Bitcoin is showing improving underlying conditions, but a widely followed on-chain indicator suggests the market has yet to confirm a durable bullish shift.

CryptoQuant’s Bitcoin Bull Score Index has climbed to 50, returning to neutral territory for the first time since the market topped above $126,000. The move marks a notable transition after an extended period in bearish territory, though similar signals have historically proven inconclusive.

The index compiles ten on-chain metrics—including network activity, liquidity, and investor profitability—to assess overall market strength. A reading of 50 reflects an even split between bullish and bearish signals. By comparison, readings below 40 typically indicate a structural bear market, while levels above 60 point to a strong, sustained uptrend.

The shift coincides with bitcoin’s rebound from roughly $60,000 to the upper-$70,000 range, suggesting that market conditions are stabilizing beyond price action alone.

However, past patterns highlight the risk of false signals.

In March 2022, the index similarly reached neutral after bitcoin recovered from around $35,000 to $48,000, prompting expectations that the broader downturn had ended following the late-2021 peak. Instead, the market reversed sharply, with prices eventually falling below $20,000.

Julio Moreno, head of research at CryptoQuant, noted that the index only briefly held neutral levels during that period before the downtrend resumed.

While the current reading reflects a genuine improvement in on-chain fundamentals, derivatives markets continue to signal caution.

According to QCP Capital, options data points to limited conviction. Implied volatility remains subdued, skew favors downside protection, and the term structure shows only a modest upward slope.

Taken together, the data suggests the market remains in a transitional phase, with a sustained breakout likely dependent on stronger confirmation from both on-chain indicators and derivatives positioning.