u.today
As per the estimations of a seasoned analyst, a reliable cycle top indicator is activated when three oscillators out of four are simultaneously at extremes.
Four cycle top indicators by Glassnode lead analyst
In his recent tweet, Checkmate shared with his 75,000 followers a list of four popular on-chain oscillators. Once three of them are at extreme points, it becomes obvious that the Bitcoin (BTC) market reached its top in an ongoing cycle.
#Bitcoin Confluence is your friend.
— _Checkɱate 🔑⚡🌋☢️🛢️ (@_Checkmatey_) March 4, 2023
This WIP tool seeks +/- 1-standard deviation extremes across four popular on-chain oscillators:
- 🟢MVRV Ratio
- 🟡Puell Multiple
- 🔵aSOPR
- 🔴Reserve Risk
Signal is designed to fire off when at least 3-of-4 of the signals are at an extreme. pic.twitter.com/uYljFFLgEN
This list includes the MVRV Ratio, i.e., the ratio of the BTC market capitalization to its realized capitalization, the value of the coin compared to its price when last moved. This oscillator displays how many holders are in profit right now.
Then, analysts need to track the Puell Multiple, which is calculated by dividing the daily USD-denominated issuance value of Bitcoin (BTC) by the 365-day moving average (MA) of the daily issuance value.
The Adjusted Spent Output Profit Ratio (aSOPR) demonstrates the degree of realized PnL for all Bitcoins (BTC) moved on-chain except for UTXOs with a lifespan of less than one hour. Thus, it analyzes only meaningful on-chain activity and profits of BTC holders.
The last one is the Reserve Risk, an indicator of the sentiment of long-term Bitcoin (BTC) holders and their readiness to sell the coins at a given price.
To detect a cycle top, we need to register three out of four aforementioned indicators at their extremes.
Are we in bullish market?
This approach is dubbed a "WIP tool" and fluctuates between -1 and 1 for every given period of Bitcoin's (BTC) network lifespan, Checkmate added.
Since Q4, 2022, many researchers started discussing whether the bottom of Bitcoin's (BTC) price was in. For instance, analyst Charles Edwards was among the first to confirm the outbreak of a bullish rally.
As covered by U.Today previously, he indicated nine signals of a bull run start for Bitcoin (BTC) on Feb. 27, 2023.