Survive The Chop
The past week brought a lot of market activity, with some sharp declines and an overall choppy environment. Let’s dive into what’s happening and how to approach the current cycle.
Recent Market Action
Bitcoin hit resistance around 102,000 before facing a sharp rejection, coinciding with broader market volatility, including a dip in equities and rising bond yields.
In my last Bitcoin update, I outlined three possible scenarios for Bitcoin.
Recap of the Three Scenarios:
Scenario 1: The bullish path, where Bitcoin resumes its uptrend without further major declines.
Scenario 2: A short-term shakeout, with a sharper decline into the mid-80K range, followed by a rapid recovery.
Scenario 3: A mid-term bearish ttrend, involving a period of range-bound movement or deeper declines into the 70K–80K range before the broader uptrend resumes.
While Scenario 2 suggested one last sharp drop before a strong recovery, Bitcoin instead bounced immediately, aligning more closely with the patterns described in Scenarios 1 and 3.
However, after eight days of gains, Bitcoin experienced a sharp decline with a new low, which strongly suggests that we are now following Scenario 3: mid-term bearish action with the potential for more lower lows ahead.
Corrections are a natural part of any strong trend. The recent 15% pullback, while notable, isn’t extreme for Bitcoin. To have a sustainable base for the next leg up, more consolidation or further downside may still be necessary.
Bitcoin is currently holding near critical support levels around 92,000. While a bounce at this point could provide some short-term relief, a more sustained show of strength will be necessary to regain upward momentum. Looking ahead, the market may spike lower before resuming the broader trend. A more bullish outlook would involve holding the 92K level and trading sideways.
However, if this level fails to hold, there doesn’t appear to be much support until the mid-70K range. It's important to be mentally prepared for such a potential 30% correction, which aligns with the historical norms of Bitcoin cycles and has been a typical feature of its volatility, even during strong uptrends.
Altcoins Under Pressure
As is often the case during Bitcoin corrections, altcoins are feeling the impact even more acutely. Major projects like ETH, SOL, and many others have seen sharp declines. ETH/BTC remains in a clear downtrend, while SOL has underperformed BTC, losing an additional 12% during this recent crypto drop.
The primary goal in environments like this is to remember why you bought and keep conviction. It’s easy to get caught up in emotional reactions, but over-trading or panicked decisions often lead to unnecessary losses. Only if an altcoin shows long-term weakness might I consider cutting my losses.
The Bigger Picture
Despite the current dip, the long-term outlook remains positive. Bitcoin’s four-year cycle continues to show remarkable strength, with more upside potential in the months ahead. Consolidation phases like this are necessary to build a foundation for future gains.
Thanks for reading!
Written by Timothy Assi, a popular investor on eToro.
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As a newbie holding on watching ETH keep dropping feels very hard !