Author: Ostium, Crypto Analyst
Compiled by: Felix, PANews
This article will introduce 12 cycle determination tools and exit indicators, most of which are little known. The following are the details:
PI Cycle
The PI Cycle top indicator has successfully captured the tops of the last three cycles. This indicator uses a 111-day moving average (dMA) and 2 times the 350 dMA price. In the last three cycles, when the 111 dMA broke above 2 times the 350 dMA, it marked the top of the BTC/USD cycle. It is called the PI Cycle top because 350/111 = 3.153, which is close to 3.142.
It is expected that this time may be different, as the anticipated crossing price will exceed $400,000 (difficult to achieve), but a final euphoric phase can be expected after Bitcoin reaches the level of 2 times the 350 dMA (currently around $126,000).
MVRV Z Score
Another on-chain indicator previously emphasized is the MVRV Z-Score, which is a tool for assessing extreme bubble periods. The MVRV Z-Score can help identify the position where Bitcoin may be extremely overvalued or undervalued relative to its fair value.
The indicator uses Bitcoin's market value (price x circulating supply) and realized value (average price of the last move of each Bitcoin x circulating supply), and calculates the Z-Score between them to identify extreme values.
Historically, the BTC/USD cycle high has formed within a few weeks after this ratio reaches its peak. It is expected that this cycle the indicator will reach at least 4; if it exceeds this level, it's time to start looking at other exit indicators.
A more interesting version of this indicator, little known, is the Whale MVRV (holding 1,000 to 10,000 BTC), as shown in the figure below:
Source: https://chainexposed.com/AddressWhaleMVRV.html
VAPLI and Decay Oscillator
The Volatility Adjusted Power Law Index (VAPLI) indicator is based on the power law concept, measuring the deviation of Bitcoin's price from the fitted power law curve, and adjusting for volatility to account for changes in market structure over time. Looking at the chart below, you can see that the periods when this index pushes towards 100 and then turns and starts to decline are consistent with cycle tops. This number has once again broken through 100.
Source: https://www.bitcoingoodfiatbad.com/charts/power-law-volatility-adjusted-index
Similar to the volatility-adjusted power law, the following Power Law Decay Channel Oscillator, modeled by Sminston With, has its peaks locking in the tops of the previous several cycles within a few days, but obviously there is no way to definitively determine in real-time where the peak will be reached: but when this indicator reaches over 90%, then look at other exit signals, the likelihood of being near your desired exit level is around 95%. Currently, this indicator is still below 60%, indicating that this market cycle is still in an uptrend:
Mayer Multiple
The Mayer Multiple is the multiple of the price trading at compared to the 200 dMA. While the charts above are helpful, actually standardizing it over time as volatility decreases is more helpful. The chart below shows the adjusted Mayer Multiple indicator. Currently, it is far from reaching its historical highs relative to the 200 dMA, in fact, it hasn't even returned to the March 2024 high yet. Expecting to surpass the March 2024 high and move towards the 0.9 area:
Source: https://www.tradingview.com/script/FFu4JD8k-Mikolaj-Zakrzowski-Adjusted-Mayer-Multiple/
NUPL
NUPL, or Net Unrealized Profit/Loss, uses market value and realized value (as emphasized in the MVRV Z Score section above), subtracting the realized value from the market value. It is then divided by the market cap, with the formula: (Market Cap - Realized Cap) / Market Cap.
This chart can provide a visual understanding of market sentiment and the current stage of the market cycle. Historically, when it approaches or exceeds 75%, the cycle top is not far away.
Terminal Price
The Terminal Price is a tool created by analyst Checkmate. To calculate this indicator, you need to divide the number of days Bitcoin has been destroyed by the current Bitcoin supply and its circulation time. This is seen as the "transfer price", and the transfer price is multiplied by 21.
The usage is simple, just as a reference area, hoping to ensure that positions are proportionally adjusted - now it's at $180,000. This doesn't mean waiting until $180,000 to exit any long-term exposure, but rather using it in conjunction with all the other exit indicators discussed. When looking for exit signals, more emphasis should be placed on the other on-chain indicators already discussed.
4 Year MA Multiple
The 4 Year MA Multiple is very simple: plot the 4-year moving average and calculate the degree of price deviation from this multiple. Historically, peaks have exceeded 4.5 times the 4-year MA, but when this multiple approaches 4, it's time to start paying attention to all other exit indicators:
22 Day RSI
The 22-day RSI indicator is very useful, and of course 2-week or monthly RSI can also be used, but 22 days is particularly clear for major turning points. In fact, each time the 22-day RSI reaches a peak above 90, the cycle peak has formed within the next 22 days (excluding the November 21 high).
You can reference the 22-day RSI of BTC, and when this indicator is above 90, you can start exiting positions within the next 3-6 weeks:
Coinbase / Phantom / Moonshot App Rankings
Now, there are many supporting evidence related to the cryptocurrency lifecycle, with the Coinbase app store ranking #1 in "All Apps" being a clear signal that the cycle peak time is approaching.
Phantom and Moonshot can serve as potential signals. Phantom ranking #1 in all apps would be an undoubted exit indicator. Typically, the Coinbase App Store ranking trend peaks and troughs in the last few months of the cycle, and when it ranks #1 in all apps, a major top often forms in less than 4 weeks. This indicator also needs to be used in conjunction with other indicators.
You can use AppFigures to track in real-time, or follow bots for daily updates on Coinbase app store rankings. Bitcoindata21 also provides periodic updates with sentiment analysis.
Search Trends
You can use Google Trends to determine market sentiment and understand what the public is interested in at any given time, but the keywords most people search for are very basic, such as "Bitcoin" or "cryptocurrency". You need to be more specific to really get some signals. For example: BINANCE LOGIN, CHEAPEST CRYPTO, CRYPTO APP, COINMARKETCAP, BUY CRYPTO, CRYPTO PRICES and so on.
TOP X Market Cap
This is a method of evaluating the market cycle that has been monitored since 2020, and it is very helpful in tracking the peak of the 2021 mid-cycle. If the expectation is for long-term growth in cryptocurrencies, then the market cap is expected to grow across the board. Regardless of the peak of the TOP 10, TOP 25 or TOP 100 tokens in the previous cycle, this cycle will surpass them before the peak arrives.
For example, in the previous cycle, to enter the top 100 at the November 2021 peak, a market cap of around $1.2 billion was required. Nowadays, to enter the top 100 on Coinmarketcap, a market cap of $1.25 billion is required. It has already slightly exceeded the peak of the previous cycle. Based on the outlook for total market cap, a conservative estimate is that the top 100 market cap should reach around $2 billion before the cycle peak. Once this area is reached, there should be no doubt that it is time to start looking for exit opportunities.
3-Month Annualized Basis
The 3-month annualized basis is just a quick way to understand the bubble in the derivatives market, but it is more helpful in emphasizing when it is prudent to reduce risk cautiously, rather than completely exiting the spot portfolio at the expected cycle peak. Nevertheless, historically, when the 3-month annualized basis exceeds 30%, the situation starts to become dangerous. This is because the bubble in derivatives tends to increase as the cycle peak (or even the mid-term peak) approaches, rather than decrease.
