Analyst: Bitcoin Composite Index Drops to Early-Bear Levels, Warning of Possible Structural Bear Market
CryptoQuant contributor Woo Min-gyu warns the Bitcoin Composite Market Index (BCMI) has fallen to the low 0.2s — a range that historically marked the start of major Bitcoin bear markets in 2018 and 2022. The BCMI aggregates four metrics (MVRV, NUPL, SOPR and investor sentiment) and moved from a neutral ~0.5 in October 2024 directly into the low 0.2s without a rebound through the 0.3 range. This composite decline signals simultaneous valuation compression, rising realized losses, weakening sentiment and increased selling pressure. Historically, cycle bottoms occurred near 0.10–0.15; Woo notes the market hasn’t reached that panic-sell level yet, so a final bottom could still be ahead. He advises monitoring recovery to the 0.4–0.5 neutral range as a key threshold; failure to recover would support the view of a structural bear market. Contextual factors — regulation, institutional flows, macro policy — may modulate the outcome. Traders should treat the BCMI as an important risk indicator, using the specified thresholds (0.4–0.5 recovery, 0.10–0.15 bottom) to guide position sizing, stop placement and timeframe decisions. This is not investment advice.
Bearish
The BCMI’s drop into the low 0.2s — without rebounding through the 0.3s — signals concurrent deterioration across valuation (MVRV), profitability (NUPL), selling pressure (SOPR) and sentiment. Historically, similar composite readings preceded extended downturns in 2018 and 2022; those parallels increase the probability of a sustained bearish phase if the index fails to recover. Short-term impact: elevated volatility, increased likelihood of liquidations, and downward pressure as traders de-risk or short. Traders may reduce leverage, tighten stops, or shift to defensive strategies (hedging, stablecoins). Long-term impact: if BCMI continues falling toward 0.10–0.15, deeper capitulation and a lower cycle bottom become likelier, creating eventual accumulation opportunities for longer-term investors. Offsetting factors include stronger institutional buying, improved regulatory clarity, or macro easing — any of which could push BCMI back to the 0.4–0.5 neutral range and negate the bearish case. Overall, the news raises near-term downside risk and warrants risk management adjustments rather than immediate directional certainty.