Bitcoin (BTC) is in a critical position, experiencing declining demand despite a recent break above the $28,000 price level.
Bitcoin was down, 4% in the past 24 hours at $27,808. The largest cryptocurrency was withdrawing from levels above $28,000 that it briefly surpassed on Monday for the first time in several weeks.
After several weeks of trading roughly between $26,500 and $27,500, Bitcoin trading has been more volatile over the past seven days.
This prevailing bearish scenario does not provide substantial support for the asset’s actual price movement to counter additional declines.
A recent analysis conducted by CryptoQuant shed light on the true situation, emphasizing that bitcoin’s initial upward momentum was driven by growing market demand, which appears to have slowed significantly in recent times.
According to data extracted from bitcoin trading volume on exchanges, the report notes that the price surge that began earlier this year was sustained by a noteworthy increase in BTC trading volume on derivatives and spot exchanges.
In particular, BTC experienced a noteworthy rise from its initial price of $16 541 at the beginning of the year to a high of $26 386 in March, representing a noteworthy increase of 59% in three months. Data indicates that bitcoin trading volume witnessed substantial growth on both spot and futures exchanges.
Increased demand during the rally served as a hedge against potential price corrections, but trading volume on the spot exchanges experienced a significant decline after BTC reached $26 000. However, volume on derivatives exchanges remained high, offering enough support for the asset to reach the $30,000 milestone in April.
CryptoQuant’s report highlights that demand on futures exchanges has also declined, leaving Bitcoin with a shortage of demand. This exposes the asset to further declines if bearish traders take command of the scene.
Bitcoin Hits $28,000 for the First Time in 20 days
This decline in demand came amid bitcoin’s recent recovery from the $28,000 level after 20 days. May has demonstrated to be a challenging one for BTC. The asset has been involved in an uphill battle to avoid further declines below the $25,800 threshold.
CryptoQuant reported that according to data from bitcoin’s trading volume on exchanges, the report observes that the price surge that commenced earlier this year was sustained by a notable rise in BTC trade volume across spot and derivatives exchanges.
Bitcoin is in a Dangerous Position as Demand Dries up – 1
BTC started May at $29 233, but fell to $25 811 as of May 12, reflecting an 11.7% decline in less than two weeks. The asset subsequently recovered from lows below $26 000, but has struggled to maintain a position above $27 000, according to a BTC Price graph from May 30th published by Trading View.
After a remarkable 4.51 % gain on May 28th, BTC successfully regained its $28 000 level, as reported by crypto.news. Nonetheless, subsequent declines have led to its precise $27,786 value at the time of this report. Despite these recent fluctuations, the asset has managed to maintain a 3.4% gain over the past seven days.
By Marina Meza
