Fun

Is The Bitcoin Top In For This Cycle? On-Chain Signals You Need To Know

News Feed - 2024-12-20 11:12:59

Este artículo también está disponible en español.


Bitcoin’s price retracement from its new all-time high of $108,353 on Tuesday to around $96,000 (a -11.5% pullback) has ignited intense speculation about whether the current bull cycle is nearing its peak. To address growing uncertainty, Rafael Schultze-Kraft, co-founder of on-chain analytics provider Glassnode, released a thread on X detailing 18 on-chain metrics and models. “Where is the Bitcoin TOP?” Schultze-Kraft asked, before laying out his detailed analysis. Has Bitcoin Reached Its Cycle Top?


1/ MVRV Ratio: A longstanding measure of unrealized profitability, the MVRV ratio compares market value to realized value. Historically, readings above 7 signaled overheated conditions. “Currently hovering around 3 – room to grow,” Schultze-Kraft noted. This suggests that, in terms of aggregate unrealized profit, the market is not yet at levels that have previously coincided with macro tops. MVRV Z-Score | Source: X @n3ocortex


2/ MVRV Pricing Bands: These bands are derived from the number of days MVRV has spent at extreme levels. The top band (3.2) has been exceeded for only about 6% of trading days historically. Today, this top band corresponds to a price of $127,000. Given that Bitcoin sits at around $98,000, the market has not yet reached a zone that historically marked top formations.


3/ Long-Term Holder Profitability (Relative Unrealized Profit & LTH-NUPL): Long-term holders (LTHs) are considered more stable market participants. Their Net Unrealized Profit/Loss (NUPL) metric is currently at 0.75, entering what Schultze-Kraft terms the “euphoria zone.” He remarked that in the 2021 cycle, Bitcoin ran another ~3x after hitting similar levels (though he clarified he is not necessarily expecting a repetition). Historical top formations often saw LTH-NUPL readings above 0.9. Thus, while the metric is elevated, it has not yet reached previous cycle extremes.


Notably, Schultze-Kraft admitted his observations may be conservative because the 2021 cycle peaked at somewhat lower profitability values than prior cycles. “I would’ve expected these profitability metrics to reach slightly higher levels,” he explained. This may signal diminishing peaks over successive cycles. Investors should be aware that historical extremes may become less pronounced over time.


4/ Yearly Realized Profit/Loss Ratio: This metric measures the total realized profits relative to realized losses over the past year. Previous cycle tops have seen values above 700%. Currently at around 580%, it still shows “room to grow” before reaching levels historically associated with market tops. Related Reading Bitcoin Crashes: Here’s Where The Nearest On-Chain Support Is 1 day ago


5/ Market Cap To Thermocap Ratio: An early on-chain metric, it compares Bitcoin’s total market capitalization to the cumulative mining cost (Thermocap). In prior bull runs, the ratio’s extremes aligned with market tops. Schultze-Kraft advises caution with specific target ranges but notes that current levels are not close to previous extremes. The market remains below historical thermocap multiples that indicated overheated conditions in the past. Market Cap To Thermo Cap Ratio | Source: X @n3ocortex


6/ Thermocap Multiples (32-64x): Historically, Bitcoin has topped at roughly 32-64 times the Thermocap. “We’re at the bottom of this range,” said Schultze-Kraft. Hitting the top band in today’s environment would imply a Bitcoin market cap just above $4 trillion. Given that current market capitalization ($1.924 trillion) is significantly lower, this suggests the possibility of substantial upside if historical patterns were to hold.


7/ The Investor Tool (2-Year SMA x5): The Investor Tool applies a 2-year Simple Moving Average (SMA) of price and a 5x multiple of that SMA to signal potential top zones. “Which currently denotes $230,000,” Schultze-Kraft noted. Since Bitcoin’s current price is well beneath this level, the indicator has not yet flashed an unequivocal top signal.


8/ Bitcoin Price Temperature (BPT6): This model uses deviations from a 4-year moving average to capture cyclical price extremes. Historically, BPT6 was reached in previous bull markets, and that band now sits at $151,000. With Bitcoin at $98,000, the market is still short of levels previously associated with peak overheating. Bitcoin Price Temperature | Source: X @n3ocortex


9/ The True Market Mean & AVIV: The True Market Mean is an alternative cost basis model. Its MVRV-equivalent, known as AVIV, measures how far the market strays from this mean. Historically, tops have seen more than 3 standard deviations. Today’s equivalent “amounts to values above ~2.3,” while the current reading is 1.7. “Room to grow,” Schultze-Kraft said, implying that by this metric, the market is not yet stretched to its historical extremes. Related Reading US Strategic Bitcoin Reserve Could Push Price To $500,000: Expert 2 days ago


10/ Low/Mid/Top Cap Models (Delta Cap Derivatives): These models, based on the Delta Cap metric, historically showed diminished values during the 2021 cycle, never reaching the ‘Top Cap.’ Schultze-Kraft urges caution in interpreting these due to evolving market structures. Currently, the mid cap level sits at about $4 trillion, roughly a 2x from current levels. If the market followed previous patterns, this would allow for considerable growth before hitting levels characteristic of earlier tops.


11/ Value Days Destroyed Multiple (VDDM): This metric gauges the spending behavior of long-held coins relative to the annual average. Historically, extreme values above 2.9 indicated that older coins were heavily hitting the market, often during late-stage bull markets. Presently, it’s at 2.2, not yet at extreme levels. “Room to grow,” Schultze-Kraft noted, suggesting not all long-term holders have fully capitulated to profit-taking.


12/ The Mayer Multiple: TheMayer Multiple compares price to the 200-day SMA. Overbought conditions in previous cycles aligned with values above 2.4. Currently, a Mayer Multiple above 2.4 would correspond to a price of approximately $167,000. With Bitcoin under $100,000, this threshold remains distant. Mayer Multiple | Source: X @n3ocortex


13/ The Cycle Extremes Oscillator Chart: This composite uses multiple binary indicators (MVRV, aSOPR, Puell Multiple, Reserve Risk) to signal cycle extremes. “Currently 2/4 are on,” meaning only half of the tracked conditions for an overheated market are met. Previous tops aligned with a full suite of triggered signals. As such, the chart suggests the cycle has not yet reached the intensity of a full-blown peak.


14/ Pi Cycle Top Indicator: A price-based signal that has historically identified cycle peaks by comparing the short-term and long-term moving averages. “Currently the short moving average sits well below the larger ($74k vs. $129k),” Schultze-Kraft said, indicating no crossover and thus no classic top signal.


15/ Sell-Side Risk Ratio (LTH Version): This ratio compares total realized profits and losses to the realized market capitalization. High values correlate with volatile, late-stage bull markets. “The interesting zone is at 0.8% and above, while we’re currently at 0.46% – room to grow,” Schultze-Kraft explained. This implies that, despite recent profit-taking, the market has not yet entered the intense sell pressure zone often seen near tops. Sell-Side Risk Ratio | Source: X @n3ocortex


16/ LTH Inflation Rate: Schultze-Kraft highlighted the Long-Term Holder Inflation Rate as “the most bearish chart I’ve come across so far.” While he did not provide specific target values or thresholds in this excerpt, he stated it “screams caution.” Investors should monitor this closely as it may signal increasing distribution from long-term holders or other structural headwinds.


17/ STH-SOPR (Short-Term Holder Spent Output Profit Ratio): This metric measures the profit-taking behavior of short-term holders. “Currently elevated, but not sustained,” Schultze-Kraft noted. In other words, while short-term participants are taking profits, the data does not yet show the kind of persistent, aggressive profit-taking typical of a market top.


18/ SLRV Ribbons: These ribbons track trends in short- and long-term realized value. Historically, when both moving averages top out and cross over, it indicates a market turning point. “Both moving averages still trending up, only becomes bearish at rounded tops and crossover. No indication of a top at this time,” Schultze-Kraft stated.


Overall, Schultze-Kraft emphasized that these metrics should not be used in isolation. “Never rely on single data points – confluence is your friend,” he advised. He acknowledged that this is a non-comprehensive list and that Bitcoin’s evolving ecosystem—now with ETFs, regulatory clarity, institutional adoption, and geopolitical factors—may render historical comparisons less reliable. “This cycle can look vastly different, yet (historical) data is all we have,” he concluded.


While numerous metrics show that Bitcoin’s market is moving into more euphoric and profitable territory, few have reached the historical extremes that marked previous cycle tops. Indicators like MVRV, profitability ratios, thermal metrics, and various price-based models generally suggest “room to grow,” although at least one—LTH Inflation Rate—raises a note of caution. Some composites are only partially triggered, while classic top signals such as Pi Cycle Top remain inactive.


At press time, BTC traded at $96,037. Bitcoin price, 1-day chart | Source: BTCUSDT on TradingView.com Featured image created with DALL.E, chart from TradingView.com

News Feed

Donald Trump wants US to rule Bitcoin mining industry
Robert D. Knight10 hours agoDonald Trump wants US to rule Bitcoin mining industryU.S. Presidential candidate Donald Trump wants the future of Bitcoin to be red, white and blue.2312 Total views11 Total sharesListen to art
FTX Debtors Seek Dismissal of Turkish Entities in Chapter 11 Bankruptcy Proceedings
FTX Debtors Seek Dismissal of Turkish Entities in Chapter 11 Bankruptcy Proceedings FTX debtors have filed a motion with the court requesting to dismiss its Turkish subsidiaries fr
Lysander Spooner: Natural Law – The Science of Justice
Lysander Spooner: Natural Law - The Science of JusticeThe science of mine and thine – the science of justice – is the science of all human rights; of all a man’s r
Bitcoin’s spot price action does little to spook BTC options traders
Marcel Pechman1 hour agoBitcoin’s spot price action does little to spook BTC options tradersBitcoin futures and options signal investors’ confidence was not meaningfully impacted by BTC’s recent dip to $61,500.1314
Crypto adoption in Argentina soars amid 276% inflation spike
Helen Partz11 hours agoCrypto adoption in Argentina soars amid 276% inflation spikeArgentina has emerged as the top market by numbers of visitors on Binance, one of the world’s largest crypto exchanges.1507 Total views
Robinhood Begins Rolling Out Crypto Wallets to Select Customers
Robinhood Begins Rolling Out Crypto Wallets to Select Customers Trading platform Robinhood has begun rolling out crypto wallets to 1,000 customers. Users can send and receive their
Fed Bank President: Banking Crisis Tips US Economy Toward Recession
Fed Bank President: Banking Crisis Tips US Economy Toward Recession The president of the Federal Reserve Bank of Minneapolis, Neel Kashkari, says the current banking crisis has pus
Shiba Inu Sees $120 Million Weekly Surge—Whales Tighten Their Grip
Reason to trust Strict editorial policy that focuses on accuracy, relevance, and impartiality Created by industry experts and meticulously reviewed The highest standards in reporting and pu
Terraform Labs may close products, services in bankruptcy wind-down
Derek Andersen4 hours agoTerraform Labs may close products, services in bankruptcy wind-downGet it before Oct. 30, Terraform Labs tells the third parties it is discussion its wind-down with.1573 Total views21 Total share
The ‘Undo Button’ Wallet Tool Gives Users the Ability to Reverse Ethereum Transactions
The "Undo Button" Wallet Tool Gives Users the Ability to Reverse Ethereum Transactions On Thursday, November 12, 2020, the blockchain firm Kirobo launched a tool
Crypto Pundit Says Bears Will Continue To Dominate Ethereum Price, Here’s For How Long
Reason to trust Strict editorial policy that focuses on accuracy, relevance, and impartiality Created by industry experts and meticulously reviewed The highest standards in reporting and pu
Personal Finance Expert Suze Orman Says ‘I Love Bitcoin’ — Advises How to Buy BTC, Praises Paypal
Personal Finance Expert Suze Orman Says "I Love Bitcoin" — Advises How to Buy BTC, Praises Paypal American financial advisor Suze Orman says she loves bitcoin.