Why Surviving This Latest Dip Will Set You Up for the Next Leg Higher

Feb 26, 2025

Bitcoin has dropped nearly 25% from its highs, making many to call for a market top. There’s more to this price action than meets the eye. Here are some thoughts on what this recent dip could mean and how it might just be the setup for bigger gains ahead

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Understanding Market Cycles

The ebb and flow between fear and euphoria is a natural part of Bitcoin’s cycles. Markets move in intertwined cycles, with the four-year cycle rising and declining, while shorter weekly cycles oscillate as price goes up and continue to oscillate as price begins to decline.

Bitcoin is currently in a declining phase of a weekly cycle, while the bull phase of the four-year cycle persists.

Embracing Volatility

Bitcoin’s a volatile asset class where a drawdown of 30 to even 40% is something within the range and should not come as a major surprise. Success comes from being able to ride out those storms.

Today’s price drop to 83,000 from 110,000, a 25% decline, remains within the 20-40% drawdowns typical in bull markets. This reinforces that the current dip is a storm to weather, not a cycle-ending crash.

Maintaining a Long-Term Mindset

We don’t allow short-term weakness, short-term fear, and short-term capitulation to crowd into our long-term mindset. Instead, widen the lens and ignore the short-term fear because we do few buys and few sells over years, we don’t trade over months, certainly not weeks or days.

Today’s fear is short-term noise, and the four-year cycle’s upward trajectory suggests holding steady rather than reacting hastily.

Learning from History

This cycle still looks a lot like the prior cycles, especially the cycle of 2017, with Bitcoin consistently grinding up before accelerating near the end. It is following that script, it is behaving like it has behaved in prior cycles, so put more weight in the probability of this continuing.

This historical similarity positions the current price as a mid-cycle dip, with room for growth before an accelerated finish.

Bitcoin vs. Altcoins

A significant decoupling between what Bitcoin is as an asset and altcoins is happening. The total ecosystem outside of Bitcoin is really not performing anything like it has in prior cycles, as altcoins lack real retail use cases and are mostly dead without broad retail adoption.

This decoupling highlights why today’s market fear hits altcoins harder, while Bitcoin’s drop seems relatively contained.

Bitcoin’s Institutional Rise

Bitcoin has become a true institutional asset class attracting pension funds, big institutions, and possibly sovereign wealth funds. This shift means we are now going to need more and more of that serious capital to sustain Bitcoin’s rise.

Anticipating the Bull Phase

This four-year cycle is still tracking well and on track for an expansion or a continuation higher. The second half of the four-year cycle is traditionally the more euphoric, the big bull phase, so anticipate another leg, a big leg higher and start looking at taking profit when it comes.

In month 27 of the cycle, today’s drop could precede a major upward leg later in 2025.

Accepting Market Unpredictability

You’re not going to ever time the top perfectly in any market, that goes without saying. The market is a humbling force that nobody has the answers for, so focus on finding repetitive structures or repetitive price action over cycles as an edge.

Repetitive cycles suggest this is a weekly low, not a four-year top, though exact timing remains uncertain.

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Watching for Cycle Peaks

Look for a downtrend where we don’t see a higher high and see a lower low, indicating a change in trend on the four-year cycle. Until then, this is a cleansing period and a continuation of this four-year cycle is directly ahead.

The current price drop is a sentiment reset, not evidence the four-year cycle has topped out.

Balancing Security and Opportunity

If you’ve made a lot and there’s a way to secure some of your future, like paying down a mortgage or securing a level of financial freedom, there’s nothing wrong with doing that. But otherwise, it’s mostly fear, and there’ll be more opportunities in future bull markets.

The cycle’s ongoing strength favors holding for future gains unless locking in life-altering profits now.

Living with Uncertainty

There is no guarantee that this cycle will mirror past ones perfectly. A market ultimately can do absolutely anything it wants to do, so there are no absolutes in analysis and anything is possible. Stay invested but be ready to adapt.

Past cycles point to a rebound, but the lack of certainty at this level calls for staying invested while remaining adaptable.

Thanks for reading!

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