In the movie update on YouTube, cryptocurrency analyst Rekt Capital looked at bitcoin’s price dynamics through the prism of the PI Cycle Top indicator, a predictive tool that has gained popularity due to its historical accuracy in pinpointing bitcoin bull market peaks.

Here’s How High Bitcoin Could Go This Cycle

The PI Cycle Top indicator works by tracking two key moving averages: the short-term 111-day moving average (marked in orange in Rekt Capital’s visual analysis) and the 350-day moving average (shown in green) to gauge extended market trends. A key aspect of this tool is the “crossover” event, where the short-term moving average rises above the long-term average, which historically signals the top of a bull run in the Bitcoin market over the course of several days.

However, current market data shows that these two moving averages are diverging, not converging, suggesting that bull market top conditions do not yet exist. “Since these two PI Cycle moving averages are currently diverging, the bull market top is very close,” Rekt Capital explained in its video.

The 111-day moving average serves as a key indicator in Rekt Capital analysis. During bear market phases or in the years leading up to the halving, this moving average acts as a barometer of buying opportunities, hovering around it in downtrends. In turn, in halving years like 2020, it tends to act as a support level, supporting uptrends that lead to up-to-date all-time highs.

“Any dip below this moving average is buying territory,” Rekt Capital noted, emphasizing the strategic importance of this level in various market phases. Bitcoin is currently trading below this moving average, around $59,000, something it hasn’t done for a significant period since the year prior to the halving, potentially undervaluing relative to historical patterns.

The analysis suggests that if Bitcoin reclaims the $63,900 level — just above the current position of the 111-day moving average — it could end the current buying opportunity, setting the stage for a further move higher. “We are about $5,000 away from reclaiming this region. Not much needs to happen for Bitcoin to rebound and reclaim this region, ending this buying opportunity,” noted Rekt Capital.

Another component of the PI Cycle Top indicator is the 350-day moving average. This average is typically revisited in the later stages of a market cycle, often acting as resistance before a breakout to the upside occurs.

“Upside deviations beyond the green moving average are where we see parabolic price action,” Rekt Capital pointed out, referring to events in 2013 and 2017 that saw such moves. The current green moving average is around $96,000, indicating significant upside potential before any parabolic risks manifest.

Rekt Capital’s analysis suggests that while Bitcoin is a long way from reaching $96,000, historical patterns suggest it will eventually approach or perhaps exceed that level, leading to a short-term period of rapid price growth.

“[We are] nowhere near that green moving average as it is around $96k so we are still almost $30k away from that region […] “once we cross the $96,000 level, we need to understand that the clock is starting to count down to the end of the uptrend and we may be dealing with a window lasting just a few months in which Bitcoin will continue to grow, of course with periods of decline,” the analyst explained.

Looking ahead, Rekt Capital emphasized the importance of monitoring the convergence of these two moving averages for signs of a potential bull market top. “We need to see a rise in the Pi Cycle Moving Average for this crossover to occur to some degree,” he said, indicating that a keen boost in price action is necessary for the final crossover to materialize.

At the time of going to press, the BTC price was $58,695.

Featured image created with DALL.E, chart from TradingView.com