The present month so far has been quite bullish for the crypto market. Bitcoin (BTC) hit a new all-time high just over a week ago. Ethereum (ETH) is also continuing to rally, reaching multi-month highs. In fact, in the past 24 hours alone, the total market capitalization has increased by $41 billion.
Amid this, market watchers are increasingly anticipating the next move. Analysts are now examining luxury watch prices, historical market cycles, and classic valuation metrics to gauge the market’s trajectory.
How Luxury Watches Reflect Market Psychology: The ‘Rolex Indicator’ Explained
Major technical indicators, chart patterns, the Fear and Greed Index, Bitcoin dominance, and DXY performance have become increasingly popular tools for predicting trends in the crypto market.
Sponsored
However, some analysts contend that behavioral indicators offer a more accurate and insightful view of the market. In a detailed post on X (formerly Twitter), a pseudonymous analyst, Pix, highlighted the ‘Rolex Indicator’ as a potential tool for predicting the market top.
The analyst explained that the Rolex Indicator gauges market psychology by examining the user behavior around luxury goods like watches. As new money enters the market, individuals purchase status symbols like watches to display their success.
Pix noted that watch prices have historically lagged behind crypto bull runs, peaking only after widespread wealth distribution, such as during the 2021 NFT boom. This spike marked the top of the bull market.
“What makes this useful is that luxury markets lag. Not by much – but just enough. You can see it in the data. Watch indexes trailed crypto on the way up, peaked a little later, and then collapsed almost in sync. Rolex prices fell by nearly 30% in the year following the crypto crash. Not because demand disappeared. But because the kind of demand driving them (status demand) – dried up,” the post read.
The analyst added that Bitcoin hit a record peak and many altcoins have seen double-digit surges over the past month. Yet, luxury watches haven’t yet followed suit.
Sponsored
“The fact that watches are rising again doesn’t mean we’re at the top. But it does mean we’re already a decent part of the cycle in. People don’t start buying symbols until they feel like the hard part is over. That’s usually the middle. Somewhere around 2/3 through the cycle. The wealth is accumulating. The confidence is returning. But the real spending hasn’t started. When it does, you won’t need a chart to see it. You’ll know,” Pix added.
Another analyst, Atlas, also shared a similar sentiment. He emphasized that while greed is increasing, it hasn’t hit its full potential just yet.
Furthermore, the analyst outlined more behavioral signs. He pointed out that rising “flex culture” on crypto Twitter, profit screenshots, and job-quitting posts are signs of shifting market sentiment. While there are more posts like this than six months ago, it’s still below 2021 levels.
“Sentiment shifting but not fully euphoric…..Extreme fear has passed, but peak mania isn’t here yet. We remain in rotation phase with room for upside,” Atlas stated.
Benner or Buffett: The Debate Over the Market’s Next Big Move
Meanwhile, the Benner Cycle, a historical model rooted in recurring market patterns, also offers a similar outlook. According to the cycle, the market has not peaked yet and could do so by 2026.
Therefore, it indicates that there’s still room to grow. This suggests that the current market conditions could represent a phase of accumulation and positioning before a significant upward movement.
“2026–2032 = ‘B Years’ → Liquidity surge. Re-ratings. Exit zones. 2035–2039 = ‘A Years’ → Panic. Crashes. Mass drawdowns,” a user noted.
Nonetheless, the Warren Buffett Indicator introduces a note of caution. This metric compares the country’s stock market’s total capitalization to its Gross Domestic Product (GDP). Warren Buffett has referred to this ratio as
Sponsored
“Probably the best single measure of where valuations stand at any given moment.”
It is used to assess whether a stock market is overvalued or undervalued relative to its underlying economy. A value above 100% usually indicates that the former is the case. Notably, in July, the ratio exceeded 200%.
Sponsored
It could be a signal that the market is in a bubble or that stock prices are excessively inflated. This raises concerns about a potential correction in risk assets, including cryptocurrencies.
The juxtaposition of these indicators highlights a market at a crossroads. The Rolex Indicator and Benner Cycle point to ongoing growth, while the Buffett Indicator warns of overheating. The crypto market’s next move may hinge on whether confidence translates into speculative excess or triggers a broader reassessment of valuations.
Disclaimer
In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.