Profit Levels Suggest Bitcoin Top Could Be Closer Than Most Think

Indicators are flashing red as a local top may be in for bitcoin.

Is this cycle going to peak early?

This cycle is different. Bitcoin ripped to an early all-time high, passing the $69,000 top of the 2021 cycle ten months earlier than it has taken out the old ATH in prior cycles (typically two years into the bull market). Much has been made of the fact that it soared past this critical level before the halving. The ETFs, and the narrative around them, have changed the game, creating intense demand for a limited number of bitcoins that has never before been seen.

But the question remains: Is it too much, too soon?

This Time Is [Not] Different
It’s already different, but the entry of big money won’t change fundamental realities like herd mentality.

Too High, Too Fast

We only have limited data from the past, but bitcoin cycles tend to follow a similar pattern, with the price action fitting neatly into four-year chunks. A long bull market is followed by a bear market: Three years up, one year down.

This cycle has started the same way, but the market has got very heated at the beginning of year 2. In the 2019 bull market cycle, bitcoin soared to an early first peak of $14,000, before cooling off. That was still far below the old all-time high of $20,000, though. It eventually peaked two years later at $69,000.

Bitcoin's recent price action has moved the goal posts. Some of the old assumptions and models are broken. One analyst looks at a particular metric, the 30-day MA profit/loss ratio, to gain insights.

All this indicator is really showing us is that there are a large number of traders who are currently well in profit (unsurprising, given that bitcoin has hit all-time highs). Taking money off the table is an obvious move. As more traders do that, the trend weakens, even if price continues upwards for a while. Ultimately, it rolls over, and as price declines, fewer and fewer traders end up booking profits.

@CryptoCon notes that we have crossed a key threshold for this indicator: One that has previously shown we are entering the final stages of the cycle. If that's the case this time, a lot of traders are going to be surprised.

Last Chance Saloon

Analysts warn that if bitcoin doesn't cool down soon, then there is a strong possibility of a left-translated cycle. In short, the market gets overheated and peaks earlier than in previous cycles. A longer-than-normal bear market follows. While the current price action might be exciting, such an unsustainable move ultimately means lower prices than would be the case with regular pullbacks and more more orderly market.

However, as Bitcoin enters the last-chance saloon for a "normal" cycle, it's possible that things might be about to change. A sizeable correction here, in terms of price and/or time, might put this cycle back onto a more sustainable footing.

Not everyone agrees, and the narrative and buying linked to the ETFs is certainly strong.

If that's the case, it may turn out to be a net negative for holders expecting $500,000 per BTC this cycle. We'll know more within a few weeks, at most, and sooner if a new high emerges this week.

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