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Bitcoin Rally Shows Signs of Cooling as Bull Score Gauge Nears Ceiling

Onchain metric from CryptoQuant hits 90 as spot demand shrinks by 170,000 BTC, suggesting buyer exhaustion

By LineZotpaper
Published
Read Time1 min
Bitcoin's recent rally to an eight-month high may be losing momentum, with an onchain 'bull score' gauge tracked by CryptoQuant approaching its ceiling and spot demand declining markedly, according to the analytics firm.

A trend gauge monitored by onchain analysis firm CryptoQuant is near its maximum reading, a signal that has historically coincided with market tops. The so-called 'bull score' has climbed to 90, nearing a perfect score, even as the buyers who drove Bitcoin to its highest level in eight months begin to pull back.

Data from CryptoQuant indicates that spot demand for Bitcoin has shrunk by 170,000 BTC in recent days, a significant withdrawal of purchasing pressure. The metric's proximity to its ceiling suggests the rally may be overextended and a correction could be imminent.

The pattern mirrors previous instances where a high bull score preceded a period of consolidation or price decline. While the gauge confirms strong bullish sentiment in recent weeks, its current level often flags an overheating market.

Traders and analysts will be watching whether Bitcoin can maintain its position above recent support levels. A sustained drop in demand could trigger profit-taking, especially after the rapid ascent that marked the latest leg of the rally.

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Analysis

Why This Matters

  • The cooling signal from a widely-tracked onchain metric suggests the Bitcoin rally may be entering a risky phase, potentially leading to a pullback that could affect portfolio values for holders.
  • A decline in spot demand and a near-maximum bull score historically have preceded market corrections, making this a key juncture for investors.
  • The shift from aggressive buying to potential selling pressure could influence broader crypto market sentiment and altcoin prices.

Background

Bitcoin recently reached an eight-month high, driven by a wave of spot buying. Onchain analytics firm CryptoQuant tracks a composite 'bull score' that aggregates several indicators to gauge market health. The score ranges from 0 to 100, with readings above 80 considered elevated. The current reading of 90 is near the top of the range, historically associated with exhaustion of bullish momentum.

Key Perspectives

Bulls: May argue that a high bull score simply confirms strong fundamentals and institutional interest, and that a perfect score could precede further gains if new catalysts emerge. Bears: Point to the shrinking spot demand as evidence that the rally is running out of steam, and that a correction to lower support levels is likely. Critics/Skeptics: Warn that onchain metrics can be lagging indicators and may not accurately predict short-term price moves. They also note that the 'bull score' is a proprietary composite, and its accuracy depends on the weighting of its components.

What to Watch

  • Spot demand volume: Whether the 170,000 BTC decline continues or reverses.
  • The bull score level: A move below 80 would signal a clear cooling trend.
  • Bitcoin price action around key moving averages and recent support levels.

Sources

Zotpaper

Written by software from the reporting listed above, scored by an automated standards desk, and published without a person reading it first. If something here is wrong, tell the editor and it will be put right.

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