Bitcoin, the largest cryptocurrency by market capitalization, began to plummet after Tesla CEO Elon Musk criticized the environmental impact of Bitcoin mining on Twitter. , Bitcoin’s market capitalization fell from $1.2 trillion to $916 billion.
Bitcoin’s market dominance plummeted this week to levels not seen since mid-2018, and it now accounts for just 40.2% of the global crypto market capitalization. The largest altcoin, Ethereum (ETH), with a market capitalization of $430.7 billion, currently accounts for 19.3% of the market. This stands in stark contrast to the long and uninterrupted market dominance of more than 50% since summer 2019 and the yearly high of 69.7% on January 4 this year.
Given Bitcoin's high volatility, how do we determine the top of a bull market, or a "phase top" that kicks off another top?
Thanks to the transparency of the Bitcoin blockchain, we can see changes in on-chain consumer transfer behavior, funds moving in and out of exchanges, gains and losses between Bitcoin wallets, and other information about how people use Bitcoin.Some indicators will show specific changes when Bitcoin is close to the top of its market cycle at a certain time before the start of Bitcoin’s bear market.
Puell Multiples, MVRV Z-Score and HODL Waves by Realized Market Cap are three indicators that can help you see momentum shifts in the market before anyone else.
Compares the daily value of newly mined Bitcoin (in U.S. dollars) to the 365-day moving average of the daily issuance value. Extreme readings indicate a peak in the market cycle.The Puell multiple compares the price of newly mined bitcoins to the average market value of all mined bitcoins in a given time period.When the Puell multiple is high, miners tend to dump Bitcoin in large numbers.The MVRV Z-score measures Bitcoin's market value and realized value. Extreme readings indicate a peak in the market cycle.The MVRV Z-score measures the difference between Bitcoin’s current price and the average price people pay for it. When the score is high, people convert bitcoins into other things.Maybe they want to cash in on new wealth? Maybe they fear the market will crash?For whatever reason, they also tend to sell in bulk like miners.Every Bitcoin bull run ends with the MVRV Z score reaching its limit.
HODL Wave of Realized Market CapWhile Puell Multiples and MVRV Z-Scores can reliably signal market peaks, realized ceiling HODL Waves provide clues as to how close or far these market peaks may be.Unlike traditional HODL waves that capture transactions, realized market capitalization HODL waves take into account the realized price of Bitcoin that has not moved within a specific time frame.When the entire market is chaotic and crazy, those short-term HODLers who hold Bitcoin for three months or less will show abnormal behavior. See below, Glassnode diagram
The bundled price of all active BTC supply ages (also known as HODL Waves) is weighted by the actual price of each bitcoin. The colored bands show the value of the last moved bitcoins during the corresponding time period.Historically, Bitcoin has peaked when at least 80% of the market value falls within these ranges. Each previous market cycle peak is circled in the graph.April 2013 was not the top!Yes, many people say that.According to these three indicators, April 2013 marked the top of the then 77-week-long bull market. But the price of Bitcoin still rose after that.The largest drop in prices in 2013 was 83%. It took nearly seven months for Bitcoin’s price to recover.Why do people say April 2013 was not the peak of the market cycle. It's a fair point, but you definitely want to avoid this kind of thing. With these data, some opportunities and risks can be avoided.Both the MVRV Z-score and the Puell multiple measure human behavior and estimate all movements of Bitcoin from all entities. When they both peaked at the same time, Bitcoin also peaked.Meanwhile, realized market capitalization HODL Waves confirms that strong players have moved nearly all of their bitcoin to newbies, typically those who buy more frequently, buy in smaller volumes, and sell more quickly when prices fall or fall fast people.Usually this causes the bitcoin market to crash, leaving buyers in a tizzy.In the history of Bitcoin, major price corrections in bear markets have only occurred four times. Each time, Bitcoin’s price fell by at least 67% in the month that followed.Risk warning: the above views are only personal opinions, not as investment adviceRisk warning: the above views are only personal opinions, not as investment advice
