Crypto Analysis | Pi Cycle Top Indicator for Bitcoin just crossed - Bullmarket over?!

tobetada (70)in #bitcoin • 3 years ago

Good day Hiveians!

Join me in analyzing the crypto markets!

Let's have a look at one of the most famous indicators for bitcoin which has so far always coincided with the top of a bitcoin bull cycle.

Although this sounds dramatic, considering that the indicator just crossed, let's have a look here at what this could actually entail.

What is the Pi Cycle Top indicator?

It is created by using

the 111 day moving average (111DMA) and a newly created multiple of the 350 day moving average, the 350DMA x 2.[...] When the 111DMA moves up and crosses the 350DMA x 2 we see that it coincides with the price of Bitcoin peaking. It is also interesting to note that 350 / 111 is 3.153, which is very close to Pi = 3.142.

Hence the name "Pi".

In the chart we can see that it so far has coincided with price peaks to a remarkably high degree:

So with the indicator crossing yesterday, does this mean that the bull cycle is already over?

The short answer to this is in my opinion "no". But let's look at some reasons for why this might be the case.

1

This indicator was retrofitted and has so far never actually predicted the top of a cycle. Furthermore, as you can see in 2013, it crossed already once before the actual top of that cycle in 2014. This could also be the case for the current cycle which many expect to top out at the end of this year or perhaps early next year.

2

The logarithmic trend chart for bitcoin predicts a minimum price of 100k for this cycle.

3

The RSI (relative strength index) has previously reached at least 96 (on the monthly chart) when the cycle topped. Currently we are sitting at 92. You might also see that the peak was always defined by two tops on this indicator. Since we haven't even reached one top, it is relatively safe to say that this bull cycle is not over yet.

Conclusion

While the Pi Cycle indicator crossed yesterday, other indicators and also market sentiment (when factoring in that institutions are just getting involved with bitcoin) strongly support the argument that the cycle is not yet over. And who knows, maybe with mainstream adoption this cycle might look even more different than previous ones?

As a general reminder: Please keep in mind that none of this is official investment advice! Crypto trading entails a great deal of risk; never spend money that you can't afford to lose!