According to analyst firm CryptoQuant, Bitcoin could be heading for a multi-month price decline after an April rally driven largely by futures traders while demand in the spot market fell.

Bitcoin gained about 20% in April, rising from $66,000 to a high of $79,000 in a rally “driven entirely by an increase in futures demand,” CryptoQuant said in report on Thursday.

Meanwhile, spot demand for Bitcoin declined throughout the rally, “indicating that the marginal buyer in the market was speculative rather than fundamental,” he said.

“The discrepancy between the rising price and shrinking demand in the spot market is one of the clearest signals on the chain that the price increase is speculative rather than structural,” CryptoQuant added.

At the time of writing, Bitcoin is trading at around $77,000, up 2.1% in the last 24 hours. CryptoQuant said Bitcoin’s correction from $79,000 last month is in line with gains driven solely by robust futures demand.

The current demand for Bitcoin reflects the pattern from the beginning of the bear market in 2022, when demand for futures contracts increased while demand in the spot market fell, which “ultimately preceded a sustained price decline.”

Source: CryptoQuant

Related: Bitcoin Price Hits Weekly Low, $100 Oil Raises New Concerns Over Asian Crisis

“History suggests that this setup carries significant risk of loss as Bitcoin remains in a bear market,” CryptoQuant said.

The report contrasts with a Tuesday note from Bitwise Chief Investment Officer Matt Hougan, who said the company’s Bitcoin treasury strategy was the “largest single factor” in Bitcoin’s recent surge.

“Many factors contributed to the recent rally, including strong buying in ETFs [exchange-traded funds]$3.8 billion as of March 1 and renewed purchases by long-term holders. But the most important factor was strategy,” argued Hougan.

CryptoQuant added that its Bull Score Index, which analyzes market and network activity to gauge market sentiment on a scale of 100, dropped from 50 to 40 in April despite price increases.

“The Bull Score index returning to 40 indicates that conditions are ‘turning bearish’ and places the market in the same range that has historically preceded continued price weakness,” CryptoQuant said.

Warehouse: Bitcoin won’t reach $1 million by 2030, says veteran trader Peter Brandt

Cointelegraph is committed to independent and clear journalism. This news article has been produced in accordance with Cointelegraph’s Editorial Policy and is intended to provide true and up-to-date information. Readers are encouraged to verify the information themselves.