Both a Danger and a Hope for Bitcoin: What Do CryptoQuant Data Say? Analysts and CEO Evaluate!

CryptoQuant CEO Ki Young Ju warned investors, pointing out that the recent surge in the Bitcoin market is not driven by strong spot demand.

Spot Demand is Necessary for Bitcoin’s Rise!

Ki Young Ju, in a post from his X account, stated that the Bitcoin market is currently largely driven by the futures market, while the apparent spot demand for Bitcoin on-chain remains in negative territory.

Ju wrote that currently, open positions are increasing, but on-chain spot demand remains in net selling territory and has not yet clearly recovered.

This means that prices are only rising due to inflows into the futures market, and the spot market is not providing the same support for the actual rise.

In this context, Ju states that a recovery in spot demand is necessary for a sustainable rise in BTC.

“…Sustainable gains require both spot and futures demand. As we saw in April, futures-led gains tend to weaken without support from spot demand.”

The Drop in $USDT Could Be Positive for Bitcoin!

Furthermore, analysts at the on-chain analytics firm CryptoQuant have reported a $4 billion drop in the market capitalization of $USDT, the largest stablecoin, over the past two months. According to the analysts, this indicates one of the sharpest $USDT declines in recent years and suggests that many investors are exiting the cryptocurrency market.

At first glance, this picture might be interpreted as investors withdrawing from the market and new capital inflows weakening.

However, CryptoQuant analysts point out that $USDT contractions of this magnitude have historically been seen mostly in the later stages of bear markets. They note that the sharpest $USDT contractions coincided not with periods of accelerating selling pressure, but rather with periods when selling pressure was nearing its end.

In this context, analysts believe that while the contraction in $USDT could be a negative liquidity signal for Bitcoin in the short term, historically it can also be seen as an early indication that the current sell-off may be nearing its end.

*This is not investment advice.