Bitcoin's 13% rally faces risk as spot demand weakens, CryptoQuant says

Bitcoin spot demand is weakening while futures positioning stays bullish, a divergence CryptoQuant CEO Ki Young Ju flagged as a stability risk.

"Spot demand is not keeping pace with the optimism in futures markets," Ki Young Ju, chief executive of on-chain analytics platform CryptoQuant, said. "This divergence historically precedes a correction when leveraged longs unwind."

Bitcoin changed hands near $65,600 as of 06:00 UTC Thursday, down 0.5% since midnight and extending a pullback from Wednesday's $66,700 high. The token has rallied 13% from its July 1 low of $57,750 but has failed to break above $66,000 resistance for three consecutive sessions. Open interest across crypto futures stands at about $111 billion, with the 24-hour long-short ratio nearly balanced, Coinglass data shows.

The weakening spot demand alongside elevated futures positioning leaves the market vulnerable to a long-squeeze scenario. A drop below support at $64,000 — the lower bound of the current range — could trigger about $420 million in long liquidations, accelerating selling toward $60,000, Coinglass data shows. The next trigger for a breakout or breakdown may come from the Clarity Act vote, with Polymarket odds of passage falling to 38% after key Democrats criticized the latest draft.

$420 million in long liquidations at risk

The 30-day Bitcoin implied volatility index, BVIV, has risen for five consecutive days — a pattern that, since spot ETF launches, has correlated with price drops rather than upside breakouts, CryptoQuant data shows. The Coinbase Premium Index has been negative since May, a streak exceeding 900 hours that points to persistent institutional caution that aligns with Ki Young Ju's assessment.

Macro headwinds compound pressure

The U.S. two-year Treasury yield jumped to 4.31%, its highest since February, while the 10-year yield rose to 4.66%, raising the opportunity cost of holding non-yielding assets. West Texas Intermediate crude climbed to $88.60 per barrel, the highest since June 11, adding inflationary pressure that could delay Federal Reserve rate cuts.

Bitcoin's 200-period exponential moving average held as support near $58,000 during the July selloff, but the death cross on the daily chart remains active. The Relative Strength Index at 59.9 leaves room for upside, though the Average Directional Index at 19.5 shows no trend momentum behind the current bounce.

This article is for informational purposes only and does not constitute investment advice.