🔥 Bitcoin Pi-Cycle Bottom Indicator Signals Bear Market Bottom

13 Jul 2022

Before we dive deeper into the analysis I want to give a quick overview of what the pi-cycle bottom indicator is,

"The indicator comprises a 471-day simple moving average (SMA) and a 150-period exponential moving average (EMA). Furthermore, the 471-day SMA is multiplied by 0.745; the outcome is pitted against the 150-day EMA to predict the underlying market's bottom."

In short, the Pi-Cycle bottom indicator is similar too the Pi-Cycle top indicator, but with different values.

Historically, the Pi-Cycle bottom indicator has signaled the BTC bear-market bottom within 3 days of the signal. This would mean that the BTC bottom will be in within the next three days.

However, will the pi-cycle bottom indicator work again this time? There's only two previous instances of the indicator working, one can't really deduce statistical validity from an N=2. Funnily enough, people said the same thing about the Pi-Cycle top indicator last year. In hindsight, the Pi-Cycle top indicator did a great job signaling the technical top for the current BTC cycle (technical top = top based on indicators and on-chain metrics).

Will this time be different? Maybe.

The current macro-economic outlook is vastly different from the previous cycles. Bitcoin's correlation with the stock market has never been this high and, with inflation still on the rise and a recession looming, stocks are more likely to go down than to go up in the near-future. Unless today's CPI numbers will cause a huge 20%-30% sell-off, I don't think that BTC will bottom within the next three days. Time will tell.

Nevertheless, I think that this indicator is one of the better bear-market bottom indicators. Bottoms never occur when people expect it.