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Key Takeaways
Fear and Greed nears neutral territory as Bitcoin regains US $80k, with several altcoins following the momentum higher.
A look at previous market cycles; how long it has taken for bear market bottoms to form in the past.
Chart of the week: A technical analysis of Bitcoin and a channel to watch.
In last week’s Squawk I spoke about how BlackRock’s exchange-traded fund, IBIT, was nearing a key price milestone according to on-chain data. A real test of conviction moment. Well, we hit that price milestone earlier this week.
For me, this is another chance to pull up the hood and work out what we know about the market. At the minute, we’re seeing optimism, with the Fear and Greed charts grinding higher, currently reading just under 50.
This week we’ll shed some light on the current cycle compared to previous ones, as well as dive into technical analysis on Bitcoin’s market structure.
Let's dig in.
Bear market bottoms
Now this is another one of those data points, where – you know the spiel – past performance isn’t a guarantee of what is to come.
Now, looking at the chart below, we can see that bear market bottoms (specifically for Bitcoin’s price) have taken at least one year to form in the previous four cycles.
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This is how long it took following each cycle’s all-time high to find a new bottom in BTC price:
2014: 426 days
2018: 365 days
2022: 365 days
We currently stand at circa 212 days in the present market cycle, which would place a potential market bottom between October to December in 2026 – that is, of course, should this pattern repeat.
It’s far from a guarantee; but it is a useful sequence that helps add some context to the current BTC market cycle. If we move away from price, and just talk about time, the current state of affairs would have us sitting at around August 2022.
This isn’t a crystal ball, as we know that the pressures impacting the crypto industry (good and bad) have changed over the years. But it is still an example of how we can view the market through another lens.
Chart of the week: A BTC channel to watch
Now, let’s delve into a snapshot of where the market sits today. Below is a Bitcoin chart where we’ve mapped out the ascending channel BTC price has been following since March. The channel connects the first two major lows, and highs of the past eight weeks or so.
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Back in April, price briefly moved outside this channel (the first of the blue arrows) before reclaiming it. That re-entry was a key decision made by the market; buyers stepped in and formed a floor by paying higher prices for BTC, rather than sellers dominating the tape and sending us lower.
We are now sitting at another meaningful decision point within this channel, as we stare almost squarely at the middle of the range. These are the kind of levels, in my experience, where you see chop and volatility rise as the market forms its consensus – whether we’re going higher or lower.
That makes this channel an important way to view the market from here. If we keep in mind the market has historically taken longer for a market bottom to form, it’s quite possible that sellers could start to show up if we move into the upper portion of the channel.
So, while price could potentially go higher from here, we've approached an inflection point for the market where we may see a clearer direction unfold in the near-term as buyers and sellers duke it out.
See you next time.