Author: Ostium, Crypto Analyst
Compilation: Felix, PANews
This article will introduce 12 cycle determination tools and exit indicators, most of which are relatively unknown. Here are the details:
PI Cycle
The PI cycle top indicator has successfully captured the tops of the previous three cycles. This indicator uses a 111-day moving average (dMA) and 2 times the 350 dMA price. In the past 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 not far from 3.142.
It is expected that this time may be different, as the expected crossover price will exceed $400,000 (difficult to achieve), but it can be anticipated that after Bitcoin reaches the 2 times 350 dMA price (currently about $126,000), there will be a final excitement phase.
MVRV Z Score
Another on-chain indicator emphasized earlier 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 fair value.
This indicator uses the market value of Bitcoin (price x circulating supply) and the realized value (the average price of each Bitcoin's last movement x circulating supply), and calculates the Z-Score between them to identify extremes.
Historically, BTC/USD has formed cycle highs within weeks after this ratio peaks. It is expected that this round's cycle will see this indicator reach at least 4; if it exceeds this level, research into other exit indicators can begin.
A more interesting version of this indicator, which is less known, is the whale MVRV (holding 1,000 to 10,000 BTC), see below:
Source: https://chainexposed.com/AddressWhaleMVRV.html
VAPLI and Decay Oscillator
The Volatility Adjusted Power Law Index (VAPLI) indicator is based on the concept of power laws and is used to measure the deviation of Bitcoin prices from the fitted power law curve, adjusted for volatility to account for changes in market structure over time. Looking at the graph below, it can be seen that the period when this index pushes towards 100 and then turns and starts to decline coincides with the cycle peak. Currently, this number has once again broken through 100.
Data Source: https://www.bitcoingoodfiatbad.com/charts/power-law-volatility-adjusted-index
Similar to volatility adjusted power laws, the following decay oscillator is modeled by Sminston With. The peaks of this oscillator nearly locked in the tops of 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 gives a 95% chance of getting close to your desired exit position. Currently, this indicator is still below 60%, indicating that this market cycle is still in an upward phase.
Mayer Multiple
The Mayer Multiple is a multiple of the price trading at the 200 dMA. While the chart above is helpful, normalizing it, given that volatility decreases over time, is actually more useful. The following chart shows the adjusted Mayer Multiple. Currently, it is far from historical highs relative to the 200 dMA; in fact, it has not yet returned to the peak of March 2024. Looking forward to surpassing the peak of March 2024, moving towards the 0.9 area:
Data 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) to subtract realized value from market value. It is then divided by market value, with the formula being: (Market Value - Realized Value) / Market Value.
This chart provides a visual understanding of market sentiment and the current stage of the market cycle. 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 days of Bitcoin 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 very simple, as a reference area, hoping to ensure that positions are proportionally adjusted — now its price is $180,000. This does not mean waiting until $180,000 to exit any long exposure, but rather using it in conjunction with all other exit indicators. When looking for exit signals, more emphasis should 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 extent to which the price deviates from that multiple. Historically, peaks have exceeded 4.5 times the 4-Year MA, but when the multiple approaches 4, attention should be paid to all other exit indicators:
22 Day RSI
The 22-day RSI indicator is very useful, and of course, 2-week or monthly RSIs can also be used, but 22 days is especially clear for major volatility points. In fact, every time the 22-day RSI peaks above 90, the cycle peak forms within the next 22 days (excluding the peak on November 21).
The 22-day RSI of BTC can be referenced; when this indicator is above 90, positions can be exited within the subsequent 3-6 weeks:
Coinbase / Phantom / Moonshot app rankings
Currently, there is substantial supporting evidence related to the lifecycle of cryptocurrencies; Coinbase app store ranking first among 'All Apps' is a clear signal indicating a peak in the cycle.
Phantom and Moonshot can serve as potential signals. Phantom ranking first across all apps will be an undeniable exit indicator. Generally, Coinbase App Store ranking trends show peaks and troughs in the last few months of a cycle, and when it ranks first across all apps, a major top often occurs 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 on rankings such as the Coinbase app store. Bitcoindata21 also provides regular updates with sentiment analysis.
Search Trends
Google Trends can be used to determine market sentiment and understand what the public is interested in at any given moment, but most keywords searched 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, and other keywords.
TOP X Market Cap
This is a method of assessing market cycles that has been monitored since 2020 and has been very helpful in tracking the peaks of the mid-cycle in 2021. If the expectation is for long-term growth in cryptocurrency, then a comprehensive increase in market cap is expected. Regardless of the peak of the previous cycle's TOP 10, TOP 25, or TOP 100 tokens, this cycle will exceed it before the peak arrives.
For example, in the last cycle, to enter the top 100 before the peak in November 2021, a market cap of about $1.2 billion was required. Today, 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 outlook for total market cap, a conservative expectation is that before the cycle peak, the market cap of the top 100 should reach at least about $2 billion. Once this area is reached, there is no doubt that it should start looking for exit opportunities.
3-Month Annualized Basis
The 3-month annualized basis is just a quick way to understand derivatives market bubbles; however, it is more helpful in emphasizing when to cautiously reduce risk rather than completely exiting a spot portfolio when expecting a cycle peak. Historically, when the 3-month annualized basis exceeds 30%, things start to become dangerous. Because the degree of bubble in derivatives increases as it approaches the cycle peak (or even mid-cycle peak) rather than decreases.
