Bitcoin Pi Cycle Top Risk Indicator

In this idea, I’ll walk you through the Bitcoin Pi Cycle Top Risk Indicator — a tool based on the well-known Pi Cycle Top Indicator.

By the end, we’ll have a new lens to analyze BTCUSD market cycles. 👇

First, a quick recap of the original Pi Cycle Top Indicator. It uses two moving averages:

— 111-day MA (111DMA)

— 350-day MA × 2 (350DMA x 2)

A bullish crossover (111DMA crossing above 350DMA×2) historically predicted BTC tops within 3 days.

However, one sould know that in 2021 the signal occurred in April (the first peak). The higher November peak didn’t trigger the indicator.



Now let’s take the ratio: 111DMA / (350DMA × 2) → this gives us the Pi Cycle Top Ratio (orange line). When the ratio crosses 1 from below, that’s equivalent to the original Pi Cycle Top signal.

As you can see: each new major peak is lower than the previous. In 2021, the ratio barely touched 1. This implies that in this cycle, the moving averages may not cross — and Pi Cycle Top Indicator may not generate a signal.



Can we forecast the next peak of the Ratio? (Keep in mind: Ratio peaks ≠ BTC price peaks but we'll get back to it later.)

Turns out the Ratio peaks fit nicely along a logarithmic curve — let’s plot it. And the lows sit on a straight line. We add both bounds, plus a midline.

Now we have a band within which the Ratio tends to move — useful for anticipating turning points.



Next, let’s normalize the Ratio within this band:

— bottom bound = 0

— top bound = 1

This gives us the Pi Cycle Top Risk indicator — a clean, scaled version of market risk.

Currently, it sits at 0.47, right around the mid-range.



Now let’s compare Pi Cycle Top Risk to past BTC tops and bottoms (using daily closes).

We’ll treat April 2021 as the last cycle top.

The chart shows:

— BTC tops occurred when Risk ≥ 0.79

— Bottoms occurred when Risk ≤ 0.24 (or ≤ 0.10 excluding 2011)



Summary:

1. Right now, Pi Cycle Top Risk ≈ 0.47 and has been hovering near 0.5 for the past year.

This reflects a relatively low volatility during this market cycle — BTC has been rising steadily, with pauses for consolidation, no mania phase and blow-off top.

2. How can we use this going forward?

I can’t say whether the Risk will rise or fall — and there’s no guarantee it’ll hit the boundaries.

But if it's ever:

— Above 0.9 (bright-red zone) → strong signal to consider selling

— Below 0.1 (bright-green zone) → potentially good buy opportunities



Not financial advice.

We’ll keep tracking it.