Before we begin, please note that this is not financial advice. This framework is intended solely as a guide, offering data-based insights to help inform your decisions. Also, thanks to Bitcoin Magazine for providing all of this great data!

The last time I wrote this was on February 5th. Bitcoin had reached a new record high of about $109k in January but then dropped to around $95k when I wrote the piece. (it would go on to bottom around $75k). I argued, using certain on-chain indicators, that the cycle probably wasn't finished yet.

There were a lot of very vocal bears at this time calling the top.

For those interested in reviewing the reasoning presented in our previous article from February, the complete piece is available here:

I’m empathetic to people that want to be cautious and call tops, because I know the downsides of being too greedy and not taking profits.

Everyone is different and has their own financial situations to consider. For example, people who live in more strict tax jurisdictions need to be very diligent and have enough money set aside to pay taxes vs the person yapping on X who’s in Dubai, Portugal or Puerto Rico (extremely relaxed tax jurisdictions). Furthermore, you never know when someone has hit their own internal profit targets and decides to take chips off the table. So even though data is powerful, you don’t have insight into the underlying motivations for why someone is formulating a certain view. It’s also very possible they are projecting what they want the market to do.

All that said, calling early tops can be equally as damaging if it prevents you from catching material upside. We aren’t getting exposure to a highly volatile asset class so we can slightly outperform the S&P 500.

It’s my opinion that the best thing we can do is try to inform our decisions with data.

Thanks to our sponsors for making it possible to share this content for FREE!

| NEWSLETTER CONTINUES BELOW |

🧪 MANTLE | START YOUR RESTAKING JOURNEY TODAY WITH CMETH

🐡 PUFFER FINANCE | LIQUID RESTAKING FOR THE LITTLE FISH

🌔 MOONWELL | THE LEADING LENDING AND BORROWING APP ON BASE

⚙️ GEARBOX PROTOCOL | ONCHAIN LENDING REIMAGINED

Let’s take a fresh look at what all the indicators are telling us right now.

Bitcoin Dominance

What Is This Indicator?

Bitcoin Dominance (BTC.D) is an indicator used to understand Bitcoin's market share relative to other cryptocurrencies and is shown as a %.

How Do We Use it?

• Rising Dominance:

  • This can signal that capital is flowing into Bitcoin from other cryptocurrencies, possibly due to Bitcoin's perceived stability or market events favoring Bitcoin. It might precede or accompany bearish conditions for altcoins.

• Falling Dominance:

  • Suggests capital might be moving from Bitcoin into altcoins, which could indicate a bullish trend for altcoins or a lack of confidence in Bitcoin's near-term performance.

Our Current Interpretation

• BTC.D is sitting at 63.71% and touched a high of ~65.5% on monthly timeframe

• We have a very small sample but BTC.D has bottomed around ~35% to 40% range previously and topped around the ~70% - 73% range last cycle.

• Last cycle, after BTC.D topped, we had a ~10 month alt season until BTC.D bottomed

• Interpretation: As Bitcoin is becoming a globally accepted asset, it’s possible that BTC.D will become less of a useful indicator over time. I don’t think BTC.D has ever been something that could be used in isolation, instead its part of a basket of things you can look at to get a rough picture of the market. BTC.D is not my favorite indicator but worth looking at. Currently, I really have no view on where its going. We could top out at 70% - 73% like last cycle or rip to 80% and neither would surprise me.

• For another view, here’s what Rekt Capital is saying

MVRV Z-Score

What Is This Indicator?

The MVRV Z-Score chart helps identify when Bitcoin is highly over or undervalued compared to its 'fair value' using three metrics:

1. Market Value (black line): The current Bitcoin price multiplied by the total coins in circulation, similar to market cap in traditional finance.

2. Realised Value (blue line): Calculates the average price of each Bitcoin based on its last movement between wallets, providing a long-term valuation by filtering out short-term market sentiment.

3. Z-Score (orange line): A standard deviation measure highlighting extreme differences between Market Value and Realized Value.

How Do We Use it?

The MVRV Z-score effectively highlights periods when Bitcoin’s market value significantly exceeds its realised value, marked by the Z-score (orange line) entering the pink zone, which often indicates market cycle tops—accurately identifying cycle highs within two weeks.

It also signals when market value is well below realised value, shown by the Z-score entering the green zone. Historically, buying during these times has yielded substantial returns.

Attempting To Predict Bitcoin Price Using MVRV Z-Score

The MVRV Z-Score chart helps predict Bitcoin price extremes, signaling potential pullbacks when the Z-score reaches the upper red band and possible rallies after time in the lower green band. Historically, it has identified major price peaks within two weeks.

Our Current Interpretation

• The orange line (z-score) is currently at 2.56 (This was 2.75 when I wrote this in February when Bitcoin was at ~$95k)

• In every other bull market, the orange line (z-score) has breached 7

• Interpretation: By this metric, Bitcoin is still nowhere near what would be considered frothy overvalued territory and if this metric remains accurate, it’s likely that this cycle has a lot more room to run.

Pi Cycle Top Indicator

What Is This Indicator?

The Pi Cycle Top Indicator has been highly accurate in identifying Bitcoin market cycle highs within three days. It combines the 111-day moving average (111DMA) with a 2x multiple of the 350-day moving average (350DMA x 2).

For the last three cycles, Bitcoin’s price peaked when the 111DMA crossed above the 350DMA x 2, illustrating Bitcoin's cyclical price behavior. Interestingly, dividing 350 by 111 yields 3.153, very close to Pi (3.142), highlighting a unique mathematical pattern.

How Do We Use It?

The Pi Cycle Top Indicator forecasts Bitcoin’s market cycle peaks, predicting when the price will reach a top before declining. It operates on high time frames and has accurately identified the absolute tops of Bitcoin’s major price movements throughout its history.

Attempting to Predict An Overheated Market Using Pi Cycle Top Indicator

The Pi Cycle Top Indicator signals when the market is extremely overheated—when the 111-day moving average reaches a 2x multiple of the 350-day moving average. Historically, this has been a beneficial time to sell during Bitcoin’s price cycles.

However, since this indicator has been effective primarily during Bitcoin’s early adoption phase, it may become less relevant as Bitcoin ETFs launch and Bitcoin integrates further into the global financial system.

Our Current Interpretation

• The 111DMA and 350DMA x 2 are relatively far apart

• In previous bull markets, this indicator has shown a high degree of accuracy at calling potential tops when these two lines meet.

• Interpretation: Currently these two lines are widely separated and we will be monitoring them closely going forward. If this indicator remains accurate, it would appear as though the market is still not in overheated territory.

Everything Indicator

What Is This Indicator?

The Bitcoin Everything Indicator consolidates multiple metrics into one score to provide a comprehensive market overview. The result is a reactive, historically reliable oscillator that identifies market peaks and bottoms for Bitcoin.

It combines the following critical inputs:

• Market Profitability: MVRV Z-Score

• External Macro Supply: Global M2 Money Supply

• Miner Profitability: Puell Multiple

• Onchain Profit Taking: Spent Output Profit Ratio (SOPR)

• Volatility Trends: Crosby Ratio

• Relative Network Growth: Active Address Sentiment Indicator (AASI)

Our Current Interpretation

• This indicator is sitting at 49.84 (This was 44.97 when I wrote this in February when Bitcoin was at ~$95k)

• You want to think of taking profits at or before the red band (85) and consider buying at or below the green band (15)

• We’re currently somewhere in the middle

• Interpretation: Nothing appears to be overheated and this indicator would suggest we’re not close to a market peak.

Some Other Great Reads

Jamie Coutts from Real Vision has been doing some great work in the crossover space of macro and Bitcoin.

In this post below Jamie shows the sensitivity crypto has to liquidity:

I also really like this post below by Jamie as I don’t have access to data for Long Term Holder SOPR (Spent Output Profit Ratio) so its interesting to see how Jamie pairs this with some of the other onchain indicators I follow like: MVRV, NUPL.

(LTH SOPR tracks long term Bitcoin holders and assumes that any time coins move they are being sold. It then accounts for the level of profit and loss when the transaction takes place)

Conclusion

MVRV Z-Score

Current Level: 2.56

Area Of Caution: Anything above 5

Highly Overvalued: 7+

Pi Cycle Top Indicator

Current: Widely Separated

Area Of Caution: Lines Becoming Close

Overheated: Lines Touch/Cross

Everything Indicator

Current: 49.84

Area Of Caution: 75

Highly Overheated: 85+

After analyzing all of these indicators, most of them are at their midway point to neutral. None are suggesting we’re overheated. I personally don’t think we’ve topped out for this cycle.

Are we at the beginning of the cycle? No.

In my opinion, we’re actually in a similar spot as we were when I wrote this piece back in February - a little over ½ of the way through.

This is actually pretty wild to see. After 4 months of price action which included another Bitcoin all-time high, the indicators are telling us we’re still in roughly the same spot.

When putting this all together I see the following possibilities:

• We have not topped and are still waiting for the classic parabolic/blowoff top that has come in every other cycle

• We’re coming into a more mature adoption period of crypto where the trend could be a slower “up-and-to-the-right” trajectory without a blowoff top (this is probably a long way of saying “Supercycle”)

• These indicators are irrelevant in this new regime and we don’t really know where we are

Overall, I’m still bullish. I’m mostly risk on and expecting a continuation of higher crypto prices at some point in 2025. That said, I’m not exposed to any leverage and trying not to put myself in a bad situation if I’m wrong. This also doesn’t mean that we can’t have 20% corrections (or more) at various times throughout the second half of the year. Anything is on the table when dealing with an asset class as volatile as crypto. However, I do think the bull trend is still intact barring any unforeseen world calamities.

There’s a lot of other macro factors that have a strong impact on Bitcoin that we didn’t cover, but I’ll leave you with these two images that paint a bullish picture:

And lastly in response to the image above:

That’s all, thanks for reading!

• Follow Nomatic on X (Twitter) here

• Subscribe to The Edge Podcast here

• Watch The Edge Podcast on YouTube here