Where will this Bitcoin cycle peak?

Source: On-Chain Mind, Translated by: Shaw Jinse Finance

To be honest, most Bitcoin price predictions are more like astrological forecasts than rigorous analysis. Bold predictions and "sky-high" targets may be interesting, but in reality, they are nothing more than guesswork.

They often ignore the fundamental mechanisms of the Bitcoin network: transfers, the actions of long-term holders, and the valuation dynamics that actually drive the cycles.

Here, we will take a different approach: delving into 6 on-chain indicators that have consistently signaled at the top of all previous cycles.

Key Takeaways Overview: From Factored Terminal Price to Delta Peak, 6 time-tested indicators have historical accuracy in accurately predicting Bitcoin frenzy peaks. Convergence is Key: These indicators may diverge in volatile markets, but they converge in parabolic uptrends, forming a dynamic range for potential tops rather than a fixed value. The Power of Averages: The composite line, combining all 6 lines, currently hovers around $180,000 after cyclical decay adjustments, and can serve as a reference for practical exit planning. **Focus on Momentum, Not Numbers:** True tops are not determined solely by price levels, but rather by market behavior, the actions of long-term holders, and the frenzy at the end of a cycle. **Why Most Price Predictions Fail:** Before delving into various indicators, we first need to understand why traditional forecasting methods rarely work. Blurred trendline charts are inherently subjective and largely lack context. They don't account for underlying network activity, the behavior of long-term holders, or the flow of accumulated value. Essentially, they rely on speculation rather than observable data. **To truly predict Bitcoin's top, we need indicators based on network fundamentals—data reflecting real-world usage, accumulation, and distribution. This is where the value of on-chain analytics lies.

6 Selected Indicators

In the chart below, the six lines of different colors represent estimates of different on-chain or market derivatives for the potential top of the cycle.

The forecast range is between $168,000 and $267,000. Due to the current market consolidation phase, the forecast range is relatively large.

Such fluctuations are normal during the mid-cycle downturn; during the late-cycle boom, indicators tend to converge. The following is a detailed explanation of each indicator and its importance: 1. Factored Terminal Price (Light Red) Factored Terminal Price is a classic indicator in on-chain analysis. It represents the theoretical upper limit of Bitcoin based on cumulative network value transfer and coin age. Historically, reaching this level indicates extreme market overheating. It provides a mature upper limit, serving as a benchmark for measuring price movements at the end of the cycle. 2. Token Value Enhancement (Dark Red) Token Value Enhancement (CVE) is a custom indicator that tracks the long-term price ceiling by combining Bitcoin holding time and changes in long-term holdings. Essentially, it measures the degree of speculative frenzy and dynamically adapts to longer cycles. It typically provides an early warning of late-stage frenzy driven by FOMO (fear of missing out). 3.5x Equilibrium Price (Yellow) This indicator combines realized price (average investor cost) and terminal price, incorporating historical network valuation and current market sentiment. Multiplying by 5 yields a speculative top prediction that encompasses both network fundamentals and reflects short-term market optimism. 4.4x Adjusted Realized Price (Green) This indicator is an improvement on the standard realized price multiple, taking into account spent output profit margin (SOPR) and trading volume. By multiplying the adjusted realized price by 4, it serves as a network-wide heat indicator, highlighting when a large number of tokens are being sold at high prices. 5. Days of Token Value Burn (Orange) This metric focuses on the liquidation of long-term held tokens. It spikes when idle tokens are finally transferred. Multiplying it by 4.5 gives it a high correlation with historical highs, especially when long-term holders sell during frenzied rallies. 6. Delta Top (Purple) The Delta top is calculated as seven times the difference between the actual price and the time-adjusted average market capitalization. It often coincides with psychological spikes. These are irrational spikes that push Bitcoin far above its fair value, marking the final frenzy of a bull market. Current Signals: Currently, these six indicators suggest a potential price top between $168,000 (CVE) and $267,000 (Delta top). Larger price fluctuations are normal in the current range-bound or volatile market phase. However, this discrepancy does not necessarily indicate inaccuracy. It reflects that Bitcoin has not yet entered a frenzied parabolic upward phase. Historical analysis shows that these indicators tend to converge closely before the peak of a cycle, as was the case in 2017: These six indicators have converged, aligning with the prices at the peak of each previous cycle. The Value of Composite Indicators: Relying solely on a single indicator can be misleading. To address conflicting signals, I created a composite moving average that integrates all six indicators and incorporates a decay rate factor to account for diminishing cyclical returns. This line, currently around $180,000, has consistently and reliably captured the peaks of the cycle. Take a look: In 2021, the average price of Bitcoin was close to $64,000. In 2017, amidst a frenzy, the price of Bitcoin reached $20,000. Even during the volatile market of 2013-2014, it touched similar price levels before its pullback. These are not coincidences, but rather reflect recurring patterns of investor behavior. Why Indicators Alone Are Not Enough It must be remembered that reaching an indicator target does not equate to a price top. Background factors such as market behavior, the speed of price fluctuations, and other typical signs of late-cycle frenzy are equally important. Price divergence is normal in the early to mid-cycle. Once Bitcoin enters its final vertical upward phase, indicators will quickly converge. My confidence in a macro top increases when prices begin to hug the moving average during a rapid rise. Ultimately, these models do not provide precise numbers, but rather a convergence zone that allows us to act based on evidence rather than emotion. Dealing with the Remaining Phase of This Cycle The key to this analysis is that the best prediction is not guessing a number, but identifying patterns and behaviors that have recurred in previous cycles. By combining multiple on-chain and market indicators, we can gain a clearer understanding of potential peak areas, rather than blindly pursuing a single target. It's important to note that this entire analysis is based on the premise that a frenzied phase occurs at the end of a Bitcoin cycle. While every previous Bitcoin cycle has experienced this phase, there's no guarantee it will repeat itself this time. Even so, considering the persistence and recurring patterns of market behavior, and the unchanging nature of investor psychology, my basic assessment is that we are very likely to witness this phase again. In the later stages of a Bitcoin cycle, even seasoned Bitcoin holders can be swept up in the frenzied upward movement; therefore, using data-driven indicators for advance planning is crucial. While Bitcoin may be maturing, and its peak may be less pronounced than in previous cycles, even considering the decay factor I've applied, current evidence suggests that we have not yet reached a typical cycle top. Depending on price movements, if this consolidation continues for longer, the average price could climb above $200,000; conversely, if a macroeconomic-driven rally accelerates faster than expected, a decline is possible. My plan for this cycle is to remain patient, avoid being blinded by market euphoria, and approach the peak in a more rational rather than impulsive manner. Observing the data and the underlying behavior is far more valuable than guessing the raw numbers. Summary: Relying on a single indicator carries the risk of missing opportunities; using a combination of six indicators provides robust and historically validated signals of cycle peaks. Dynamic Ranges Over Static Targets: The $180,000 moving average changes with market phases, providing a flexible exit range rather than a precise target. Situational Frenzy: Tops are reflected in holder behavior and parabolic price movements, not just price. Be rationally prepared to avoid falling into emotional traps. Evidence Over Guessing: Using on-chain data allows decisions to be based on observable trends, not hype or intuition.