We’ll begin with the introduction of the Bitcoin Top Gauge, which is exclusive to this newsletter. This gauge reading will be updated 2 times a week in newsletter issues.
It is one I have developed personally by combining 3 different price-action-based indicators which have each on their own called the Bitcoin cycle top in every cycle to date (2011, 2013, 2017) with reasonable accuracy.
While each indicator is effective on its own, I believe their combination offers an even more accurate look at our proximity to the Bitcoin cycle top.
By combining readings from all 3 indicators, and comparing it to a combination of their critical levels, I’ve derived a single number which has fallen within historically reliable ranges at cycle lows, mid-cycle lows (more on this in next section), and tops. We’ll refer to this as the Bitcoin Top Gauge.
The Top Gauge ranges between 20 and 100, where 20 represents proximity to the cycle low and 100 represents proximity to the cycle top. The reading should be taken as a guideline. It is not expected to reach its max level exactly at the Bitcoin cycle top and may even overshoot.
Let’s quickly backtest:
- At the 2013 low, Top Gauge read 20.
- At the 2017 low, Top Gauge read 27.
- At the 2021 low, Top Gauge read 23.
- At the 2013 mid-cycle low, Top Gauge read 38.
- At the 2017 mid-cycle low, Top Gauge read 53.
- At the 2021 mid-cycle low, Top Gauge read 31.
- At the 2011 top, Top Gauge read 101.
- At the 2013 top, Top Gauge read 100.
- At the 2017 top, Top Gauge read 100.
It is advisable to consider ranges on this gauge, rather than exact numbers. For our purposes, we’ll consider:
Cycle Low Near = 20-29
Cycle Top Near = 95-100
Anything over 95, and it’s time to closely track lower time frame indicator levels and price action to more precisely identify the top.
Today’s Top Gauge reading is 66.