The Market That Won't Quit: Making Sense of This Relentless Rally
Bitcoin Roadmap
The S&P 500 just delivered another impressive move, and honestly, the odds seemed stacked against it. Since April, we’ve seen mostly upward movement with very little downside action. If you look at the trend from April forward, besides that initial shakeout, we’ve only had a few brief periods where the market dipped and nothing lasted more than a week.
What’s really catching attention here is just how impressive the gains have been since April. This has become a real outlier in terms of both duration and performance. The market is basically ignoring any natural ebb and flow you’d typically expect. You know, that normal behavior where things reset after a significant run to prepare for the next leg up? Yeah, that’s not happening. This tells me we’re dealing with what has essentially become a speculative market.
Yes, we are well overdue for a decline, but price is just saying, “Screw you, we’re going higher.” There’s demand for these stocks.
The Rotation Factor
There’s even a bit of rotation happening. I noticed over the last couple of weeks that some of the big AI plays took a substantial hit, but other stocks and other industries stepped in to pick up the slack. That’s exactly what a bull market does. There’s always this rotation in play. When one sector stops leading, others step in. And now you’ll probably see another rotation back into tech and AI as well, which will keep driving this market higher.
Once we get to this type of move, there’s no point in calling a top (and nobody’s really doing that anyway). I’m just saying this could actually accelerate to the upside and get a real stretch into a high at some point.
There’s absolutely no point being afraid of the market or running away from it just because it looks overbought. I think we will get a shakeout at some point, even though it may not come from the last six or eight weeks of action. We might see a push like this all the way through December.
Gold’s Current Situation
Flipping over to gold, I’m pretty sure gold has topped now. It’s holding right here after the big decline, but generally when you see this pattern, it typically trends sideways for a couple more sessions and then drops again. That’s usually how it plays out.
When you look at silver’s history, the pattern is clear. After a big blow off move, it does pull back sharply. But then, in each of the past cases, it built a base and went again. That’s what I think is going to happen here with silver and gold. We may need to be patient again. It’s not wise to think it’s just going to continue indefinitely.
Bitcoin’s Tricky Picture
Bitcoin is having a strong bounce here, and it’s a bit of a mixed picture. Here’s why: anytime you get a push to an all time high like it did in early October, you would expect it to not look back. Instead, it gave back a lot of those gains, so there was no follow through.
But here’s the thing. If the stock market is going to continue this fourth quarter push, I would think Bitcoin does as well. I don’t see an environment where stocks are pushing through to December highs and Bitcoin is actually going down. It may not perform as well, but I just don’t see that scenario playing out.
This leads me to believe that we may be seeing, in this particular four year cycle, these longer duration declines into extended lows, tagging that 50 week moving average. It’s looking pretty similar to what happened in the past. We’ve seen this pattern before where it takes longer to form a proper low before the next big leg up.
I’m still open to the idea that we get one more push down to around 100,000, just below that 50 week moving average. Then we’d get that final big push into the top of the four year cycle, aligning pretty well with the equity markets and risk on markets as a whole. That would actually make a lot of sense given where we are in the broader cycle.
I want to be patient with this, even though I’m a little concerned about how Bitcoin isn’t getting much attention right now. Certainly the rest of the crypto space isn’t doing well, and that concerns me a bit. When the broader crypto market is weak, it usually means something.
But here’s what could change everything: any good push from here, certainly any push above all time highs, sets up for potentially a nice big run in the final stage of this four year cycle. The sentiment is crushed enough right now that a breakout could really take off.
Staying the Course
The key takeaway here is simple: respect the trend while being prepared for the inevitable shifts that come with these longer term cycles. We’re in a unique environment right now, and fighting it doesn’t make much sense. The market is telling us what it wants to do, and our job is to listen.
Patience and discipline are going to be your best friends as this continues to play out. Don’t try to outsmart what’s happening. Just stay positioned, stay aware, and let the market do its thing.
Thanks for reading.
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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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