CryptoQuant Analysis Shows Bitcoin Rally Might Be Temporary

According to the latest report released in early January, blockchain data analysis firm CryptoQuant provides an interesting perspective on Bitcoin price movements. They see the possibility that the recent upward trend is a rally within a bearish market— a temporary spike in a larger downtrend. This perception is based on observations that, although market demand shows slight improvement, the fundamentals remain weak.

CryptoQuant Warning About Bearish Market Rally

In their analysis, CryptoQuant notes that Bitcoin has increased by about 21% since November. However, this price surge appears to be a bearish market rally—a phenomenon where prices rise sharply but the underlying bearish market structure remains unchanged. Research director Julio Moreno explains that while short-term optimism is visible, the downward demand trend continues steadily.

Growth Contrary to Fundamental Conditions

Before the upward momentum yesterday, Bitcoin had fallen about 19% and dropped below the 365-day moving average level— a parameter CryptoQuant considers a critical demarcation line between bull and bear conditions. The failure of Bitcoin to maintain this level signals that the bear market still dominates. Interestingly, the price has returned close to the 365-day average level (around $101,000), but has not yet decisively broken through it.

The 2022 Pattern May Repeat

CryptoQuant shows a striking similarity between the current scenario and what happened in 2022. Back then, Bitcoin also experienced a strong rebound after falling below the long-term moving average, but then faced resistance in that area before continuing its decline. This historical pattern serves as a warning that failure to surpass the 365-day average level often triggers a new downturn in the bear market.

Market Psychology: False Hope or Genuine Recovery?

What is concerning is the psychology of market participants that could repeat itself. Moreno writes, “Many market players at that time believed the bear market was over, the four-year cycle was no longer valid, and the super cycle had arrived— a feeling very similar to today’s market sentiment.” However, various technical and fundamental indicators still show that the bearish market structure remains dominant. With Bitcoin now in the $84,440 zone (based on the latest data as of January 30), short-term volatility does not change the larger technical reality—market demand remains weak and psychological barriers still stand in the way.

CryptoQuant emphasizes that in-depth analysis of on-chain and off-chain indicators shows we are still in a bear market phase, despite the momentary optimism reflected in recent price movements.