A significant metric used to evaluate Bitcoin’s overall market health has issued its first neutral signal since prices hit $126,000, suggesting the potential conclusion of the bear market.
However, this neutral reading was a false positive in similar circumstances several years ago. The indicator in question is CryptoQuant’s Bitcoin Bull Score Index, which gauges the market’s condition by analyzing ten key on-chain indicators such as blockchain activity, investor profitability, and liquidity.
The index has reached 50 for the first time since the downturn from $126,000 commenced, indicating that half of its underlying metrics are now bullish while the rest remain bearish. This shift from bearish to neutral aligns with Bitcoin’s price recovery from nearly $60,000 to $78,000.
For an index consistently in bear territory throughout this cycle, achieving a neutral status is noteworthy. Readings below 40 denote a structural bear market, whereas readings above 60 suggest a robust, sustainable uptrend.
CryptoQuant’s analyst referenced March 2022 when the Bull Score Index similarly reached 50, marking what was then believed to be the end of the bear market after prices rose from about $35,000 to nearly $48,000. However, prices eventually more than halved to below $20,000 in subsequent months, indicating a deepening bear market.
“For the first time during this bear cycle, the Bull Score Index has entered the neutral zone (50). In March 2022, it briefly reached neutrality before the price continued its descent,” stated Julio Moreno, head of research at CryptoQuant.
While the index reaching neutral is a positive sign reflecting genuine improvements in on-chain conditions rather than just price movements, the precedent set in March 2022 serves as a caution that transitional phases can lead to different outcomes. Current derivatives positioning suggests skepticism about the recovery’s durability.
“Volatility at the front end remains subdued compared to realized levels, skew still favors downside protection, and term structure is only modestly upward sloping. Positioning indicates range-bound conditions rather than a sustained breakout,” noted QCP Capital, a leading digital asset trading firm based in Singapore.