Bitcoin Remains in Bearish Territory Despite Recent Price Surge — Here’s Why

Bitcoin

Despite a brief recovery in Bitcoin's price, the outlook for the cryptocurrency is still grim. Recent analyses indicate that the price hike may be part of a weakening trend driven by various macroeconomic factors.

Key Takeaways

Bitcoin’s recent uptick may not signal a full recovery, but rather a temporary rebound.
The weak Japanese yen has not spurred increased interest in cryptocurrencies.
The Coinbase Premium Index shows lack of strong demand from U.S. investors, indicating insufficient spot buying.
Bitcoin is currently valued at $88,034 with a slight decline of 0.84% in the past 24 hours.

Weak Japanese Yen Impacts Crypto Trading Sentiment

In a QuickTake post by XWIN Research Japan on CryptoQuant, it is highlighted that the current state of the Bitcoin market appears to be in a “post-rebound adjustment” phase, rather than on the path to a substantial price recovery. The analysis points to the Bank of Japan's recent interest rate hike of 0.75%. However, because this change was expected, it failed to boost the Japanese yen, which remains weak.

Typically, a weaker yen encourages “yen-funded carry trades,” allowing Japanese investors to borrow yen to invest in assets like cryptocurrencies for profit. Yet, according to XWIN Research Japan, today's scenario does not follow historical patterns.

Bitcoin
Source: CryptoQuant
To support this assertion, the research uses the Bitcoin: Estimated Leverage Ratio metric, which assesses how much leverage traders utilize in the futures market compared to the Bitcoin held on exchanges. The research group noted a clear decline in this estimated leverage ratio across exchanges. Moreover, despite Bitcoin's recent price fluctuations, there has not been a recovery in leverage, suggesting that “risk-taking through yen-funded carry trades is still limited.”

Spot Demand Lacks Momentum as Indicated by Coinbase Premium Index

Further complicating the picture of a robust market recovery is the Coinbase Premium Index. This index measures the price difference between Bitcoin on Coinbase, a U.S.-based exchange, and the average price on global exchanges. Although the index has improved from a significantly negative position to moderate levels, it only signifies that selling pressure is decreasing rather than increasing. Importantly, it shows that U.S. spot investors remain uninterested in entering the market.

Bitcoin
Source: CryptoQuant
Consequently, XWIN Research Japan concludes that with the yen remaining weak, “the lack of sustained spot buying implies that the current recovery does not yet reflect a structural uptrend.” However, there’s a possibility that the situation could improve. If the Coinbase Premium Index climbs into positive territory while prices rise without a rise in leverage, it may signal an ongoing demand-driven accumulation.

As of now, Bitcoin is priced at $88,034, with CoinMarketCap reporting a slight loss of 0.84% over the past 24 hours.

Bitcoin
BTC trading at $88,096 on the daily chart | Source: BTCUSDT chart on Tradingview.com