Original | Odaily Planet Daily (@OdailyChina)
Author | Nan Zhi (@Assassin_Malvo)
In the previous article (Reviewing the market data of the past 4 years, what stage of the bull market are we in?), we derived from four years of market and price data starting in 2020 that rates, active buy transaction volume, and total transaction volume are effective leading indicators of the market. However, these three indicators give two completely opposite conclusions. The rate suggests that the current market has just entered a slight FOMO phase from a calm period, but active buy transaction volume and total transaction volume have already reached historical highs, indicating the peak of the stage.
The author believes that the divergence in indicator conclusions is mainly caused by the rise of Bitcoin spot ETFs and 'micro-strategy-style' coin-holding, which are outside the 'traditional crypto circle.' The net inflow of these funds has driven the continuous rise in Bitcoin prices and trading volumes, while on the other hand, their trading is isolated from CEX such as Binance and has a completely different leveraged form, leading to a disconnection between rates and prices.
Therefore, the author aims to explore what stage we are ultimately in the bull market through other more general, intuitive, and historically longer-lasting indicators.
MVRV-Z Score
MVRV (Market Value to Realized Value Ratio) is an algorithm used to assess whether the market is in an overvalued or undervalued state, achieved by comparing Bitcoin's current market value to its realized value.
Here, market value refers to the circulating market value, while realized value refers to the total of the last moving prices of each Bitcoin. For example, if 100,000 Bitcoins last transferred three years ago at a price of $65,000, it would be calculated as 100,000 × $65,000, and so on to derive the total value. Dividing market value by realized value yields the MVRV.
The algorithm for the MVRV-Z Score is (Circulating Market Value - Realized Value) ÷ Standard Deviation of Circulating Market Value. This method excludes short-term price noise, making it more suitable for capturing extreme market sentiment.
According to coinglass, the current value of MVRV-Z is 3.2, close to the peak of November 2021, but still far from the peaks of the first half of 2021 and the end of 2017.
ahr 999 Index
The Bitcoin ahr 999 index is a parameter proposed by ahr 999 in 2018 to guide coin-holding, based on ahr 999's statistics for that year, where 8.5% of the time the index is less than 0.45, defined as the bottom-buying range; 46.3% of the time between 0.45 and 1.2, defined as the dollar-cost averaging range; and 29.3% of the time above 1.2, which is the stop investment waiting range.
According to coinglass, the current value of this indicator is 1.49, which is relatively close to the March peak of 1.75, but still quite far from the two peaks of 6 and 3.4 in 2021.
PlanB: Bitcoin will rise to $150,000 in December
PlanB and his Stock-to-Flow model (S2F) gained fame during the bull market from 2019 to the first half of 2021 for successfully predicting that Bitcoin would reach $55,000 at the beginning of 2021, but diverged in the second half of 2021 and completely failed in 2022.
As Bitcoin leads the entire market again, PlanB has started to return to the market. Yesterday, PlanB posted on the X platform, stating that according to his predictions about Bitcoin's price trends in the coming years released at the end of September, BTC has essentially achieved its first two goals: reaching $70,000 in October and $100,000 in November (actually $99,800 but close enough). The next goal for BTC is to reach $150,000 in December.
Rate-Cutting Cycle
In the article (Summarizing the 35-Year Cycle of US Interest Rates, Can the Rate Cut After 36 Days Trigger the Second Bull Market for Bitcoin?), the author summarizes the performance of the US stock market and gold during the five rate cuts in the past 35 years, concluding that whether or not to cut rates is not the fundamental reason for the market's rise or fall. The impact of rate cuts on future markets depends on the overall economic situation at the time, whether the rate cuts are proactively made to promote economic development or forced by black swan events. From the perspective of the US stock market, it is a tug of war between economic resilience and liquidity easing pricing.
To make a comparison reminiscent of the old proverb about seeking a sword in a boat, the current situation is closest to the rate-cutting cycle of 1989, when the United States experienced a seven-year expansion period and faced high inflation pressure in 1988-89, responding to inflation with extremely high interest rate hikes, with the peak rate approaching 10%. In the following three years, the US began a sustained rate-cutting cycle, reducing from 9.75% on February 24, 1989, to 3.00% on September 4, 1992.
According to the dot plot released in September, the Federal Reserve's interest rate is expected to drop from the current 4.75% by about 2% over the next two years. Historically, how have the trends been after rate cuts? It can be divided into two phases: 1989 and 1995. During the first three years of the rate-cutting cycle, the US stock market experienced continuous fluctuations. In 1992, the rate cuts stopped and were maintained for two years, and after a brief preventive rate hike in 1994, there were no significant rate adjustments, leading to a continuous bull market for US stocks. Therefore, from a macroeconomic perspective, we are still in the early to mid-stage.
Other classic indicators
Fear and Greed Index
Today's greed index is 76, a slight decline from its peak, with the recent peak being 94 on November 22, when the Bitcoin price was $95,829. This greed level exceeds those of November 2021 and March 2024 and is at the same level as the peak of 95 in February 2021.
200-Week Moving Average
Historically, Bitcoin's price typically bottoms out near the 200-week moving average, while significant deviations from this average indicate a peak. At the 2021 peak, the price of Bitcoin was about four times the 200-week average, while the current price is about twice that (96,500: 41,500), still at a relatively low point.
