Bitcoin Surges 7% Despite Bearish Indicators and Declining Demand

Bitcoin has experienced a 7% surge in the last 24 hours, reaching $82,910, up from a low of $79,356. However, despite this recent uptick, key market indicators are signaling bearish conditions, raising concerns among analysts about the sustainability of the price movement.

According to CryptoQuant’s March 11 report, several valuation metrics suggest that Bitcoin is currently in "bearish territory." The on-chain analytics platform highlighted the Bitcoin Bull-Bear Market Cycle Indicator, which is at its "most bearish level so far this cycle." Additionally, Bitcoin’s MVRV Ratio Z-score, a crucial measure of whether Bitcoin is overvalued or undervalued, has crossed the 365-day moving average, signaling that the upward price momentum may be losing steam.

Demand Decline and Market Concerns

One of the most pressing concerns raised by CryptoQuant is the significant drop in Bitcoin demand. The platform reported that Bitcoin's demand had fallen by 103,000 BTC last week, marking the fastest pace of contraction since July 2024. The decline in demand coincides with increased uncertainty in the US, particularly surrounding inflation rates and the economic policies of US President Donald Trump, including his imposition of tariffs on February 1.

Federal Reserve Chair Jerome Powell’s recent comments, in which he reiterated that he is in no rush to adjust interest rates, have also added to market unease. As a result, Bitcoin's demand in the US remains in "contraction territory," with large institutional investors, or "whales," slowing down their Bitcoin accumulation. Additionally, spot ETFs in the US have turned into net sellers of Bitcoin, further contributing to the bearish outlook.

Short-Term Bullish Momentum Following Legislative Developments

Despite the overall bearish trend, Bitcoin's recent 7% price spike was largely attributed to positive news surrounding US legislation. A significant catalyst was the reintroduction of the BITCOIN Act by Senator Cynthia Lummis, which proposes that the US government acquire 1 million BTC over five years. This proposal has sparked optimism in the market, though many traders remain cautious.

Some traders, including analyst Bitcoin Rachy, expressed skepticism about the rally. On March 11, Rachy posted on X (formerly Twitter), saying, “Fake pump, right?” Similarly, crypto trader BitcoinHyper remarked, “Every pump feels like the beginning. This is how the market takes your money.” These sentiments reflect the cautious optimism that is common in a market that has experienced significant volatility.

Looking Ahead: Is Bitcoin's Rally Sustainable?

Bitcoin remains 14% down over the past month, with CryptoQuant noting that this drawdown is not unusual in terms of magnitude, as similar corrections have occurred during previous bull markets. However, the platform warned that if Bitcoin were to break its current support levels between $75,000 and $78,000, the next potential support could be as low as $63,000, a level not seen since October 2024.

Despite these concerns, there is still hope among some market participants. Cory Klippsten, CEO of Swan Bitcoin, remains bullish on Bitcoin's long-term prospects. In a recent statement to Cointelegraph, Klippsten suggested there is a greater than 50% chance that Bitcoin will reach new all-time highs before the end of June 2025. Bitcoin’s current all-time high of $109,000 was reached on January 20, 2024, and Klippsten’s optimistic forecast reflects the belief that the market could rebound in the near term.

As Bitcoin continues to show signs of life, the market remains divided. While some see the recent surge as a potential turning point, others are more cautious, with many questioning whether the rally is sustainable given the bearish indicators and declining demand. Only time will tell whether Bitcoin can break through its current resistance levels and continue its upward momentum.