Bitcoin sentiment has fallen to its lowest level since 2023, but a "risk-on" environment may emerge to drive a bullish rally.

Bitcoin is entering one of its “least bullish” phases since January 2023. According to the Bitcoin “bull score index,” investor sentiment is at its lowest level in two years.

The bull score index of Bitcoin | Source: CryptoQuantWeekly newsletter – Crypto Weekly Report from CryptoQuant explains that the bull score index being below 40 for an extended period increases the likelihood of a bear market.

The bull score index remains above 40 throughout 2024, only dropping below this threshold in February 2025, as indicated in the chart above.

However, in the past 24 hours, the price of Bitcoin has shown signs of recovery compared to the significant losses in the US stock market. On April 3, Bitcoin closed the trading day with a green candle, while the S&P 500 lost up to 4.5%.

The S&P 500 and Dow Jones extended their declines on April 4, shedding an additional 3.87% and 3.44%, respectively, while Bitcoin remained close to breakeven.

Is Bitcoin nearing a risk acceptance phase?

Data from CryptoQuant indicates that the Value Days Destroyed (VDD) index of Bitcoin is currently around 0.72, suggesting that the price of Bitcoin is in a transitional phase.

Since 2023, such phases have occurred before the price is consolidated or accumulated before forming a bullish breakout.

The Value Days Destroyed index of Bitcoin | Source: CryptoQuantThe VDD of Bitcoin tracks the movement of coins held for the long term, and this index has signaled notable market trends since the end of 2024.

The index peaked at 2.27 on December 12, signaling strong profit-taking, and this movement is consistent with the highs seen in 2021 and 2017. However, the VDD dropped to 0.65 in April, reflecting a cooling-off period as the profit-taking subsided.

This opens up the possibility of a “risk-on” market for Bitcoin. Financially, a “risk-on” scenario occurs when investors hold higher-risk assets such as cryptocurrencies, often driven by optimism and reversals in trends.

In the context of the market being unstable due to the trade war driven by the United States, Bitcoin could unexpectedly benefit from these tense conditions.

Speaking about Bitcoin and the potential of the crypto market as a hedge against volatility compared to traditional markets, trader Jackis said:

“This is not a decline caused by crypto itself but a general decline due to risks, tariffs, and trade wars. While all of that is happening, it seems that the crypto space has gone through most of the downturns and has recently absorbed all the sell-offs quite well.”

Similarly, the Crypto Fear and Greed Index is falling into the “fear” zone with a score of 28 on April 4th. This index recorded an “extreme fear” score of 25 on April 3rd, indicating that the current price may present an attractive buying opportunity.

Crypto Fear and Greed Index | Source: alternative.meYou can check the BTC price here.

Disclaimer: This article is for informational purposes only and is not investment advice. Investors should conduct thorough research before making any decisions. We are not responsible for your investment decisions.

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Viet Cuong

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