Many crypto enthusiasts have heard of the Picycle Top Indicator, which “magically” predicted the peak of several previous bull markets. However, few know that there is also a pie cycle bottom to the contrary, which also has some track record in trying to anticipate the bottom of a bear market.
But before we take a closer look at the Pie Cycle Bottom, let’s remind ourselves why its fast nemesis has earned it so much popularity.
Historical Effectiveness of Pie Cycle Tops
We first wrote about the pie cycle top on BeInCrypto a year ago, when bitcoin was close to reaching its previous all-time high (ATH). The indicator is based on the correlation between the double of the 350-day DMA and the 111-day DMA. The signal ran on April 12, 2021, and two days after that, bitcoin reached a historic ATH of $64,900.
This high accuracy of the Pi Cycle Top was no exception, as the indicator has been very effective in previous cycles as well. All 3 of the previous bull markets coincide with historical ATH signals that flashed 5 days before or after the peak.
The only ATH during which the pie cycle was far from crossing the top is the most recent. On November 10, 2021, the indicator failed to generate a signal when BTC reached $69,000. At the time, this was interpreted as a sign that the second wave of the bull market was not over. Today we know that in this case the indicator failed.
Pie Cycle Down and the End of a Bear Market
The Pie Cycle Bottom is the opposite of the Pie Cycle Top. The bearish version is in a correlation between the 471 SMA and the 150 EMA. Further, the former is multiplied by a factor of 0.745. Not a very beautiful construction, but historically quite effective.
As it turns out the Pie Cycle Bottom Indicator can be successfully used to predict the area of the absolute bottom of the two previous bear markets (blue lines).
The first time the 150 EMA fell below the 471 SMA was on January 16, 2015. This happened two days after BTC price hit an absolute low of $152.
The second time the pie cycle bottom generated the same signal was on December 16, 2018. This happened just a day after the absolute bottom of the previous bear market at $3122.
We are currently approaching the third signal in history and another bearish crossover of the two moving averages (blue circle).
When will bitcoin bottom out?
If the correlation between the intersection of the two moving averages and the bottom of the BTC price repeats itself in this cycle, Bitcoin could soon reach the bottom of this bear market. Currently, the 150 EMA has started to feature a sharp decline from the recent capitulation phase. A crossover is likely in the coming days.
cryptocurrency market analyst @TheRealPlanC Tweeted the date of the intersection and his prediction of bitcoin reaching an imaginary bottom. Based on the movement trajectories of the two curves, they estimated the intersection would occur on July 9, 2022.
If this happens, the bottom of the pie cycle in exactly 15 days will generate a signal that very accurately indicates the bottom of the BTC price in the last two iterations.
Another analyst went a step further @el_crypto_prof, who combined the potential signal from the pie cycle bottom with the fractal analysis of previous cycles. In his opinion, if a potential bitcoin bottom does occur in the near future, it would fit well with the analogy between previous cycles.
In the chart above, we can see that for the entire period from April 2021 onwards, the analyst has included an ATH correction phase highlighted in red. This also includes the latest ATH, which reached $69,000 on November 10th. Although technically higher BTC price was reached at the time, several technical and on-chain indicators suggest that it was already a bear market.
Maybe this was the reason why the Pie Cycle top didn’t give the proper signal. If this is true and the correction in the BTC market has been going on for over a year, then indeed we can expect the end of the long-term downtrend very soon. The pie cycle bottom indicator is an additional layer of confluence that could make this scenario more probable.
For the latest bitcoin (BTC) analysis from BeInCrypto, click here,