Bitcoin’s rally up to $86K is a sign of investor confidence. However, it’s still too early to declare a trend change.

BitcoinBTCThe price of, continues to suffer from macroeconomic insecurity. Analysts are now questioning whether BTC is preparing for a reverse of its downward trend, which has been going on since January.

Some, including the experienced trader Peter Brandt see this as nothing more than a trendline. According to him, noted The X-post is a post that was made by a user.

“Of all chart construction, trendlines are the LEAST significant. A trendline violation does NOT signify a transition of the BTC trend. Sorry.”

Other analysts, however, have more reasons for cautious optimism. Analyst Kevin Svenson highlighted A weekly RSI break out is possible, pointing this out. “Once confirmed, weekly RSI breakout signals have proven to be among the most reliable macro breakout indicators.” 

Ultimately, price is driven by supply and demand—and while both sides of the equation are beginning to show subtle signs of recovery, they are yet to reach the levels needed for a proper breakout. Bulls also have to cut through an intense sell-off near $86,000 before they can confirm the turn around. 

Bitcoin demand — Are there early signs of recovery?

CryptoQuant estimates that Bitcoin is worth about $4,000, according to the company. apparent demand — measured by the 30-day net difference between exchange inflows and outflows — is showing early signs of recovery after a sustained dip into negative territory.

Analysts warn against declaring prematurely a trend reverse. When we look back at the cycle peak of 2021, conditions were similar: Demand remained negative or low for several months; Prices temporarily stabilised or recovered, but true structural recovery was only achieved after extended consolidation. 

This current uptick in demand may simply mark a pause in selling pressure—not a definitive bottom sign. To confirm that the market is changing, it will need time and confirmation.

According to traders, this apparent demand indicator does not appear optimistic. Bitcoin trade volume is currently 30,000 BTC for spot and 400,000 BTC for derivatives, according to CryptoQuant. It is 6x or 3x lower than the period between June and July 2021 that preceded last year’s bull market. The current dip in price is a hopeful indication of what the future will bring, but current volumes suggest that traders are less interested.

Investors confirm the trend of low demand. Since April 3, the spot BTC ETFs The first modest inflow occurred on April 15, but the outflows have continued. They totaled over $870 millions. Despite this, trading volumes remain relatively high — only 18% below the 30-day average — indicating that some investor appetite for Bitcoin persists.

You can also read about Related Articles: Crypto in a bear market, rebound likely in Q3 — Coinbase

Bitcoin supply — Will liquidity return?

The supply of liquidity is weak. Glassnode recently published a report. reportThe realized cap has decreased to 0.80% per monthly (from previously 0.83%). Glassnode explains that this shows a continuing lack of significant new capital in the Bitcoin system. “remains well below typical bull market thresholds.”

The BTC balance on exchanges — often used to gauge available sell-side liquidity — has dropped to just 2.6 million BTC, the lowest level since November 2018.

On a broader level of macroeconomics, analysts do see reason for cautious optimism. Independent market analyst Michael van de Poppe pointed out In the past, Bitcoin prices were often influenced by the rapidly increasing M2 Supply.

“If the correlation remains, he wrote, then I assume that we’ll see Bitcoin rally to an ATH in this quarter. This would also imply a rise in CNH/USD, a fall in Yields, a fall in Gold, a fall in DXY, and a rise in Altcoins.”

Bitcoin must clear the critical resistance area between $86,300 to $86,500 in order for it to continue its upward trend. CoinGlassThe ‘liquidity heatmap’ maps clusters of orders to buy or sell at various levels.

Alphractal adds another layer of insight through its Alpha Price Chart, which incorporates realized cap, average cap, and onchain sentiment — and comes to the same conclusion. BTC needs to decisively breach $86,300 according to the chart to restore short term bullish sentiment. The support levels for a price drop are at $73,900 or $64,700.

It may not be wise to call a trend change at this point. Investors remain cautious, liquidity is thin and macroeconomic challenges persist. Bitcoin’s resistance above $80,000 still signals strong long-term support. A decisive breakout above $86,300 could shift market sentiment—and, in a best-case scenario, ignite a new rally. A move of this magnitude must, however, be accompanied by spot market volumeNot only leverage-driven activities.

The article is not intended to provide investment advice. Risk is inherent in every investment decision and trade. The reader should always do research prior to making a final decision.