Bitcoin is once again facing significant selling pressure. The market is in a complex phase characterized by weakening dynamics and cautious positioning of investors. Recent price action suggests that bullish belief has waned. Traders are increasingly paying attention to liquidity conditions, macro uncertainty and changing market sentiment. While volatility is not unusual at this point in the cycle, the current environment reflects the market searching for direction rather than maintaining a clear uptrend.

A recent report from CryptoQuant provides additional context with the Bitcoin Combined Market Index (BCMI), a composite indicator that integrates valuation, profitability, spending behavior, and sentiment indicators. The analysis shows that the BCMI has fallen to the lower 0.2 range, a level historically associated more with early bear markets – such as those seen in 2018 and 2022 – rather than routine mid-cycle corrections. This change suggests that deeper structural adjustment may occur.

It is worth noting that back in October, BCMI fluctuated around 0.5, i.e. in the zone usually interpreted as market balance between bullish and bearish forces. The subsequent decline indicates that this balance has been disturbed. Whether this signals the beginning of a prolonged decline or a ephemeral reset will likely depend on future liquidity conditions, investor demand and broader macroeconomic developments.

The BCMI split highlights structural weaknesses in the Bitcoin market

CryptoQuant report highlights the noticeable deterioration in Bitcoin’s Combined Market Index (BCMI), which suggests a shift away from mid-cycle consolidation towards a more defensive market regime. The analysis shows that the mid-cycle balance around the 0.5 level was not maintained, and no significant bounce emerged from the 0.3 zone.

Instead, the index continued to decline, directly towards the lower 0.2 range, without the expansion-related reset typically seen during healthier corrective phases. This pattern is different from previous mid-cycle cooling periods and increasingly resembles a transition to a risk-free market environment.

Historical comparisons provide additional perspective. The lows of previous cycles typically formed when the BCMI reached around 0.10-0.15, especially in 2019 and again in a bear phase in 2022-2023. Current readings remain above these surrender levels, suggesting that while Bitcoin may already be operating within a bearish structural framework, the terms for full surrender have not yet materialized.

As BCMI aggregates valuation metrics such as MVRV, profitability metrics such as NUPL, spending behavior via SOPR and broader sentiment measures, its decline to the lower 0.2 range reflects shrinking unrealized gains, rising realized losses, deteriorating sentiment and continued valuation compression. Unless the index stabilizes and regains the 0.4-0.5 zone, the likelihood of continued structural weakness remains elevated.

Bitcoin Tests Long-Term Support After Weekly Crash

Bitcoin’s weekly chart reflects mounting structural pressure following the recent loss of the $70,000 level, a key psychological and technical threshold that previously acted as support. The price has now retreated towards the mid-$60,000 range, placing BTC below near-term trend averages and signaling a weakening of bullish momentum. This change suggests that the market is moving from consolidation to a more defensive phase.

The chart shows a clear sequence of lower highs from the end-of-cycle high near the $120,000 area. A pattern often associated with a corrective or transitional market environment. The recent declines were accompanied by increased trading volume. It usually indicates distribution or forced deleveraging rather than gradual profit-taking. Such dynamics often boost volatility while complicating sustained attempts at economic recovery.

From a structural perspective, the $60,000-$62,000 zone appears as a critical support area. This region coincides with earlier phases of consolidation and high liquidity trading zones that have attracted demand in the past. Maintaining above this level could allow Bitcoin to stabilize and potentially create the basis for sideways consolidation. However, a decisive break would boost the likelihood of deeper retracement scenarios.

Bitcoin’s direction remains closely linked to liquidity conditions, institutional flows and broader macro sentiment affecting risky assets.

Featured image from ChatGPT, chart from TradingView.com