Cryptocurrency Market Cycle Indicator Shows Bearish Signs, But Here’s Why You Shouldn’t Worry

In a post published on X on August 6, CryptoQuant’s head of research Julio Moreno reported that the on-chain analytics firm’s bull-bear market cycle indicator has signaled a bearish phase for the first time since January 2023.

The move follows a massive market rout that saw the loss of about $500 billion in less than a week.

There is no reason to panic yet, however, as this indicator has issued bearish warnings during previous bull market cycles that continued to reach all-time highs.

The Bull-Bear Market Cycle Indicator has signaled the BEAR phase (high blue zone) for the first time since January 2023.

Other periods where it marked BEAR phases for a limited period were the COVID-related sell-off (March 2020) and the Chinese mining ban (May 2021). It… pic.twitter.com/hwJRFjJuFg

— Julio Moreno (@jjcmoreno) August 6, 2024

Bull or bear market

Other periods when the indicator signaled bearish phases for a limited period were the Covid-19 black swan event and sell-off in March 2020 and the crypto mining ban in China in May 2021. However, it correctly anticipated the start of the bear market at the peak of the cycle in November 2021, he added.

While it is true that most altcoins are still in a bear market, Bitcoin currently remains just 22.5% off its all-time high, which does not seem bearish at all. Analysts seem to be hesitant about bull/bear market conditions.

Earlier this week, crypto trader “Philakone” told his 148,000 X followers that there was “25% of me” who believed BTC had reached the top of this cycle and a major correction was beginning, something no one has yet accepted.

“This would mean that a major bear market has started and that $25,000 to $30,000 is the next target that will eventually destroy the market.”

However, technical analyst “Titan of Crypto” claimed that the bull market is still in play in an article published on X on August 6. The trader referenced the 38.2% Fibonacci retracement level, saying, “As long as the price closes above this level, the bull market is still in play.”

Cryptocurrency Market Outlook

Cryptocurrency markets have recovered slightly from their massive rout earlier this week, with total capitalization recovering $2.1 trillion.

Bitcoin’s price hit $57,000 on August 6, up 14% from its drop below $50,000 the day before. The asset is currently trading up 2.6% on the day, just below $57,000.

Ethereum was slower to react. It reclaimed the $2,500 price level but did not advance much afterward despite another solid day of positive ETF inflows in the US.