What Do On-Chain Indicators Say About the Cycle? | Credit: Hameem Sarwar
Share
Key Takeaways
The RHODL ratio has given a signal that previously led to a prolonged bear market.
The Accumulation Trend Score shows that larger entities accumulate Bitcoin (BTC).
Bitcoin’s (BTC) Reserve Risk indicator shows a bearish divergence that could mark the cycle top.
Bitcoin’s on-chain data is flashing familiar signals that have historically marked major cycle tops.
From the RHODL ratio’s bearish divergence to the Accumulation Trend Score nearing its peak, key indicators align in a way that suggests the market may have topped.
Similar patterns in past cycles have preceded prolonged bear markets, raising the question of whether this time will differ.
RHODL Ratio
The Realized HODL (RHODL) ratio is an indicator that uses a ratio of the Realized Cap HODL waves.
The ratio between the 1-week and 1—to 2-year Realized Cap HODL bands determines whether the market is overheated.
Get These Top Crypto Casino Offers Now!
Sponsored
Disclosure
We sometimes use affiliate links in our content, when clicking on those we might receive a commission at no extra cost to you. By using this website you agree to our terms and conditions and privacy policy.
Bitcoin RHODL Ratio | Credit: Valdrin Tahiri/Glassnode
In this sense, the current cycle is more similar to the previous one. The RHODL ratio peaked at 15,000, generating a significant bearish divergence with the Bitcoin price.
So, if the pattern repeats, Bitcoin has already reached its cycle peak and has started a lengthy bear market.
An accumulation score close to one (purple) suggests that large entities are accumulating, while one close to 0 (yellow) indicates that small ones are doing the same.
Interestingly, all previous cycle tops have had accumulation scores close to 1.
While this may seem counterintuitive, it could also mean that accumulation has occurred to the cycle peak, and distribution by long-term holders will follow during the first stage of the downward trend.
The accumulation trend score has been close to 1 for several weeks, which, if history repeats, could mean that the cycle top is near.
Reserve Risk
The final Bitcoin on-chain indicator analyzed is the Reserve Risk indicator, which measures long-term holders’ confidence through the Bitcoin price and the HODL bank.
The indicator is similar to the RHODL ratio in that peaks in overbought territory often mark the top of the Bitcoin cycle, but that did not happen in 2021.
Instead, the indicator created a bearish divergence (black), which marked the cycle top.
This cycle has been extremely unusual for the Reserve Risk indicator since it never left the oversold level (green), which indicates high confidence and low price.
However, the indicator has already created a bearish divergence relative to Bitcoin’s price, so if history repeats, this could mark the top of the market cycle.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
Valdrin Tahiri is a cryptocurrency analyst and reporter at CCN, specializing in technical analysis with a focus on Elliott Wave theory, on-chain metrics, and fundamental research. He brings over seven years of experience in the crypto space as both a trader and writer.
He discovered cryptocurrencies in 2017 while earning his MSc in Financial Markets at the Barcelona School of Economics, which sparked a deep interest in blockchain and market dynamics. Since then, he’s contributed to top crypto outlets like BeInCrypto and CoinGape.
Valdrin also served as Community Manager of BeInCrypto’s Telegram group for three years, helping grow it into one of the largest crypto communities worldwide. His expertise in market structure and price patterns allows him to break down complex trends into clear, actionable insights.
He’s published thousands of articles covering altcoins, Bitcoin cycles, and macro trends.
