The Bitcoin Cycle Index from analytics firm CryptoQuant suggests that Bitcoin has transitioned to a bearish phase after the crash.
CryptoQuant’s Bitcoin Bull Bear Cycle Indicator is now in negative territory
In new mail In X, CryptoQuant’s Head of Research, Julio Moreno, discussed the latest developments in “Bull and Bear Market Cycle Indicator“Created by Analytics.”
This metric is based on CryptoQuant’s P&L indicator, which itself is a consolidation of a few different popular on-chain indicators relating to realized and unrealized profit/loss.
The P/E indicator basically works as a means of determining whether Bitcoin is currently in a bearish or bullish market. When the indicator crosses above its 365-day moving average (MA), it can be assumed that Bitcoin has entered a bullish phase. Similarly, a dip below the MA indicates a bearish move.
The Bull and Bear Market Cycle Index, which is the actual measure we’re focusing on here, depicts the P&L in a more convenient form by tracking its distance from its 365-day moving average.
Now, here is a chart showing the trend of this Bitcoin indicator over the past two years:
The value of the metric appears to have plunged into the negative territory in recent days | Source: @jjcmoreno on X
As shown in the chart above, the Bitcoin Bull-Bear market cycle indicator spiked earlier in the year when the asset’s price surged to an all-time high (ATH) and reached an area called the “bullish bull.”
At these values, the P/E indicator gains a significant distance above its 365-day moving average, which is why the asset price is considered overbought. Along with these overbought values, the asset has made a top that still represents the peak of the rally to date.
After spending months within the normal bullish zone, the indicator appears to have dropped below the zero level, meaning that the P/E indicator has now crossed below its 365-day moving average.
The bull and bear market cycle indicator is now signaling a bearish phase for Bitcoin. Moreno notes that this is the first time since January 2023 that the gauge has given this signal.
But one thing to keep in mind is that this signal doesn’t necessarily mean the cryptocurrency is headed for an extended bear market. As the CryptoQuant boss pointed out, there have been periods in the past where the metric only temporarily signaled a bearish phase for Bitcoin.
The previous bear phases for the asset | Source: @jjcmoreno on X
From the chart, it is clear that the COVID-19 crash in March 2020 and the mining ban in China in May 2021 both led to temporary bearish phases from the index perspective.
It remains to be seen whether the Bitcoin Bull-Bear Market Cycle Indicator will remain within the negative territory for only a short period this time as well.
Bitcoin price
At the time of writing, Bitcoin is trading just below the $57,000 level, down about 14% over the past seven days.
Looks like the price of the coin has been making recovery since the crash | Source: BTCUSD on TradingView
Featured image by Dall-E, CryptoQuant.com, chart by TradingView.com
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