I just saw CryptoQuant's latest on-chain data, and the Bitcoin Bull Market Index has reached 50 points, breaking out of the bear market range and entering a neutral state for the first time. This news has caused the market to cheer and rejoice, as if the bearish cloud has finally lifted. But upon closer inspection, the situation might not be that optimistic.

Bitcoin has rebounded from $60k to now $81.6k, and the increase is indeed significant. The Bull Market Index, a comprehensive on-chain indicator that combines 10 data points, indicates a structural bear market below 40 points, and only above 60 points does it qualify as a true bull market. Currently stuck at 50, meaning the market is experiencing a tug-of-war between bulls and bears and hasn't established a clear direction.

A detail worth noting is that the same situation occurred in March 2022, when the Bull Market Index also rose to 50 points, and the price rebounded from $35k to $48k. What happened afterward? The price was halved in the following months, dropping below $20k, and the bear market deepened. So, is this rebound a true counterattack or just a trap to lure more buyers? That’s really questionable.

Looking at the derivatives market performance provides even more clues. The implied volatility is only around 40%, and traders are willing to spend more on put options for hedging, indicating a lack of confidence in further upward movement. The options term structure is also only slightly upward sloping, reflecting that the market is more betting on range-bound oscillation rather than a sustained surge.

Therefore, although the Bull Market Index returning to the neutral zone is a positive signal and the fundamentals are recovering, the lack of confidence in the derivatives market warrants caution. Unless the index can hold above 60 points, the true bull market threshold, how far this rebound can go remains uncertain. The next few weeks will be critical.