From the perspective of on-chain data, exploring the gradually disappearing cycles of BTC

Inevitable Disappearance of Cyclicality

I believe most people in the crypto space are familiar with BTC's strong cyclicality. Originating from the design of halving every four years, BTC's price movements seem to correspond perfectly with it.

The end of 2013, the end of 2017, and the end of 2021 correspond precisely to three cyclical peaks, with the four-year pattern making countless market participants revere it as a guiding principle.

However, from a scientific perspective, mere "carving the boat to seek the sword" clearly cannot yield rigorous conclusions.

As the influence of halving diminishes, and with the growth of market capitalization, there are currently no viewpoints that can withstand scientific scrutiny and support the four-year cycle theory.

If cyclicality disappears in the future, how should we, as traders, respond?

The Most Powerful Group: Market Participants Holding for 1 to 3 Years

Historically, there is a group whose behavior always perfectly corresponds to BTC's bull and bear cycles, which is the market participants holding for "1 to 3 years."

(Chart Description: Proportion of market participants holding for 1-3 years)

We can clearly see:

Whenever this proportion hits a bottom, it always corresponds to the cyclical peak in price.
Whenever this proportion hits a peak, it always corresponds to the cyclical bottom in price.

In simple terms: whenever BTC's price peaks, they have just sold out; and whenever BTC's price bottoms, they have just accumulated a large amount of chips.

Which is the cause and which is the effect, we cannot provide an answer at this moment, but it is evident that the emergence of bull and bear cycles is closely related to them.

In this chart, three points are worth noting:

After each cycle, the minimum value of this proportion is increasing year by year. The reason behind this is not hard to speculate: more and more participants are choosing to hold BTC long-term.
Currently, this group's proportion is beginning to "increase," which resonates with my logic of being bearish on BTC since the end of last year. For detailed content, please refer to my previous post (the comments section has subsequent updates):

Detailed analysis of on-chain data: You may need to be prepared to escape the top at any time https://x.com/market_beggar/status/1878653495311839475
It can be reasonably speculated that the future bottom value of this proportion will only continue to grow. As BTC gradually enters the public eye, from being obscure to being listed on U.S. ETFs and competing with gold, more people will be willing to hold BTC.

The Two Peaks in 2021: A Complete Defeat for the "Carving the Boat to Seek the Sword" Faction

Previously, I wrote several articles specifically discussing the double peaks of 2021.

In one of them, "Revisiting the Double Peaks of 2021: What is 'Future Data Leakage'?", I explicitly pointed out the uniqueness of the double peaks in 2021 and explained in detail why one cannot simply "carve the boat to seek the sword."

Article link: https://x.com/market_beggar/status/1891335031177851380

Combining today's theme, I will analyze from another perspective:

(Chart Description: Realized Profit)

Realized Profit refers to the amount of profit realized daily based on the UTXO accounting principle on-chain.

In my pinned post, I also mentioned: whenever a concentrated and massive Realized Profit appears, it indicates that a large amount of low-cost chips is being sold off, which is a major warning signal.

For detailed analysis logic, please refer to the following:

Top signal tracking: Massive Realized Profit reappears https://x.com/market_beggar/status/1882645089786450368

From the perspective of on-chain data, the current cycle actually ended in April 2021 (the first peak) (https://x.com/market_beggar/status/1889878465056481309); however, due to various factors, BTC created a second peak in November 2021.

As shown in the above chart, when the second peak appeared, it was also accompanied by a massive amount of Realized Profit. So the question arises: "Where did this massive Realized Profit come from?"

Combining with the first chart, the proportion of the group holding for 1 to 3 years had already hit a bottom in April 2021. Therefore, the massive Realized Profit at the second peak could only have originated from the group that accumulated chips from "May to July 2021."

The point worth pondering is here:

If cyclicality gradually disappears in the future, will there be more situations of "brief bottoms" followed by the start of a new main upward wave?

As I mentioned in my previous article, past peaks often accompanied two large-scale distributions. This cycle indeed saw a second large-scale distribution in December last year. But if, with the future decrease in volatility, only one distribution is needed to complete a new style of bull-bear cycle for BTC, it is worth deep consideration.

For the First Time in History: A Massive Change in the URPD Chip Structure

Next, let's discuss this topic from the perspective of chip structure.

(Chart Description: Comparison of URPD chip structures at the tops of the past three cycles)

It can be seen that this cycle is the most special one to date.

The reason I say this is because:

This is the first time in history that, after two large-scale distributions, a massive amount of chips has accumulated in the peak area.

Previously, I also wrote about this topic, and detailed viewpoints can be found in the following:

BTC Chip Analysis: Discussing the Biggest Potential Chip Structure Risks on URPD https://x.com/market_beggar/status/1887430338009567304

Based on this, we may have to admit: BTC is entering a brand new era.

Analysis Methods and Coping Strategies After the Disappearance of Cyclicality

If cyclicality indeed continues to weaken as expected in the future,

How should we, as traders, view the market?

First, the conclusion: never "carve the boat to seek the sword," analyze using the logic of deduction.

In BTC's young life cycle, the sample size is severely insufficient,

Which has led to countless theories of the "carving the boat to seek the sword" faction being overturned one after another.

Altcoin seasons, guaranteed rises during the New Year, guaranteed rises n days after halving… and so on, the list goes on,

Not to mention the various indicators that were already knocked down in 2021.

Therefore, to overcome the problem of insufficient sample size, we must ensure the existence of logic during our research process.

Here’s an example: AVIV Heatmap.

AVIV can be seen as an optimized version of MVRV,

Calculating based on active (rather than completely inactive) chips, while excluding the influence of miners.

The AVIV Heatmap is one of the models I personally designed,

Utilizing the mean-reversion characteristic of AVIV, coloring based on its deviation.

The advantage of this analysis method is that the calculation of deviation considers "standard deviation,"

And standard deviation is a direct indicator of BTC's volatility.

Therefore, as volatility decreases, the criteria for defining extreme values in the AVIV Heatmap will also be relaxed accordingly.

Conclusion

To summarize briefly:

With the maturation of the market, the disappearance of cyclicality is an inevitable path.
Chips held for 1 to 3 years have dominated the bull and bear cycles in the past.
The emergence of the double peaks in 2021 announced the failure of the "carving the boat to seek the sword" methodology.
The chip structure has undergone unprecedented changes.
As traders, we must ensure logical consistency in our research process to ensure the usability of our findings.

BTC is still young, moving towards the public eye at an unprecedented pace,

And you and I will be witnesses to this historical feast.

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