May 14, 2021

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BTC Pi Cycle Indicator Signals Overheated Bull Market

2 min read

The BTC Pi cycle top indicator has just flashed for the first time since the end of the 2017 bull run. 

The two displaced moving average (DMA) curves of this indicator crossed again and signaled a potential end to the BTC bull market.

Three weeks ago BeInCrypto reported on the impending intersection. Today we will analyze other factors to see if a bearish BTC scenario is probable.

BTC Pi cycle cross

Yesterday, BTC (BTC) reached its highest-ever weekly close slightly above $60,000. Today it reached a new high of $62,750 after a month of trading below $60,000.

However, the new all-time high might be dampered as the Pi cycle indicator has flashed. The Pi cycle is the intersection of the 350-day and 111-day DMAs. This signal has historically flashed just before significant BTC bear markets.

At the time of press, BTC is trading for $62,745.

BTC Pi Cycle Indicator Signals Overheated Bull Market
BTC/USD chart by TradingView

Previous peaks

So far, the Pi cycle top indicator has signaled three cycle peaks—twice in 2013 and once in 2017. In all cases, the price of BTC peaked within five days of the DMAs crossing.

BTC Pi Cycle Indicator Signals Overheated Bull Market

BTC/USD chart by TradingView

Historically, almost immediately after the Pi cycle signal, a bear market lasting several years followed. During these cycles, BTC losing around 80% of its value in the years that followed.

Bull run end in sight?

If BTC did reach the peak of its current cycle today or in the coming days, an 80% correction would bring prices back to the $12,000 region.

This would be a drop below the previous 2017 high of $20,000. So far, this has never happened in the history of BTC cycles.

It’s also worth taking a look at BTC on-chain analysis. As BeInCrypto regularly reports, none of its main indicators yet suggest activity resembling the final stages of the bull market.

On the contrary, the vast majority of indicators point to a lot of room for further increases in the BTC price. The constantly dropping supply of BTC on exchanges, HODL Waves, Reserve Risk, and Hodler Supply are some of the most important indicators of on-chain analysis. None are currently showing any characteristics of a market peak.

Conclusion

The Pi cycle top indicator has flashed, suggesting that BTC may be nearing the end of its bull market.

However, there are no signals from other technical or on-chain indicators that agree with this reading. On the contrary, most major indicators that have historically marked cycle peaks are currently far from such pessimism.

If we can assign any meaning to the Pi cycle indicator, it would be that the market has become increasingly heated. This could be a signal that a relatively small 20-30% correction could be incoming in order to keep the macrostructure of the upward trend intact.

The post BTC Pi Cycle Indicator Signals Overheated Bull Market appeared first on BeInCrypto.

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