Glossary of market-cycle terms
Quick definitions of the terms used across CycleBottom’s risk metrics and cycle-bottom detector. For educational purposes only — not financial advice.
- Risk level (0–1)
- A normalized score of how cheap or expensive an asset is versus its long-term trend. 0 is historically cheap (accumulation); 1 is historically expensive (distribution).
- 365-day moving average
- The average daily closing price over the last 365 days. It smooths out short-term noise to show the long-term trend the risk metric measures deviation from.
- Drawdown
- The percentage decline from a prior peak (often the cycle’s all-time high). Deep drawdowns are one signal of a possible cycle bottom.
- Accumulation zone
- A price range, usually at low risk readings, where long-term buyers have historically accumulated.
- Distribution zone
- A price range, usually at high risk readings, where long-term holders have historically sold into strength.
- MVRV
- Market Value to Realized Value — compares an asset’s market cap to the aggregate price at which coins last moved. Low MVRV means holders are broadly underwater, common near bottoms.
- Hash ribbon
- A Bitcoin indicator comparing short- and long-term moving averages of network hash rate. A recovery after miner capitulation has historically marked good accumulation periods.
- Pi Cycle
- A timing indicator built from long and short moving averages whose crossings have lined up with major cycle tops and bottoms.
- Puell Multiple
- Daily miner revenue divided by its 365-day average. Low values indicate depressed miner economics, often seen near Bitcoin bottoms.
- RSI (Relative Strength Index)
- A momentum oscillator from 0 to 100. Readings below 30 are considered oversold; weekly RSI below 30 is one bottom indicator.
- RSI divergence
- When price makes a lower low but RSI makes a higher low (bullish divergence), suggesting downside momentum is fading.
- Capitulation
- A phase of panic selling, often on high volume, where holders give up. It frequently coincides with cycle lows.
- 200-week moving average
- A very long-term average that has historically acted as a floor near Bitcoin cycle bottoms.
- Dollar-cost averaging (DCA)
- Investing a fixed amount on a fixed schedule regardless of price, to spread purchases over time and reduce timing risk.