Bitcoin’s recent price action above $85,000 has sparked intense debate about whether the current recovery signals a continued bull run or a potential bull trap. With a weekly gain of 4.7%, on-chain metrics and the Bitcoin Combined Market Index (BCMI) are providing crucial insights into BTC’s next potential move.
BCMI Analysis Reveals Market Position
The BCMI, a comprehensive market health indicator developed by CryptoQuant, combines four essential metrics with specific weightings:
- MVRV (30% weight)
- NUPL (25% weight)
- SOPR (25% weight)
- Fear & Greed Index (20% weight)
Currently, the BCMI sits below 0.5, significantly lower than the typical ‘overheated’ threshold of 0.75. This positioning suggests Bitcoin still has room for growth before reaching concerning levels. As noted in recent whale accumulation patterns, institutional investors continue to show confidence in Bitcoin’s upward trajectory.
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Critical Price Levels and Resistance Zones
IntoTheBlock’s analysis identifies $97,400 as a crucial resistance level, where approximately 1.44 million BTC are currently underwater. This aligns with recent data showing short-term holders facing significant unrealized losses as Bitcoin tests higher levels.
Market Outlook and Trading Implications
Two key scenarios emerge from the current market structure:
- Continued bull cycle with temporary correction
- Early signs of potential bearish transition
FAQ Section
What is a healthy BCMI reading for Bitcoin?
A BCMI reading below 0.75 is considered healthy, with readings above this level potentially indicating market overheating.
As Bitcoin continues to test key resistance levels, traders should monitor the 7-day and 90-day moving averages of the BCMI for additional confirmation of market direction.