Bitrabo Editorial
Analysis of on-chain data by CryptoQuant reveals a decrease in the bullish sentiment surrounding Bitcoin in recent times.
Bitcoin Bull-Bear Market Cycle Indicator Shows Downtrend
According to a recent update on X, Julio Moreno, the Head of Research at CryptoQuant, shared insights on the evolving trend of the Bitcoin Bull-Bear Market Cycle Indicator. This key indicator is based on the P&L Index developed by the analytics firm.
The P&L Index serves as a valuation tool for Bitcoin, assessing whether the coin is undervalued or overvalued by combining data from three prominent profit and loss indicators (MVRV Ratio, NUPL, and SOPR).
Historically, the P&L Index’s interactions with its 365-day moving average (MA) have been significant for Bitcoin. Crosses above the MA line signal a bullish phase, while drops below indicate a bearish shift.
The Bitcoin Bull-Bear Market Cycle Indicator, derived from the P&L Index, measures the distance of the index from this crucial MA.
Positive values on this indicator indicate a bull market, with the P&L Index above its 365-day MA, while negative values suggest a bearish market.
The chart below illustrates the performance of this CryptoQuant indicator over the past year:
During the recent rally that led to a new all-time high (ATH), the Bitcoin Bull-Bear Market Cycle Indicator surged significantly.
A high value on the indicator typically indicates an overvalued asset. Following the ATH, the indicator reached levels associated with an “overheated bull,” possibly contributing to the peak in Bitcoin’s price at that time.
Despite remaining above zero, signifying a bull market, the indicator has cooled off during the consolidation period. Moreno comments that the Bitcoin market is currently experiencing its lowest bullish sentiment since September 2023.
Back in September 2023, Bitcoin’s price was consolidating around lows before witnessing a bullish breakout. The current decrease in the indicator’s value might not be detrimental to the asset.
It remains uncertain whether the indicator has completed its decline or if it will transition into negative territory, indicating a bearish shift in the market.
Bitcoin Price Update
As of the latest update, Bitcoin is trading at approximately $61,600, reflecting a decline of over 5% in the past week.