Bitcoin: A New Phase

Bitcoin’s price action seems stuck, lacking any real momentum in the short term. While this may feel discouraging, it’s important to focus of the broader picture.

Currently, the market is sitting at a critical point. The failure to push beyond recent highs and the rejection at key levels—such as $65k—signals that we’re in a phase of consolidation. Bitcoin remains to be dominated by lower highs and, overall, a downtrend that’s persisted since March.

It's easy to get caught up in the short-term volatility, especially with everyone speculating that the market will rally towards the end of the year. But being overly optimistic can be risky without clear signs of a reversal. The current trend still leans towards weakness, and while there’s a chance of a late-year surge, it’s not something to bet heavily on without confirmation.

Watch this level

What we need to watch for is whether we see a significant break to the upside. A move past $70,000 would change the tone of the market, signaling a potential end to the current downtrend and offering the possibility of renewed optimism. However, until that happens, caution is needed. The downtrend structure remains dominant, and this period of waiting could easily continue for a few more weeks—or even months.

The larger trend

Now, the short term may feel uncertain, but there is a larger trend at play that we must not lose sight of. We're approaching a critical point in the four-year cycle, with a potential breakout still on the horizon. Typically, as we near the end of the second year of the cycle, momentum begins to build in anticipation of the third, which has historically been the most bullish phase of the cycle. The image below illustrates our current position in the 4-year cycle, with a comparison to previous cycles.

The most important action in this phase is to be patient. We’re nearing the midpoint of the 4-year cycle, and from here, historically, the most powerful moves take place. While the past several months have been a mix of consolidation and declines, this pattern could soon resolve itself. The key is to avoid getting overly aggressive in the short term.

The market may not be doing much right now, but it’s in these quiet periods that the groundwork is laid for the next big phase.

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Written by Timothy Assi, a popular investor on eToro.

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