Bitcoin’s Gold’s recent push above $80,000 was driven by leveraged trades and lacked significant participation from U.S. investors, who typically play a key role in sustaining bullish trends.
The underperformance of U.S. spot buyers relative to their global peers is evident in the Coinbase premium, which measures the price gap between Bitcoin on Coinbase and offshore exchanges, which has remained negative since late April, according to CryptoQuant data.
A positive premium typically indicates U.S. institutional demand outpacing spot buying in the rest of the world, as Coinbase is the main entry point for U.S. capital. A negative premium means the opposite: offshore traders are paying more for Bitcoin than U.S. investors are willing to pay, pushing the price higher.
Now, that difference holds true on a 5% rebound. Bitcoin After trading above $82,000 on Tuesday, it fell back below $80,000 on Wednesday following the release of the popular producer price index, with the cryptocurrency changing hands at nearly $79,500 at the time of writing.
The price action is well above the $80,000 level where the Coinbase premium turned negative. CoinDesk first noted the premium flipped into negative territory on April 29, along with a surge of $5.97 billion in realized losses as underwater holders sold off during the rally.
Other on-chain indicators, such as CryptoQuant’s apparent demand, also point to continued weakness in spot demand. The metric, which measures how much new Bitcoin the market absorbs relative to changes in mining issuance and dormant supply, has narrowed to -11,000 BTC as of today from -91,000 BTC in April.
In other words, on-chain demand has improved from severe oversupply to near equilibrium. However, it was still slightly negative, indicating that spot absorption failed to meet supply-side pressure.
Futures lead rebound
CryptoQuant said the actual demand growth is concentrated in perpetual futures positions rather than spot accumulation.
Perpetual contracts are futures with no expiration date that allow traders to hold leveraged call and put bets and pay out funds to keep the contract price close to the spot price.
Leverage magnifies returns, but also brings risks. Perpetual futures bids can be quickly unwound when funding rates flip or a liquidation chain reaction occurs. Spot accumulation tends to stay on the order book longer.
As a result, rallies driven by futures positions rather than spot demand tend to be less durable. Coincidentally, BTC has fallen back below $80,000 in the past 24 hours.
It’s 2022 again?
CryptoQuant said in a weekly report that the current situation is that this rally has structural characteristics that mitigate the rebound, rather than a new accumulation phase.
The analysis also compares to March 2022, when Bitcoin rallied 43% before stalling near the 200-day moving average and resuming its downtrend. The current rally is up 37% from April’s lows. Unrealized margins were “similar” to March 2022 levels, the analysts wrote.
The next test lies at the $70,000 level, which CryptoQuant identifies as the on-chain realized price for traders and the most likely support level when the current rally fades.
This number represents the average cost basis for short-term traders. At this level, unrealized margins compress back to zero, thereby removing the structural incentive to continue selling.
