Bitcoin Investing

Strengthening Your Mindset for Volatility

We are currently in a tricky environment for Bitcoin, especially when analyzing the weekly timeframe.

While the long-term trend may be pointing upwards, the intermediate trend tells a different story. Since March, weekly lower highs and lower lows have been froming. This decline is noteworthy as it indicates that, despite the recent surge to $60k, the intermediate trend remains in control.

This pattern of lower highs and lower lows suggests a weak structure. Therefore, it’s not abnormal to be mentally prepared for continued downward price action, even if the overall picture points toward growth in the future. While this isn't necessarily an alarm to liquidate long-term positions, it’s a reminder that patience remains essential.

This downtrend may persist through the end of the year, suggesting that the market needs more time before resuming the bull run.

An Update On The Four-Year Cycle

While the weekly chart raises some concern, the long-term view presents a more optimistic scenario. The four-year cycle, particularly on the monthly chart, still suggests that we are in the rising portion of a broader uptrend. This longer-term perspective is crucial for those focused on multi-year investments. Despite the noise of short-term declines, the overall structure of the four-year cycle remains intact.

This is where the focus should remain. It’s easy to be swayed by the volatility in the shorter-term, but the broader view shows that we’re still on an upward path. However, I remain prepared for volatility in the next few months.

It’s wise to keep in mind that markets could trend sideways or even dip further before resuming the uptrend again. While we may not see new highs until early 2024, the groundwork for a stronger market may be forming right now.

So while the market is trending down, consider gradually building positions during these major corrections. It’s always about positioning yourself effectively during periods of fear and uncertainty.

For long-term investors, it’s not about picking the exact top or bottom of every cycle. Instead, it’s about managing risk effectively and making sure your overall position is still aligned with your long-term goals. If your position has appreciated, consider scaling back slightly and locking in profits, especially if you’re uncomfortable with the potential for a short-term pullback.

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Written by Timothy Assi, a popular investor on eToro.

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