Question marks have arisen as to when the bullish cycle of Bitcoin (BTC), which has been running from record to record, will end.
The leading crypto Bitcoin continues to rise under the influence of Donald Trump and spot BTC ETFs traded in the US. BTC gained momentum after Trump's media company acquired the crypto exchange Bakkt. The BTC price broke a record by reaching $93,905 the other day.
As the bull cycle continues in the crypto market, with new investors joining day by day, investors have begun to wonder when a potential drop will come.
On-chain data platform CryptoQuant has shared five indicators to follow to understand whether the BTC price has peaked (the end of a bullish cycle).
It is worth remembering that the metrics in question will not provide definitive results and that they should not be used as a sole indicator.
MVRV Ratio
The MVRV Ratio, calculated by dividing Bitcoin's market value by its realized value (cost), has become one of the metrics to be followed to understand whether the bullish cycle will end.
CryptoQuant emphasized that if the MVRV Ratio is above 3.7, the BTC price will reach the highest level it can reach and that point will be the end of the cycle. Data shows that the MVRV Ratio is at 2.67 levels.
In February 2021, when Bitcoin reached a historic peak of $60,000, the MVRV Ratio rose to 7 levels.
Fear and Greed Index
According to CryptoQuant’s report, the next indicator to watch is the Fear & Greed Index, which measures market sentiment.
CryptoQuant said that BTC will reach the end of its bullish cycle when the index score reaches 80 out of a total of 100. The report emphasized that the index in question will not mean anything on its own.
The index has been running above 80 percent since November 12. The Fear and Greed Index, which reached 90 levels on November 19, reached its highest level since February 2021.
New money inflows
In CryptoQuant’s report, the third peak prediction indicator was new money inflows. According to the report, Bitcoin price may have reached its peak if new money inflows into the crypto market decrease. The decrease in the flow of money in question will cause the bullish cycle to stop and eventually pull back.
CryptoQuant noted that BTC’s realized value growth chart is an ideal tool for tracking how much money is flowing into the market. The report emphasized that new money inflows are still at higher levels.
Days Destroyed indicator
Another indicator included in the report was the “Coin Days Destroyed” indicator. The indicator, which evaluates whether long-term BTC holders are actively selling, examines the status of BTCs that have been inactive for a long time.
If the indicator rises above 15 to 20 million, the BTC price may experience a short-term decline. According to CryptoQuant, the data in question is currently trading at 15.1 million levels.
Inter-Exchange Flow indicator
The final indicator included in the report is the Inter-Exchange Flow (IFP) indicator, which tracks the movement of Bitcoin into and out of derivatives exchanges. The indicator assesses whether traders are using BTC as collateral.
CryptoQuant emphasized that the IFP is still forming a bullish structure and traders are using BTC as collateral in futures. According to the data, BTC continues to move to derivatives exchanges.
BTC’s IFP is currently hovering around 730,000. CryptoQuant reported that in the previous bull cycle, the IFP reached 1 million and then dropped to 200,000. BTC reached its peak when the IFP was around 1 million.
Stay tuned.