Historic Bitcoin Rule For Identifying Cycle Tops In Jeopardy – Here’s Why

Bitcoin’s renewed upward trend has put the flagship asset in the limelight as it moves toward its current all-time high of $110,000, achieved in January this year. While BTC is about 5% away from its peak, speculations are whether this newfound strength could lead to a cycle top. However, cycle-top indicators appear to be shifting away from previous trends.

Market Threatens To Break Key Cycle Top Trend

As Bitcoin prepares for another surge, Alphractal, an advanced investment and on-chain platform, points to a potential divergence between this cycle and past cycle trends. The platform’s analysis reveals that BTC’s current market behavior could challenge one of the most reliable indicators of its cycle tops over the years.

Specifically, this reliable indicator outlined by the on-chain platform is the 2-year  Simple Moving Average (2Y SMA). If the trends continue, it may signify a change in the way future tops are determined through this indicator, indicating a more mature and uncertain market structure.

According to Alphractal, Bitcoin’s cycle tops historically have occurred at progressively lower multiples of the 2Y SMA indicator, suggesting a slow consolidation and decreased volatility.

Looking at the multiplier chart, BTC’s first peak appeared at about 2Y SMA x15. In past cycles like 2017, the flagship asset reached its peak after hitting the 2Y SMA x10. Meanwhile, in the 2021 cycle, it first reached 2Y SMA ×5 before dropping to 2Y SMA ×2.65 by the end of the cycle.

The chart shows that BTC attempted to break past the 2Y SMA ×2.65 multiple in the ongoing cycle but could not succeed, which exhibits a reduction in gains and points to a more consolidated and mature asset. Presently, the 2Y SMA ×2.65 level is situated at the $159,000 mark, and this will be the main obstacle for Bitcoin to go beyond if it develops traction again.

While BTC charges toward this resistance zone, Alphractal has underlined a key take in the current trend. With each new cycle, the platform points to the potential of extending gains far beyond the 2-year moving average, bolstering this market’s long-term strength.

BTC’s Top For This Cycle Is Not Too Far Away

Axel Adler Jr., an on-chain expert and author, has also shed insights about BTC’s cycle peak using the MVRV-Z Top Pricing Bands. This metric is another crucial indicator for determining cycle peaks and bottoms over the years, with the help of the z-score standard deviation between market value and realized value.

With the market gradually stabilizing, Axel Adler highlighted that selling pressure is still unusually calm. Meanwhile, the MVRV-Z indicator readings show that BTC won’t reach its peak for this cycle until this Fall.

In the meantime, the expert hopes that events like the Black Swan do not occur in the market before then in order for investors to enjoy the full ride of the final wave of buyer momentum without facing any disruption.

At the time of writing, BTC’s price was hovering near the $104,000 mark with a nearly 2% increase in the last 24 hours. Its trading volume is slowly picking up pace alongside the recovery, rising by over 14% in the past day.