A recent analysis from CryptoQuant indicates that Bitcoin (BTC) may have entered a bearish phase following the latest market crash. This development is highlighted by CryptoQuant’s Bull-Bear Market Cycle Indicator, a tool that leverages on-chain data to assess market conditions. Let's dive deeper into what this means for Bitcoin and the broader cryptocurrency market.
CryptoQuant’s Bull-Bear Market Cycle Indicator Turns Negative
In a recent post on X, Julio Moreno, CryptoQuant’s Head of Research, discussed the Bull-Bear Market Cycle Indicator's shift into negative territory. This indicator is based on CryptoQuant’s Profit and Loss (P&L) Index, which integrates several on-chain metrics related to unrealized and realized profit/loss.
The P&L Index helps determine whether BTC is in a bull or bear market. When the P&L Index crosses above its 365-day moving average (MA), it suggests a bullish phase. Conversely, a drop below this MA indicates a bearish transition. The Bull-Bear Market Cycle Indicator visualizes this by tracking the distance between the P&L Index and its 365-day MA.
Recent Trends in the Bitcoin Indicator
The chart below illustrates the trend in the Bull-Bear Market Cycle Indicator over the past few years:
Earlier this year, as Bitcoin’s price rallied to a new all-time high (ATH), the Bull-Bear Market Cycle Indicator surged, entering what CryptoQuant describes as the “overheated bull” territory. This phase signifies that the P&L Index has significantly outpaced its 365-day MA, marking an overbought market.
