Details of the crypto market cycle indicator

Signalling elegantly when to start buying or selling crypto.

Looking for a long-term strategy to outperform just HODLing it? No day-trading, just a few actions in a year? Our sell and buy signals are for the long-term investor who has limited time and wants guidance on WHEN to make a move close to a a crypto market cycle top or bottom.

These signals are for long-term crypto investors who aim to accumulate more assets with minimal downside risk

What we measure and how

We’ve tested 50+ on-chain metrics to determine which ones make most sense to form the foundation of Ace BTC. The current models looks at a set of on-chain and off-chain metrics and their ability to ‘predict’ past cycle bottoms and tops. Those metrics currently include:

  • Pi-cycle

  • Long-Term Holders NUPL

  • Reserve Risk

  • AVIV-Ratio

  • Market Value to Realized Value

  • Volume, Addresses and Fees

  • Twitter data

  • Coinbase App Rank

Note that we regularly evaluate and optimize our model, so these metrics might change over time.

Historical performance

Here’s an overview of the past price ranges in which our Crypto Market Cycle Indicator would have bought and sold Bitcoin. Our model starts with the assumption that on the 1st of January 2013 we became active in the crypto market and held Bitcoin.

Chainalytics Bitcoin Buy Score & Sell Score

We use extensive testing, weighing, and metric normalization to get to two easy to read scores on which we base our buy and sell decisions:

Some on-chain metrics are better indicators for a top or a bottom than others. In the two models, each metric has a specific weight depending on its predictive power; this allows the score to be more accurate. For example, if metric A has a high predictive power for tops but low for bottoms, it will respectively have a relatively high weight compared to other metrics in the sell model, and a relatively low weight in the buy model.

Taking action based on the CRYPTO MARKET cycle indicator

A BUY or SELL signal signals the start of a series of 4 recommended actions. This signal is triggered when the respective buy or sell score exceeds a defined threshold and remains within that range for a predetermined number of consecutive days. Here is the SELL strategy for upcoming market cycle:

Its aim is not to time the exact top or bottom, but rather take action around the top and bottom. The idea is that by doing this, the average buy/sell price is less sensitive to the short-term volatility we usually see around the ultimate tops and bottoms. Nobody is able to time the top or bottom, and there is little need for long-term investors to perfectly time their actions.

With each SELL signal, 25% of the original holdings is sold at every step. This means that on the day of the SELL signal, 25% of the total holdings is sold, followed by another 25% of the original amount at each subsequent interval. This approach ensures a systematic reduction of the overall position, maintaining consistency by always basing the sales on the initial holdings throughout the process.

Removing complexity from decision making

This Crypto Market Cycle Indicator provides comfort and peace of mind. It takes emotion out of decision making. We let the inputs be complex, and the output and actions be simple.

Models are never perfect, therefore we continuously aim to improve our model by evaluating and calibrating the model when necessary.