Bitcoin (BTC) Bull Score Index Flashes Deep Structural Shift as Prices Dip

Short-term price dips are par for the course in bitcoin's (BTC) bull markets, but one indicator suggests the current decline from recent highs may reflect a deeper structural shift in market dynamics.

Bitcoin (BTC) price has dropped 23% from recent highs, and a new analysis from on-chain analysis firm CryptoQuant suggests the recent decline may be reflecting a deeper structural shift in market dynamics.

As of European morning hours on Friday, bitcoin was trading around $84,000. The fall from January's peak of $109,000 has rattled investors and fueled debate over whether this marks the start of a new bear market or a fleeting correction within a broader bullish trend.

Such pullbacks are not uncommon, with BTC having weathered similar declines in past bull cycles, often rebounding to new heights.

However, CryptoQuant’s analysis shows that its Bull Score Index, a composite metric designed to gauge bitcoin’s market health, is now signaling deeper weakness.

The index, which combines ten critical indicators—spanning network activity (like transaction volume), investor profitability, market liquidity, among other factors—is scored on a scale of 0 to 100. Higher scores denote a robust, bullish environment, while lower readings (especially below 40) usually flag bearish conditions.

Currently, the Bull Score Index stands at a troubling 20, the lowest since January 2023, when bitcoin was trading around $16,000 post the collapse of then-behemoth crypto exchange FTX.

Out of the ten metrics that feed into the index, eight are showing warning signs, with network activity being bearish since December 2024 and transaction volumes and liquidity drying up.

“Historically, bitcoin has only sustained major price rallies when the Bull Score is above 60, while prolonged readings below 40 have aligned with bear markets,” CryptoQuant analysts said in the Thursday report.

Investor profitability has also decreased as short-term holders are now reporting unrealized losses, and demand is slowing—U.S. spot bitcoin ETFs, once aggressive buyers, have registered a net $180 million in outflows over the past 30 days, or among the highest rates of withdrawals since they started trading at the beginning of 2024.

In previous cycles, such low readings (below 40) over several weeks or months have preceded extended bear phases, like the 2022 slump that saw bitcoin lose more than 60% of its value from peak.

The coming weeks will be pivotal. Either the index rebounds, signaling renewed strength, or it continues to lower, testing the $80,000 support zone—one that analysts have been keeping an eye on.