Bitcoin came close to a new high on the recent push, and instead of following through it rolled back over. What looked like a breakout attempt now looks more like a test of the high at $67,000, with price drifting back toward the middle of the range.
So let me walk through what I am seeing and where the risk sits.
Holding Up Well Is Not Much To Ride Home On
Bitcoin has been steady compared with other risk markets, and that is a breath of fresh air after the last few months. But it does not mean a lot in the end. Look back at the prior down move where price dropped from $73,000 to $60,000 in 1 week! So we should be mentally prepared for a move like that.
July has been positive, and I flagged that in previous posts. Bitcoin usually ends July green, and this one is up 8.9% so far.
August is the weakest month on the record. 9 of the last 12 Augusts closed red, and the average is a 1.5% loss. September is not much better with a negative average of its own. So the seasonal pattern that just delivered a green July hands off directly into the two softest months Bitcoin has.
If price follows that script, then the push into the top of the range was the high, and a declining phase starts again from here.
What the Weekly and Monthly Charts Are Saying
On the weekly, the chart is not bullish. Still lower highs and lower lows, still trading below the 50 week moving average. For me to get confident a bull market is resuming, Bitcoin needs to reclaim that level, now sitting at $84,300.
On the monthly you can see we are approaching the end of the bear phase of the four year cycle. If Bitcoin breaches these current lows around $58,000 and prints a new low, that actually strengthens the case for a first real chance at a four year cycle low. I do not put heavy weight behind that yet, but it is on the table. Price may well trend further down into the lower $50,000s from there.
So we are getting closer to the end of the bear market, and that is the positive. The negative is that final phases can be punishing. That washout is usually what you need for a four year cycle low to hold, and it matters more when the low arrives earlier than projected. In this case, August instead of October.
Lows that come early tend to arrive with a sharp decline. Lows that come through time alone tend to form at the timing average or later. As I wrote last week, what I want is price based capitulation rather than simply running out the clock.
Alts Still Need to Bleed Out
People are starting to get excited about altcoins again. Ethereum has had a decent move of late. But Bitcoin is the driver. Bitcoin has the most gravitational pull, and the alts are pretty much satellites around it. Whatever Bitcoin does, they follow, and they can drop very substantially.
Look at any altcoin visually and you are counting a few monthly red candles in a row. Some people see that and think a big green candle is due. It does not really work that way. You respect the trend, and this trend is horrible.
Remember what the phases look like. The first phase of a bull market gives you big green candles. The ending phase of a bear market gives you big red ones. That means there is still potentially a 50% plus drop in something like Solana.
People seem to have short memories about how punishing crypto gets in a bear market. Across the last few four year cycles the high beta speculative names have consistently shown they can hurt a lot of people. This is not the spot for longer run altcoin positions. These still need to bleed out.
So stop worrying about missing gains on the upside. Let price come to your target. Keep cash ready for the levels nobody thinks we reach.
The opportunity is getting closer. You do not have to force it.
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Written by Timothy Assi, an Elite Popular Investor on eToro.
Not investment advice. eToro is a multi-asset investment platform. Your capital is at risk. For information and educational purposes only.
Copy Trading does not amount to investment advice. The value of your investments may go up or down. Your capital is at risk.
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