Author: Ostium, Cryptocurrency Analyst
Compiled by: Felix, PANews
This article will introduce 12 cycle determination tools and exit indicators, most of which are relatively unknown. Here are the content details:
PI Cycle
The PI cycle top indicator has successfully captured the tops of the first three cycles. This indicator uses the 111-day moving average (dMA) and double the 350 dMA price. In the past three cycles, when the 111 dMA broke above double 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 not far from 3.142.
It is expected that this time may be different, as the anticipated crossover price will exceed $400,000 (which is difficult to achieve), but one can expect the final excitement phase to occur after Bitcoin reaches double the 350 dMA price (currently about $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 whether Bitcoin is significantly overvalued or undervalued relative to its fair value.
This indicator uses the market value of Bitcoin (price x circulating supply) and the realized value (the average price of the last move of each Bitcoin x circulating supply) and calculates the Z-Score between them to identify extreme values.
Historically, BTC/USD has formed cycle highs within weeks after this ratio peaked. It is expected that this cycle will see this indicator reach at least 4; if it exceeds this level, one can start researching other exit indicators.
A more interesting version of this indicator, which is relatively unknown, is the whale MVRV (holding 1,000 to 10,000 BTC), see below:
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VAPLI and Decay Oscillator
The Volatility Adjusted Power Law Index (VAPLI) indicator is based on the concept of power laws, used to measure the deviation of Bitcoin price from the fitted power law curve and adjusted for volatility to account for changes in market structure over time. Looking at the chart below, the period when this index pushed towards 100 and then turned to begin to decline aligns with the cycle top. Currently, this figure has once again broken through 100.
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Similar to the volatility-adjusted power law, the decay oscillator below is modeled by Sminston With. The peaks of this oscillator almost locked in the tops of the previous cycles within days, but there is clearly no way to truly determine in real-time where it will peak: however, when this indicator reaches above 90%, then looking at other exit signals, the possibility of being close to your desired exit position reaches 95%. Currently, this indicator is still below 60%, indicating that this market cycle is still in the upward phase:
Mayer Multiple
The Mayer Multiple is the multiple of the 200 dMA when trading at price. While the chart above is helpful, it is actually more useful to standardize it considering that volatility decreases over time. The chart below shows the adjusted Mayer Multiple indicator. It is still far from the historical high relative to the 200 dMA; in fact, it hasn't even returned to the peak of March 2024. Looking forward to surpassing the peak of March 2024 and moving towards the 0.9 area:
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NUPL
NUPL, or Net Unrealized Profit/Loss, uses market value and realized value (as emphasized in the MVRV Z Score section above), subtracting realized value from market value. Then divide by market cap, the formula is: (Market Cap - Realized Market Cap) / Market Cap.
This chart provides a visual understanding of market sentiment and what phase of the market cycle it may currently be in. Historically, when approaching or exceeding 75%, the cycle top is not far away.
Terminal Price
Terminal Price is a tool created by analyst Checkmate. To calculate this indicator, the number of days Bitcoin has been destroyed is divided by the existing Bitcoin supply and its circulation time. This is regarded as the 'transfer price,' and the transfer price is multiplied by 21.
The usage is very simple, it serves as a reference area, hoping to ensure that positions are proportionally adjusted—its current price is $180,000. This does not mean waiting until $180,000 to exit any long exposure, but rather used in conjunction with all other exit indicators. When looking for exit signals, more emphasis needs to be placed on other on-chain indicators that have been discussed.
4-year MA multiple
The 4-year MA multiple is very simple: draw the 4-year moving average and calculate the degree of price deviation from that multiple. Historically, peaks have exceeded 4.5 times the 4-year MA, but when this multiple approaches 4, it is necessary to start paying attention to all other exit indicators:
22-day RSI
The 22-day RSI indicator is very useful, and of course, you can also use the 2-week or monthly RSI, but the 22-day is particularly clear for major turning points. In fact, every time the 22-day RSI reaches a peak above 90, the cycle peak appears within the subsequent 22 days (excluding the peak on November 21).
You can refer to BTC's 22-day RSI; when this indicator is above 90, you can exit your position within the following 3-6 weeks:
Coinbase / Phantom / Moonshot App Rankings
Currently, there is a lot of supporting evidence related to the lifecycle of cryptocurrencies; the Coinbase App Store ranking is ranked first among 'all applications,' which is a clear signal indicating that we are at the peak time of the cycle.
Phantom and Moonshot can serve as potential signals. Phantom ranking first among all applications will undoubtedly be an exit indicator. Typically, the ranking trends in the Coinbase App Store peak and trough in the last few months of the cycle, and when it ranks first among all applications, a major top often appears in less than 4 weeks. This indicator also needs to be used in conjunction with other indicators.
Real-time tracking can be done using AppFigures, or you can follow bots for daily updates like the Coinbase App Store rankings. Bitcoindata21 also provides regular updates with sentiment analysis.
Search Trends
Google Search Trends can be used to gauge market sentiment and understand what the public is interested in at any given moment, but most people's search keywords are very superficial, 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, etc.
TOP X Market Cap
This is an evaluation method for market cycles monitored since 2020, which has been very helpful in tracking the peaks of the mid-2021 cycle. If the expectation is for long-term growth in cryptocurrency, then a comprehensive increase in market cap is anticipated. Regardless of what the peaks of the last cycle's TOP 10, TOP 25, or TOP 100 tokens were, this cycle will surpass them before the peak arrives.
For example, in the previous cycle, to enter the top 100 by November 2021 peak, a market cap of about $1.2 billion was needed. Now, to enter the top 100 on Coinmarketcap, a market cap of $1.25 billion is required. Currently, it has slightly exceeded the peak of the previous cycle. Based on the view of total market cap, a conservative expectation is that the market cap of the top 100 should reach at least about $2 billion before the cycle peak. Once this area is reached, there is no doubt that one should 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 to emphasize when to cautiously reduce risk, rather than completely exiting spot portfolios when the expected cycle peaks. Historically, when the 3-month annualized basis exceeds 30%, the situation begins to become dangerous. This is because the bubble level of derivatives increases as it approaches the cycle peak (or even the mid-cycle peak) rather than decreasing.
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Read more: Opinion: BTC's last mega cycle: The theory of BTC's value and price
