strategy has been the single biggest factor,” Hougan stated, offering a different perspective on the rally’s underlying dynamics.
Adding to CryptoQuant’s bearish outlook, the firm’s Bull Score Index fell from 50 to 40 in April despite the price increase. The Bull Score Index analyzes market and network activity to gauge market sentiment on a scale of 100, providing insights into overall market conditions.
“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 explained. The declining index score during a price rally suggests weakening fundamental support beneath the surface price action.
The distinction between futures-driven and spot-driven rallies has significant implications for Bitcoin’s price trajectory. Futures-based rallies typically involve leveraged positions that can unwind quickly, while spot-driven rallies reflect actual buying demand and tend to be more sustainable over longer periods.
CryptoQuant’s analysis suggests that the lack of spot demand during April’s rally indicates institutional and retail investors were not accumulating Bitcoin at higher prices. Instead, the price appreciation was driven by speculative positioning in derivatives markets, which the firm considers a less stable foundation for sustained price growth.
The warning from CryptoQuant comes as Bitcoin continues to face headwinds from broader market concerns. Recent volatility in oil prices and macroeconomic uncertainty in Asia have contributed to renewed caution among cryptocurrency investors, with Bitcoin hitting one-week lows earlier this week.
As Bitcoin trades below its April peak, market participants will be watching closely to see whether spot demand returns or if the futures-spot divergence continues. Historical patterns suggest that extended periods of futures dominance without corresponding spot demand have typically resulted in meaningful price corrections.
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