Bitcoin’s value retracement from its new all-time excessive of $108,353 on Tuesday to round $96,000 (a -11.5% pullback) has ignited intense hypothesis about whether or not the present bull cycle is nearing its peak. To tackle rising uncertainty, Rafael Schultze-Kraft, co-founder of on-chain analytics supplier Glassnode, released a thread on X detailing 18 on-chain metrics and fashions. “Where is the Bitcoin TOP?” Schultze-Kraft requested, earlier than laying out his detailed evaluation.
Has Bitcoin Reached Its Cycle Top?
1/ MVRV Ratio: A longstanding measure of unrealized profitability, the MVRV ratio compares market worth to realized worth. Historically, readings above 7 signaled overheated circumstances. “Currently hovering around 3 – room to grow,” Schultze-Kraft famous. This means that, by way of combination unrealized revenue, the market is just not but at ranges which have beforehand coincided with macro tops.
2/ MVRV Pricing Bands: These bands are derived from the variety of days MVRV has spent at excessive ranges. The prime band (3.2) has been exceeded for less than about 6% of buying and selling days traditionally. Today, this prime band corresponds to a value of $127,000. Given that Bitcoin sits at round $98,000, the market has not but reached a zone that traditionally marked prime formations.
3/ Long-Term Holder Profitability (Relative Unrealized Profit & LTH-NUPL): Long-term holders (LTHs) are thought-about extra secure market members. Their Net Unrealized Profit/Loss (NUPL) metric is at present at 0.75, coming into what Schultze-Kraft phrases the “euphoria zone.” He remarked that within the 2021 cycle, Bitcoin ran one other ~3x after hitting comparable ranges (although he clarified he’s not essentially anticipating a repetition). Historical prime formations typically noticed LTH-NUPL readings above 0.9. Thus, whereas the metric is elevated, it has not but reached earlier cycle extremes.
Notably, Schultze-Kraft admitted his observations could also be conservative as a result of the 2021 cycle peaked at considerably decrease profitability values than prior cycles. “I would’ve expected these profitability metrics to reach slightly higher levels,” he defined. This could sign diminishing peaks over successive cycles. Investors needs to be conscious that historic extremes could turn out to be much less pronounced over time.
4/ Yearly Realized Profit/Loss Ratio: This metric measures the entire realized earnings relative to realized losses over the previous 12 months. Previous cycle tops have seen values above 700%. Currently at round 580%, it nonetheless exhibits “room to grow” earlier than reaching ranges traditionally related to market tops.
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5/ Market Cap To Thermocap Ratio: An early on-chain metric, it compares Bitcoin’s complete market capitalization to the cumulative mining value (Thermocap). In prior bull runs, the ratio’s extremes aligned with market tops. Schultze-Kraft advises warning with particular goal ranges however notes that present ranges are usually not near earlier extremes. The market stays under historic thermocap multiples that indicated overheated circumstances prior to now.
6/ Thermocap Multiples (32-64x): Historically, Bitcoin has topped at roughly 32-64 instances the Thermocap. “We’re at the bottom of this range,” stated Schultze-Kraft. Hitting the highest band in right this moment’s atmosphere would suggest a Bitcoin market cap simply above $4 trillion. Given that present market capitalization ($1.924 trillion) is considerably decrease, this implies the potential of substantial upside if historic patterns had been to carry.
7/ The Investor Tool (2-Year SMA x5): The Investor Tool applies a 2-year Simple Moving Average (SMA) of value and a 5x a number of of that SMA to sign potential prime zones. “Which currently denotes $230,000,” Schultze-Kraft famous. Since Bitcoin’s present value is effectively beneath this stage, the indicator has not but flashed an unequivocal prime sign.
8/ Bitcoin Price Temperature (BPT6): This mannequin makes use of deviations from a 4-year shifting common to seize cyclical value extremes. Historically, BPT6 was reached in earlier bull markets, and that band now sits at $151,000. With Bitcoin at $98,000, the market continues to be wanting ranges beforehand related to peak overheating.
9/ The True Market Mean & AVIV: The True Market Mean is an alternate value foundation mannequin. Its MVRV-equivalent, often called AVIV, measures how far the market strays from this imply. Historically, tops have seen greater than 3 normal deviations. Today’s equal “amounts to values above ~2.3,” whereas the present studying is 1.7. “Room to grow,” Schultze-Kraft stated, implying that by this metric, the market is just not but stretched to its historic extremes.
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10/ Low/Mid/Top Cap Models (Delta Cap Derivatives): These fashions, primarily based on the Delta Cap metric, traditionally confirmed diminished values in the course of the 2021 cycle, by no means reaching the ‘Top Cap.’ Schultze-Kraft urges warning in decoding these as a result of evolving market buildings. Currently, the mid cap stage sits at about $4 trillion, roughly a 2x from present ranges. If the market adopted earlier patterns, this may enable for appreciable progress earlier than hitting ranges attribute of earlier tops.
11/ Value Days Destroyed Multiple (VDDM): This metric gauges the spending habits of long-held cash relative to the annual common. Historically, excessive values above 2.9 indicated that older cash had been closely hitting the market, typically throughout late-stage bull markets. Presently, it’s at 2.2, not but at excessive ranges. “Room to grow,” Schultze-Kraft famous, suggesting not all long-term holders have absolutely capitulated to profit-taking.
12/ The Mayer Multiple: The Mayer Multiple compares value to the 200-day SMA. Overbought circumstances in earlier cycles aligned with values above 2.4. Currently, a Mayer Multiple above 2.4 would correspond to a value of roughly $167,000. With Bitcoin underneath $100,000, this threshold stays distant.
13/ The Cycle Extremes Oscillator Chart: This composite makes use of a number of binary indicators (MVRV, aSOPR, Puell Multiple, Reserve Risk) to sign cycle extremes. “Currently 2/4 are on,” which means solely half of the tracked circumstances for an overheated market are met. Previous tops aligned with a full suite of triggered indicators. As such, the chart suggests the cycle has not but reached the depth of a full-blown peak.
14/ Pi Cycle Top Indicator: A price-based sign that has traditionally recognized cycle peaks by evaluating the short-term and long-term shifting averages. “Currently the short moving average sits well below the larger ($74k vs. $129k),” Schultze-Kraft stated, indicating no crossover and thus no basic prime sign.
15/ Sell-Side Risk Ratio (LTH Version): This ratio compares complete realized earnings and losses to the realized market capitalization. High values correlate with unstable, 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 defined. This implies that, regardless of current profit-taking, the market has not but entered the extreme promote stress zone typically seen close to tops.
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 didn’t present particular goal values or thresholds on this excerpt, he acknowledged it “screams caution.” Investors ought to monitor this intently as it might sign growing distribution from long-term holders or different structural headwinds.
17/ STH-SOPR (Short-Term Holder Spent Output Profit Ratio): This metric measures the profit-taking habits of short-term holders. “Currently elevated, but not sustained,” Schultze-Kraft famous. In different phrases, whereas short-term members are taking earnings, the info doesn’t but present the form of persistent, aggressive profit-taking typical of a market prime.
18/ SLRV Ribbons: These ribbons observe tendencies in short- and long-term realized worth. Historically, when each shifting averages prime out and cross over, it signifies a market turning level. “Both moving averages still trending up, only becomes bearish at rounded tops and crossover. No indication of a top at this time,” Schultze-Kraft acknowledged.
Overall, Schultze-Kraft emphasised that these metrics shouldn’t be utilized in isolation. “Never rely on single data points – confluence is your friend,” he suggested. He acknowledged that it is a non-comprehensive listing and that Bitcoin’s evolving ecosystem—now with ETFs, regulatory readability, institutional adoption, and geopolitical components—could render historic comparisons much less dependable. “This cycle can look vastly different, yet (historical) data is all we have,” he concluded.
While quite a few metrics present that Bitcoin’s market is shifting into extra euphoric and worthwhile territory, few have reached the historic extremes that marked earlier cycle tops. Indicators like MVRV, profitability ratios, thermal metrics, and numerous price-based fashions typically recommend “room to grow,” though not less than one—LTH Inflation Rate—raises a be aware of warning. Some composites are solely partially triggered, whereas basic prime indicators resembling Pi Cycle Top stay inactive.
At press time, BTC traded at $96,037.
Featured picture created with DALL.E, chart from TradingView.com
