Bitcoin Rally Faces New Threats Amid Weakening Spot Demand

Bitcoin's rally faces fresh risks as spot demand weakens in the US. The Coinbase premium index shows that despite Bitcoin's price recovery, U.S. spot buying has not kept pace, raising concerns about stronger buying support being necessary for a push toward $85,000.

The short-term holder whale cohort is sitting on a record $9 billion in unrealized profit, increasing the risk of near-term selling pressure. Historically, these holders have been quick to lock in gains when prices weakened, which could prompt profit-taking and add further volatility to Bitcoin's recovery.

Additionally, crypto market analyst Ted Pillows pointed toward a bearish divergence between Bitcoin's price and on-balance volume (OBV), with the cryptocurrency making higher highs while the volume indicator was making lower highs. This can be a warning sign that the rally is losing strength.

The Federal Reserve remains a binding constraint in Bitcoin's price movement, with markets having priced in about 60% chance of a 25-basis-point Fed hike for September meeting. Oil prices are also another factor, and whether the cryptocurrency can add to its gain will likely depend on the next inflation reading and the Fed's decision in September.