On-chain at its lowest, yet surging... Bitcoin's 'danger signal' has appeared

▲ Bitcoin plunge/ChatGPT generated image ©

Bitcoin continues its upward trend, surpassing $81,000, but warnings are simultaneously emerging that its upward foundation is fragile due to sluggish on-chain indicators.

According to investment media FXStreet on May 5 (local time), Bitcoin (BTC) rose above $80,000 and reached the $81,000 range, driven by strong capital inflows into US Bitcoin spot ETFs. Notably, a net inflow of $532.21 million occurred, continuing the capital inflow trend for three consecutive trading days.

Institutional demand remains a key pillar supporting the market. According to SoSoValue data, if ETF capital inflows continue, there is potential for further upside. However, structural limitations are pointed out, as this rally is driven by only some capital rather than an expansion of overall market participation.

According to Santiment data, Bitcoin's on-chain activity has fallen to its lowest level in the last two years. This shows a 'discrepancy phenomenon' where network participation does not accompany price increases. Experts warned that if large investors realize profits in a situation of insufficient new demand, there may be insufficient buying power to support the price.

The current upward structure being derivative-centric is also cited as a risk. While demand in the futures market is driving the rally, the spot market is contracting, which is analyzed to be a pattern similar to the beginning of the 2022 bear market. The market is evaluated to be moving towards a more speculative structure.

Technically, the upward momentum is being maintained. Bitcoin is trading above the 50-day and 100-day EMAs, in the $74,700-$76,000 range, maintaining a short-term upward trend. The Relative Strength Index (RSI) is around 68, close to the overbought zone, and the Moving Average Convergence Divergence (MACD) is also showing a recovery trend. However, the 200-day EMA at $81,917 acts as the primary resistance level, and a breakthrough is required for further gains to the $83,437 and $84,410 ranges. Conversely, if it falls below $80,000, the $78,962 and $75,000 levels are considered key support zones.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*