Bitcoin’s Bull Score Hits Zero Traders Freeze as On-Chain Signals Flash Full Red Alert

Bitcoin Bull Score Falls to Zero, Raising Fresh Questions About Market Momentum

A closely followed on-chain indicator is flashing one of its most pessimistic signals in years. According to new data from CryptoQuant, Bitcoin’s Bull Score has dropped to zero out of a possible 10, marking the weakest reading since January 2022.

The update has drawn attention across the crypto market, particularly among traders and analysts who rely on blockchain data to assess sentiment and momentum. A zero reading suggests that nearly all major on-chain signals tracked by the index are pointing toward contraction rather than growth, reinforcing a cautious outlook at a time when market confidence already appears fragile.

Source:  X official

At the time of the report, Bitcoin was trading near $70,394, with a total market capitalization of approximately $1.4 trillion. While prices remain well above levels seen in previous bear markets, the sudden deterioration in on-chain indicators has reignited debate over whether the market is entering a prolonged cooling phase or simply pausing before its next move.

What the Bitcoin Bull Score Measures

The Bull Score is a composite on-chain indicator designed to provide a broad snapshot of the crypto market’s underlying health. Rather than focusing on price alone, the metric combines ten separate data points derived directly from blockchain activity.

These components include measures of investor profitability, liquidity conditions, network usage, and capital flows. By aggregating multiple signals, the index aims to reduce reliance on any single metric and instead highlight broader trends in market behavior.

Historically, analysts interpret the score using broad thresholds. Readings above 60 are typically associated with bullish conditions, suggesting expanding activity and improving confidence. Levels below 40 are generally viewed as bearish, signaling slowing momentum and rising caution. A score of zero represents an extreme case, indicating that all tracked components are underperforming their historical trends.

Why a Zero Reading Matters

CryptoQuant noted that the current reading is significant not only because of its severity, but also because of its rarity. The Bull Score has not touched zero since early 2022, a period marked by aggressive monetary tightening, collapsing risk appetite, and sharp declines across digital assets.

This latest drop ends a nearly four-year stretch during which the indicator remained at healthier levels, even through periods of volatility. Analysts say the shift suggests a broad-based slowdown rather than weakness isolated to a single segment of the market.

In practical terms, a zero score implies fragile sentiment and muted capital inflows. Under such conditions, markets often struggle to sustain strong rallies, as buying pressure remains limited and participants become more defensive.

Key Drivers Behind the Decline

CryptoQuant highlighted that all ten components of the Bull Score are currently below their trend lines. Among the most influential factors are a sharp decline in the MVRV ratio and reduced stablecoin liquidity on the Bitcoin network.

The MVRV ratio compares Bitcoin’s market value to its realized value, which reflects the average price at which coins last moved on-chain. When the ratio falls, it suggests that investor profitability is shrinking. In some cases, this can point to undervaluation, but it can also signal waning enthusiasm if losses begin to dominate.

A declining MVRV ratio means that many holders are seeing smaller unrealized gains or temporary losses. This dynamic often discourages new buying, as investors become hesitant to deploy capital while profitability remains uncertain.

Stablecoin liquidity has also weakened, according to the data. Because stablecoins are commonly used as a bridge for entering crypto positions, a lower supply can indicate reduced buying power waiting on the sidelines. When liquidity dries up, price movements tend to lose momentum, reinforcing sideways or downward trends.

Macro and Market Forces at Play

Beyond on-chain metrics, broader economic forces may be contributing to the weak reading. Global financial markets have been grappling with uncertainty around interest rates, inflation trends, and liquidity conditions. In such environments, investors often scale back exposure to risk assets, including cryptocurrencies.

Profit-taking after earlier rallies can also drain short-term momentum. When prices rise sharply, early participants may lock in gains, reducing the flow of new capital into the market. This behavior can suppress on-chain activity even if long-term conviction remains intact.

Large institutional players may also be adopting a wait-and-see approach. During periods of unclear macro direction, accumulation often slows, leading to quieter blockchain signals and lower composite scores.

Historical Context: What Happens After Extreme Lows

While a Bull Score of zero appears alarming, analysts caution against viewing it in isolation. Historically, extreme lows in on-chain indicators have often coincided with transitional phases rather than permanent downturns.

In previous cycles, similar conditions have sometimes preceded periods of consolidation or gradual accumulation. As weaker hands exit and long-term participants step in, underlying metrics can stabilize before eventually improving.

For a meaningful recovery in the Bull Score, analysts typically look for several developments. These include improving liquidity, a rebound in profitability metrics like MVRV, and renewed activity from long-term holders. Sustained inflows into stablecoins and rising network usage would also signal a healthier environment.

How Traders and Investors Are Responding

Market participants are interpreting the data in different ways, depending on their time horizons and risk tolerance. Short-term traders often see weak momentum as a signal to reduce exposure or wait for clearer confirmation before re-entering the market.

Source: CoinMarketCap official

Long-term investors, by contrast, sometimes view periods of low confidence as opportunities to reassess valuation and accumulate selectively. Rather than reacting to daily price swings, they focus on broader adoption trends, supply dynamics, and the long-term role of Bitcoin within the global financial system.

Most analysts agree on one point: indicators are tools, not guarantees. A single metric, even a composite one, cannot fully capture the complexity of market behavior. Risk management and diversification remain essential, particularly during periods of heightened uncertainty.

Looking Ahead: What Could Change the Outlook

Several developments could alter the current picture in the coming months. A shift toward more accommodative global liquidity conditions could revive risk appetite and encourage capital to flow back into crypto markets. Clearer regulatory frameworks may also improve confidence among institutional participants.

On-chain, signs of renewed accumulation by long-term holders would be an important signal. Rising transaction volumes, improving profitability metrics, and expanding stablecoin supply would all contribute to a healthier Bull Score.

Until such changes emerge, analysts expect volatility to remain elevated, with markets sensitive to both macro news and blockchain data.

A Market at a Crossroads

Bitcoin’s Bull Score falling to zero underscores a phase of reduced confidence and subdued network activity. While prices remain far above historical lows, the underlying signals suggest that momentum has weakened considerably.

Whether this period evolves into a deeper slowdown or serves as a quiet reset ahead of the next cycle will depend on liquidity conditions, investor behavior, and broader economic trends. For now, the data points toward caution, reminding market participants that even in a maturing asset class, sentiment can shift quickly.

As traders and investors digest the latest on-chain signals, attention will remain focused on whether the market can rebuild momentum or whether further consolidation lies ahead.

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Writer @Erlin
Erlin is an experienced crypto writer who loves to explore the intersection of blockchain technology and financial markets. She regularly provides insights into the latest trends and innovations in the digital currency space.
 
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