The Pi Cycle Top indicator was created by Phillip Swift in April 2019 and identifies tops in the bitcoin market cycle. Historically, the Pi Cycle Top indicator has called out tops in the price of bitcoin within three days.
The indicator uses the 111-day moving average and the value of the 350-day moving average times by two (the value of the 350 day moving average is multiplied by two, not the number of days).
The 111-day moving average has crossed over the 350-day moving average x 2 a total of three times in previous cycles. Each crossover is closely aligned with the top of each cycle.
The chart below shows each time the top has been indicated by the Pi Cycle Top indicator.
Once the 111-day moving average moves above the multiple of the 350-day moving average, it has been a good time to sell bitcoin. As shown in the chart above, the first time the Pi Cycle Top indicator gave a sell signal was when bitcoin peaked at $230 in April 2013. After the 111-day moving average crossed above the multiple of the 350-day moving average, the price proceeded to fall from highs near $230 to a low near $60 in July 2013.
The second signal was given after BTC exceeded $1,000, when it was trading at around $780 in early December 2013. Following the indication of a top in the market, BTC went on to fall as low $175 in January 2015.
Finally, the third sell signal was provided by the Pi Cycle Top indicator after BTC reached its all-time high near $20,000, with the top indicated when the price was $16,600 on December 14th, 2017. Following this, the price went on to fall to a low near $3,100 in December 2018.
While the Pi Cycle Top indicator doesn’t give signals that often, it is a useful tool to gauge market tops for bitcoin.
Currently, the market is nowhere near a top as the 111-day moving average and multiple of the 35-day moving average are diverging. But once the 111-day moving average cross above the 350-day moving average times by 2, then we will get a reliable signal that bitcoin has peaked and that it is a good time to go short.