The bitcoin bull run is in full swing. Everyone in the crypto world – from new, emotional players, to experienced investors, to anemic market analysts – is writing about targets for this cycle of $100,000, $200,000, $300,000, and even more. What if the peak is reached in less than 2 weeks?
Many on-chain analysis data, which we recently discussed in BeInCrypto, indicate that bitcoin still has room for growth. However, a straightforward and surprisingly effective indicator called Pi Cycle starts to flash its first warnings. It is worth taking a look at it and not to miss the giant elephant in the room!
What is Pi Cycle?
Pi Cycle is a straightforward indicator that analyst Philip Swift created. It takes into account two Displaced Moving Average (DMA):
- 350-day DMA x 2.
- 111-day DMA.
Both can be considered long-term indicators. The second one is obviously more sensitive to the current market changes as it takes into account a smaller date range.
This indicator’s main argument is apparent: Whenever the 111-day DMA crosses the 350-day DMA x 2, it is the signal for the bitcoin cycle’s peak.
In a world of advanced technical analysis, where seasoned traders and market analysts use a whole spectrum of complex indicators, concepts, and data, such a simple indicator can be a smile of pity. However, the effectiveness it has shown in the previous cycles makes you take it more seriously and look at it closely.
In the cycle that peaked at the end of 2013, Pi Cycle predicted the end of gains very accurately. And it did it twice. In April 2013, as bitcoin hit its first major high, the aforementioned two moving averages crossed 5 days ahead of the peak at $259.
Half a year later, the Pi Cycle flashed again, but this time 5 days after the absolute peak at $1,163. Both situations were surprising, but many may have downplayed this indicator, saying that it may have correctly captured these peaks, but – as the market grows and the dynamics of bitcoin’s volatility change – it will no longer apply in the future.
This supposition turned out to be incorrect. At the end of the 2017 cycle, the Pi Cycle flashed again. It did it exactly on December 16, 2017, a day before the absolute peak at $19,666.
This event truly surprised analysts and gave the previously underestimated indicator a truly mythical status. The intersection of the two moving averages at the top of the bull market was significant, but the fact that it did not occur during a long uptrend led to an astronomical area of $20,000 at the time. The indicator had a few occasions to make an intersection, but it successfully drove two lines apart whenever a correction occurred until December 2017.
Pi Cycle Today
The two curves of the Pi Cycle indicator are steadily converging from the end of one of the longest consolidations in bitcoin history, which took place from May to July 2020. The pace of approaching moving averages has definitely accelerated since bitcoin broke its historical all-time high at $ 20,000 in December 2020.
As of today, the distance between the lines is approximately 1.79%. This equates to roughly $1,000 as compared to the current bitcoin valuation. If this value is 0%, an intersection will occur.
If you look for an analogy with 2017, it can be expected that Pi Cycle will flash again in 12 days. This is the indicator needed for the intersection, then, after reaching a distance between the lines of 1.79%.
On the other hand, descending to 0% was tantamount to increasing the BTC price by as much as 70%. As of today, this would correspond to a price of around $95,000 within less than two weeks. Possible? Well – it’s a crypto market!