Major Bitcoin Move Coming: Are You Ready?

Bitcoin has been moving sideways for months now, with the notable exception of a dip during the Japan stock market crash—a setback from which markets showed resilience. However, this period of stagnation has divided the market into two camps. Some believe that more downside is ahead (bear case), while others think Bitcoin has bottomed out, and the worst is behind us (bullish case). In this blog, I’ll explore both perspectives and share my thesis on why Bitcoin may revisit lower levels, possibly below $54K, in the coming months—offering an excellent accumulation point—before it eventually climbs to the 6-figure range in Q4 2024 and 2025.

The Uncertainty Ahead

You might be wondering, “When exactly will BTC reach the 6-figure range?” The truth is, no one knows for sure. Bitcoin typically shifts from a power law function to an exponential trend as we approach a cycle top. However, the timing of this transition hinges on several key factors: the outcome of the US election, central banks’ pace in reducing interest rates, and significant market-moving news, such as major corporations adopting Bitcoin.

As investors, our task is to enter or exit the market based on our risk-reward ratio. That’s why I believe a significant drop in the next couple of months could actually be a golden opportunity, given the broader context of an impending quantitative easing era and increasing global liquidity.

Understanding Market Dynamics

Bitcoin, like other risky assets, typically underperforms at the start of rate cuts—a counterintuitive but consistent trend. In 2019, Bitcoin’s local top occurred a month before the first rate cut, followed by a 50% drop (excluding the COVID-19 crash). The reason? Markets want assurance that we’ve avoided a recession and that central banks have successfully tamed inflation without crashing the economy—what’s known as a “soft landing.” If central banks fail and trigger a recession (a “hard landing”), Bitcoin and other risky assets could face more significant challenges.

The market’s eyes are on the first US rate cut, expected on September 18, 2024, because the US is the world’s largest economy, and its monetary policy decisions have global ripple effects.

Seasonal Patterns and Gold’s Role

Statistically, September is a tough month for Bitcoin, with only four positive closes since 2010. Meanwhile, gold, the traditional hedge against inflation and economic instability, is hitting all-time highs. This aligns with the current market uncertainty/fear over whether we’ll experience a soft or hard landing.

Interestingly, Bitcoin often follows a similar path to gold, albeit with a six-month lag. Therefore, monitoring gold’s price action in the coming months could offer valuable clues for Bitcoin investors.

Preparing for the Next Move

Bitcoin’s recent price action may seem boring, but if we look at the Bollinger Bands, we see they are tightening—an indication that a big move is imminent. Whether this move is up or down remains to be seen, but as an investor, I’m planning for a potential downside.

Periods of panic, when people lack a clear plan and act irrationally, often provide the best accumulation opportunities. My strategy to accumulate Bitcoin during a downturn is based on factors beyond charts, including (a) Quantitative Easing, (b) the US Debt Problem, (c) Institutional Adoption, (d) Geopolitical Tensions, and (e) the possibility of a pro-crypto US president. I’ve discussed these factors in detail in my previous blog, so feel free to check them out for more insights.

*I’ve also created a video version of this blog for those who prefer a more visual approach. In the video, I break down these concepts with charts and additional commentary. You can watch it on my YouTube channel.

Quantitative Analysis

Looking at the numbers, Bitcoin’s top in March doesn’t align with any previous tops. If we measure Bitcoin’s Return on Investment (ROI) from various reference points like halvings and cycle bottoms, we see that Bitcoin is performing as expected. Multiple models—such as Free Float MVRV, PriceVsRisk, NUPL, and Bitcoin’s Deviation from its Fair Value—all indicate that we’re far from a cycle top, with much more room for growth. Depending on how quickly Bitcoin enters its exponential phase, we could see prices ranging from $140K to $220K in 2025.

To explore these models in more depth, we offer videos and interactive plots on our platform to enhance your understanding.

Conclusion

In conclusion, I believe that Bitcoin and the broader crypto industry are far from their cycle tops, and 2025 is set to be an epic year. The total cryptocurrency market capitalisation (TMC) also adheres to a power law function. You can experiment with this interactive graph on our platform, which is currently the best equation we have to describe the TMC growth.

Current deviations from fair value are significantly less pronounced than those observed in prior cycles, indicating that we have much more room left in the current cycle. However, many will miss out because they forget that during bull runs, the real battle is not with the market but with themselves.

When the exponential phase begins, you need to be prepared in advance. Developing and executing your exit strategy months ahead is crucial. From my experience in the last cycle, many missed out on gains because they assumed the market would keep rising indefinitely and didn’t exit in time.

Educate yourself now, and prepare for the next phase—because it’s coming, and it’s going to be big.

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