Bitcoin’s market structure may be showing early signs of recovery, but historical precedent suggests caution.
A closely watched indicator—CryptoQuant’s Bitcoin Bull Score Index—has returned to neutral territory for the first time since the market peaked above $126,000. The shift marks a notable milestone and has often coincided with potential turning points in past cycles.
The index, which aggregates ten key on-chain metrics including network activity, investor profitability, and liquidity conditions, has risen to a reading of 50. This indicates that half of its underlying signals have turned bullish, while the other half remain bearish.
For much of the current cycle, the indicator remained firmly in bear territory. Readings below 40 typically signal a structural downturn, while levels above 60 are associated with strong, sustained uptrends. The move to 50 suggests improving conditions and aligns with bitcoin’s recent rebound from near $60,000 to around $78,000.
However, the signal is not without risk.
CryptoQuant analysts point to March 2022 as a key comparison. At the time, the index also climbed to 50 after bitcoin rallied from roughly $35,000 to $48,000, leading many to believe the bear market had ended following the November 2021 peak near $70,000.
Instead, the market reversed sharply. Prices later fell below $20,000, deepening the downturn despite the temporary improvement in on-chain metrics.
Julio Moreno, head of research at CryptoQuant, noted that the current move mirrors that earlier phase. The index briefly entered neutral territory in 2022 before the broader decline resumed, underscoring the risk of false signals during transitional periods.
Still, the latest reading reflects genuine improvement in underlying market conditions rather than a price-driven anomaly.
That said, derivatives data continues to point to limited conviction behind the recovery. According to Singapore-based trading firm QCP Capital, options markets remain cautious. Short-term volatility is subdued relative to realized moves, skew continues to favor downside protection, and the term structure shows only a modest upward slope.
Taken together, positioning suggests a market that may remain range-bound rather than entering a sustained breakout phase, leaving the latest bullish signal open to interpretation.
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