When the "Old Map" No Longer Applies: A Review of 8 "Failing Classic Cryptocurrency Indicators"

Author: Frank, PANews

At the beginning of 2026, the cryptocurrency market is filled with a sense of frustration and confusion.
Bitcoin has retraced about 36% from its all-time high set in October 2025, and the market swings back and forth between bulls and bears. But what’s causing more unease among crypto investors isn’t just the price itself, but the fact that almost all of their traditional indicator systems used to gauge market positioning have failed.
The S2F model’s prediction of $500,000 has deviated more than threefold from reality. The four-year cycle, after halving, has yet to produce a breakout rally. The Pi Cycle Top indicator remains silent throughout the entire cycle. The fixed threshold of the MVRV Z-Score no longer triggers signals. The rainbow chart’s top zones seem unreachable. Meanwhile, the contrarian signals from the Fear and Greed Index keep failing, and the highly anticipated “altcoin season” has yet to arrive.
Why have these indicators collectively failed? Is it just a temporary deviation, or has the market structure fundamentally changed? PANews has systematically analyzed the eight widely discussed failed indicators.

Four-Year Cycle Theory: The Halving Supply Shock Is Becoming Insignificant
The four-year cycle is the most widely accepted rule in crypto markets, suggesting Bitcoin follows a fixed rhythm driven by halving events: accumulation before halving, explosive growth 12-18 months after, peak with 75%-90% decline, then bottoming out and restarting. The halvings in 2012, 2016, and 2020 have validated this pattern well.
However, after the April 2024 halving, the market did not experience the typical explosive rally seen in previous cycles. Bitcoin’s annualized volatility has dropped from over 100% historically to around 50%, showing more of a “slow bull” pattern. The decline in bear markets has also narrowed: in 2022, the drop from peak to trough was 77%, less than 86% in 2014 and 84% in 2018.
Discussions about the failure of the four-year cycle are widespread on social media. The mainstream view is that institutional capital has fundamentally changed the microstructure of the market.
First, Bitcoin spot ETFs in the US have continuously attracted funds, creating sustained demand and breaking the simple narrative driven solely by halving.
Second, on the supply side, the 2024 halving reduced block rewards to 3.125 BTC, decreasing daily new supply from about 900 BTC to 450 BTC, a reduction of roughly 164,000 coins annually. This halving lowered Bitcoin’s annual inflation rate (supply growth) from 1.7% to about 0.85%, with the reduced supply amounting to only 0.78% of the total 21 million coins. Compared to Bitcoin’s market cap in trillions of dollars, this supply reduction’s actual impact is minimal.

Pi Cycle Top: Lower Volatility Makes Moving Averages Cross Less Likely
Developed by Philip Swift, the Pi Cycle Top indicator identifies market tops by observing when the 111-day moving average crosses above twice the 350-day moving average. It accurately signaled tops in 2013, 2017, and April 2021.
In the 2025 bull cycle, these two moving averages never produced a valid crossover, and the indicator remained “silent.” Yet, the downward trend in the market was already quite clear.
The failure of this indicator may be because Pi Cycle Top relies on extreme price volatility to produce crossovers—short-term moving averages diverge significantly from long-term averages during sharp swings. As Bitcoin’s volatility structurally declines, especially with ETF and institutional participation, price movements become smoother, reducing parabolic surges driven by retail traders. The conditions for moving average crossovers are no longer easily met. Additionally, this indicator is essentially a curve fit based on early adoption phases (2013-2021). Once market participant structures change dramatically, the parameters fitted to early data may no longer be applicable.

MVRV Z-Score: Changes in Market Size and Holding Patterns Alter the Basis of Calculation
The MVRV Z-Score is an on-chain valuation metric comparing Bitcoin’s market value (current market cap) with realized value (the total value based on the last on-chain movement price). Traditionally, a Z-Score above 7 signals overbought conditions, while below 0 indicates extreme undervaluation.
In practice, even at the 2021 cycle top, the Z-Score did not reach previous cycle highs, and the fixed threshold (>7) was not triggered. By 2025, although Bitcoin topped out, the highest Z-Score was only 2.69.
Possible reasons include:

1. Institutional high-cost buying and long-term holding have systematically raised the realized value closer to market value, compressing the Z-Score’s volatility range.
2. Short-term active traders’ high-frequency movements continually “refresh” the realized value near current prices, further narrowing the MV-RV gap.
3. As market capitalization grows, generating extreme Z-Score values similar to early cycles requires exponentially larger capital inflows.
   The combined effect is that the Z-Score’s ceiling has been structurally lowered, making the original “7 = overbought” threshold impossible to reach.

Rainbow Chart: The Logarithmic Growth Assumption Is Being Broken
The Bitcoin Rainbow Chart uses a logarithmic growth curve to fit long-term price trends, dividing price ranges into color bands from “extremely undervalued” to “bubble peak,” helping investors identify buy and sell zones. In 2017 and 2021, when prices reached the high color bands, they indeed corresponded to cycle tops.
However, during the entire 2024-2025 bull cycle, Bitcoin’s price only stayed within the neutral “HODL!” zone, never approaching the deep red “bubble” zone. The chart’s top prediction function was almost never activated.
For the rainbow indicator, the model treats price as a function of time, ignoring halving, ETFs, institutional flows, macro policies, or other variables. Additionally, the decline in volatility brought by institutional participation reduces the deviation of prices from the trend line, making the fixed-width color bands less reachable. Moreover, Bitcoin’s growth is transitioning from the “steep segment of the S-curve” of adoption to a “slow growth phase of a mature asset.” The exponential extrapolation overestimates actual growth, causing prices to stay systematically below the center line in the long term.

Altcoin Season Index and BTC Dominance: The Premise of “Capital Rotation” Has Changed
The Altcoin Season Index measures the proportion of top 100 altcoins outperforming BTC over the past 90 days; a value above 75 indicates “altcoin season.” BTC Dominance (Bitcoin’s market cap share) falling below 50% or 40% signals capital flowing from BTC into altcoins. In 2017, BTC dominance dropped from 85% to 33%, and in 2021 from 70% to 40%, corresponding to major altcoin rallies.
However, throughout 2025, the Altcoin Season Index has remained below 30, staying in a “Bitcoin season” zone. BTC dominance peaked at 64.34% and never fell below 50%. By early 2026, what’s called “altcoin season” is more about narrative-driven partial rotations, benefiting only specific sectors like AI and RWA, rather than broad-based rallies like in previous cycles.
The deeper reason for these indicators’ failure is that the current market structure, dominated by institutional and ETF funds, has shifted risk preferences—these large funds prefer to buy on dips and hold long-term, smoothing out volatility driven by retail sentiment. This makes signals based on extreme volatility or sentiment less reliable. Additionally, the siphoning of capital into AI and precious metals markets reduces overall inflows into crypto. The incremental capital attracted by Bitcoin ETFs flows directly into BTC, and these funds are structured as financial products, not entry tickets into the crypto ecosystem. Furthermore, the narrative exhaustion in the altcoin space and weakening liquidity support for new projects are also reasons why altcoin season has been delayed.

Fear and Greed Index: Retail Sentiment Is No Longer the Price Driver
The Fear and Greed Index combines factors like volatility, market momentum, social media sentiment, and Google Trends into a 0-100 score. The classic approach is to buy when extremely fearful and sell when extremely greedy.
In April 2025, the index dropped below 10, lower than during the FTX collapse, but Bitcoin did not experience the expected sharp rebound afterward. The 30-day average for the year was only 32, with 27 days in fear or extreme fear zones. As a top indicator, it’s also unreliable. During the October 2025 market high, the index was only around 70.
The core reason for the failure of the Fear and Greed Index is that the transmission mechanism between sentiment and price has been broken by institutional capital. When retail investors are fearful, institutions may be buying the dip; when retail investors are greedy, institutions might be hedging with derivatives. This disconnect means retail sentiment no longer dominates price movements.

NVT Ratio: On-Chain Transaction Volume No Longer Reflects True Economic Activity
The NVT ratio, called the “Crypto Price-to-Earnings ratio,” divides network value (market cap) by daily on-chain transaction volume. A high NVT suggests overvaluation; a low NVT suggests undervaluation.
In 2025, the indicator showed conflicting signals: in April, before a major price rally, the NVT Golden Cross reached 58, but by October, when prices hit around $120,000, it indicated undervaluation.
The fundamental reason for NVT’s failure is that the on-chain transaction volume, the denominator, no longer accurately represents Bitcoin’s real economic activity.

S2F Model: Only Looks at Supply, Not Demand
The Stock-to-Flow (S2F) model was proposed by anonymous analyst PlanB in 2019, inspired by precious metals valuation logic. It measures scarcity by the ratio of Bitcoin’s stock (total supply) to its annual production (flow), fitting a price prediction curve via logarithmic regression. The core assumption is that after each halving, the S2F ratio doubles, leading to exponential price increases.
In terms of failure, in December 2021, the model predicted Bitcoin would reach about $100,000, but the actual price was around $47,000—more than 50% off. For 2025, the target was $500,000, but the actual price was only about $120,000, a gap of over three times.
The fundamental reason for S2F’s failure is that it’s purely a supply-side model, ignoring demand variables. Moreover, once Bitcoin’s market cap reaches trillions, exponential growth becomes physically harder to sustain, and diminishing marginal effects are unavoidable.

It’s Not Just One Indicator Failing, But the Shared Market Assumptions Behind Them
Looking at these indicators collectively reveals that their failures are not isolated but point to a common set of structural changes:

• Institutional shifts have altered the microstructure: Bitcoin ETFs, corporate treasury allocations, CME derivatives, and pension fund entries have fundamentally changed capital structures and price discovery mechanisms. Institutions tend to buy on dips and hold long-term, smoothing out volatility driven by retail sentiment. This makes all indicators relying on extreme volatility or sentiment signals less effective.
• The structural decline in volatility is a direct technical reason for many indicators’ failure: Pi Cycle Top and rainbow charts require extreme price surges to trigger signals; MVRV needs large deviations between market cap and cost basis; funding rates need extreme long-short imbalances. As volatility drops from 100% to 50%, these conditions become harder to satisfy.
• Bitcoin’s “asset type” is shifting: from a digital commodity to a macro financial asset. Its price drivers are moving from on-chain variables (halving, on-chain activity) to macro factors like Federal Reserve policies, global liquidity, and geopolitics. Indicators focused on on-chain data face a market increasingly dominated by off-chain factors.
• The representativeness of on-chain data itself is declining: Layer 2 transactions, exchange settlements, ETF custody modes are eroding the data foundation of on-chain metrics, making indicators like NVT and MVRV less capable of capturing the full picture.
• Many classic indicators are based on curve fitting over just 3-4 halving cycles, with very small sample sizes. Once market conditions change dramatically, these models tend to fail.

For ordinary investors, the collective failure of these indicators may convey a more fundamental message: understanding each indicator’s assumptions and boundaries is more important than seeking a universal predictive tool. Over-reliance on any single indicator can lead to misjudgments. During a period when market rules are being rewritten, maintaining cognitive flexibility may be more pragmatic than chasing the next “all-in-one” indicator.