Bitcoin Recovery Falters Amid Weakening Spot Demand and Deteriorating Market Participation

Bitcoin's recent price recovery has been characterized by a widening split between rising blockchain activity and weakening U.S. spot-market conviction. According to data from CryptoQuant, Coinbase Premium has weakened to negative $66.8, even as Bitcoin approaches $77,200. This divergence suggests that offshore demand on Binance is outpacing U.S.-based buying pressure, despite higher prices.

Base network revenue has also climbed to near $972,000, surpassing late-March levels of around $917,000 due to increased blockchain usage. However, this growth in revenue does not appear to be translating into stronger spot participation, potentially leaving the rally vulnerable if offshore liquidity and derivatives demand begin to weaken further.

The total demand for Bitcoin has collapsed, with CryptoQuant data showing that it has fallen sharply beneath the neutral zero region during May. This reversal is significant because similar demand breakdowns have previously aligned with sharp Bitcoin pullbacks from around $120,000 towards lower support regions. The price has stabilized near the broader $77,000 zone while total demand continues to fall, reinforcing weakening participation beneath the recovery structure.

Bitcoin's rally remains structurally fragile beneath deteriorating market participation, as growing divergence between price stability and collapsing demand suggests. Profit-taking pressure accelerated sharply during May, reaching levels not widely seen since late 2025, with ETF flows also weakening after recent outflows reportedly reached around $331 million. Futures activity still dominates broader positioning, although leverage momentum has gradually cooled after earlier squeeze-driven expansion.