Important takeouts:
Bitcoin’s top market cycle is notoriously difficult in the age of trembling, but combining technical and behavioral indicators can provide a powerful signal.
MVRV-Z scores, PI cycle top indicators, trade volume trends, Puell Multiple, and Exchange inflows accurately predict Bitcoin’s top price cycle.
Bitcoin (BTC) may be nearing the final stages of the current market cycle. This is a sharp fix following a dramatic final rally, and ultimately a bear market. For many, this is the much-anticipated climax of the past four years, with key players preparing accordingly.
Since the second half of 2024, the accumulation of Bitcoin Dilla has skyrocketed. GlassNode data shows that the number of addresses with over 100 BTC has increased by almost 14%, reaching 18,200, a level not seen since 2017.
However, riding a rally is notoriously more difficult than it looks, and knowing when to take the exit is notoriously difficult. The temptation of higher prices fuels FOMO and encourages investors to buy the top.
So, how can traders and investors find the top before the market enters a recession?
Bitcoin Cycle Top Markers
Several technical and on-chain indicators have been historically reliable when Bitcoin is approaching peak, including MVRV (value of realised value from market value) Z-score, PI cycle top, and trading volume trends.
The MVRV-Z score compares the market value of Bitcoin with its realised value and adjusts the volatility. A high Z-score suggests that Bitcoin is significantly overvalued compared to its historical cost base. If this indicator is at a historic high, there is likely to be a subsequent downward trend in Bitcoin prices.
PI Cycle Top uses moving averages to track BTC price dynamics. Overheating is indicated when the 111-day moving average (111-SMA) is more than twice the 350-day average (350-SMAX2). In other words, when short-term trends catch up with their long-term trajectories, they are at the top of the market.
Historically, all previous Bitcoin Bull runs began with a noticeable spike in MVRV Z-scores, ending 111-SMA beyond the long-term trend.
Furthermore, a decline in trading volume during price increases can be a warning sign, often weakening momentum and indicating a possible turnaround. Balanced Volumes (OBVs) that register cumulative volume flows are a valuable metric for tracking this process. When obv is no different to price action, it is often an early reversal signal.
The second round of the 2021 Bull Run was a great example. The BTC price had reached a high of $68,000 (compared to a previous all-time high of $63,170), but the volume moved in a different direction, dropping from 710,000 BTC to 628,000 BTC. This creates a bearish divergence between price and volume, suggesting that market participants support fewer rallies.
Profitable indicators
As the market cycle approaches the top, long-term holders and Bitcoin miners often begin locking in profits. Some valuable metrics that can be tracked are the multiple and exchange flows in Puer.
Puell Multiple Indicator looks at miners’ revenues compared to the 365-day average. Higher measurements indicate that miners may be proactive in selling, often seen near the top of the market.
As investors prepare to sell coins, a large influx into exchanges is usually a sign of circulation.
Individually, these indicators may mark various changes in market trends. When combined, they often align with the cycle top.
Related: Sorry Bears – Bitcoin Analysis rejects BTC price double top of $107,000
15% rule
Observations of historical price activities may also be helpful. Crypto Market analyst Cole Garner shared an exit playbook based on whales’ behavior. His roadmap includes three steps.
A sense of happiness. Bitcoin travels vertically for several weeks and uses a large amount of candles worth over $10,000 each day.
Whiplash. Bitcoin experiences the sharpest correction of the Bull Cycle. The curved parabolic trendlines supporting the rally are broken. This is a clear signal that it is likely that the top is in it. Meanwhile, altcoins and meme tokens can continue pumping a little more.
Self-satisfaction. Measures Bitcoin’s highest ever-growing 15%. That’s the selling zone. Orders for major exchanges often point to the sell order wall around this level.
According to Garner, the 15% (or 16%) rule works not only in crypto but also in traditional markets.
Especially in a changing macro environment, it is not possible to determine the exact moment at which a single indicator ends. However, when multiple signals are aligned, it becomes difficult to ignore. The final leg of the Bitcoin Bull Market is thrilling, but knowing when the music will stop is the key to locking up profits.
This article is for general informational purposes and is not intended to be considered legal or investment advice, and should not be done. The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or express Cointregraph’s views and opinions.
