Bitcoin may be on the brink of experiencing a further decline, according to the Head of Research at on-chain analytics firm CryptoQuant. Julio Moreno, in a recent post on X, delved into the ongoing patterns observed in the Bitcoin Bull-Bear Market Cycle Indicator, a tool developed by CryptoQuant based on the P&L Index.
The P&L (Profit and Loss) Index aggregates several popular Bitcoin metrics related to market profit and loss, providing a singular value that reflects the overall market balance. By comparing this index against its 365-day moving average (MA), the indicator can determine whether Bitcoin is in a bullish or bearish period. If the cryptocurrency exceeds its 365-day MA, it suggests a bullish market; conversely, falling below this MA signals a shift towards bearish conditions.
The Bull-Bear Market Cycle Indicator simplifies this assessment by measuring the distance between the P&L Index and its 365-day MA. Recently, this indicator has shown noteworthy fluctuations. A chart tracking this trend over the past few years revealed significant movements. During Bitcoin’s price all-time high (ATH) earlier in the year, the indicator hit extreme values, highlighted in red on the chart. This marked a substantial gap between the P&L Index and its 365-day MA, indicating an overheated bull rally. Similar patterns were observed at various points in the past two years, with each instance corresponding to a market peak.
Nonetheless, these peaks did not detain the market’s progress long-term, as the indicator remained in the bull territory—denoted by the orange shading—where the P&L Index stayed above its 365-day MA. Recently, however, the momentum has waned, with the indicator dipping into bear territory (light blue) during a recent price crash. Despite a subsequent recovery that pushed the indicator back into the bull zone, it remains perilously close to the neutral mark. This proximity implies that another drop into bearish territory could be imminent. Moreno underscores that given this precarious trend, Bitcoin still faces the risk of further correction.
In terms of price movement, Bitcoin’s recovery has hit a plateau. Currently, the cryptocurrency’s value hovers around the $58,500 mark, exhibiting a sideways trend in recent trading sessions.
