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Pi Cycle Bottom Is Flashing. Has Bitcoin (BTC) Bottomed Out?

Bitcoin

beincrypto.com 14 July 2022 14:24, UTC
  
Reading time: ~3 m

The pi cycle bottom has flashed. The goal of this recently-created indicator is to try to estimate the macro bottom of the Bitcoin price. So, are we approaching the end of the bear market?

At the end of last month, Be[In]Crypto presented an analysis, according to which the pi cycle bottom indicator was supposed to flash on July 9. However, this happened on July 13, when BTC fell to the $18,900 level.

However, a lower low at $17,622 was recorded on June 18 (blue circle). Moreover, another low occurred as recently as June 30 at $18,600 (dark blue circle). Therefore, Wednesday’s low is the third consecutive higher low on the BTC chart, and it was only at this level that the pi cycle bottom flashed.

BTC/USD 1D Bitstamp

Historical performance of pi cycle bottom

The pi cycle bottom is a simple indicator that is based on two long-term moving averages: 471-day SMA and 150-day EMA. The signal lights up when the latter falls below the former.

Historical analysis shows that so far such a crossing has happened three times in the history of BTC trading (blue line). The first time was on Jan 16 2015, just two days after the absolute bottom of the BTC price at $152.

The second time was on Dec 16 2018. This was a day after the absolute bottom of the previous bear market at $3,122. The third intersection occurred on Wednesday.

BTC/USD 1D Bitstamp

Compared to the two previous intersections, yesterday’s signal is heavily delayed. If the macro bottom was reached on June 18, the signal is 25 days late.

If, on the other hand, it shows similar accuracy to the previous two historical lows, we can expect a sharp capitulation on the BTC chart in the next two to three days.

Bullish Bitcoin interpretations

Despite the above inaccuracies and only two historical benchmarks for the pi cycle bottom indicator, many analysts have presented bullish interpretations of the signal. For example, @rovercrc compared all three historical instances of the signal and concluded that Bitcoin is in the process of forming a bottom.

Then, analyst @el_crypto_prof updated his monthly BTC chart, in which the price reached the falling support line he drew. In his opinion, Bitcoin has already performed an ABC correction and the bottom has already been reached.

On his prediction, we can see that the coming months will be a period of consolidation, which is expected to be followed by another bull market.

Finally, user @Kwontik put together two versions of the indicator: pi cycle top and pi cycle bottom, responsible for Bitcoin’s macro peaks and bottoms, respectively. What’s more, he drew – on a logarithmic chart – a rising support line, where the Bitcoin price is currently expected to hold.

However, it is worth noting that this line does not pass through the points indicated by the pi cycle bottom signal. He took it through two historical higher lows, which followed the absolute lows of previous bear markets.

For Be[in]Crypto’s latest Bitcoin (BTC) analysis, click here.


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