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According to CryptoQuant’s most recent data, Bitcoin is now positioned below the zero mark on the Bull-Bear Market Cycle Indicator.
In a recent update, Julio Moreno, CryptoQuant’s Head of Research, highlighted a significant change in the Bitcoin market phase through the firm’s Bull-Bear Market Cycle Indicator. This latest assessment indicates that Bitcoin might have entered a bear market phase.
Understanding the Indicator
CryptoQuant’s Bull-Bear Market Cycle Indicator uses the P&L Index, which consolidates various on-chain metrics pertaining to unrealized and realized gains and losses. This indicator determines Bitcoin’s market phase by measuring the P&L Index against its 365-day moving average (MA). When the Index is above the MA, it signals a bullish market, whereas a fall below the MA indicates a bearish trend.
The Bull-Bear Market Cycle Indicator simplifies the analysis by monitoring the extent to which the P&L Index diverges from its 365-day moving average (MA). Earlier in the year, as Bitcoin’s price reached new record highs, the indicator moved into the “overheated bull” zone, indicating a substantial distance from the MA.
According to CryptoQuant’s most recent data, Bitcoin is now positioned below the zero mark on the Bull-Bear Market Cycle Indicator. This drop suggests that the P&L Index has fallen beneath its 365-day moving average (MA), signaling a transition into a bear market phase. This is the first instance of such a signal from the indicator since January 2023.
Photo: CryptoQuant
Recent Market Trends
Bitcoin is currently trading around $57,000, marking a nearly 14% decrease over the past week. This decline has raised some concerns among analysts. According to 10X Research, despite attempts at recovery, Bitcoin has encountered strong resistance between $56,000 and $57,000. The research highlights ongoing outflows from Bitcoin spot ETFs and a lack of inflows from stablecoins, indicating diminished buying interest and casting doubt on market stability.
Historical patterns indicate that previous bearish signals, such as those during the COVID-19 crash in March 2020 and the China mining ban in May 2021, were short-lived. This suggests that the current bearish phase might also be transient. The ultimate effect of this signal on Bitcoin’s price trajectory will largely depend on forthcoming market trends and investor behavior.
Looking Ahead
The outlook for Bitcoin in August and beyond will largely depend on global market trends and upcoming economic events. The Federal Open Market Committee (FOMC) meeting in September could play a crucial role in shaping Bitcoin’s direction. While Bitcoin was initially considered a hedge against inflation, recent global market shifts could affect its performance.
For 2024, there is cautious optimism. Analysts anticipate a potential rise in Bitcoin’s value, with forecasts suggesting a possible peak of around $120,000 if the current bearish indicators reverse to the anticipated bullish bull-run trends. However, investors should remain attentive to market conditions and economic indicators that may influence Bitcoin’s future movements.
