In a video update on YouTube, crypto analyst Rekt Capital examined the dynamics of Bitcoin price movements from the perspective of the PI Cycle Top Indicator, a forecasting tool that has attracted attention due to its historical accuracy in determining the tops of Bitcoin bull runs.
This is how high the Bitcoin price could rise in this cycle
The PI Cycle Top Indicator tracks two key moving averages: a short-term 111-day average (highlighted in orange in Rekt Capital’s visual analysis) and the 350-day average (shown in green) to measure extended market trends. A crucial aspect of this tool is the “crossover” event, where the short-term moving average rises above the long-term average, which historically signals a peak in Bitcoin’s bull market within a matter of days.
However, current market data shows that these two moving averages are diverging rather than converging, suggesting that the conditions for a bull market top are not yet in place. “With these two PI cycle moving averages currently diverging from each other, the bull market top is still a long way off,” Rekt Capital explained in its video.
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The 111-day moving average serves as a critical metric in Rekt Capital’s analysis. During bear markets or pre-halving years, this moving average acts as a barometer of favorable buying opportunities and fluctuates around it in downtrends. Conversely, in halving years like 2020, it tends to act as a support level, underpinning uptrends that lead to new all-time highs.
“Any dip below this moving average is a bargain,” noted Rekt Capital, emphasizing the strategic importance of this level in different market phases. Currently, Bitcoin is trading below this moving average, around $59,000, which has not happened for an extended period since the year before the halving, representing a potentially undervalued state compared to historical patterns.
The analysis suggests that if Bitcoin reclaims the $63,900 level – just above the current position of the 111-day moving average – it could end the current bargain-buying opportunity and set the stage for further upside. “We are about $5,000 away from reclaiming this region. Not much needs to happen for Bitcoin to rally and reclaim this region to end this bargain-buying opportunity,” noted Rekt Capital.
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Another element of the PI Cycle Top Indicator is the 350-day moving average. This average is typically re-reached in later stages of the market cycle and often acts as resistance before an upward deviation occurs.
“On upside deviations beyond the green moving average, we see parabolic price moves,” Rekt Capital emphasized, pointing to past events in 2013 and 2017 where such moves were observed. The current green moving average is around $96,000, suggesting significant upside potential before any parabolic risks manifest.
Rekt Capital’s analysis suggests that while Bitcoin is still far from reaching the $96,000 mark, historical patterns predict that it will eventually approach and possibly surpass that mark, leading to a short-term period of rapid price appreciation.
“(We are) far from that green moving average as it sits at around $96,000. So we are still almost $30,000 away from that region (…) Once we break above $96,000, we need to understand that that is when the clock really starts ticking for the end of the run and we could have a window of just a few months where Bitcoin rises continuously, with pullbacks of course,” the analyst explained.
Looking ahead, Rekt Capital stressed the importance of watching the convergence of these two moving averages for signs of a potential bull market top. “We need to see an uptrend in the Pi Cycle moving average for this crossover to occur to some degree,” he explained, noting that a sharp increase in price action would be needed for a definitive crossover to occur.
At press time, BTC was trading at $58,695.
Featured image created with DALL.E, chart from TradingView.com
