Bitcoin Faces Potential Decline After Futures-Driven April Rally

According to CryptoQuant, a crypto analytics firm, Bitcoin's price rally in April was driven mainly by futures traders, while spot demand declined, which has historically preceded extended price declines. This trend may lead to a multimonth price decline for the cryptocurrency.

Bitcoin's price gained around 20% in April, rising from $66,000 to a peak of $79,000, driven entirely by growth in perpetual futures demand. However, spot demand for Bitcoin contracted throughout the rally, indicating that the market's marginal buyer was speculative, not fundamental. The divergence between rising price and contracting spot demand is a clear on-chain signal that price gains are speculative rather than structural.

CryptoQuant noted that the current demand for Bitcoin mirrors a pattern at the start of the 2022 bear market, when futures demand surged while spot demand dropped, a setup that ultimately preceded a sustained price decline. The report also mentioned that the Bull Score Index, which analyzes market and network activity, fell from 50 to 40 in April, indicating 'getting bearish' conditions that historically preceded continued price weakness.

The findings by CryptoQuant contrast with a note from Bitwise chief investment officer Matt Hougan, who argued that the Bitcoin treasury company Strategy has been the single biggest factor in Bitcoin's recent rally, driven by strong buying from ETFs and renewed purchases by long-term holders. Despite the differing opinions, CryptoQuant's analysis suggests that Bitcoin's correction from $79,000 last month is consistent with rallies led only by strong futures demand, and history suggests this setup carries meaningful downside risk as Bitcoin remains in a bear market regime.