Bitcoin hovers around the 100,000 mark. Six dimensions analyze what stage we are in the bull market

Author: Nan Zhi, Odaily Planet Daily

In the previous article "Reviewing Market Data from the Past 4 Years, What Stage of the Bull Market Are We In?", we concluded that the fee rate, active buy transaction volume, and total transaction volume are effective leading indicators of the market. However, these three indicators have provided two completely opposite conclusions: the fee rate indicates that the current market has just entered a slight FOMO phase from a calm period, but the active buy transaction volume and total transaction volume have already reached historical highs, suggesting a peak stage.

The author believes that the divergence in indicator conclusions is mainly caused by the rise of Bitcoin spot ETFs and the prevalence of "MicroStrategy-style" coin hoarding. These funds, which operate outside the "traditional crypto space," have driven the price and trading volume of Bitcoin to continue rising. On the other hand, their trading is isolated from centralized exchanges like Binance, and the leverage forms are completely different, leading to a disconnection between the fee rate and price.

Therefore, the author aims to explore what stage of the bull market we are ultimately in through other more universal, intuitive, and historically longer-standing indicators.

MVRV-Z Score

MVRV (Market Value to Realized Value Ratio) is an algorithm used to assess whether the market is overvalued or undervalued, achieved by comparing Bitcoin's current market value and realized value.

Market value refers to circulating market value, while realized value refers to the total of the last moving prices of each Bitcoin. For example, if 100,000 Bitcoins were last transferred three years ago at a price of $65,000, it would be recorded as 100,000 × 65,000, and so on to calculate the total value. The MVRV can be obtained by dividing market value by realized value.

The MVRV-Z score is calculated as (circulating market value - realized value) ÷ standard deviation of circulating market value. This method excludes short-term price noise and is more suitable for capturing extreme market sentiment.

According to coinglass, the current value of MVRV-Z is 3.2, close to the peak of November 2021, but still a considerable distance from the peaks of the first half of 2021 and the end of 2017.

AHR 999 Index

The Bitcoin AHR 999 index is a parameter proposed by AHR 999 in 2018 to guide coin hoarding. According to AHR 999's statistics from that year, 8.5% of the time the index is below 0.45, defined as the bottom-buying range; 46.3% of the time it is between 0.45 and 1.2, defined as the dollar-cost averaging range; and 29.3% of the time, it is above 1.2, which is the stop-investing waiting range.

According to coinglass, the current value of this indicator is 1.49, which is relatively close to the peak of 1.75 in March this year, but still a considerable distance from the two peaks of 6 and 3.4 in 2021.

PlanB: Bitcoin Will Rise to $150,000 in December

PlanB and his Stock-to-Flow model (S2F) gained fame during the bull market from 2019 to the first half of 2021 for successfully predicting that Bitcoin would reach $55,000 at the beginning of 2021, but it deviated in the second half of 2021 and completely failed in 2022.

As Bitcoin leads the market again, PlanB has begun to return. Yesterday, PlanB posted on the X platform stating that based on his predictions about Bitcoin's market trends for the next few years released at the end of September, BTC has basically achieved the first two targets, which are to rise to $70,000 in October and to $100,000 in November (actually $99,800 but close enough). The next target for BTC is to rise to $150,000 in December.

Interest Rate Cut Cycle

In the article "Summarizing the Patterns of U.S. Interest Rate Cycles Over 35 Years, Can a Rate Cut After 36 Days Trigger the Second Round of the Bitcoin Bull Market?", the author summarized the performance of U.S. stocks and gold during the five rate cuts in the past 35 years, concluding that whether or not there is a rate cut is not the fundamental reason for market fluctuations. The impact of rate cuts on future markets depends on the overall economic situation at the time, whether the rate cut is a proactive measure to promote economic development or a forced response to a black swan event. From the perspective of U.S. stocks, it is a tug-of-war between economic resilience and liquidity easing pricing.

If we were to make a comparison, the current situation is most similar to the interest rate cut cycle of 1989, when the U.S. experienced seven years of expansion and faced high inflation pressure in 1988-89, responding to inflation with extremely high interest rates, with the highest rate approaching 10%. In the following three years, the U.S. began a continuous rate cut, from 9.75% on February 24, 1989, to 3.00% on September 4, 1992.

According to the dot plot released in September, the Federal Reserve's interest rate is expected to decrease by about 2% from the current 4.75% over the next two years. How has the market performed historically after rate cuts? It can be divided into two phases: 1989 and 1995. During the first three years of the rate cut cycle, U.S. stocks experienced continuous fluctuations. In 1992, the rate cuts stopped and were maintained for two years, and after a brief preventive rate hike in 1994, there were no significant rate adjustments, leading to a continuous bull market for U.S. stocks. Therefore, from a macro fundamental perspective, we are still in the early to mid-stage.

Other Classic Indicators

Fear and Greed Index

Today's greed index is 76, down from the highest point, with the recent peak being 94 on November 22, when the Bitcoin price was $95,829. This greed value exceeds the levels of November 2021 and March 2024, and is at the same level as the peak value of 95 in February 2021.

200-Week Moving Average

Historically, Bitcoin's price typically bottoms near the 200-week moving average, while significant deviations from this average indicate a peak. At the peak in 2021, Bitcoin's price was about four times the 200-week average, while currently it is about twice (96,500: 41,500), still at a relatively low point.