Analyst: Declining BTC index signals potential bear market

The recent decline in the Bitcoin Composite Market Index (BCMI) suggests the market may be transitioning into a bear phase rather than undergoing a simple correction, according to crypto analyst Woominkyu in a contribution to CryptoQuant. The analyst noted that while the BCMI's return to the 0.5 level on Oct. 21 was initially interpreted as a market cooling-off period, a subsequent significant drop in BTC's price and a further fall in the index point to a different scenario. Woominkyu explained that the simultaneous price correction and weakening on-chain momentum indicate the market has entered a structural reset phase. Historically, the BCMI bottomed out in the 0.25-0.35 range in 2019 and 2023. While the current index is below its equilibrium line, it remains high compared to these historical lows. The analyst concluded that if past patterns repeat, a market bottom may only form after the BCMI falls to those levels, suggesting the market is currently in a downward transition rather than having completed its reset.