Bitcoin (BTC) has undergone a sharp correction, falling as much as 23% from its recent peak, raising concerns about whether the market is entering a prolonged bearish phase.
Cryptocurrency analytics firm CryptoQuant has introduced the Bullish Score Index to assess whether this decline is part of a temporary correction within a broader bull cycle or the start of a deeper decline.
CryptoQuant’s Bull Score Index, which evaluates ten key indicators of network activity, investor profitability, Bitcoin demand, and market liquidity, currently sits at 20, the lowest level since January 2023. Ranging from 0-100, the index is designed to measure the percentage of bullish metrics in the market, with higher values indicating a strong investment climate, while lower values indicate a bearish outlook.
Historically, Bitcoin has only sustained major price rallies when the Bullish Score Index was above 60, while prolonged readings below 40 have equated to bear markets. Given that the index remains well below this threshold, CryptoQuant analysts warn that current market conditions are weak and could signal further downside risk.
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If the Bull Score Index remains below 40 for an extended period of time, it could confirm the continuation of bearish conditions similar to previous downtrends. While Bitcoin has seen similar corrections in past bull cycles, the current weak market environment could make a rapid recovery difficult unless fundamental metrics improve, analysts note.
This is not investment advice.