Follow up to my previous article on market cycles - from 2019. Start there if you need more explanations than what the chart provides :)
This is the bitcoin 4-year cycle put on a chart. BTC goes through the same phases every time : bear market, 3 phases of consolidation, and a bubble. I won't remind the context and uncertainties that could make this completely obsolete : inflation, war, debt cycles, etc.
I've read many arguments as to why this time will be different. And a few solid points as to why the cycles will continue. I think a bit of both are true, and we can use the cycles history to visualize what could happen, while keeping in mind this is now an asset traded by almost all kind of entities (possibly even countries). This makes Bitcoin a very correlated asset, as funds will buy or sell according to their global strategy which includes assets from very different classes.
My personal opinion is that this changes nothing : bitcoin was already seen as a risk on asset (see my article on BTC / DXY historical correlation). Wealthy people who previously invested their personal money on bitcoin in risk-on environments, now invest their fund's money on bitcoin in risk-on environments. The magnitude changes, not the overall logic. In a few months, the DXY should reach its range high and will show signs of being at peak levels. This will be the signal that we can cautiously go risk-on on BTC once more.
I see 4 ways to play this as an investor : - DXY reaches range high, just explained above - Capitulation phase happens, price reaches monthly moving average 50 (yellow line on the chart). Also coincides with fundamental indicators (production cost etc) and price trendline from 2013. - Break of monthly resistance (see white dotted line marked with a red "R" on the side) - Dollar cost average in the next months
I think all of them are good, a mix of all being my personal choice.
Always happy to discuss in the comments. Links to articles mentioned, are below. Cheers - Harry.
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BTC / DXY cycles
Trade active
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Conditions of my trade idea are being fulfilled
- DXY showing signs of rejection. - Capitulation happening - Reached 50Month average price and electrical cost (see @capriole_charles indicator)
Last doubts : - DXY has not reached range high like I was hoping - Capitulation is happening but how deep can it go and how long will it last ?
Hi Harry, nice analisis; question: I would like to draw on my own chart some of your lines, but I cannot configure the whole chart as you do. This is cycles from day one up to now as to draw all 4 cycles to reflect the logarithmic scale as you have it, How do I do that?
Harry_Seldon
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@DanielUY, Hi, no access to PC ATM, but have you tried the log button at the bottom right corner of your TV UI ?
DanielUY
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@Harry_Seldon, no, I had not! Done! thank you! Great analisis, I will be working on that. I might come back to share if you feel like it. Best REgards!
I would like to draw on my own chart some of your lines, but I cannot configure the whole chart as you do. This is cycles from day one up to now as to draw all 4 cycles to reflect the logarithmic scale as you have it, How do I do that?