Bitcoin (BTC) could see a massive price rally in the coming months, based on an indicator that marked bear market lows from 2015 and 2018.
What is the Bitcoin Pi Cycle Bottom Indicator?
Named “Pi Cycle bottom” (bottom of the cycle pi, in Spanish), the indicator comprises a 471-day simple moving average (SMA) and a 150-period exponential moving average (EMA). Also, the 471-day SMA is multiplied by 0.745; the result is compared to the 150 day EMA to predict the bottom of the underlying market.
Specifically, every time the 150-day EMA has dipped below the 471-day SMA, it has marked the end of a Bitcoin bear market.
For example, in 2015, the crossover coincided with Bitcoin bottoming near $160 in January 2015, followed by a nearly 12,000% bull run to $20,000 in December 2017.
Similarly, the second crossover of the 150-471 MAs in history marked the end of the 2018 bearish cycle. A 2,000% price rally also followed, from nearly $3,200 in December 2018 to $69,000 in November 2021.
Only the third time in history
This week, Bitcoin’s 150-day EMA (at $32,332 as of Jul 12) will close below its 471-day EMA (at $32,208), thus recording the third Pi Cycle bottom in its history.
The cross appears as Bitcoin reels around $20,000, after a price correction of more than 75% from its high of $69,000.
The BTC/USD pair has been flirting with the level for almost a month, and the latest MLIV Pulse survey pointed out that its price is more likely to drop towards $10,000 than to bounce towards $30,000.
Fears arise due to an ongoing carnage in the crypto market led by the bankruptcy of several high-profile companies.
Meanwhile, central bank policies that focus on removing excess cash from the economy have also spooked investors.
Nonetheless, Bitcoin could rally to at least $30,000 if the given bottom fractal holds. The interim upside target coincides with the 0.236 Fib line of the Fibonacci retracement chart drawn from the $69,000 high to $17,000 low, as shown on the chart above.
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