Article reprinted from: Felix
Author: Ostium, Crypto Analyst
Translated by: Felix, PANews
This article will introduce 12 cycle determination tools and exit indicators, most of which are not well-known. Below are the 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 price of the 350 dMA. In the past three cycles, when the 111 dMA breaks above twice the 350 dMA, it marks 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 expected cross price will exceed $400,000 (difficult to achieve), but one can expect the last excitement phase will occur after Bitcoin reaches twice the 350 dMA (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 when Bitcoin may be overvalued or undervalued to an extreme degree relative to its fair value.
This indicator uses Bitcoin's market value (price x circulating supply) and actual value (average price of the last movement 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 a few weeks after this ratio peaked. It is expected that this cycle, this indicator will reach at least 4; if it exceeds this level, one can begin to study other exit indicators.
A more interesting version of this indicator, which is not well-known, is the Whale MVRV (holding 1000 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 power law concept and is used to measure the deviation of Bitcoin prices from fitted power law curves, adjusted for volatility to account for changes in market structure over time. Looking at the chart below, periods when the index pushes towards 100 and then turns down coincide with cycle tops. Currently, this number has once again broken through 100.
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Similar to the volatility-adjusted power law, the following power law decay oscillator (Decay Oscillator) is modeled by Sminston With. The peaks of this oscillator almost lock in the tops of the previous cycles within days, but there is obviously no real-time way to determine exactly where the peak will be: however, when the indicator reaches above 90%, then looking at other exit signals, the likelihood of being close to your desired exit position is 95%. Currently, this indicator is still below 60%, indicating that this market cycle is still in an upward phase.
Mayer Multiple
The Mayer Multiple is the multiple of the 200-day moving average (dMA) at the time of price trading. While the chart above is helpful, normalizing it is actually more useful, considering that volatility decreases over time. The chart below shows the adjusted Mayer Multiple indicator. It is still far from the historical highs relative to the 200 dMA; in fact, it hasn't even returned to the peak from March 2024. Looking forward to surpassing the March 2024 peak 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 previous MVRV Z Score section), subtracting realized value from market value. Then it is divided by market cap, with the formula: (Market Cap - Realized Market Cap) / Market Cap.
This chart provides an intuitive understanding of market sentiment and the current market cycle phase it may 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, you need to divide the number of days Bitcoin is destroyed by the existing Bitcoin supply and its circulation time. This is considered the 'transfer price', and the transfer price is multiplied by 21.
The usage is quite simple, as a reference area, hoping to ensure that positions are proportionally adjusted—currently, its price is $180,000. This does not mean waiting until $180,000 to exit any long exposure, but rather combining it with all other exit indicators. When looking for exit signals, more emphasis needs to be placed on other on-chain indicators that have already been 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 that multiple. Historically, peaks have exceeded 4.5 times the 4-year MA, but when that multiple approaches 4, all other exit indicators need to be monitored:
22-Day RSI
The 22-Day RSI indicator is very useful, and of course, the 2-week or monthly RSI can also be used, but the 22-day is particularly clear for major turning points. In fact, every time the 22-Day RSI peaks above 90, the cycle peak forms within the following 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 in the following 3-6 weeks:
Coinbase / Phantom / Moonshot application rankings
Currently, there is much supporting evidence related to the lifecycle of cryptocurrencies, and the Coinbase App Store ranking first in 'all applications' is a clear signal that we are at a peak time in the cycle.
Phantom and Moonshot can serve as potential signals. Phantom ranking first in all applications would 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 across 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 Coinbase app store rankings. Bitcoindata21 also provides regular updates with sentiment analysis.
Search trends
Google search trends can be used to determine market sentiment and understand what the public is interested in at any given moment, but most of the keywords people search for are very superficial, such as 'Bitcoin' or 'cryptocurrency.' You need to be more specific to actually get some signals. For example: keywords like BINANCE LOGIN, CHEAPEST CRYPTO, CRYPTO APP, COINMARKETCAP, BUY CRYPTO, CRYPTO PRICES, etc.
TOP X Market Cap
This is a method of assessing market cycles that has been monitored since 2020, which has been very helpful in tracking the peaks of the 2021 mid-cycle. If the expectation is for long-term growth in cryptocurrency, then overall growth in market cap is expected. Regardless of what the peaks are for the top 10, top 25, or top 100 tokens in the last cycle, this cycle will surpass those peaks before reaching its own peak.
For example, in the last cycle, to enter the top 100 before the November 2021 peak, a market cap of about $1.2 billion was needed. Nowadays, to enter the top 100 of Coinmarketcap, a market cap of $1.25 billion is needed. It has already slightly exceeded the peak of the previous cycle. Based on the 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 region is reached, one should undoubtedly start looking for exit opportunities.
3-Month Annualized Basis
The 3-month annualized basis is just a quick way to understand the derivatives market bubble; however, it is more helpful in emphasizing when it is time to cautiously reduce risk, rather than completely exiting the spot portfolio when expecting a cycle peak. Nonetheless, historically, when the 3-month annualized basis exceeds 30%, things start to get dangerous. Because the degree of bubble in derivatives increases as it approaches the cycle peak (even mid-cycle peak) rather than decreases.
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Further reading: Viewpoint: BTC's last mega cycle: BTC's value and price theory
