A Bitcoin cycle indicator from analytics firm CryptoQuant suggests that BTC has entered a bear market after the crash.
CryptoQuant’s Bitcoin Bull-Bear Cycle Indicator Now in Negative Territory
In a new after on X, CryptoQuant Head of Research Julio Moreno has shared the latest development in the “Bull-Bear Market Cycle Indicator“designed by the analytics company.
This metric is based on CryptoQuant’s P&L Index, which itself is an amalgamation of several different popular on-chain indicators relating to unrealized and realized profit/loss.
The P&L Index basically serves as a way to determine whether BTC is currently in a bear or bull market. When the indicator crosses above its 365-day moving average (MA), it can be assumed that BTC has entered a bullish phase. Likewise, a drop below the MA implies a bearish transition.
The Bull-Bear Market Cycle Indicator, the actual metric we’ll focus on here, visualizes the P&L Index in a more useful way by tracking its distance from the 365-day MA.
Below is a chart showing the trend of this Bitcoin indicator over the past few 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 shot up earlier this year as the asset’s price surged to new highs. highest point ever (ATH) and reached an area called the “overheated bull.”
At these values, the P&L Index gains a significant distance from its 365-day MA, hence the asset price is considered overheated. Besides these overheated values, the asset had reached a top which remains the peak of the rally so far.
After months of being in normal bull territory, it seems that the indicator has gone below zero. This means that the profit and loss index has now gone below the 365-day moving average.
The Bull-Bear Market Cycle Indicator is now signaling a bear phase for Bitcoin. Moreno notes that this is the first time since January 2023 that the metric has given this signal.
Something to keep in mind, however, is that this signal doesn’t necessarily mean the cryptocurrency is headed for a long-term bear marketAs the head of CryptoQuant pointed out, there have been periods in the past where the metric only temporarily indicated a bearish phase for BTC.
The previous bear phases for the asset | Source: @jjcmoreno on X
The chart shows that the COVID-19 crash in March 2020 and the Chinese mining ban in May 2021 both led to temporary bear markets from the indicator’s perspective.
The question now remains whether the Bitcoin Bull-Bear Market Cycle Indicator will remain in negative territory for only a short period of time this time or not.
BTC price
At the time of writing, Bitcoin is trading just below $57,000, down almost 14% over the past seven days.
Looks like the price of the coin has been making recovery since the crash | Source: BTCUSD on TradingView
Main image from Dall-E, CryptoQuant.com, chart from TradingView.com