Bitcoin on-chain signals flip bullish, but huge unrealized losses could cap gains

Bitcoin (BTC) is showing early signs of a potential shift in market conditions, with key on-chain signals flipping bullish.

CryptoQuant contributor Darkfost said Bitcoin’s Bull Score has returned to bullish territory for the first time since October 2025, signaling a potential shift in its market regime. The indicator crossed the 60 threshold, which separates bullish and bearish territory. Darkfost noted that the score failed to reach this level even in May, when Bitcoin broke above $82,000.

“This is the first time the Bitcoin Bull Score has moved back into bullish territory (≥60) since October 2025,” Darkfost stated in a Friday report.

The metric tracks 10 indicators to assess the market’s current regime. Six of those indicators have now turned green, including demand growth, stablecoin liquidity and the trader realized price. The analyst noted that during previous bull phases, the Bull Score Index typically remained above 60 for most of the cycle before eventually falling back into bearish territory.

“If this indicator manages to hold at this level and keeps climbing, a new bull cycle could well be starting,” he wrote.

Bitcoin's MVRV delivers first powerful signal

Meanwhile, CryptoQuant contributor Crypto Dan pointed to Bitcoin’s MVRV indicator, which compares its market value with its realized value.

The analyst noted that the MVRV is now showing a sharp vertical rise, a movement that has historically appeared as Bitcoin’s previous downcycles came to an end.

“This signal is the very movement that appeared as the bottom range came to an end in every past downcycle,” Crypto Dan wrote.

The development suggests that Bitcoin could be moving closer to a transition from a declining market into an upward phase.

Short squeeze drives Bitcoin’s 27% rebound

While the analysts focused on market indicators, CryptoQuant contributor Boris attributed Bitcoin’s latest surge largely to derivatives activity.

Bitcoin climbed from around $63,000 to $77,000, gaining roughly 27% in the past 7 days. Boris said the move was driven mainly by a chain reaction of short liquidations on Binance futures rather than spot buying.

As short positions were liquidated, the forced buying created additional upward pressure and helped produce a “practically uninterrupted vertical surge.” Binance data showed a short squeeze reading of 6.94 during the latest move, compared with 5.38 in November 2024.

Boris shared that the reading represents the strongest short squeeze pressure on Binance since late 2024, with extreme short positioning acting as the primary trigger for Bitcoin’s rapid advance.

CryptoQuant Head of Research Julio Moreno highlighted that Bitcoin’s surge could hit $83,000, a level that matches the top crypto’s 365-day moving average and represents a key technical target. However, he warned that Bitcoin’s rapid 20%+ advance could leave the market overheated and vulnerable to a pullback as traders take profits.

“Indeed, the Traders’ On-chain unrealized profit/loss margin is approaching the highest level since May, when Bitcoin peaked around $82K,” Moreno told FXStreet.

Bitcoin is trading at $77,370, up 6.4% in the past 24 hours at the time of writing.