Author: Nanzi, Odaily Planet Daily
In the previous article "Reviewing the market data of the past 4 years, which stage of the bull market are we in?", we found that funding rate, active buy trading volume, and total trading volume are leading indicators of the market trend, but these three indicators gave two completely opposite conclusions. The funding rate indicates that the current market has just entered a slightly FOMO stage from a calm period, but the active buy trading volume and total trading volume have hit historical highs, suggesting a stage top.
The author believes that the divergence of the indicator conclusions is mainly due to the prevalence of Bit currency spot ETFs and "micro-strategy-style" hoarding, which have led to a net inflow of funds outside the "traditional crypto circle", driving the continuous rise of Bit currency price and trading volume. On the other hand, their trading is isolated from exchanges like CEX and the leverage form is completely different, leading to a decoupling of the funding rate and price.
Therefore, the author intends to explore what stage of the bull market we are in through other more universal, intuitive, and longer-historical indicators.
MVRV-Z Score
MVRV (Market Value to Realized Value Ratio) is an algorithm used to assess whether the market is in an overvalued or undervalued state. It achieves this by comparing the current market value and realized value of Bit currency.
The market value refers to the circulating market value, and the realized value refers to the sum of the last moving price of each Bit currency. For example, if 100,000 Bit currencies were last transferred three years ago at a price of $65,000, it would be recorded as 100,000 × $65,000, and so on to calculate the total value. The MVRV can be obtained by dividing the market value by the realized value.
The MVRV-Z score algorithm is (circulating market value - realized value) ÷ circulating market value standard deviation, which excludes short-term price noise and is more suitable for capturing extreme market sentiment.
According to coinglass, the current MVRV-Z value is 3.2, close to the peak in November 2021, but still far from the highs in the first half of 2021 and the end of 2017.
ahr 999 Index
The Bit currency ahr 999 index is a parameter proposed by ahr 999 in 2018 to guide hoarding. According to ahr 999's statistics that year, the index was less than 0.45 for 8.5% of the time, defined as the buy the dips interval; 46.3% of the time it was between 0.45 and 1.2, defined as the DCA interval; and 29.3% of the time it was above 1.2, which is the stop investment and wait interval.
According to coinglass, the current indicator value is 1.49, relatively close to the 1.75 high point in March this year, but still relatively far from the two peaks of 6 and 3.4 in 2021.
PlanB: Bit currency will rise to $150,000 in December
PlanB and his Stock-to-Flow model (S2F) were deified during the bull market from 2019 to the first half of 2021, as they successfully predicted that Bit currency would reach $55,000 at the beginning of 2021, but they went off track in the second half of 2021 and completely failed in 2022.
As Bit currency is leading the market again, PlanB is returning to the market. Yesterday, PlanB posted on the X platform that according to his speculation on the market trend of Bit currency in the next few years released at the end of September, BTC has basically achieved the first two targets, i.e., rising to $70,000 in October and $100,000 (actually $99,800 but close enough) in November, and the next target is to rise to $150,000 in December.
Interest Rate Cutting Cycle
In the article "Summarizing the 35-year US interest rate cycle rules, can the interest rate cut 36 days later ignite the second round of the Bit currency bull market?", the author summarized the performance of US stocks and gold in the 5 interest rate cuts in the past 35 years, and found that whether or not to cut interest rates is not the fundamental reason for the rise and fall of the market, and the impact of interest rate cuts on the future market depends on the overall economic situation at that time, whether it is a proactive interest rate cut to promote economic development or a forced interest rate cut due to a black swan event, from the perspective of US stocks, it is a tug-of-war between economic resilience and liquidity easing pricing.
If we were to make a comparison, the current cycle is most similar to the interest rate cut cycle in 1989, when the US experienced a seven-year expansion period and faced high inflationary pressure in 88-89, using super-high interest rate hikes to deal with inflation, with the highest interest rate reaching close to 10%. Then the US began a sustained interest rate cut for three years, from 9.75% on February 24, 1989 to 3.00% on September 4, 1992.
According to the dot plot released in September, the Fed's interest rate is expected to decrease by about 2% in two years from the current 4.75%. How did the market perform historically after interest rate cuts? It can be divided into two stages, 1989 and 1995. In the first three years of the interest rate cut cycle, US stocks continued to fluctuate, and in 1992 the interest rate cut stopped and was maintained for two years, with a brief preventive rate hike in 94, and no more major interest rate adjustments thereafter, and then a continuous bull market in US stocks began. Therefore, from a macroeconomic perspective, we are still in the early to mid-stage.
Other Classic Indicators
Fear and Greed Index
The Greed Index today is 76, down slightly from the peak, with the recent high point being 94 on November 22, when the Bit currency price was $95,829. This greed value exceeded the peaks in November 2021 and March 2024, and is at the same level as the peak of 95 in February 2021.
200-Week Moving Average
Historically, the Bit currency price usually bottoms out around the 200-week moving average, and a significant deviation from this average line suggests a top. At the 2021 peak, the Bit currency price was about 4 times the 200-week average, while currently it is about twice (96,500 : 41,500), still at a relatively low point.
