Bitcoin briefly rallied above $74,000 on Thursday, but momentum has already slowed, with analysts expecting a sustained bear market to cap it.
“Despite the recent rally, Bitcoin remains in a bear market,” on-chain analytics firm CryptoQuant said on Thursday.
The platform’s Bullscore Index is a composite indicator that measures the overall health of Bitcoin ($BTC) The combination of fundamental and technical indicators gave it a score of 10 out of 100, putting it “deep in bearish territory,” the paper said.
“Even after the recent price rally, fundamental and technical indicators still point to a bear market environment.”
“The current move is likely just a relief rally and not the start of a new bullish phase.”
Bitcoin briefly hit a one-month high of $74,000 on Coinbase on Thursday, reaching its 50-day exponential moving average, according to TradingView. But it has already lost more than $3,000 and was trading below $71,000 on Friday morning.
The Bullish Score Index remains deep in bearish territory. sauce: cryptoquant
Bitcoin remains vulnerable to renewed downward pressure
Nick Luck, director of LVRG Research, told Cointelegraph that the crypto market’s recent bailout rally is due to “resurgent risk appetite and ETF inflows,” but warned that the rally “is likely due to persistent macro uncertainty and prices soon facing headwinds as momentum wanes.”
He said that while the short-lived push provided a welcome rebound amid supportive liquidity conditions, “cryptocurrencies remain vulnerable to renewed downward pressure as bear market trends remain alarming due to continued macro bearish signals, such as the expected slowdown in non-farm payrolls in February.”
$BTC quickly lost momentum, falling 4.7% from Thursday’s high. sauce: TradingView
There is a possibility that there will be renewed interest in purchasing Bitcoin.
CryptoQuant said positive Coinbase premiums indicate a resurgence in U.S. purchasing appetite and are driving the recent rally.
Related: Bitcoin’s decline is slowing, but the bear market remains: Analyst
Bitcoin spot demand from US-based investors has also turned from contraction to growth, as evidenced by Coinbase’s Bitcoin premium “switching from significantly negative territory in early February to its most positive territory since October,” they said.
Selling pressure from traders and long-term holders also eased as unrealized losses reached levels not seen since July 2022.
Meanwhile, Swissbloc analysts observed on Friday that “momentum indicates an important change,” adding: “We are emerging from the peak of negative momentum, a transition often seen before a change of government.”
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