By Chris Hollingworth 
Bitcoin (BTC) recently surged to $87,000 on March 20, marking a 14% increase from its low of $76,600 recorded on March 11. While this uptrend initially buoyed market sentiment, the price of BTC has since retraced to around $84,000, signaling a 2% decline over the last 24 hours and prompting speculation about potential further drops in the coming days.
BTC’s recent price movements have brought it down by as much as 30% from its all-time high of over $109,000 reached on Jan. 20. This downturn has caused its Bull Score Index to plummet to levels not seen since 2023, indicating a potential continuation of bearish market conditions, according to insights from CryptoQuant’s latest Weekly Crypto report.
The Bull Score Index for Bitcoin measures the proportion of various bullish metrics out of a total of ten key indicators, encompassing factors like network activity, investor profitability, demand, and market liquidity. This index ranges from 0 to 100, with higher values suggesting a favorable investment climate and lower values signaling bearish conditions.
Historically, a Bull Score Index reading of 60 or higher has corresponded with robust market rallies, as evidenced during the 2021 bull market and the period from late 2023 to early 2024. Conversely, values below 40 have typically aligned with bear markets, similar to the downturns observed in the 2022 and mid-2023 bear markets.
Currently, the Bull Score Index sits at 20, its lowest level since January 2023. This indicates a weakened investment environment for Bitcoin, diminishing the likelihood of a sustained rally in the near future. If the index remains below 40 for an extended period, it could signify a prolonged bearish phase, mirroring past market conditions.
From a technical viewpoint, BTC is currently trading within a bearish continuation pattern known as a bear flag, implying a potential corrective phase ahead despite the ongoing consolidation. The bear flag formed following Bitcoin’s decline from $109,000 to a local low of $76,600 between January 21 and March 11.
The consolidation within the bear flag pattern has kept BTC within an ascending parallel channel, with the recent drop testing critical support levels, including the lower boundary of the flag at $83,700. A breakdown below this level may trigger another downward price movement, with the bear flag’s downside target estimated around $60,000, representing a 28% decline from the current price levels.
In summary, Bitcoin’s recent price actions and technical patterns suggest a cautious outlook for the cryptocurrency, with indicators pointing towards potential further downside movements in the near term. Investors and traders are advised to closely monitor key support and resistance levels while conducting thorough research before making any investment decisions.
