Bitcoin Relief Rally Hits Headwinds as Bear Market Persists

Q: What to Know?

Bitcoin's relief rally above $74,000 stalled on Thursday as multiple analysts warned that the broader bear market remains firmly intact. The leading cryptocurrency quickly surrendered gains, sliding back below $71,000 during Friday morning trading as on-chain data and macro signals pointed to continued downside risk.

What to Know

$74,000 -- Bitcoin briefly reached a one-month high before shedding over $3,000 and dropping back under $71,000
10 out of 100 -- CryptoQuant's Bull Score Index remains deep in bearish territory despite the short-lived relief rally
The Coinbase Premium flipped positive for the first time since October, signaling renewed US buying interest
Analysts caution that softer macro signals, including anticipated February nonfarm payroll weakness, leave crypto vulnerable to further downside

Bitcoin's relief rally above $74,000 stalled on Thursday as multiple analysts warned that the broader bear market remains firmly intact. The leading cryptocurrency quickly surrendered gains, sliding back below $71,000 during Friday morning trading as on-chain data and macro signals pointed to continued downside risk.

Is Bitcoin Still in a Bear Market?

Yes -- despite the brief price surge, Bitcoin is still mired in bearish conditions, according to on-chain analytics firm CryptoQuant. The company's Bull Score Index, a composite gauge blending fundamental and technical metrics, currently sits at just 10 out of 100, which CryptoQuant described as "deep in bearish territory" on Thursday.

Bitcoin touched a one-month peak of $74,000 on Coinbase, briefly tagging the 50-day exponential moving average, according to TradingView. The advance proved short-lived as the asset shed more than $3,000 and fell back under $71,000 by Friday morning.

Even after the recent price rally, fundamental and technical indicators still point to a bear market environment.
— CryptoQuant

ETF Inflows and Macro Uncertainty Collide

The crypto market's short-lived bounce emerged from renewed risk appetite and ETF inflows, but those tailwinds quickly faded. Nick Ruck, director of LVRG Research, told reporters that prices pulled back toward $71,000 amid "persistent macro uncertainties and fading momentum."

Ruck cautioned that ongoing bear market dynamics reinforce caution. Softer macro signals, including the anticipated slowdown in February nonfarm payrolls, keep cryptocurrencies vulnerable to renewed downside pressure, he said. The CryptoQuant Bull Score Index reading of 10 underscores how far sentiment sits from bullish territory.

US Buying Interest Shows Signs of Recovery

Not all signals are negative. CryptoQuant reported that a positive Coinbase Premium has signaled renewed buying interest from US-based investors. Bitcoin spot demand from American traders switched from contraction to growth, with the premium moving from "deeply negative territory in early February to the most positive since October," the firm noted.

Selling pressure from traders and long-term holders has also eased after unrealized losses reached levels not seen since July 2022, according to CryptoQuant.

What This Means Going Forward

Momentum may be nearing a turning point despite the prevailing bearish backdrop. Analysts at SwissBlock observed on Friday that "momentum is flashing a critical shift," adding the market is "exiting peak negative momentum, the kind of transition that often precedes a regime change."

Still, traders should remain cautious. With the Bull Score Index pinned near historic lows and macro headwinds from upcoming payroll data, any sustained recovery will require a clear catalyst. For now, the bear market retains its grip on Bitcoin.