Why a Composite Indicator?
Every individual Bitcoin indicator has blind spots. The MVRV Z-Score relies on on-chain data that can lag during rapid price moves. Pi Cycle Top only signals peaks, not bottoms. The Mayer Multiple can give false signals in prolonged bear markets. The Power Law model assumes a specific mathematical relationship that may evolve over time.
The Cycle Score solves this by combining five indicators that use different data sources and methodologies. This diversification is the same principle behind portfolio theory — just as holding multiple uncorrelated assets reduces portfolio risk, combining multiple uncorrelated indicators reduces signal noise.
When only one indicator flashes a buy or sell signal, it might be noise. When three or four agree simultaneously, it's a high-conviction signal. The Cycle Score captures this agreement in a single, easy-to-read number.
The Five Component Indicators
The Cycle Score draws from five distinct sources of market intelligence:
1. Power Law Position — Measures where Bitcoin's current price sits relative to the Power Law model's support, fair value, and resistance bands. Based on the mathematical relationship between price and time since Bitcoin's genesis block. Source: time-based regression model.
2. MVRV Z-Score — Compares market capitalization to realized capitalization (the aggregate cost basis of all holders). Based purely on blockchain data — what people actually paid for their coins. Source: on-chain data.
3. Pi Cycle Top Proximity — Measures the convergence between the 111-day MA and 2× the 350-day MA. When these lines cross, a cycle top is imminent. Source: price-based technical analysis.
4. 2-Year MA Multiplier Position — Tracks where price sits between the 2-year moving average (buy zone) and its 5× multiple (sell zone). Source: long-term price trend.
5. Mayer Multiple — The ratio of price to the 200-day moving average. Quantifies deviation from the medium-term trend. Source: price-based technical analysis.
Each indicator is normalized to 0-100 using its historical minimum and maximum values, then the five scores are averaged.
Reading the Cycle Score
The Cycle Score maps to three zones with clear investment implications:
0-33: Accumulation Zone (Green) Multiple indicators suggest Bitcoin is undervalued. Historically, this zone has coincided with bear market bottoms and early recovery phases — the highest-probability buying opportunities. The deepest readings (below 15) have only occurred during maximum capitulation events like the March 2020 crash and the November 2022 FTX collapse.
34-66: Neutral Zone (Yellow) Bitcoin is fairly valued by most metrics. This is the zone where DCA strategies are most appropriate — not cheap enough for aggressive accumulation, not expensive enough for profit-taking. Most of Bitcoin's trading time is spent in this range.
67-100: Distribution Zone (Red) Multiple indicators agree that Bitcoin is overvalued relative to historical norms. This doesn't mean price will crash immediately — Bitcoin can spend weeks or months in the overvalued zone during parabolic bull runs. But it does mean the risk/reward ratio has shifted unfavorably. Readings above 85 have preceded every major cycle top.
The transition between zones is gradual, not binary. A score of 35 is very different from a score of 65, even though both are "neutral."
Strengths and Best Practices
The Cycle Score's primary strength is robustness. Because it combines five independent signals, it's resistant to any single indicator failing or producing a false signal. If one component gives a misleading reading, the other four dilute its impact on the composite score.
How to use it effectively:
- Don't treat zone boundaries as binary triggers. A score of 32 vs. 34 is not meaningfully different. Think in gradients, not switches. - Pay attention to direction, not just level. A score of 50 that's falling from 70 is very different from a score of 50 that's rising from 30. The trend in the Cycle Score matters as much as its absolute value. - Use it for position sizing, not all-or-nothing decisions. Increase your DCA amount when the score is low, decrease it when high. Don't go 100% cash or 100% Bitcoin based on any single reading. - Check the individual components. When the Cycle Score gives an extreme reading, click through to each component indicator to see which ones are driving the signal. Unanimous agreement across all five is a stronger signal than one extreme outlier dragging the average. - Combine with your own judgment. No indicator replaces macroeconomic context, regulatory developments, or personal financial circumstances. The Cycle Score is a tool, not a crystal ball.