Is The Bitcoin Cycle Top In? What 13 On-Chain Indicators Say

In the newest edition of Capriole Investments’ “Bitcoin Update,” Charles Edwards, founder and CEO, examines the present state of Bitcoin through an in depth evaluation of thirteen on-chain indicators to deal with the critical query: Is the Bitcoin cycle top in?

A month after a promising technical breakout above $65.5K, which briefly touched $70K, Bitcoin experienced a pointy reversal, suggesting a possible cycle top. Edwards notes, “Never before has Bitcoin broken a recent all-time high and had two retests as a substitute of printing recent highs.” This pattern, in response to him, indicates a possible size-related consolidation but is mostly an indication of market weakness.

Bitcoin On-Chain Data Evaluation

#1 Supply Delta + 90 Day CDD: These metrics provide a powerful indication of cycle tops by displaying supply movements and coin destruction days. The recent data formed a rounded top after a vertical increase in each metrics, which historically corresponds with market peaks. Edwards rates this as bearish, implying that the availability dynamics are signaling a downturn.

#2 Long-term Holder Inflation Rate: Historically, a threshold of two.0 on this metric has been a reliable predictor of cycle tops. The speed has escalated from 0.5 in April to 1.9, now teetering near this critical level. This proximity suggests that long-term holders have gotten increasingly more likely to sell, marking one other bearish indicator.

#3 Hodler Growth Rate (HGR): This measures the web growth of long-term holders. A decline or plateau on this rate often precedes market tops, because it indicates long-term investors cashing out. Currently, the HGR has not made recent highs in over six months, aligning with historical precedents of cycle tops and thus is scored bearish.

#4 Bitcoin Heater: Analyzing extreme readings in funding, basis, and options, this metric stands neutral in the present cycle, indicating no significant market exuberance that typically precedes market tops. Moreover, the absence of recent leverage out there contributes to this neutral stance.

#5 Dynamic Range NVT: This valuation metric compares on-chain transaction volume to market cap, recently moving out of the worth zone as a result of increased on-chain activity from innovations like Ordinals and Runes. Despite this increase, it stays neutral, suggesting a balanced market valuation.

#6 On-chain Transaction Fees: Elevated transaction fees typically indicate high network demand, which might point to cycle peaks when followed by a pointy decline. Current fees have shown some spikes but largely mirror the decline noted in April. This metric stays neutral but is something Edwards advises to look at closely.

#7 Net Unrealized Profit/Loss (NUPL): Positioned just under the euphoria zone at 74%, the NUPL suggests that almost all market participants are in profit, but not excessively so. This delicate balance leaves the metric in a neutral state, reflecting potential caution but not outright exuberance.

#8 Spent Volume 7-10 years: A major increase in spent volume from older coins typically suggests selling by long-term holders or “whales,” which might precede a market top. The large transaction on May 28, involving 138,000 Bitcoin, primarily from Mt. Gox distributions, marks this as bearish, indicating potential market pressure from large-scale sell-offs.

#9 SLRV Ribbons: This metric, which looks at short and long revert ribbons, shows a bearish crossover for the primary time this yr. While it hasn’t reached an elevated point suggesting a cycle top, the recent trend is concerning and contributes to the bearish outlook.

#10 Dormancy Flow: With dormancy flow peaking significantly this yr, the typical age of spent coins is higher, just like peaks seen in 2017 and 2021. This continuation of a high dormancy flow rate is bearish, suggesting a possible cycle top is near.

#11 Percent Addresses in Profit: Over 95% of addresses being in profit normally precedes a cycle top. With the recent high and subsequent decline, this indicator turns bearish, signaling that many investors could be taking profits, which may lead to a price drop.

#12 Mayer Multiple: Despite a peak at 1.9 in March, the Mayer Multiple stays below the two.5 threshold that has historically indicated major cycle tops. Currently at 1.0, this metric is neutral, indicating that while the market is heated, it hasn’t reached the extremes of previous cycle peaks.

#13 US Liquidity: The correlation between liquidity and Bitcoin’s price is powerful, and up to date trends show a persistent downtrend in liquidity, which Edwards finds concerning. This negative liquidity growth aligns with a bearish outlook for Bitcoin.

What Does This Mean For The Bitcoin Cycle?

Out of thirteen metrics analyzed, eight are currently bearish, five remain neutral, and none are bullish. This predominance of bearish indicators suggests that the cycle top could thoroughly be in, marking a possible pivot point for Bitcoin. “I won’t lie, I find this on-chain data hard to consider. I’m surprised by the count of Bearish signals for being just two months post halving,” Edwards noted.

Despite the bearish lean in on-chain metrics, he highlights the importance of considering technical patterns and broader market behavior. Bitcoin’s price is currently above the $58K support level, and the potential formation of a Wyckoff Accumulation pattern on the every day chart suggests that the market could still hold bullish potential.

Nevertheless, the mixed signals necessitate cautious optimism and vigilant risk management. “Fundamentals look bearish, but technicals are still bullishly skewed. That leaves ambiguity here. The entire bearish Top Signals might be the results of typical summer months inactivity. Or perhaps this cycle can be a bit more like 2013 with a double top, or some hybrid mid-cycle grind that we must undergo now given we’re playing in the large league with the TradFi today,” Edwards remarked.

Nevertheless, he also concluded, “My gut tells me that is just an exceptionally bad summer period for Bitcoin on-chain activity, and we are going to see what is often the perfect 12 month window for Bitcoin risk-adjusted returns post-Halving resume in Q4 and beyond.”

At press time, BTC traded at $62,747.

BTC trades below $63,000, 1-day chart | Source: BTCUSD on

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