Bitcoin's recent surge has hit a critical juncture, with CryptoQuant Research Head Julio Moreno sounding the alarm on mounting correction risks. Moreno's warnings are grounded in a meticulous analysis of various on-chain and technical indicators, painting a picture of heightened vulnerability in the market.
Moreno's concerns are multifaceted. Firstly, the 37% price rally from April lows has brought Bitcoin to the 200-day moving average, a pivotal resistance level. This parallel with March 2022 is crucial, as Bitcoin's subsequent decline followed a similar 43% rally. The question now is whether history will repeat itself.
A key factor is the surge in unrealized profits, reaching 17.7% on May 5, the highest since June 2025. This high level of paper gains among traders can trigger profit-taking, especially when approaching a significant resistance level. The market's reaction to this situation in March 2022 is instructive, and the current setup mirrors those conditions.
CryptoQuant's analysis also highlights the weak demand side. The Coinbase Bitcoin Price Premium, a gauge of US investor demand, turned negative in late April and remained so as Bitcoin approached $80,000. This absence of broad-based institutional conviction is a red flag, contrasting with the sustained positive premium seen in more robust rallies.
While spot demand has improved, it remains negative, indicating less severe conditions but not enough to confirm sustained accumulation. The firm also notes that demand growth is concentrated in speculative perpetual futures positioning rather than spot buying.
If a correction occurs, CryptoQuant identifies the main on-chain support level near $70,000, represented by the Traders' On-chain Realized Price. This level has historically acted as a resistance-turned-support band in bear markets, reflecting short-term traders' average cost basis.
In conclusion, Moreno's warnings underscore the market's delicate balance. The current setup, with its technical and on-chain resistance, high unrealized profits, and weak demand, suggests a heightened risk of correction. Investors are advised to proceed with caution, as the market's trajectory remains uncertain.
