Bitcoin Price Surge in April Built on Shaky Ground

CryptoQuant's latest report has shed light on the underlying dynamics of Bitcoin's price rise in April.

The analysis shows that the 20% increase in prices from around $66,000 to a monthly high of $79,000 was largely fueled by the growth of perpetual futures, a form of speculative trading. In contrast, the demand for spot coins, which reflects genuine buyer interest, remained negative throughout the period.

This divergence is seen as a warning sign, as recoveries driven by futures are often followed by price drops when the speculation subsides.

The pattern is not unique to this instance, as CryptoQuant's analysts point out that a similar setup occurred at the start of 2022, leading to a prolonged price collapse that saw Bitcoin lose around 70% of its value relative to its peak.