Bitcoin (BTC) Defies Bearish Valuation Metrics, Surging 7% Despite Weakening US Demand

CryptoQuant has reported that Bitcoin's valuation metrics remain in bearish territory despite the price surge.

Bitcoin (BTC) price defied bearish valuation metrics and surged 7% in the past 24 hours despite a contraction in US demand for the cryptocurrency and overall market uncertainty.

According to data from CoinMarketCap, Bitcoin is currently trading at $82,910, a 24-hour high of $85,108.00. This rally follows a surprising gain of over $7,000 in a single day, leaving analysts debating whether this is a short-term fake pump or a sign of renewed bullish momentum.

Bitcoin’s bull-bear market cycle indicator is at its most bearish level in this cycle.

On March 11, on-chain analytics platform CryptoQuant reported that Bitcoin’s valuation metrics remain in bearish territory despite the price surge.

At press time, Bitcoin’s MVRV Ratio Z-score, a critical metric for determining whether Bitcoin is overvalued or undervalued, has crossed below its 365-day moving average.

Historically, this suggests that the upward price trend may have lost momentum. However, Bitcoin’s unexpected gains indicate that external market factors are influencing its price action.

Bitcoin rose amid a stabilizing US stock market on March 11, following turbulence sparked by US President Donald Trump’s refusal to rule out a potential recession.

Many investors had been cautious, fearing a downturn in economic growth and its impact on risk assets such as cryptocurrencies.

Senator Cynthia Lummis's reintroduction of the BITCOIN Act, which proposes that the US government acquires 1 million BTC over the next five years, could be a significant factor driving Bitcoin’s gains.

This legislative move has fueled optimism among crypto investors, as large-scale government adoption could significantly impact Bitcoin’s long-term valuation.

Many traders are skeptical about the sustainability of this rally, considering the ongoing contraction in Bitcoin demand.

CryptoQuant reports that US-based traders decreased their demand for Bitcoin by 103,000 BTC last week, the fastest pace of contraction since July 2024.

The rapid decline in demand is attributed to macroeconomic uncertainties, including concerns over inflation and new tariffs imposed by President Trump on February 1.

Federal Reserve Chair Jerome Powell’s statement on March 7, reiterating that the Fed is in no hurry to adjust interest rates, has further contributed to investor caution.

Additionally, CryptoQuant notes that whales have slowed down their Bitcoin accumulation, and US-based spot Bitcoin ETFs have turned into net sellers of BTC.

These suggest that institutional demand for Bitcoin may be weakening in the short term.

Despite the recent price surge, Bitcoin is still down 14% over the past month. However, CryptoQuant suggests that this drawdown is not unusual in historical bull markets.

Similar corrections have occurred before, but whether Bitcoin can sustain its gains remains uncertain.

Market analysts are watching Bitcoin’s key support levels between $75,000 and $78,000.

If BTC breaks below this range, CryptoQuant warns that its next target could be as low as $63,000, a price level not seen since October 14, 2024.

Some industry experts, such as Swan Bitcoin CEO Cory Klippsten, remain optimistic, believing that there is a more than 50% chance of Bitcoin hitting a new all-time high before June 2025.

Bitcoin’s current all-time high of $109,000, which it reached on January 20, remains a key psychological level for investors.

Overall, Bitcoin’s recent rally defies bearish indicators, but uncertainties around US demand, macroeconomic conditions, and whale activity suggest caution.

The upcoming months will be critical in determining whether Bitcoin can sustain its upward momentum or if further corrections are on the horizon.

Investors should closely monitor macroeconomic trends, regulatory developments, and key support levels to gauge Bitcoin’s next move.