Bitcoin is flashing early signs of recovery, but a key on-chain indicator suggests the market has not yet confirmed a full bullish reversal.
CryptoQuant’s Bitcoin Bull Score Index has climbed to 50, marking its first move into neutral territory since prices peaked above $126,000. The shift reflects improving underlying conditions after a prolonged stretch in bearish territory, though similar signals have proven misleading in the past.
The index aggregates ten on-chain metrics—ranging from network activity to investor profitability and liquidity—to gauge overall market health. A reading of 50 signals a balanced outlook, with half the indicators bullish and half bearish. Levels below 40 typically point to a structural bear market, while readings above 60 indicate a strong, sustained uptrend.
The move higher aligns with bitcoin’s rebound from around $60,000 to the high-$70,000 range, suggesting that the recovery is being supported by improving fundamentals rather than price action alone.
Still, historical precedent warrants caution.
In March 2022, the index similarly reached neutral after bitcoin rallied from roughly $35,000 to $48,000, leading many to call an end to the bear market that began after the late-2021 peak.
Instead, the rally faded and prices fell below $20,000 in the months that followed, highlighting the risk of false positives during transitional phases.
Julio Moreno, head of research at CryptoQuant, noted that the index only briefly held neutral levels during that period before the broader downtrend resumed.
While the latest reading signals a meaningful improvement in on-chain conditions, derivatives data points to limited conviction behind the move.
According to QCP Capital, options markets remain cautious. Implied volatility is subdued relative to realized levels, skew continues to favor downside protection, and the term structure shows only a modest upward slope.
Taken together, the signals suggest a market that may remain range-bound in the near term, with a sustained breakout likely requiring stronger confirmation from both on-chain and derivatives indicators.
