Bitcoin has surged 7% over the past 24 hours, defying a wave of bearish indicators that suggest weakening demand and slowing momentum. While price action shows strength, underlying market metrics paint a more cautious picture—highlighting a growing divergence between sentiment and fundamentals.
According to CryptoQuant, a leading on-chain analytics platform, all major valuation indicators currently point to a bearish market phase. In a March 11 market report, the firm noted that Bitcoin’s key metrics are flashing red, with its Bitcoin Bull-Bear Market Cycle Indicator reaching the most bearish level observed in the current cycle.
Despite this, Bitcoin climbed from $79,356 to $82,910 within a single day—a significant rebound amid broader macroeconomic uncertainty.
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MVRV Z-Score Drops Below Key Trendline
One of the most telling signs of cooling momentum is the Market Value to Realized Value (MVRV) Ratio Z-score, which recently fell below its 365-day moving average. The MVRV Z-score is a critical metric used to determine whether Bitcoin is overvalued or undervalued relative to its historical norms.
When the Z-score drops below zero or the long-term average, it often signals that profit-taking has outpaced accumulation, and speculative enthusiasm is waning. CryptoQuant interprets this development as evidence that the recent upward trend may be losing steam.
While price has recovered somewhat, the underlying data suggests caution. The rally appears to be driven more by legislative sentiment than organic demand growth.
Demand Shrinking at Fastest Pace Since July
On-chain data reveals a troubling trend: U.S. Bitcoin demand is contracting rapidly. CryptoQuant reported that weekly Bitcoin inflows into U.S.-based exchanges dropped by 103,000 BTC compared to the previous week—the fastest decline since July 2024.
This contraction is attributed to several factors:
- Ongoing uncertainty around U.S. inflation data
- Federal Reserve Chair Jerome Powell’s cautious stance on interest rate cuts
- President Trump’s February 1 tariff policies, which increased economic volatility
CryptoQuant stated: “Bitcoin demand remains in contraction territory. Whales are slowing their accumulation pace, and U.S. spot ETFs have turned into net sellers.”
This shift marks a pivotal change from earlier in the year when institutional inflows fueled much of the price surge. Now, outflows from spot ETFs are adding downward pressure, even as retail interest shows signs of resurgence.
Legislative Momentum Boosts Sentiment
The recent price spike coincided with Senator Cynthia Lummis reintroducing the Bitcoin Bill, a legislative proposal that calls for the U.S. government to purchase 1 million BTC over five years. If passed, this would represent one of the largest institutional commitments to Bitcoin in history.
Markets reacted positively to the news, interpreting it as a potential catalyst for long-term demand. The announcement helped fuel a 7.5% rally in Bitcoin’s price, briefly reversing weeks of bearish sentiment.
However, not all analysts are convinced this rally is sustainable.
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Skepticism Among Traders: “Is This a Fake-Up?”
Many traders remain wary of the current uptick. Prominent crypto analyst Bitcoin Rachy questioned the rally on X (formerly Twitter), asking, “This is a fake-up, right?” Similarly, trader BitcoinHyper commented, “Every rally feels like a new beginning. That’s how the market takes your money.”
These sentiments reflect broader concerns about market structure. With whales reducing accumulation and ETFs selling, some fear that short-term price movements are being driven more by speculation than real demand.
CryptoQuant warns that if Bitcoin fails to hold the current support zone between $75,000 and $78,000, the next major downside target could be $63,000—a level not seen since October 14.
Still, not all outlooks are grim.
Long-Term Outlook: New All-Time Highs Possible by Mid-2025
Cory Klippsten, CEO of Swan Bitcoin, recently told Cointelegraph that there’s over a 50% chance Bitcoin will reach a new all-time high by the end of June 2025. The current record stands at $109,000, set on January 20.
Klippsten’s optimism stems from anticipated macroeconomic shifts, including potential rate cuts and increased adoption through self-custody solutions and corporate treasuries.
While short-term indicators are mixed, long-term fundamentals—including halving effects and growing institutional infrastructure—remain supportive of higher prices over time.
Frequently Asked Questions (FAQ)
Q: Why is Bitcoin rising despite bearish indicators?
A: Short-term price movements can diverge from fundamentals due to news events, regulatory speculation, or sudden shifts in sentiment. In this case, Senator Lummis’s Bitcoin Bill proposal triggered renewed buying interest.
Q: What does the MVRV Z-score tell us about Bitcoin’s value?
A: The MVRV Z-score compares Bitcoin’s market value to its realized value (the average price at which coins were last moved). A drop below the 365-day average suggests the asset may be fairly valued or slightly undervalued—but also indicates weakening momentum.
Q: Are U.S. spot Bitcoin ETFs still driving demand?
A: Not currently. Recent data shows U.S. spot ETFs have become net sellers, contributing to downward pressure on price despite periodic rallies.
Q: Could Bitcoin drop to $63,000?
A: Yes—if support between $75,000 and $78,000 breaks, technical analysis suggests $63,000 could become the next major target. However, macroeconomic conditions and regulatory developments could alter this trajectory.
Q: Is now a good time to buy Bitcoin?
A: Every investment decision should be based on personal risk tolerance and thorough research. While long-term projections are positive, short-term volatility remains high.
Q: How does whale activity affect Bitcoin’s price?
A: Large holders (whales) significantly influence market dynamics. When whales slow accumulation or begin selling, it often signals reduced confidence or profit-taking, which can precede corrections.
Bitcoin remains in a complex phase—caught between weakening demand signals and resilient price action. While core metrics suggest caution, legislative momentum and long-term adoption trends offer reasons for optimism.
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As the market navigates this contradictory landscape, investors should focus on both on-chain data and macro developments to stay ahead of potential reversals or breakout opportunities.