Recently, I noticed a pretty interesting phenomenon: the classic indicators that have repeatedly proven effective in the crypto market seem to have collectively "failed" this round of market movement. I’ve carefully analyzed this and found that the underlying logic is much more complex than simply indicator failure.

First, let’s talk about the most intuitive feeling. Bitcoin retraced about 36% from its high in October last year, now oscillating around $81k, but the market trend of BTC has left many veterans a bit confused. Tools previously used to judge market positioning, such as the S2F model, four-year cycle theory, Pi Cycle Top, almost all give contradictory signals.

Take the S2F model, for example, once regarded as a bible; its target price for 2025 is $500k, but BTC’s actual price only reached just over $120k, a gap of more than three times. The four-year cycle theory? After the halving in April 2024, the market didn’t show the expected explosive rally but instead exhibited a "slow bull" characteristic. The Pi Cycle Top indicator remained silent throughout the cycle, the MVRV Z-Score’s fixed threshold no longer triggers, and the rainbow chart’s top zone is far out of reach.

I think the key is that the fundamental reason these indicators are failing isn’t that they are flawed, but that the market’s underlying structure has undergone a fundamental change.

First is the impact of institutionalization. After the listing of Bitcoin spot ETFs in the U.S., capital has continued to flow in—corporate treasury allocations, CME derivatives, retirement funds—all these have changed the capital structure and price discovery mechanism. Institutions tend to buy on dips and hold long-term, which directly smooths out the previously volatile swings driven by retail sentiment. When retail fears, institutions may buy the dip; when retail greed, institutions hedge with derivatives. This means retail sentiment is no longer the decisive force behind BTC price movements.

Second is the structural decline in volatility. Bitcoin’s annualized volatility has dropped from over 100% historically to about 50%. This hits hardest those indicators that rely on extreme volatility to trigger signals. The Pi Cycle Top requires a significant deviation between short-term and long-term moving averages to generate a crossover; rainbow charts need extreme rallies to reach bubble zones. In this smoother market environment, these conditions become increasingly difficult to satisfy.

Another overlooked factor: Bitcoin’s asset type is shifting. From a digital commodity gradually moving toward a macro financial asset, the price-driving factors are shifting from on-chain variables to Federal Reserve policies, global liquidity, and geopolitical events. Indicators focused on on-chain data face a market increasingly dominated by off-chain factors.

I’ve also noticed that on-chain indicators like NVT ratio and MVRV are failing as well. The root cause is that on-chain transaction volume no longer accurately represents the real economic activity of the Bitcoin network. Trends like Layer 2 transactions, exchange internal settlements, and ETF custody models are eroding the data foundation of on-chain indicators.

Regarding the failure of altcoin season indices and BTC dominance, this reflects a change in capital rotation logic. In the past, when BTC dominance fell from 70% to 40%, it corresponded with a large-scale altcoin rally. But now, BTC dominance only reached a maximum of 64%, never falling below 50%. This is because the incremental capital attracted by ETFs flows directly into BTC, structurally preventing "rotation" into altcoins. Additionally, the siphoning of funds into AI and precious metals has also reduced liquidity in the crypto market.

Interestingly, most of these classic indicators are essentially based on curve fitting over 3 to 4 halving cycles, with very small sample sizes. When the market environment undergoes a fundamental change, the parameters based on historical data tend to fail easily.

So, my view is that the collective failure signals from these indicators do not mean the market is about to collapse, but rather that the game rules are being rewritten. Understanding each indicator’s assumptions and applicable boundaries might be more important than chasing a universal predictive tool. When tracking BTC trends, over-reliance on any single indicator can lead to misjudgment.

Looking at the current BTC market, I think a more pragmatic approach is to stay flexible in cognition, understand the structural changes in the market, rather than blindly searching for the next “all-in-one” indicator. The market is evolving, and our analytical frameworks need to keep pace.