Bitcoin is entering a phase of active cooling after hitting a record high of $123,000.
The declining Bull Score indicates a cooling phase for Bitcoin.
Bitcoin's rapid surge has paused after reaching a record high of $123,000, entering a phase that Cryptoquant's Institutional Insights report calls a phase of 'active cooling'. The company's Bull Score index has dropped from 80 to 60, signaling weakening momentum but still remains in positive territory.
Researchers point out that weaker on-chain trends are driving this slowdown. The growth of Stablecoin liquidity – a key measure of new capital flows – has decreased, turning red on Cryptoquant's dashboard. Network activity has dropped, and BTC inflows to leading exchanges like Coinbase have decreased, suggesting short-term demand from investors is easing.
Strong profit-taking is also playing a role. The on-chain profit margin signals from Cryptoquant traders have turned red, indicating that many participants have taken significant profits and are currently holding less unrealized gains. Combined with the typical summer lull in the market, these factors are shaping the current consolidation phase.
Valuation measures are currently hovering near a critical point between bullish and bearish cycles. The Bull-Bear Market Cycle Index, P&L Index, and MVRV Z-score are all near levels that, if prices decrease further, could push them into bearish territory. If that happens, Cryptoquant analysts say the Bull Score could drop below 40 for the first time since April 2023.
Currently, the company describes the outlook as cautiously neutral. The overall market cycle still leans positive, but with profit-taking trends, slowing liquidity growth – particularly tether (USDT) growth slowing to $9.6 billion over 60 days – and weakening momentum, prices may consolidate or slightly decline.
Cryptoquant researchers note that this phase is causing the market to stall and requires new positive drivers to kickstart the next phase.
