Bitcoin Surges 7% Amid Bearish Market Sentiment, Demand Declines 103,000 BTC

Bitcoin has recently shown signs of life with a 7% price increase. However, underlying indicators suggest a persistent bearish sentiment in the market. The current market dynamics indicate a notable decline in Bitcoin demand, which has raised concerns among traders about the sustainability of recent gains. According to CryptoQuant, Bitcoin demand remains in contraction territory, and whales have slowed down their Bitcoin accumulation.

CryptoQuant's latest market analysis reveals that Bitcoin’s Bull-Bear Market Cycle Indicator is currently at its most bearish level for this market cycle. The report highlights that Bitcoin’s MVRV Ratio Z-score has dipped below the crucial 365-day moving average, indicating that the cryptocurrency’s price momentum is weakening. Despite a short-term rally, analysts caution that the broader market trend remains grim.

While Bitcoin experienced a temporary surge following Senate support for significant government investments, market analysts are not entirely convinced that the downtrend has been reversed. Traders express skepticism, reflecting fears of a “fake pump” trapped within a bearish framework. CryptoQuant’s report corroborates these concerns, noting a significant drop in demand, with Bitcoin trading volumes declining by 103,000 BTC compared to the previous week—the steepest contraction observed since July 2024. This decline is attributed largely to external economic pressures, including uncertainties surrounding inflation rates and responses to new tariffs.

The influence from regulatory frameworks continues to affect market dynamics. With the Federal Reserve signaling a cautious stance on interest rates, the implications for digital asset investment strategies remain significant. Spot ETFs in the US have turned into net sellers of Bitcoin, contributing to the constriction in demand. This shift underscores a growing disconnect in the market as large holders slow down their accumulation efforts, further contributing to the sentiment of bearishness.

Although Bitcoin is currently down 14% over the past month, historical data suggests that such drawdowns are not uncommon during bull market phases. Nevertheless, experts warn that a breach of critical support levels between $75,000 and $78,000 could trigger a sharper decline, potentially targeting $63,000—a level not witnessed since October 2022.

In light of these developments, market experts offer a range of predictions. Cory Klippsten, CEO of Swan Bitcoin, optimistically forecasts a greater than 50% chance for Bitcoin to reach new