Bull Market Essentials: A Look at 12 Cycle Tools and Exit Indicators

Author:Ostium , Crypto Analyst

Compiled by: Felix, PANews

This article will introduce 12 cycle identification tools and exit indicators, most of which are little known. The following are the content details:

PI cycle

The PI Cycle Top indicator has successfully captured the tops of the previous three cycles. This indicator uses the 111-day moving average (dMA) and 2x the 350 dMA price. Over the past three cycles, the top of the BTC/USD cycle was marked when the 111 dMA broke above the 2x 350 dMA. It is called the PI cycle top because 350/111 = 3.153, which is not far from 3.142.

Expectations may be different this time as the expected cross will be over $400,000 (difficult to achieve), but expect a final move after Bitcoin reaches the 2x 350 dMA level (currently around $126,000) excitement stage.

MVRV Z Score

Another on-chain metric highlighted previously is the MVRV Z-Score, which is a tool for assessing extreme bubble periods. The MVRV Z-Score can help identify where Bitcoin may be overvalued or undervalued to an extreme degree relative to fair value.

The metric takes Bitcoin’s market value (price x circulating supply) and real value (average price of each Bitcoin’s last move x circulating supply) and calculates a Z-Score between them, identifying extreme values.

Historically, BTC/USD has formed cycle highs within weeks of the ratio peaking. It is expected that this indicator will reach at least 4 in this cycle; if it is higher than this level, you can start studying other exit indicators.

A more interesting version of this indicator that is less well known is the MVRV of whales (holding 1000 to 10000 BTC), see the chart below:

source

VAPLI and Decay Oscillator

The Volatility Adjusted Power Law Index (VAPLI) indicator is built on the concept of power law and is used to measure the deviation of Bitcoin price from the fitted power law curve and is adjusted based on volatility to take into account changes in market structure over time. Looking at the chart below, you can see that the period when the index pushed towards 100 and then turned around and began to decline coincides with the top of the cycle. The number currently exceeds 100 again.

Data source

Similar to the volatility adjusted power law, the power law Decay Oscillator below is modeled by Sminston With. The peak of this oscillation pretty much locked in the top of the previous cycles for a few days, but obviously there's no way to really determine in real time where it's going to peak: but when the indicator gets above 90%, then look at other exit signals that are closer to what you want The probability of exiting the position is 95%. Currently, the indicator is still below 60%, indicating that this market cycle is still in the rising phase:

Mayer Multiple

The Mayer Multiple is the multiple of the 200 dMA at which the price trades. While the chart above is helpful, it's actually more helpful to normalize it given that volatility decreases over time. The chart below shows the adjusted Mayer Multiple indicator. It is currently far from its all-time high relative to the 200 dMA, in fact, not even back to the March 2024 high. Looking to surpass the March 2024 highs and head towards the 0.9 area:

Data source

NUPL

NUPL, or Net Unrealized Profit/Loss, uses market value and realized value (as highlighted in the MVRV Z Score section above), subtracting realized value from market value. Then divide by the market capitalization, the formula is: (market capitalization - realized market capitalization) / market capitalization.

This chart provides a visual representation of market sentiment and the stage of the market cycle it may currently be in. Historically, when 75% is approached or exceeded, the top of the cycle is not far away.

Terminal Price

Terminal Price is a tool created by analyst Checkmate. To calculate this metric, divide the number of days burned by the existing supply of Bitcoin and the time it has been in circulation. This is considered the "transfer price" and is multiplied by 21.

The way it is used is simply as a reference area and you want to make sure that the position is proportional - it is now priced at $180,000. This does not mean waiting until $180,000 to exit any long-term exposure, but is used in conjunction with all other exit indicators. When looking for exit signals, greater emphasis needs to be placed on the other on-chain indicators already discussed.

4 -year MA multiple

The 4-year MA multiple is very simple: draw the 4-year moving average and calculate how much the price deviates from the multiple. Historically, peaks have exceeded 4.5x the 4-year MA, but when the multiple approaches 4, you need to start paying attention to all other exit indicators:

22 -day RSI

The 22-day RSI indicator is very useful, and of course the 2-week or monthly RSI can be used as well, but the 22-day is particularly clear for major swing points. In fact, every time the 22-day RSI peaks above 90, a cycle peak develops over the subsequent 22 days (excluding the November 21 high).

You can refer to BTC's 22-day RSI. When this indicator is above 90, you can exit the position within the next 3-6 weeks:

Coinbase/Phantom/Moonshot App Ranking

Now, there is a lot of supporting evidence related to the cryptocurrency life cycle, and Coinbase App Store ranking is #1 in “All Apps”, which is a clear signal that we are at the peak time of the cycle.

Phantom and Moonshot can serve as potential signals. Phantom ranking #1 across all apps would be a no-brainer exit indicator. Typically Coinbase App Store ranking trends peak and trough in the last few months of the cycle, with a major top often occurring in less than 4 weeks when it ranks #1 across all apps. This indicator also needs to be used in conjunction with other indicators.

You can track it in real time using AppFigures , or you can follow bots like Coinbase App Store Rankings for daily updates. Bitcoindata21 also provides regular updates with sentiment analysis.

Search trends

It's possible to use Google Search Trends to determine market sentiment and get a sense of 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 actually get some signals. For example: BINANCE LOGIN, CHEAPEST CRYPTO, CRYPTO APP, COINMARKETCAP, BUY CRYPTO, CRYPTO PRICES and other keywords.

‍TOP X market value

This is a method of assessing market cycles that has been monitored since 2020 and will be very helpful in tracking the mid-cycle peak in 2021. If the expectation is long-term growth for cryptocurrencies, then market caps are expected to grow across the board. No matter what the peak of the TOP 10, TOP 25 or TOP 100 tokens in the previous cycle was, this cycle will be surpassed before the peak arrives.

For example, in the last cycle, to enter the top 100 at the peak in November 2021, a market capitalization of approximately US$1.2 billion was required. Today, to enter the top 100 of Coinmarketcap, a market capitalization of $1.25 billion is required. It has now slightly exceeded the peak of the previous cycle. Based on the view of total market capitalization, a conservative expectation is that the top 100 should have a market capitalization of at least about $2 billion before the peak of the cycle. Once you reach this zone, you should undoubtedly start looking for exit opportunities.

3 -month annualized basis

The 3-month annualized basis is just a quick way to understand bubbles in the derivatives market, but it's more useful in highlighting when it's prudent to reduce risk rather than exit a cash portfolio entirely in anticipation of a cycle peak. Still, historically, things start to get dangerous when the 3-month annualized basis exceeds 30%. Because the degree of bubbles in derivatives increases rather than decreases as we approach cycle peaks (or even mid-term peaks).