The Pi cycle top indicator gave a signal for the first time since the 2017 bull market. Last time it all ended in a protracted crypto winter.
Today we will analyze the cycle top indicator and other factors to understand how high the likelihood of a bearish reversal is.
What is the Pi indicator
The Pi cycle top indicator, also known as the Pi indicator, appears when the 350-day moving average crosses the 111-day moving average. As a rule, this happens before the start of a large-scale correction and a reversal into a bear market.
Interesting! If you divide 350 by 111, you get 3.153, which is very close to Pi (3.142). Hence the name of the indicator.
Yesterday bitcoin finished the week above $ 60,000 for the first time. Today, the first cryptocurrency has renewed its all-time high, marking in the area of ​​$ 63.7 thousand. At the time of writing, bitcoin is trading in the region of $ 63.3 thousand, and the Pi indicator is already giving alarm signals to the bulls.
BTC / USD Chart by TradingView
Previous peaks
In the entire history of statistics, the Pi indicator has given signals only twice: in 2013 and in 2017. In both cases, Bitcoin formed a top within five days of crossing the DMA.
BTC / USD Chart by TradingView
In other words, as soon as the Pi indicator gave a signal, a powerful bear market began literally immediately, which lasted for several years. During these cycles, the cryptocurrency fell by about 80%.
Are the bulls finished?
If Bitcoin did peak in the current cycle, an 80% correction would push it back into the $ 12,000 area.
Thus, the coin will fall below the 2017 peak at $ 20,000. However, this has never happened in the history of bullish cycles.
Let’s take a closer look at bitcoin’s on-chain performance. No major indicator yet indicates the end of the bull market.
On the contrary, most metrics signal that the price will continue to rise. These include BTC stocks on exchanges, HODL waves, stock risk, and holer stocks. None of these indicators indicate an approaching top.
Conclusion
The Pi cycle top indicator, also known as the Pi indicator, indicates the end of a bull market.
However, other technical or on-chain indicators do not confirm this signal. In contrast, most of the key indicators that traditionally predict the top of the cycle are far from pessimism.
In any case, the appearance of the Pi indicator indicates a strong overheating in the market. It is possible that the market will enter a 20-30% correction. to maintain the current macro structure of the uptrend.
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