Bitcoin: Bull Market Support Band

Key Concepts

Bull Market Support Band: A technical indicator, typically represented by moving averages (like the 20-week SMA and 21-week EMA), used to identify the lower boundary of a bull market. Drops below this band can signal a potential trend change.
4-Year Cycle / Post-Halving Year: The historical tendency for Bitcoin's major price cycles to conclude in the fourth quarter (Q4) of the year following its halving event.
Quantitative Tightening (QT): A monetary policy where a central bank reduces the size of its balance sheet, effectively withdrawing liquidity from the financial system.
Quantitative Easing (QE): The opposite of QT, where a central bank injects liquidity into the financial system by purchasing assets.
Bitcoin Dominance: The percentage of the total cryptocurrency market capitalization that is held by Bitcoin. An increase in Bitcoin dominance suggests that Bitcoin is outperforming altcoins.
Altcoin Season: A period when altcoins (cryptocurrencies other than Bitcoin) experience significant price appreciation, often outperforming Bitcoin.
Death Cross: A technical indicator where a shorter-term moving average (e.g., 50-day SMA) crosses below a longer-term moving average (e.g., 200-day SMA), often seen as a bearish signal.
50-Week Moving Average (50W MA): A key support level for Bitcoin in previous cycles, often indicating the end of a bull market when breached on weekly closes.
RSI (Relative Strength Index): A momentum oscillator used to measure the speed and change of price movements.

Bitcoin and the Bull Market Support Band Update

The video provides an update on Bitcoin's current position relative to its bull market support band, which is defined by the 20-week Simple Moving Average (SMA) and 21-week Exponential Moving Average (EMA). Bitcoin has recently dropped below this band, a pattern observed three times previously in the current cycle: in Q3 2023, Q3 2024, and early Q1/Q2 2025.

Historical Performance Below the Support Band

Duration Below Band: Historically, when Bitcoin has fallen below the bull market support band, it has typically stayed there for a few months. Specific durations mentioned include:
- 9 weeks
- 11 weeks
- 7 weeks (most recent instance)
Time Above Band: Bitcoin has spent significant periods above the support band. The time taken to fall back below after regaining the band has varied:
- 37 weeks (after regaining in October 2023)
- 24 weeks (after regaining in 2024)
- 25 weeks (after regaining in early 2025)
Current Situation: The current drop below the band is only a couple of weeks old.

The 4-Year Cycle and Q4 Top Expectation

A central argument presented is the historical tendency for Bitcoin cycles to end in the fourth quarter (Q4) of the post-halving year. The speaker emphasizes the principle of "if it's not broke, don't fix it," suggesting that assuming this cycle will break the historical pattern is not prudent.

Argument for Q4 Top: The speaker leans towards the belief that the cycle will likely end in the current quarter. The focus is on determining if the top is already in, rather than speculating on a cycle extending into 2026.
2026 as a Bear Market Year: The speaker subscribes to the view that the year following the post-halving year (analogous to 2014, 2018, and 2022) will likely be a bear market year. Therefore, the top is expected to occur in the current quarter.

Unfulfilled Peak Indicators and Monetary Policy Influence

A key observation is that many traditional "peak indicators" have not yet triggered or reached extreme levels, raising questions about their reliability or whether they will signal at all.

Quantitative Tightening (QT) and Bitcoin Rally: The speaker explores the possibility that the current Bitcoin rally might be more akin to the rally seen in late 2018/early 2019, which occurred during a period of QT.
- Bitcoin Dominance: During that 2019 period, Bitcoin dominance increased alongside the rally, a phenomenon also observed in the current cycle, albeit for a longer duration. This suggests a "Bitcoin-only rally" where altcoins lag.
- Current Scenario: The question is posed whether the current situation mirrors the point where Bitcoin topped shortly before QT ended in that past cycle.
Liquidity Rotation: The expectation is that there will be a final rotation of liquidity from the altcoin market back into Bitcoin. Bitcoin dominance has been trending higher for several weeks, supporting this view. The speaker predicts dominance could significantly exceed 60%.

Technical Analysis and Potential Price Targets

Current Top at 126K: The current perceived top is around $126,000, which connects the dots on prior peaks.
ROI and Cycle Length: The Return on Investment (ROI) from the low for Bitcoin has been similar to the last two cycles, making it difficult to dismiss the cyclical pattern.
Underperforming Indicators: Metrics like the Pi Cycle Top indicator, risk metrics, fear and greed index, and terminal price have not reached extreme levels typically associated with cycle tops.
Open-mindedness: The speaker advocates for being open-minded to predictions playing out for a little longer, but not into 2026. If a top hasn't occurred by the end of the year, it's unlikely to happen this cycle.

The 2019 Analogy and Monetary Policy Regimes

The speaker draws parallels between the current market conditions and the 2019 period, particularly concerning monetary policy.

2019 Rally: During the 2019 rally, top indicators did not flash, and the Pi Cycle Top did not cross. This occurred during QT.
Current Cycle vs. Previous Cycles: The current cycle is contrasted with the previous cycle (2020-2021), which operated under a different monetary policy regime of near-zero interest rates and unprecedented money printing (QE).
Bitcoin-Only Rally: The current move is seen as more similar to the Bitcoin-only rally of 2019, where altcoins did not participate significantly.
Altcoin Season Pre-requisite: For an altcoin season to occur, Bitcoin would need to experience a parabolic rally first. While not impossible (as seen in 2017 even during QT), the speaker believes if this parabolic rally doesn't happen in the next two months, it won't happen this cycle.

Short-Term Outlook and Potential Scenarios

The speaker outlines a cautious yet open-minded approach for the next couple of months.

Scenario 1: Parabolic Rally: If Bitcoin experiences a parabolic rally into the end of the year, it would likely lead to new all-time highs. However, even in this scenario, traditional topping indicators might not signal conventionally due to diminishing peaks observed in previous cycles.
- Diminishing Peaks: Dividing moving averages shows a trend of diminishing peaks. Extrapolating this suggests the next peak might not cross moving averages, thus not triggering the Pi Cycle Top in its conventional sense.
- Surface-Level Signals: Top indicators might not signal at a surface level but could provide signals upon deeper data analysis.
Scenario 2: No Parabolic Rally: If Bitcoin does not have a parabolic rally by December, it might enter a phase of lower highs, indicating a potential shift in trend.
Confirmation of Optimism: The speaker is looking for confirmation that a rally is possible, such as continued increases in Bitcoin dominance.
Comparison to 2019: The current situation is compared to mid-June 2019, where a final rotation led to a new all-time high for Bitcoin, but topping indicators still didn't signal.
Price Targets: Even if Bitcoin reaches $130K, $140K, or $150K, many signals might not trigger without higher prices. Complacency in the current quarter is discouraged.

Validation for Top Confirmation

The speaker shares personal indicators for confirming a market top.

50-Week Moving Average (50W MA) Breach: A critical signal for the speaker is when Bitcoin closes weekly below the 50W MA, especially by the end of the post-halving year or going into the midterm year. This has historically marked the end of cycles (2013-2014, 2017-2018, 2021-2022).
- Current Support: The 50W MA has acted as a more significant support band than the 20W SMA in this cycle.
- RSI Support: The weekly RSI finds support around 44, currently at 49.
Flexibility: The speaker remains flexible and not deterministic, hoping for Bitcoin to lead and for top indicators to trigger. However, the 50W MA breach would necessitate a change in bias.

Bitcoin Dominance and Altcoin Performance

The speaker reiterates the importance of Bitcoin dominance as a leading indicator.

Bitcoin Dominance Trend: Bitcoin dominance has been trending upwards for six consecutive weeks, indicating a shift in liquidity.
All-Time Highs for Altcoins: Altcoins are unlikely to see sustained moves until Bitcoin surpasses its prior all-time high. This has been the pattern throughout the cycle.
Comparison to 2017 and 2019:
- All Bitcoin Pairs: The current valuation of all Bitcoin pairs is comparable to October 2017, which preceded a parabolic altcoin rally. However, during that period, Bitcoin was also rising.
- 2019 Comparison: The current alt-Bitcoin valuation is also similar to 2019. In that year, Bitcoin hit a new all-time high, but Bitcoin dominance rose not due to altcoin season, but because altcoins dropped less than Bitcoin during a mid-cycle bear market.
Focus on Bitcoin: For now, focusing on Bitcoin is recommended, as it offers exposure to upside even if the market resembles 2019, where Bitcoin stayed near highs for months after the top.

The Role of the 50-Week Moving Average and Potential Death Cross

The speaker emphasizes the significance of the 50W MA for cycle continuation.

Cycle Continuation: The only way for the cycle to continue from here is if Bitcoin can hold above the 50W MA on weekly closes and lead back to all-time highs.
Altcoin Decimation: If Bitcoin fails to lead back up, altcoins are at risk of significant losses.
Death Cross Expectation: The speaker anticipates a "death cross" (50-day SMA crossing below 200-day SMA) in the coming weeks.
- Lagging Indicator: Death crosses are lagging indicators and often correspond to market lows.
- Historical Correlation: Death crosses have historically coincided with yearly lows (2023, 2024, early 2025) and significant rallies (2019).
- Timing: The death cross is expected to occur within a few weeks, with the 50-day SMA at $114 and the 200-day SMA at $108.
- Opportunity: If Bitcoin cannot pump significantly before the death cross, it might present the best chance for a final rally before the cycle ends.

Trading the Market in Front of You

The speaker advises against trading based on desired outcomes and instead to focus on current market conditions.

Trading the Market You Want vs. The Market You Have: Many investors desire altcoin season to sell their holdings. However, the current market suggests that for altcoins to perform positively, Bitcoin must lead the way.
Liquidity Flow: The flow of liquidity back to Bitcoin is a sign that others are also recognizing this trend.
Capitulation on Altcoins: The upward trend in Bitcoin dominance reflects capitulation on altcoins.

Conclusion and Final Thoughts

The speaker concludes by reiterating the importance of Bitcoin's leadership and the potential for a death cross to signal a local low.

No Significant Move: If there is no significant price move (like the October new high) in November, faith in a parabolic rally into 2026 will diminish.
Uncomfortable Truth: By December, if new highs are not made, an uncomfortable truth about the cycle might need to be faced.
Optimism with Caution: Until weekly closes below the 50W MA occur, there is still reason for optimism.
Bitcoin's Lead: The speaker maintains that Bitcoin remains the better play compared to other cryptocurrencies, both for the entire cycle and in the short term.
Dominance Surge: A significant surge in Bitcoin dominance is expected over the next week and a half to two weeks, potentially exceeding 60%.
Risk Management: If the top is in, a 5-10% drop in Bitcoin (weekly closes below $100K) would be less painful than the 30-50% drops altcoins could experience.
Open-mindedness: The speaker emphasizes the need to remain open-minded to market developments.