BTC Cycles - A New Era Begins

23 Apr 2022

Every new uptrend begins with fear, uncertainty and doubt. When Bitcoin is no longer being discussed on traditional financial broadcasts, around your office between coworkers who are suddenly crypto experts overnight, or at family events when grandmom asks how to buy, it is time to consider the beginning of a new uptrend.

Under the hood, Bitcoiners are refusing to sell their stashes since we all accept the fact that the US dollar simply can not hold it's purchasing power better over time than a fixed-supply asset like Bitcoin. More and more Bitcoin is being removed from exchanges and stored in cold wallets for the long term. Whales are accumulating at these lower levels and over-leveraged, emotional investors are dumping their holdings because they are expecting another massive sell-off as we navigate unprecedented geopolitical fears around the globe. The massive sell-off, which everyone seems to be preparing for and scared of, may never come to fruition unless we see another black swan event.

One of the tell tale signs that an asset is back in an uptrend is the formation of right-translated cycles over a 50 to 60 day timeframe on the daily chart. During these types of cycles, bullish momentum helps the asset increase for a longer period of time than it decreases. Uptrends during these cycles tend to be gradual and conclude after the investors who refused to buy at the bottom finally FOMO back into the market. Downtrends tend to be sharp and illustrate the emotional intensity of the most fearful investors. The bottoms for these cycles are ripe with "buy the dip" investors and the window for entry closes quickly.

As you can see in the chart above, consecutive higher-highs and higher-lows have formed over the past few months (albeit very subtle) as two consecutive right-translated cycles have developed. If this trend continues, we can expect to see an increase in market optimism and these cycles will become more volatile to the upside. A similar set up occurred after the March 2020 COVID crash when everyone was calling the asset dead. A few short months later and euphoria kicked in.

Also, I find it very odd that each major volume capitulation at some of the cycle bottoms were sparked by news coming out of either China or Russia after Bitcoin reached all time highs. Very strange!

More people around the world are becoming aware of the potential that Bitcoin has in a digital economy, as well as the hope it provides for lower and middle class families, who can more easily preserve their hard-earned wealth into the future. The executive order issued by Biden will create a clear regulatory environment, where the hope is that institutional investors will be more comfortable to invest billions into a budding asset class without fear of crossing any red lines.

I hope to be able to provide some clarity for investors who may be feeling the pain since Bitcoin achieved all time highs in 2021. I know what you are going through and have been there before. The tide will turn and you will be better off financially in the future if you are invested in Bitcoin today. Continue to research on your own and approach everything with a skeptical mindset. Decades from now, we will all look back on these difficult times as we tell our children about the early stages of Bitcoin and how lucky we were to receive such an amazing gift from Satoshi Nakamoto for free. The price of Bitcoin simply doesn't matter, you have a chance to invest in a ground breaking technology that will have an incredibly positive impact on future generations.

I will share more cycle content for Bitcoin and other projects, if people respect my efforts and find it useful for their investing strategies, thank you for reading and enjoy your weekend.