Bitcoin has entered a 'bullish cooldown' phase, signaling a pause in its uptrend: CryptoQuant

Bitcoin is showing signs of short-term consolidation or mild downside risk after reaching an all-time high of over $123,000 last month, according to onchain analytics firm CryptoQuant.

"Bitcoin has entered a bullish cooldown period, as the Bull Score Index declined from 80 to 60. While conditions remain positive, momentum has softened," CryptoQuant said in a report shared with The Block on Thursday.

CryptoQuant's Bull Score Index gauges the strength of the bitcoin market based on various on-chain indicators. Scores closer to 100 suggest strong buying momentum and bullish sentiment, while scores near zero indicate heavier selling pressure and negative outlooks.

At its current level of 60, the index still points to a broadly bullish regime, but with fading momentum. CryptoQuant said the dip in the index reflects both profit-taking after bitcoin's recent all-time high rally and a seasonal slowdown in trading activity during the summer.

"If Bitcoin’s price weakens further, this indicator could dip into negative territory, dragging the Bull Score Index below 40 — a shift that would formally signal bearish market conditions for the first time since April 2023," the firm noted.

What’s driving BTC's cooldown?

The fading momentum is being confirmed by multiple onchain indicators, CryptoQuant said.

Stablecoin liquidity has stalled, with the signal turning red — suggesting fresh capital inflows into the market are drying up. That's often an early sign of weakening buying power, the firm said. Tether (USDT) liquidity has grown by $9.6 billion over the past 60 days, but the pace has now slowed and fallen below trend.

At the same time, the onchain profit margin signal has also flipped red, CryptoQuant said, indicating that traders have recently realized significant gains and are no longer sitting on large unrealized profits — a classic sign of profit-taking.

New bullish catalysts may be needed to push the uptrend forward, the firm said. When asked what those catalysts might be, Julio Moreno, head of research at CryptoQuant, told The Block: "I think one important catalyst would be the Fed [The U.S. Federal Reserve) lowering interest rates in the next meeting (September), as this is something markets have been expecting."

Bitcoin is currently trading at around $116,340, up about 0.8% over the past 24 hours, according to The Block’s BTC price page.