Bitcoin’s rise in the cryptocurrency market, which started from the bottom in February, stalled last week at $82,000, just above the 200-day simple moving average (SMA). When this resistance point was not overcome, the price quickly retreated to $77,500. Experts state that this move is reminiscent of a rally that occurred in 2022 and ended in similar failure after a 43% rise.
The support elements behind the rally have weakened
The latest report from blockchain analysis company CryptoQuant sheds light on the main reasons why this rise cannot be sustained. The company stated that the price increase in April and May was fueled by leveraged futures transactions, demand in the spot market and fund inflows to Bitcoin ETFs traded in the USA, but all three factors have weakened in recent weeks. In particular, CryptoQuant’s “Bull Score” index dropped from 40 to 20. This value points to a region that the company defines as extremely negative, and it saw similar levels when prices were stuck in the range of $ 60,000 to $ 66,000 last February-March.
Negative Coinbase premium attracts attention
The “Coinbase Bitcoin premium,” which is considered one of the important indicators of price movement, remained negative throughout the May rally and subsequent correction. This premium shows whether Bitcoin is traded higher on the Coinbase exchange, which is widely used by US investors, compared to other foreign platforms. While a positive value indicated strong US demand, a negative premium revealed that investors were not interested in the market.
Mini dictionary: Coinbase premium is a data showing whether Bitcoin is sold more expensive or cheaper on the US-based Coinbase exchange compared to other overseas exchanges. When it is positive, it is interpreted that the demand in the USA is high, while when it is negative, it is thought that domestic investor interest is low.
Net sales came from the USA and Korea
A similar weakening is occurring in spot Bitcoin ETFs traded in the United States. Weekly data from SoSoValue shows that these products had a total outflow of $979.7 million in the seven-day period ending May 19. There was a net loss of approximately 1 billion dollars in the previous week. This trend reveals that after six consecutive weeks of inflows, the market has changed direction.
In Korea, the “kimchi premium”, which shows the price of Bitcoin on local stock exchanges, dropped below zero. This development indicates that the unusually high demand in the country has ended.
In CryptoQuant’s analysis, the evaluation was included: “The pressure on prices continues in the USA and Asian markets, and the slowdown in local demand is pulling prices down.”
Asian markets also failed to support
On the Asian side, daily trading volumes for all three spot Bitcoin ETFs operating in Hong Kong remained at a few million dollars throughout May. The low general volume in the market stands out as another factor that prevents the price from rising.
Important support level: $70 thousand
The report predicts that if the correction in Bitcoin deepens in the future, the $ 70,000 level, which corresponds to the cost of traders in on-chain data, will be the main support. The rally was stopped at this level in October and January. This time, it is a matter of curiosity whether the price will be able to hold on in this region.
