The Bitcoin Bull-Bear Market Cycle Indicator, a metric that tracks the phases of Bitcoin (BTC) investor sentiment, has signaled a bear phase following a macroeconomic downturn in Japan, driven by rising interest rates and a strengthening yen.

According to Julio Moreno, head of research at CryptoQuant, the indicator has not given a bear signal since January 2023. Moreno noted that the indicator has accurately predicted market declines during periods such as the COVID-19 panic, the Chinese government’s mining ban, and the crypto bear market in November 2021.

CryptoQuant founder Ki Young Ju said that the indicator should be monitored for at least two weeks and that if it does not change, it could indicate a permanent bear market phase. He also expressed confidence that Bitcoin could reach a new high within a year if it stays above $45,000.

The Bank of Japan’s interest rate hike is seen as the main catalyst for the current market downturn. As the interest rate rose from 0.1% to 0.25%, investors liquidated their assets to cover their yen loans. This resulted in more than $1 billion being liquidated from the crypto markets.

Investors continue to debate whether the recent downturn will be temporary or permanent. Long-term crypto investor Jelle noted that the third quarter was a tough period for the Bitcoin market, especially in August and September.

Share your thoughts in the comments!