There have been some instances regarding what to do now when the BTC market has fallen drastically, and we cannot predict or be sure of when to expect the market to appear green again. But some technical mapping and tools already showed the present situation and that too with many of the useful tools. One of the useful tools that preemptively showed the current market condition was the Pi Cycle Top/Bottom Indicator.
What is it and how does it work? The opinion differs as there are quite a few experts that showed this tool only applies to the BTC market and not to other altcoins or tokens. There is always a chance of a difference of opinion, but we must ignore the fact that due to BTC’s situation, the market would survive as it gains the strongest position in terms of market capitalization. And once it is down, the ripple effect is seen in the entire market while some projects completely failed and could not survive the change that occurred.
What is a Pi Cycle Top Indicator?
The Pi Cycle Top Indicator and Pi Cycle Bottom Indicator were prepared by Philip Swift, to check out the highest and lowest points in the BTC market and its price range. This proved right when the 2015 downfall took place for BTC. With the help of this tool, the traders were able to pinpoint the coming surge or downfall. The Pi cycle top indicator considers the moving averages of certain days. In this case, there were several days’ averages taken to check out the changes in coming highs and troughs, but the Pi cycle’s figure of 111 DMA (111 days (about 3 and a half months), Displaced Moving Average) compared with the 350-day moving average called 350DMA*2.
The market cycles that occurred in the past were correct when the market for BTC was about to plunge the Pi cycle bottom points flashed. The DMA of 350*2 is the price fluctuations in the price of BTC. It is quite fascinating to know that if we divide and compare the DMA’s we get a number quite close to that of the Pi value of 3.14. Let us see how this works. If we divide 350 by 111 the value is 3.153 which is quite close to Pi.
Using BTC Pi Cycle Top Indicator to Sell
In case of market noise when the market gets filled with unnecessary speculations and FUD, there are chances linked with the decision to sell the BTC at the right price seem difficult. To make decision-making easier at this point we use the Bitcoin Pi Cycle Top Indicator. Pi Cycle Top Indicator shows that Bitcoin’s price has reached its zenith for one cycle. As the price has reached its topmost point, there are chances of it falling. This is not a mere assumption but is backed by what happened in the past price changes. While in all these instances, the BTC did not take a further uptrend as soon as the top points of the Pi cycle top indicator flashed.
Pi Cycle Top Indicator denotes that the market is overheated and there will be a sudden steep curve about to occur. The indicator or tool works upon bigger time frames. From historical charts and data set points, the Pi cycle top indicator proved right and there were steep curves seen later. Also, the Pi Cycle top indicator shows that the 111-day moving average has reached 2x of 350 Days Moving Average. This gives a signal that since it has reached the double limit of 350 days (about 11 and a half months), it is
time to sell Bitcoin and there will be no further surge in the BTC’s price until we complete the next cycle and wait for the price surge.
Pi Cycle Bottom Indicator
In the case of the Bottom Pi Cycle Indicator, the situation is inverse and opposite to the pi cycle top indicator. We take the correlation for the 150 Exponential Moving Average and 471 days (about 1 and a half years) Simple Moving Average (SMA) and take it as bearish. The Pi Cycle Bottom Indicator shows that the architecture works for historic prices and signals the bearish low points of the market. This has proven right, as the bottom pi cycle has proven the right base points in the past. In the previous bear market cycles, the pi cycle bottom indicator showed the signal and from there the market fell to an all-time low of $152 as of January 16th, 2015. The second time the bottom signal flashed was on 16th December 2018. This made investors and analysts curious about the market and its volatility and when to buy and sell it.
In the case of defining the bottom pi cycle indicator, the long moving average is derived by finding the product of the value of pi by 150 days (about 5 months) MA.
As the value of Pi in the case of the bottom pi cycle is,
Value of Pi = Long MA/ Short MA
3.14 = Long MA/ 150
Long MA= 3.14 x 150
= 471.42
The Bottom Pi Cycle reaches its value when the long MA of 471.42 is divided by 150 EMA
Pi Cycle Bottom
OR
Pi Value = 471.42/150
= 3.14
Here is an additional value of x0.745 is used as a multiple of 471 days (about 1 and a half years) SMA and 150 Days EMA.
Crypto Cycles Explained
Crypto cycles are always recurring and therefore the investors, new entrants and many more would enjoy as well as face losses. These cycles form a recurring pattern with time. To cope with uncertain happenstances, there are lots of other techniques to pinpoint the next slump and sell. Though the prices would go up and down with time, there are fewer chances that every cycle would remain high or low.
The crypto cycle consists of an accumulation phase, where the prices begin to flatten out and paper hands sell their cryptos. Therefore, ideal sellers jump into the market and buy the dip. Here less volatility was seen in the market and people know that it is time to take advantage of the falling prices.
After the Accumulation Phase, the next phase is the Markup Phase. In the markup phase, the bullish trend is seen in the market where the prices somehow stabilize, and investors are ready for market highs. Everyone who buys now can make a profit if they hold on to their crypto.
As the Markup Phase ends, the next in line is the Distribution Phase. This is seen as the most volatile phase of all, and this is the phase where FOMO investors make their move. And their purpose is to mark their profits. The average distribution time is around 4 months.
As the distribution phase ends, the last phase is Markdown Phase. In this phase, there are chances that the sellers and their supply would dominate the buyers in the market. In this phase, many paper hands appear in the forefront and sell actively as they do not absorb the brunt. As the price drops below 50% of a certain asset, the market mirrors the most pessimistic outlook.
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