There isn’t much to update on Bitcoin right now.
Everything else seems to be exploding on the equity side, the tech side, and Bitcoin is obviously not. That is because it remains in the depths of a bear market.
We should remember what it was like in the prior four year cycle lows around this time, two to three months before the eventual low. It was very much like this. Low volatility. Very little interest. That is where we find ourselves now.
So I am not in a rush to get excited about a potential bottom.
The Trend Is Down and I Respect That
Anybody that looks at this chart visually can clearly see the trend is down.
We have had these periods where we drop, then counter trend or consolidate, then drop again. This can also be viewed from a bearish lens, where you could say we are simply consolidating before the next leg down.
The dominant trend is definitely down, and I like to see confirmation of a trend change before getting aggressive on the long side.
In cycles in general, the later it goes into the cycle, the more confidence you have in a reversal marking a cycle low. In prior cycles we went deep into the timing window, and when we got that big capitulation, the reversal or stabilization was a pretty clear indicator the cycle had bottomed.
We don’t have that right now, because we are still slightly early. We have had two good sell offs, but no massive capitulation into that window where you can say with real confidence this is where I should be buying aggressively.
What pushes people in early is impatience, more than anything else. Or the fear that this bottoms earlier than expected and just rushes higher without them.
The Level That Caps Everything
The 10 month moving average is sloping down and sits around $72,000. Until we break up and through that and show the trend has broken, we have to make the assumption that any sizeable move from here is only another counter trend move up toward the low $70,000s.
From a holding perspective, these are good prices. Low $60,000s, you are probably going to be rewarded longer term.
Why the Next Cycle Might Be Harder
The next four year cycle may not be as generous as prior cycles.
Two things stand out. Political support for crypto is not permanent, and a Democrat pushback on the current policy stance would remove one of the biggest tailwinds this asset has ever had. On top of that, the AI narrative keeps getting bigger. It is pulling attention, talent and capital away from crypto, and that has been visible for a while now.
This is exactly why I don’t build a portfolio around one asset. Crypto is capped at 15% to 20% maximum for me. The rest sits in stocks, gold and other assets that can carry the load when Bitcoin does nothing for a year.
What That Discipline Actually Delivered
I track my portfolio against a Pinfolio benchmark. It compares my returns against a benchmark built from my own allocation. If you hold 70% stocks and 30% crypto, the benchmark mixes 70% S&P 500 with 30% Bitcoin. My current mix runs NASDAQ 100 at 52%, S&P 500 at 20%, Bitcoin at 9%, plus healthcare, financial, consumer and industrial ETFs.
Year to date I am at +11.25% against a combined benchmark of +10.71%. Slightly ahead again.
In a year where Bitcoin has been dead weight, capping crypto is the reason I have kept pace with the S&P instead of getting buried by it.
Compare your portfolio with the Pinfolio benchmark
The Plan Into Year End
Historically, Bitcoin has offered up a really good entry around the four year cycle low mark. My main goal over the next two to three months, and we are getting close, is simple. I want the confidence to get in, the capital available to get in, and I don’t want to be chopped to pieces up until that point.
Because when you get chopped to pieces and then the right entry finally lands in your lap, you have a tendency not to believe it. You have been scarred the whole way through and you are not committed to taking full advantage of it.
I will keep buying Bitcoin at lower prices into the end of the year, in layers, holding plenty back.
Be patient. We are close.
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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