Bitcoin (BTC) could see a massive price recovery in the coming months, based on an indicator that characterizes the bear market bottoms of 2015 and 2018.
What is the Bitcoin Pi Cycle Bottom Indicator?
Dubbed the “Pi cycle bottom,” the indicator consists of a 471-day simple moving average (SMA) and a 150-day exponential moving average (EMA). Moreover, the 471-day simple moving average is multiplied by 0.745; The result is placed against the 150-day moving average to predict the underlying market bottom.
Notably, every time the 150-period moving average drops below the 471-period simple moving average, it marks the end of the bitcoin bear market.
For example, in 2015, the crossover coincided with a bitcoin price drop near $160 in January 2015, followed by a nearly 12000% rally towards $20,000 in December 2017.
BTC/USD weekly price chart showing the ‘pi cycle bottom’ indicator. Source: TradingView
Similarly, the second 150-471 MA cross in history marks the end of the 2018 bear cycle. This was also followed by a 2,000% price increase – from around $3,200 in December 2018 to $69,000 in November 2021.
Only for the third time in history
This week, Bitcoin’s 150-day EMA (at $32,332 as of July 12) is set to close below the 471-day EMA (at $32,208), thus marking the third lowest Pi cycle in its history.
The weekly BTC/USD price chart shows the bottom of the next potential cycle. Source: TradingView
The cross is showing Bitcoin oscillating around $20,000, after a 75% correction in excess price from the peak level of $69,000.
Related: Bitcoin Price Could Drop $15.5K If It Retests This Historical Support Level
The BTC/USD pair has been flirting with the level for about a month, as the latest MLIV Pulse survey indicated that its price has a greater potential for a drop towards $10,000 than a bounce back towards $30K.
Concerns are emerging due to the ongoing carnage in the cryptocurrency market that is being driven by the failure of several prominent companies.
The results of the MLIV Pulse survey on Bitcoin’s next trend. Source: Bloomberg
Meanwhile, tight central bank policies focused on removing excess liquidity from the economy have alarmed investors.
However, Bitcoin could rebound to as little as $30K if the specified lower fractal is triggered. The temporary upside target coincides with the 0.236 Fib line of the Fibonacci retracement chart drawn from the $69,000 swing high to the $17,000 swing low, as shown in the above chart.
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