Bitcoin Bull-Bear Market Cycle Indicator Has Seen A Decline Recently

Based on on-chain data, the Head of Research at the analytics firm CryptoQuant has explained how Bitcoin has been looking less bullish recently.

Bitcoin has been rallying to new all-time highs (ATHs) in recent weeks, but on-chain data shows that the top coin is now looking less bullish.

As Bitcoin price reaches new highs, analysts and investors are wondering where the top of the next bull run might be. While some believe BTC could reach $100,000 in the next few months, others think the asset could reach $75,000 by 2022.

Bitcoin Bull-Bear Market Cycle Indicator Has Seen a Decline Lately

Julio Moreno, Head of Research at analytics firm CryptoQuant, said the new In a post, he shared what the latest trend on the Bitcoin Bullish-Bearish Market Cycle Indicator in X looks like. This indicator is based on another metric developed by the analytics firm: Profit and Loss Index.

The Profit and Loss Index is a valuation indicator for Bitcoin that can determine whether the coin is undervalued or overvalued. This metric combines data from three popular indicators related to profit and loss (MVRV Ratio, NUPL, and SOPR) to find its value.

Historically, interactions of the Profit and Loss Index with its 365-day moving average (MA) have been of some importance for the cryptocurrency . For the indicator, a crossover above this line indicated a transition into a bullish phase, while a drop below the line indicated a bearish transition.

Now, what the real metric of interest here, the Bitcoin Bullish-Bearish Market Cycle Indicator, does is take the P&L Index and this is important. It is to measure its distance from the moving average.

When the value of this indicator is greater than zero, it indicates that BTC is in a bull market as the P&L Indicator is above its 365-day moving average. Similarly, a negative value for the indicator indicates an active bear market.

Below is the chart of this CryptoQuant indicator for the last year:

The chart above shows that the indicator jumped higher during the rally and set a new all-time high ( ATH).

In general, the higher the value of the metric, the more overpriced the asset can be considered. During the ATH breakout, the indicator reached levels associated with an “overheated bull”, which may explain why the cryptocurrency reached a top at that time.

Since the cryptocurrency consolidated, the value of the indicator has cooled. It is still above the zero level, indicating that BTC is in a bull market, but the coin has become less hot. “The Bitcoin market looks the least bullish since September 2023,” says Moreno.

In September 2023, the asset was moving sideways at lows, and this consolidation eventually led to new bullish momentum. Therefore, a cooling of the indicator may not be bad for the asset.

Still, it remains to be seen whether the indicator completes its pullback or moves into negative territory. In such a scenario, the market would have moved towards a bearish market.

BTC Price

At the time of writing, Bitcoin was trading at approximately $61,600, down more than 5% from last week.

News source：https://www.kdj.com/cryptocurrencies-news/articles/bitcoin-bullbear-market-cycle-indicator-decline.html

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