Bitcoin’s price is showing signs of a potential pullback in the near term. Spot demand is weakening, and whale activity in the derivatives market seems bearish. This comes after a recent rally that took the price from $66,000 to $79,500, a level not seen since late January.
Derivatives fueled the rally
The climb was largely driven by renewed demand in the perpetual futures market, according to analytics from CryptoQuant. Interestingly, even with this price increase, we saw net selling of Bitcoin in the spot market over the last 30 days. This happened despite continued buying interest from exchange-traded funds (ETFs) like BlackRock’s iShares Bitcoin Trust (IBIT).
A similar pattern occurred back in early January of last year. Then, Bitcoin rallied toward $98,000, again led by derivatives demand while spot sellers were active. Given this history, there’s a real chance BTC could see a downturn soon if derivative traders decide to take their profits and spot selling pressure continues.
Whales vs. retail traders
The chances of a price drop have gone up recently. Metrics from Alphractal show more retail traders are piling into long leverage positions. At the same time, whales seem to be positioning for a correction. In the last five times this kind of split happened, whales were right four times.
So, what could be next for Bitcoin? Some analysts remain cautious. Aksel Kibar, a former fund manager, points out that this latest price pump hasn’t ended the broader macro bear market. He notes the coin has been trading inside a bearish flag pattern since early February. This pattern looks like a rising channel where price consolidates.
Key levels to watch
Although Bitcoin has moved above the average cost basis of recent buyers, it has already been rejected twice at the upper boundary of that rising channel. This suggests the price could drop below $70,000 again. A move that low would likely test the lower support of the macro bearish flag.
That said, not all signs are negative. If spot demand picks up again and the derivatives market turns more bullish, Bitcoin’s price could keep rising. It might even kick off a fresh bull rally. For now though, the balance of risks seems tilted toward a correction.
