Bitcoin: Bull Market Support Band

Bitcoin is currently in a precarious position below its bull market support band, and while a final rally to new all-time highs is possible this quarter, historical patterns suggest a bear market in the coming year, with Bitcoin leading any potential upside.

• Bitcoin's current position below its bull market support band aligns with prior cycle patterns.

• Expect the Bitcoin cycle to likely conclude this quarter, leading into a bear market next year.

• Any potential rally will be Bitcoin-led, with altcoins remaining secondary in the current monetary environment.

Bitcoin has repeatedly dropped below its 20-week SMA and 21-week EMA, mirroring past cycles. Historically, Bitcoin's cycles conclude in the fourth quarter of the post-halving year, suggesting a likely bear market for the next year. While some indicators for market cycle tops have not yet triggered, the current monetary policy environment (quantitative tightening) makes this cycle potentially different, resembling a 2019 'Bitcoin only rally' where altcoins lagged.

Bitcoin's Cycle Performance

• 00:00:23 Bitcoin consistently finds itself in a precarious position, dropping below its 20-week SMA and 21-week EMA, a pattern observed three times this cycle. While Bitcoin typically spends a lot of time above this 'bull market support band,' periods below it have historically lasted a couple of months. The current cycle is only a few weeks into this latest drop, raising questions about its duration compared to previous nine, eleven, and seven-week periods below the band.

Post-Halving Year Outlook

• 00:02:19 Historically, Bitcoin cycles end in the fourth quarter of the post-halving year, a pattern that should not be dismissed despite optimistic views about the cycle extending into the next year. This recurring trend suggests a likely bear market in the coming year, similar to prior midterm years (2014, 2018, 2022) when the market dropped. The prudent assumption is that the cycle will likely conclude this quarter, focusing on whether the top is in rather than future extensions.

Monetary Policy & Altcoins

• 00:05:15 The current Bitcoin rally has occurred during a period of quantitative tightening, making it more akin to the 2019 rally where Bitcoin dominance increased, signifying a 'Bitcoin only rally.' Unlike past cycles with zero interest rates and extensive money printing, the existing monetary policy might limit the overall market's upside, preventing many traditional top indicators from flashing. For altcoins to see significant gains ('alt season'), Bitcoin must first undergo a parabolic rally, otherwise, liquidity will continue flowing back to Bitcoin, and altcoins will bleed against it.

Death Cross & Final Rally

• 00:23:11 Bitcoin is currently below its bull market support band, and if price action remains suppressed, a 'death cross' (50-day SMA crossing below 200-day SMA) is likely in the coming weeks. Historically, death crosses often correspond to market lows, preceding short-term relief rallies. This upcoming event could be Bitcoin's best chance for a final rally to new all-time highs before the cycle ends, but it must be Bitcoin-led, with altcoins unlikely to lead in a durable fashion until Bitcoin surpasses its prior all-time high.