- Some Bitcoin indicators and metrics are better than others at figuring out if the top is in.
- Neither you nor I will catch the exact top, that is a fool’s errand- be prepared to leave some profits on the table.
Bitcoin [BTC] was inching towards its all-time high once more after facing rejection at the $69k level on the 5th of March. Whales were buying the dip and the daily miner fee was at the highest it has been since December 2021.
AMBCrypto reported that we are in the middle of a bull run based on these metrics. Once Bitcoin climbs into price discovery territory, how will the average investor know when to cash out?
Round number targets are not your friend
Some investors might have set plans for themselves, something along the lines of “if Bitcoin reaches $150k, I will sell all my BTC holdings”. It might be any other crypto asset, targeting a round number of $1, $10, or whatever else.
However, these targets are not grounded in data or technical analysis. While individuals might not have the time or the expertise to attempt to time the cycle tops, some indicators and metrics could help make this decision for you.
Source: BTC/USD on TradingView
Enter the Pi Cycle Top Indicator. It is a set of simple moving averages on the daily chart. The longer one is 350*2 period while the shorter one is 111 period. A crossover of the shorter above the longer one signals the top of the cycle was in.
The 2021, 2017, and the 2013 ones were all correctly predicted by this indicator. That is not to say that some profits would still be left behind. The 2021 rally saw the top signal at $64k prices while Bitcoin eventually reached $69k in November 2021.
One criticism of the indicator is that it gives no information about a possible bottom. Another is that it is not forward-looking.
The MVRV ratio above 3.7 on CryptoQuant has also been a decent top indicator since 2011, although the data shown above extends only till January 2016.
The 20th of February 2021 saw the reading at 3.9, with BTC prices at $57.5k at the highest on that day. Once again, it is not as close to the $69k top as investors might want, but still pretty close.
Not all metrics might fit the bill
The Puell Multiple shown above is another reliable indicator. A reading of 6 or above indicates a possible top, and 0.4 or below signals a potential bottom.
While the metric was great in helping time the 2023 bottom, it didn’t climb above 3 during the 2021 run. Therefore its accuracy is worse than the other two discussed earlier.
A reading of 3.7 on the MVRV, or a Pi Cycle Top signal, does not cause Bitcoin prices to plummet. It’s only a small part of the complex web that traders and investors must walk upon and make informed decisions at crucial junctions.
How much are 1, 10, or 100 BTC worth today?
AMBCrypto reported in December 2023 that another way to time the next Bitcoin cycle top is using the Rainbow chart. This one has even more detractors than the Pi Cycle indicator.
However, our analysis noted that according to the rainbow chart, the current bull run’s target is $192k for BTC in February 2025.