Source: Talking about Li and other things
I remember that in an article in December 2022, we helped everyone sort out 10 Bitcoin indicators, and believed that at that time, we had entered the late stage of the bear market and it was also a good time to start fixed investment. As shown in the figure below.
Two years have passed unknowingly, and we have finally seen the long-awaited new round of bull market.
Although it is said that there is no bottom in a bear market and no top in a bull market, many people seem to like to try to find some answers to this question. So, with a research mentality, in this issue, we will simply share 15 reference indicators for escaping the top of Bitcoin.
1st Indicator: Rainbow Price Chart Indicator
As a long-term valuation tool for Bitcoin, the rainbow chart indicator should be familiar to everyone, or at least you should have heard of it. This indicator uses a logarithmic growth curve to predict Bitcoin's potential price direction in the future, overlaying rainbow-colored bands on top of the logarithmic growth curve channel to highlight market sentiment for each rainbow color stage as Bitcoin's price moves. The suggested exit position can be chosen between the yellow and red areas. As shown in the figure below.
2nd Indicator: Terminal Price
Historically, this indicator has been quite effective in predicting the peaks of Bitcoin price cycles. For example, during the bull peak in November-December 2017, Bitcoin's price touched the red line, and again during the bull peak from March to May 2021, Bitcoin's price touched the red line. According to this indicator, we can sell whenever Bitcoin's price approaches or touches the red line again. Currently, the display position of the red line price is around $170,000. As shown in the figure below.
3rd Indicator: Stock-to-Flow Model (S2F Model)
Over time, the price of Bitcoin changes with the stock-to-flow ratio. When the price is above the S2F level, the divergence line changes from green to red. When the price is below the S2F line, the divergence line changes from red to green. Based on the current trend of this indicator, the first quarter of next year (2025) seems to be a favorable time to sell. As shown in the figure below.
4th Indicator: Pi Cycle Top Indicator
This indicator uses the 111DMA (111-day moving average) and 350DMA x 2 (twice the 350-day moving average) to identify the top of the market cycle. Historically, during the past three bull market cycles, when the 111DMA moved upward and crossed the 350DMA x 2, we saw it coincide with the Bitcoin price peak. Currently, the green line of this indicator (350DMA x 2) is $120,000, which suggests that Bitcoin may peak after surpassing $120,000 in this bull market. As shown in the figure below.
5th Indicator: The Puell Multiple
This indicator primarily highlights two important range areas for Bitcoin. When the Puell Multiple enters the green box area, it indicates a period of extremely low Bitcoin value. When the Puell Multiple enters the red box area, it indicates a period of extremely high Bitcoin value. We need to sell when the Puell Multiple approaches or enters the red area. However, considering the current market situation, the suggestion here is to consider selling in batches when this indicator index goes above 2, and to exit when it goes above 3. As shown in the figure below.
6th Indicator: Miner Revenue (Fees vs Rewards)
Historically, during previous bull markets, whenever Bitcoin prices began to peak, the percentage of Fees would rise significantly. As more new participants enter the market and generate more transactions through the network, the demand for Bitcoin naturally increases during bull markets. According to the current indicator, when the proportion of Miner Fees exceeds 30%, you can consider selling Bitcoin in batches. As shown in the figure below.
7th Indicator: MVRV Z-Score
This indicator is a measure of whether Bitcoin's value is undervalued or overvalued. Historically, since 2011, whenever the MVRV Z-score approaches or exceeds 7, it indicates that the market is entering a peak. As shown in the figure below.
8th Indicator: Net Unrealized Profit/Loss (NUPL)
This indicator is used to assess the total paper profit/loss of Bitcoin held by investors. Historically, whenever this indicator approaches or reaches 75%, it may be time for you to consider selling at the peak. As shown in the figure below.
9th Indicator: 2-Year MA Multiplier
This indicator uses a 2-Year MA (moving average) and the multiple of this moving average, i.e., 2-Year MA x 5, to predict Bitcoin's price. Historically, when Bitcoin's price approaches or exceeds the 2-Year MA x 5 (the red line on the chart), it will be the best time to sell Bitcoin. As shown in the figure below.
10th Indicator: 200 Week Moving Average Heatmap
This indicator uses a color heatmap based on the growth rate of the 200-week moving average and assigns a color to the price chart based on the monthly growth percentage of the 200-week moving average. Historically, when we see orange or red dots on the price chart, it indicates that the market is overheated and it's the best time to sell Bitcoin for profit. As shown in the figure below.
11th Indicator: The Golden Ratio Multiplier
This indicator uses the multiple of the 350-day moving average (350DMA) of Bitcoin prices to identify potential resistance areas for price fluctuations. Based on the current indicators, areas that exceed the green line and reach the red line represent a relatively good range for selling in batches. As shown in the figure below.
12th Indicator: RHODL Ratio
This indicator uses the ratio of realized value HODL waves. When the orange line approaches or reaches the red band area, it indicates that the market is overheated and suitable for taking profits in batches. As shown in the figure below.
13th Indicator: Coin Days Destroyed
This indicator shows when old, dormant Bitcoins suddenly awaken and are sent back to the market. When long-term holders start transferring, it often indicates they are about to sell for profit, so we see a significant spike in CDD before the market peaks. As shown in the figure below.
14th Indicator: Bitcoin Bull Run Index (CBBI)
This indicator is a comprehensive data metric that helps us understand the stage of the Bitcoin cycle by integrating 9 other indicators. A higher score indicates a potential top of the Bitcoin bull cycle. From the current displayed data of this indicator, when the value exceeds 80, you can start considering selling Bitcoin in batches. As shown in the figure below.
15th Indicator: Ahr999
This indicator was proposed by a Chinese netizen named Ahr999 in the (HODL Bitcoin) ebook. Currently, this accumulation expert has exited the scene, and all existing accounts with the same name online are not the real Ahr999. The calculation formula for this indicator is = (Bitcoin price / 200-day dollar-cost average) * (Bitcoin price / exponential growth valuation), where the exponential growth valuation is a fitting result of price and coin age.
This indicator is also known as the Bitcoin accumulation indicator and is relatively simple to use. When the index is below the green line (value 1.2), it indicates entering a dollar-cost averaging range. When the index is below the red line (value 0.45), it indicates entering a buy-the-dip range. Similarly, when the index exceeds the green line, it indicates that selling can be considered. Currently, this indicator seems less suitable for guiding peak exits and is more suitable for long-term dollar-cost averaging reference. As shown in the figure below.
In addition to the above indicators, if you enjoy studying candlestick charts, you can also combine weekly or monthly MACD, RSI, and other indicators for auxiliary reference. Moreover, all these cyclical indicators can not only be used to assist in guiding selling (topping) operations during bull markets but also apply to seizing accumulation opportunities during bear markets.
In summary, there are still quite a few indicators for Bitcoin at present. Although we shared 15 indicators, the focus here is not to use all indicators, but to select a few that you believe to be the most effective for long-term reference.
No single indicator is perfect, and when an indicator is being focused on by everyone, it may no longer be a perfect indicator. What you need is to find new fusion points from different indicators. Additionally, we must keep ourselves updated, such as considering changes in national policies regarding the crypto industry, global macroeconomic situations, and so on for comprehensive consideration and judgment.
At the same time, during this relatively long trading process, we also need to maintain sufficient patience and continuously improve our trading strategies and disciplines.
Of course, it is essential to remind again that all data indicators are also based on historical data extrapolations or model calculations and can only serve as auxiliary references. Your trading operations should also be based on your own risk preferences and position management situations. Moreover, the indicators we listed above are all cyclical indicators, which have limited guidance for short-term operations.
Note: The above content is merely personal views and analyses, intended for learning records and communication purposes, and does not constitute any investment advice. Any projects or websites mentioned in the article have no direct interests with the author. Please evaluate the safety of corresponding projects or websites on your own. Investment always carries risks; do not enter situations you do not understand or cannot afford to lose.
