Bitcoin jumps 7% despite metrics flashing ‘bearish territory’
Bitcoin experienced a notable 7% surge within 24 hours, achieving a trading price of $82,910, up from a low of $79,356, as recorded by CoinMarketCap. Despite this rally, various valuation metrics suggest a bearish outlook for the cryptocurrency market, as detailed in a recent report by the on-chain analytics platform CryptoQuant.
Demand Declining Rapidly
In its March 11 report, CryptoQuant indicated that its Bitcoin Bull-Bear Market Cycle Indicator reached its "most bearish level" of the current market cycle. Additionally, the MVRV Ratio Z-score—a crucial metric for assessing Bitcoin’s valuation—has dipped below the 365-day moving average, signaling a loss of upward momentum for Bitcoin.
This surge coincided with a temporary stabilization in the US markets after significant losses influenced by remarks from former President Donald Trump, who suggested that a recession could be imminent. Furthermore, Bitcoin’s recovery can largely be attributed to Senator Cynthia Lummis’ reintroduction of the BITCOIN Act, which aims for the US government to acquire 1 million BTC over five years.
Despite the brief uptick, skepticism persists among traders. Analysts like Bitcoin Rachy and BitcoinHyper expressed doubts regarding the sustainability of this rally, with Rachy referring to it as a “fake pump” and BitcoinHyper warning that "every pump feels like the beginning" of a subsequent decline.
Contradictory Indicators for Bitcoin Demand
Recent data shows that Bitcoin’s demand has reduced at the fastest pace since July 2024, with a decrease of 103,000 BTC compared to the previous week. This contraction arises amid uncertainty regarding US inflation rates and tariff policies instituted by Trump, further exacerbated by Federal Reserve Chair Jerome Powell’s comments on interest rates, indicating no immediate adjustments would be made.
CryptoQuant’s analysis suggests that Bitcoin demand remains in "contraction territory," with whale investors slowing their accumulation practices and spot exchange-traded funds (ETFs) becoming net sellers of the cryptocurrency.
Future Price Predictions Amid Market Volatility
Bitcoin continues to reflect a decline of 14% over the past month. While some traders are alert to potential future corrections, CryptoQuant warned that should Bitcoin breach its current support levels between $75,000 and $78,000, it could plummet to as low as $63,000—a range not observed since October 14.
However, optimism persists in some quarters, notably from Cory Klippsten, CEO of Swan Bitcoin, who suggests there is a greater than 50% probability that Bitcoin could hit all-time highs before the end of June. With the peak level of $109,000 achieved on January 20 still fresh in traders’ minds, the upcoming months will be pivotal for the future of Bitcoin amidst both the challenges and opportunities present in the current market landscape.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
