Author: Ostium, Crypto Analyst
Compiled by: 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 first 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 close to 3.142.
This time may be different, as the expected crossover price is anticipated to exceed $400,000 (which is difficult to achieve), but one can expect a final excitement phase after Bitcoin reaches 2 times the 350 dMA price (currently around $126,000).
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 helps identify positions where Bitcoin may be overvalued or undervalued to an extreme degree relative to its fair value.
This indicator uses Bitcoin's market value (price x circulating supply) and realized value (average price of the last movement of each Bitcoin x circulating supply) to calculate the Z-Score between them, identifying extreme values.
Historically, BTC/USD has formed cycle peaks within weeks after this ratio peaks. It is expected that this cycle, the indicator will reach at least 4; if it exceeds this level, one can start looking into other exit indicators.
A more interesting version of this indicator, which is less known, is the whale MVRV (holding 1,000 to 10,000 BTC), as shown in the image below:
VAPLI and Decay Oscillator
The Volatility Adjusted Power Law Index (VAPLI) indicator is based on the concept of power laws, used to measure the deviation of Bitcoin prices from a fitted power law curve, adjusted for volatility to account for changes in market structure over time. Looking at the chart below, the period when this index pushed towards 100 and then turned down aligns with cycle tops. Currently, this number has once again broken above 100.
Similar to the volatility-adjusted power law, the following power law decay oscillator is modeled by Sminston With. The peaks of this oscillator have almost locked in the tops of the previous cycles within days, but there is no real way to determine where it will peak in real-time: however, when this indicator reaches above 90%, and then looking at other exit signals, the likelihood of being close to your desired exit position is 95%. 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 is actually more useful considering that volatility decreases over time. The following chart shows the adjusted Mayer Multiple indicator. It is currently far from the historical peak relative to the 200 dMA, in fact, it hasn't even returned to the peak of March 2024. Looking forward to surpassing the March 2024 peak and moving towards the 0.9 region:
NUPL
NUPL, or Net Unrealized Profit/Loss, uses market value and realized value (as emphasized in the MVRV Z Score section above), subtracting realized value from market value. It is then divided by market value, with the formula: (market value - realized market value) / market value.
This chart provides an intuitive understanding of market sentiment and the current stage of the market cycle. Historically, when approaching or exceeding 75%, the cycle top is not far off.
Terminal Price
Terminal Price is a tool created by analyst Checkmate. To calculate this indicator, the number of days Bitcoin has been destroyed is divided by the existing Bitcoin supply and its circulation time. This is seen as the "transfer price," and the transfer price is multiplied by 21.
The usage is straightforward, serving as a reference area, hoping to ensure that positions are proportionally adjusted—currently, 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 degree of price deviation from that multiple. Historically, peaks have exceeded 4.5 times the 4-year MA, but when this multiple approaches 4, it is time to start paying attention 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 the 22-day is particularly clear for major turning points. In fact, every time the 22-day RSI peaks above 90, the cycle peak forms within the following 22 days (excluding the peak on November 21).
Referencing BTC's 22-day RSI, when this indicator is above 90, one can exit positions within the following 3-6 weeks:
Coinbase /Phantom / Moonshot App Rankings
Currently, there is substantial supporting evidence related to the cryptocurrency lifecycle, with the Coinbase app store ranking first among "All Apps," which is a clear signal indicating that we are at the peak time of the cycle.
Phantom and Moonshot can serve as potential signals. Phantom ranking first among all applications will undoubtedly be an exit indicator. Typically, the ranking trends in the Coinbase App Store peak and trough in the last few months of a cycle, and when it ranks first among all apps, a major top often appears in less than 4 weeks. This indicator also needs to be used in conjunction with other indicators.
You can use AppFigures for real-time tracking, or follow bots that provide daily updates on rankings like the Coinbase App Store. Bitcoindata21 also offers regular updates with sentiment analysis.
Search Trends
Google search trends can be used to determine market sentiment and understand what the public is interested in at any given moment, but most people search for very superficial keywords, such as "Bitcoin" or "cryptocurrency." You need to be more specific to really gain some signals. For example: keywords like BINANCE LOGIN, CHEAPEST CRYPTO, CRYPTO APP, COINMARKETCAP, BUY CRYPTO, CRYPTO PRICES, etc.
TOP X Market Capitalization
This is a method of assessing market cycles that has been monitored since 2020, and it has been very helpful in tracking the peaks of the mid-2021 cycle. If the expectation is for long-term growth in cryptocurrency, then a comprehensive increase in market capitalization is anticipated. Regardless of what the peaks of the previous cycle's TOP 10, TOP 25, or TOP 100 tokens were, this cycle will surpass those peaks before reaching its own.
For example, in the last cycle, to enter the top 100 by the peak in November 2021, a market cap of about $1.2 billion was needed. Today, to enter the top 100 on Coinmarketcap, a market cap of $1.25 billion is required. This has slightly exceeded the peak of the previous cycle. Based on the view of total market capitalization, a conservative expectation is that the market cap of the top 100 should reach at least about $2 billion before the peak of the cycle. Once this area is reached, there is no doubt that one should start looking for exit opportunities.
3-Month Annualized Basis
The 3-month annualized basis is just a quick way to understand the bubble in the derivatives market; however, it is more helpful in emphasizing when to cautiously reduce risk rather than completely exiting spot portfolios when a cycle peak is anticipated. Nevertheless, historically, when the 3-month annualized basis exceeds 30%, the situation starts to become dangerous. This is because the degree of the derivatives bubble increases as it approaches the cycle peak (or even the mid-cycle peak) rather than decreases.
Related reading: Opinion: The Last Mega Cycle of BTC: The Value and Price Theory of BTC
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