Crypto Market Top Signal Analysis: One-Fifth Indicator Has Reached Warning Line

Each round of bull market in the crypto market not only creates immense wealth but also generates countless illusions of wealth. During periods of market euphoria, staying clear-headed and timing the "top" is a highly challenging task. In the face of a highly volatile market environment, how to reasonably exit near the peak and avoid asset depreciation due to deep corrections requires us to comprehensively analyze multiple market indicators.

This article analyzes 15 commonly used exit indicators and finds that one-fifth of the indicators have already reached the exit zone in 2024. These indicators include the Bitcoin Rhodl ratio, USDT current financial management interest rate, and altcoin seasonal index. In light of this, how should investors respond to the subsequent developments in the market?

1. Indicator Explanation

1. AHR999 Coin Holding Indicator

This indicator aims to assist Bitcoin dollar-cost averaging users in making investment decisions based on timing strategies. It reflects the short-term yield of Bitcoin dollar-cost averaging and the degree of deviation of the price from the expected valuation.

Indicator Range:

• Greater than 4: It is recommended to significantly reduce the position.
• 1.2-4: Observation area, remain vigilant
• 0.45-1.2: Dollar cost averaging area, can gradually build positions.
• Less than 0.45: Strong buying zone

Current status: The indicator value is 1.21, in the wait-and-see range, it is recommended to proceed with caution.

2. AHR999 Top Escape Indicator

This is a supporting tool for the coin accumulation indicator, specifically designed to identify market top areas. It determines whether the market is overheated by observing the degree of price deviation from the long-term trend line. Accurate warning signals were given at the tops of the two major bull markets in 2017 and 2021.

Indicator range:

• Less than or equal to 0.45: The market is severely overheated, consider taking profits.

Current status: The indicator value is 2.48, and no peak signal has appeared in this period.

3. Pi Cycle Top Indicator

This indicator predicts potential market tops by comparing the relationship between the 111-day moving average and the 350-day moving average. Historically, when these two moving averages cross, the price of Bitcoin is often close to the cycle top, indicating a potential market reversal.

Signal Characteristics:

• Two lines crossover: top signal triggered
• Rapid divergence: bearish outlook for the market
• Gradually approach: stay alert

Current status: The two moving averages still have a large distance between them, and a top signal has not yet appeared. The next crossover is expected in October 2025.

4. Bitcoin Rainbow Chart

The Rainbow Chart is an intuitive long-term valuation model that divides the Bitcoin price range into 9 different colored bands. This model is based on logarithmic regression and takes into account the long-term growth characteristics and cyclical features of Bitcoin.

Indicator range:

• Red: Bubble zone, sell signal
• Yellow: Overheating zone, stay alert
• Green: Healthy zone, Holding range
• Blue: Value area, buying opportunity

Current status: The price is in the green zone, indicating that the valuation is relatively reasonable and there are no top signals.

5. Bitcoin terminal price indicator

The terminal price is the transfer price multiplied by 21. This indicator can effectively filter out speculative factors in the crypto market and reflect the true value of the Bitcoin network.

Signal Feature: The closer the Bitcoin price is to the red line, the closer the market is to the top.

Current status: Not yet peaked.

6. Bitcoin market capitalization share

This indicator reflects Bitcoin's dominance in the entire crypto market and is often used to assess market cycles and capital flows.

Indicator range:

• 65%: Bitcoin's strong period
• 40-65%: Balance period
• Less than 40%: Altcoin active period

Current status: Market capitalization accounts for about 60%, in a relatively balanced range.

7. Bitcoin CBBI Index

CBBI is a comprehensive index that integrates multiple technical indicators and on-chain data, capable of effectively identifying the turning points of bull and bear cycles.

Indicator range: Greater than 90 means the market has reached the top.

Current status: The index value is 79, indicating that the market is slightly overheated, but has not yet reached its peak.

8. Bitcoin MVRV Z-Score

The MVRV Z-Score is an important on-chain analysis metric that assesses market cycles by comparing the deviation between market capitalization and realized value.

Indicator range: Greater than 5 means the market has reached its peak.

Current status: The index is 2.5 and has not yet peaked.

9. Bitcoin Rhodl Ratio

The Rhodl ratio is a composite on-chain metric that assesses the potential turning points in the market by comparing the behavioral characteristics of coin holders over different periods.

Indicator range:

• Approaching the red band may indicate that the market is overheated.
• When the ratio is greater than or equal to 10000, the market is close to the top.

Current status: Currently not in the red zone, however, during November 2024, this indicator entered the peak range.

10. Bitcoin Mayer Multiple

The Mayer Multiple assesses the relative valuation level of the market by comparing the current price of Bitcoin to its 200-day moving average.

Indicator range:

• Greater than 1: The market may be in an overbought state.
• Less than 1: The market may be in an oversold state.
• Approximately 1: The market may be in a more balanced state.
• A value above 2.4 usually indicates that the market is overheating.

Current status: The index is 1.26, the market is in an overbought state, but has not yet peaked.

11. Number of consecutive days of ETF net outflows

This indicator tracks the capital flow of Bitcoin ETFs, reflecting the confidence of institutional investors.

Signal characteristics:

• 10 days: Significant bearish signal
• 5-10 days: need to be vigilant
• Less than 5 days: normal fluctuations

Current status: Continuous net outflow for 1 day, which is within the normal market fluctuation range. The maximum consecutive days in this cycle is 8, and there has been no occurrence of 10 days.

12. ETF accounts for the proportion of BTC

This indicator reflects the proportion of Bitcoin held by ETFs relative to the total circulating supply, used to assess institutional participation.

Signal characteristics: Less than or equal to 3.5% is a top escape indicator, which also suggests that institutional participation is relatively low.

Current status: The share is close to 6%, indicating that institutional participation is in a healthy growth stage.

13. USDT Flexible Wealth Management

The USDT flexible financial management interest rate is an important indicator of the cost of funds in the market, reflecting the overall liquidity situation of the crypto market.

Signal feature: Greater than or equal to 29% is the escape top range

Current status: The interest rate is about 6.68%, which is at a normal level. However, during March 2024, this indicator entered the peak range, reaching 65%.

14. Altcoin Season Index

This indicator is used to determine whether the market has entered an altcoin active period by comparing the performance of Bitcoin with major altcoins to assess the flow of funds.

Indicator Range:

• 75: Altcoin season, a value above 75 indicates that the market is nearing its peak.
• 25-75: Balance Period
• Less than 25: Bitcoin Dominance Period

Current status: The index is 41, however, during December 2024, the indicator entered the peak range, reaching 88.

15. MicroStrategy Cost Indicator

This indicator tracks the average Bitcoin holding cost of a large technology company, serving as a benchmark for institutional investors.

Indicator range:

• Current price is above cost: Institutional profit range
• Current price close to cost: support level
• Current price is below cost: potential buying opportunity

Current status: The company's average cost is about 60,000, which is within the institutional profit range.

2. Summary

Stay rational during market euphoria and retreat completely during madness, which is much more difficult than buying at the bottom. Currently, only some indicators show signs of a market top, which does not definitively indicate that the entire market has peaked. If investors believe there is a risk of a market top, they may consider the following strategies:

1. Set incremental reduction points, don't expect a perfect top.

2. Cash out profits into stablecoins or fiat currency, rather than turning to higher-risk small-cap tokens.

3. Prefer to sell early at a high point, rather than late. Taking profits is not the end, but a way to accumulate funds for the next round.

Every peak is a wealth-making opportunity for some and a wealth trap for most. The market offers equal opportunities to everyone, but those who can seize the opportunity are often the ones who are prepared.