Original Title: "Detailed Analysis of On-Chain Data: Perhaps You Need to Be Prepared to Escape the Top at Any Time"

Original Author: Mr. Beggar, On-Chain Data Analyst

TLDR

- This article will explain the basis for personal judgment of approaching the top from the perspective of on-chain data.

- Historical cycle peaks have "2 obvious distribution phases," and we are currently in the 2nd.

- Explaining the principle of market peaks: Completion of distribution of low-cost chips.

- Judgment that the top will appear in Q1.

- From the trader's perspective, explaining how to observe and dynamically adjust trading models.

1. The Underlying Principle of $BTC Market Top Formation

In every bear market phase, a large number of participants quietly accumulate chips, commonly known as "buying chips." As market sentiment reaches extreme lows, trading becomes quiet, and prices even fall below the average cost of long-term holders, it is the moment of bottoming out. Related reading resources: “On-Chain Data Academy (6): A New, Ark Participated Research on BTC's Magical Pricing Methodology (I)”

As the bull market starts and prices soar, these accumulated chips during the bear market will begin to be distributed continuously. When the distribution ends, the remaining chips in the market are held by participants who bought at "relatively high prices." Since these participants have a higher cost basis, if subsequent prices do not continue to rise, or even just maintain a wide range of fluctuations, their holding pressure will increase significantly, greatly raising the possibility of selling (compared to low-cost chips). Ultimately, once some high-priced chips start to panic sell, causing prices to drop, it will further trigger other high-cost chips to sell, creating a chain reaction that signals the end of the bull market.

Supplement: This is more evident in the $BTC market because, in the stock market, most companies have fundamental support, and stock prices are discounted to reflect the company's future cash flows into current value.

2. Cycle Peaks Always Accompanied by 2 Distributions

After understanding the principle of market peaks, readers can take a look at the chart below:

This is a top signal model designed by me based on on-chain data, which is also included in the weekly escape top report. It can be seen that before every cycle peak in history, there are always 2 signals.

Simply saying "because it has been like this before" is certainly not enough.

Logically, the fundamental reason for the occurrence of 2 distributions is:

· The 1st distribution represents the beginning of price surges, low-cost chips start to be sold.

· After the 1st distribution ends, prices begin to pull back, attracting a large amount of bottom-fishing buying.

· Market sentiment continues to push to extreme highs, with a large influx of buying, absorbing the remaining low-cost chips' distribution.

Due to the massive volume of low-cost chips, it usually cannot be completed in the 1st distribution, thus requiring another 2nd distribution through the massive buying brought in by bull market sentiment.

3. What Happened in This Bull Market Cycle?

You can take another look at the top model signal chart above and should find that this cycle has not yet produced a top signal.

However, while designing the model and studying market dynamics, I actually discovered some "clues." I have marked the area where I found clues with a translucent red mark on the right side of the chart. Next, I will explain to readers what warning signs I saw:

1. Realized Profit

The above chart is the Realized Profit chart, and I have similarly marked the "clue area" in translucent red.

It can be seen that in March and April 2024, when prices surged above 70k, there was a massive profit-taking (1st distribution). And at the end of last year, as prices broke through the 100k mark, a large amount of Realized Profit appeared again (2nd distribution). Therefore, from the perspective of Realized Profit, there have actually been 2 distributions.

2. AVIV Heatmap

The AVIV Heatmap is also included in the weekly report, mainly to observe whether the market is currently in an "overheated" phase. The AVIV value can temporarily be understood as a "more precise" MVRV; I will write a separate article in the future to explain the detailed principles.

As shown in the figure, I have also marked the "clue area," which is around March and April of this year. It can be seen that there was a period of "overheating" on the AVIV Heatmap at that time, which was then resolved after about half a year of wide fluctuations; and when prices broke through the 100k mark, AVIV showed overheating again.

Therefore, from the perspective of AVIV, it still indicates that we are currently in the "second distribution" phase.

3. Cointime Price Deviation Top Model

I wrote an article on December 27 last year explaining how I designed a top screening model using Cointime Price: link

The current state of the model is shown in the figure above. It can be seen that: every historical cyclical top corresponds to 2 obvious peaks (2 distributions), which corroborates the concept explained in the second paragraph of this article.

In this cycle, the first obvious peak (clue area) has already occurred, and we are currently at the second peak (which has already shown signs of turning).

4. Why Did the Top Signal Model in Figure 1 Not Trigger a Signal?

Through this article, I would like to explain this issue to readers. The top signal model contains many parameters, which are set subjectively by me. While researching and designing, I intentionally relaxed the triggering conditions for the signals, but it still did not trigger a signal during the distribution in March and April of last year.

However, this is not a big deal because, as a trader, it is impossible to rely on a single model or signal when analyzing the market. Especially for models that contain subjective parameters, I only use them as a reference, and in practical judgment, I will still analyze various indicators and data comprehensively.

Lastly, I would like to add: "This bull market is a great opportunity to test various top signals in the market, as most top signals are merely simplistic and have a high probability of failure."

5. Conclusion

This article is a bit lengthy, and I hope readers can understand. Thank you very much for patiently reading this far; I hope this article is helpful to you.

In addition to the content mentioned in this article, the previously written RUP top signal is also a highly representative indicator: “On-Chain Data Academy (10): Market Barometer RUPL (II) - The Strongest Top Signal & Detailed Analysis of Historical Cycle Tops”

Furthermore, after the subsequent price decline, I also urgently updated an article on the "Right-Side Escape Top Strategy" based on the content in the RUP top signal: https://x.com/market_beggar/status/1876836457555616173

If you agree with my viewpoint, then perhaps you should be prepared to escape the top at any time…

Original Link

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。

On-chain data detailed analysis: Perhaps you need to be prepared to escape the peak at any time.