CryptoQuant’s Bitcoin Bull-Bear Cycle Indicator Now In Negative Territory

A Bitcoin cycle indicator from the analytics firm CryptoQuant suggests BTC has gone through a transition to a bearish phase after the crash.

A new signal from a Bitcoin (CRYPTO: BTC) cycle indicator suggests that the apex coin has transitioned into a bearish phase following the recent crash.

What Happened: CryptoQuant Head of Research Julio Moreno discussed the latest development in the “Bull-Bear Market Cycle Indicator” in a post on Fxcryptonews.

The metric is based on CryptoQuant's P&L Index, which combines several popular on-chain indicators related to unrealized and realized profit/loss.

The P&L Index indicates whether BTC is in a bear or bull market. When the indicator crosses above its 365-day moving average (MA), BTC is assumed to have entered a bullish phase. A drop below the MA signals a bearish transition.

The Bull-Bear Market Cycle Indicator visualizes the P&L Index in a more user-friendly format by tracking its distance from its 365-day MA.

A chart displaying the trend in the Bitcoin indicator is shown below.

The Bull-Bear Market Cycle Indicator shot up earlier in 2023 as BTC's price rallied to a new all-time high, reaching a zone called “overheated bull.” At these values, the P&L Index gains a significant distance from its 365-day MA, indicating overheated asset prices.

Coinciding with these overheated values, the asset's price reached a top, which is still the peak of the rally to date.

After spending several months in the normal bull territory, the indicator appears to have slipped below the zero mark, indicating that the P&L Index has now crossed below its 365-day MA.

The Bull-Bear Market Cycle Indicator is now flagging a bear phase for Bitcoin. This is the first time the metric has signaled a bear phase since January 2023, Moreno noted.

However, it is important to note that this signal does not necessarily indicate that the cryptocurrency will enter an extended bear market.

As highlighted by the CryptoQuant head, there have been periods in the past where the metric has only briefly signaled a bear phase for BTC.

The chart shows that both the COVID-19 crash in March 2020 and the China mining ban in May 2021 briefly triggered bear phases from the indicator's perspective.

It now remains to be seen whether the Bitcoin Bull-Bear Market Cycle Indicator will remain in negative territory for only a short period this time as well.

BTC Price: At the time of writing, BTC trades at $56,933, down 13.5% over the last seven days.