Bitcoin Cycle: Familiar Patterns, Subtle DeviationsCycles are regular, but they never repeat exactly. If the market followed the same price action every time, trading would be easy, and everyone would be a top trader
Bitcoin Cycle: Familiar Patterns, Subtle Deviations
Cycles are regular, but they never repeat exactly. If the market followed the same price action every time, trading would be easy, and everyone would be a top trader. The key is to understand that for any market to precisely mirror past movements, the exact conditions and participants need to repeat their actions to the T which is statistically improbable and practically impossible.
Over time, we've illustrated how the current range aligns closely with the 2023 range, highlighting that while we made a new all-time high earlier in the cycle, the timing has remained remarkably consistent with previous cycles. The main question now is: are we still tracking the path of the previous cycle, or have we begun to deviate?
Given the regularity of the 4-year Bitcoin cycle, many assume "this time is different" a well-known dangerous notion in investing. Still, many anticipate the Bitcoin price peaking between $100,000 and $120,000 sometime in the first quarter of next year. Personally, I don't believe this theory. Recent market action, especially over these past weeks, has illustrated the nature of this cycle. Predicting tops is notoriously difficult indicators and technical signals can mislead even the best, and overheated periods last longer than anticipated.
In my view, the current range and summer's long consolidation indicate that this market is prepping for a more prolonged, sustained rally. This setup something I pointed out to premium subscribers months ago could result in "maximum pain" for most participants. Here's why:
- Meme coins and speculative hype tend to be intense but short-lived. Many expect these movements to last longer, but ultimately Bitcoin creates a significant high like we saw in Q1 and then undergoes a six-month consolidation.
- As a correction occurs, traders start predicting the market top while early gamblers hold on with hope and vomit their gains.
- Then, when BTC climbs again in the second half of 2025, the FOMO of top-tier bettors returns, and now-barely-funded gamblers are forced to start all over again.
Now, picture this situation repeating until a peak in either 2028 or 2029. Gamblers experience cycles of boom and bust, traders get washed out time and again, and only true quality crypto long-term holders and elite traders will remain.
So, today, I want to explore why we're seeing subtle deviations from previous cycles, but also familiar echoes of established patterns.
Long-time readers know we used last summer's range to predict the inflection point, and it was remarkably accurate. However, we're now starting to deviate from that range in terms of timing. We were expecting a major breakout over these past two weeks, but it hasn't materialized. So what's happening?
First, let's look at the comparative strength of this cycle versus previous ones. From a simple pullback perspective, we can see that BTC hasn't spent this much time consolidating above the 75% level in any other cycle. In 2020, it consolidated below the 50% level. In 2017, the consolidation wasn't nearly this extensive. Generally, the stronger and longer the consolidation phase, the larger the expansion.
Also, pay attention to the comparison between the previous two cycles' RSI values and the current one. This is a good signal that the market has significant room to run before we see overheated conditions. RSI values are still low relative to 2020 and 2017. In fact, it looks closer to 2017, which tells us that using the indicator to predict the top could be a very tricky task going forward.
If we look at how long it took the market to officially break out past the all-time highs and enter a price discovery phase, we seem to find that this cycle is beginning to realign with the previous ones, after an initial expansion that surprised almost everyone.
As you can see, the 2017 cycle took 88 weeks from the bottom breakout, the 2021 cycle took 104 weeks to break out, and currently, this cycle is at 100 weeks, slightly above the average of 97 weeks across these three cycles.
Similarly, if we look at the previous top breakouts, we see a similar pattern, only this time we're at the lower end of the average timing. 2017 was 178 weeks, 2021 was 157 weeks, and currently, we're at 154 weeks into this cycle, below the average of 163 weeks.
So, in short, this again confirms that we're still on track, although it's slightly further out than expected, and just a few weeks away from officially initiating a new price discovery period like the previous cycles. The fact that this cycle has consolidated longer at higher levels suggests that this market has incredible resilience and will more than likely see a very positive expansion.
Finally, let's zoom in a little closer on the current cycle to see why BTC can still break out and remain strong as we head into October. We're at a perfect weekly retest of the 2021 ATH (based on weekly closing prices) as well as a retest of the current weekly range (based on closing prices). We haven't seen two to three consecutive down weeks, which would be our first major sign of weakness.
In conclusion, this market hasn't taken off as we initially expected, but it hasn't shown any signs of weakness that suggest further downside. Bitcoin remains in a very strong position, and the longer this rally lasts, the longer the cycle, and the more significant the volatility in 2025 will be.
I still have no doubt that this market could make new highs anytime soon, as the cycle suggests. However, I wouldn't be surprised if we drag things out to November or even later in December, as this would create the maximum amount of frustration.
In another letter, I'll discuss what this might mean for altcoins as BTC.D continues to climb to new highs.
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