CryptoQuant analysts believe Bitcoin's rise above $73,000 is just a temporary rebound, as bearish trends persist in the market.
Analysts at CryptoQuant assert that Bitcoin's recent climb past $73,000 is merely a short-term rebound, not indicative of a new bullish trend. They maintain that the cryptocurrency remains in a bear market, as reflected by their Bull Score Index, currently positioned at a low 10 out of 100.
Julio Moreno, the firm's research lead, emphasizes that both fundamental and technical indicators still suggest bearish momentum. Former BitMEX CEO Arthur Hayes concurs, pointing out that Bitcoin's performance remains closely tied to American tech stocks, further supporting the view that this price increase is a temporary bounce.
According to analysts, recent upward movement in Bitcoin's price can be attributed to diminished selling pressure in the market. The demand deficit has notably improved, dropping from -136,000 BTC to -25,000 BTC. Additionally, there has been a resurgence of interest among U.S. investors, contributing to a positive premium on Coinbase for the first time since last October.
Long-term investors are also exhibiting reluctance to sell, as unrealized losses have reached levels similar to those seen in July 2022. Selling volume from these holders has decreased significantly, from 904,000 BTC in November to 276,000 BTC now.
Institutional Interest Revives
In the institutional sector, a notable inflow of $500 million in Bitcoin is helping offset outflows from spot Bitcoin ETFs this year. Bloomberg analyst Eric Balchunas reports that positive trends are emerging across 10 out of 11 leading funds, with Bitcoin gaining approximately 12% amid rising geopolitical tensions, contrasting with a decline in gold prices.
However, Balchunas cautions against jumping to conclusions about gold's status as a safe haven or attributing Bitcoin's surge solely to geopolitical factors. He notes that other elements, such as profit-taking and changes in investor sentiment, also play a role in market dynamics.
Despite some localized positive signals, the overall market remains weak, as the Bitcoin Bull Score index continues to reflect a bearish outlook. Should Bitcoin's price continue to rise, it could encounter resistance at $79,000 and $90,000, levels that previously halted its rally in January. Currently, Bitcoin is trading at $70,620, down 2.7% over the last day.
On March 4, Bitcoin briefly surpassed $74,000, a critical threshold analysts believe is necessary for a sustained rally.
