Bitcoin: Midterm Year Returns

Key Concepts

• Midterm Year Returns: Bitcoin’s typical price action during the year following a halving event.
• Local Low/High: Short-term price bottoms and peaks within a larger trend.
• Year-to-Date (YTD) ROI: The percentage gain or loss of an investment since the beginning of the calendar year.
• Standard Deviation: A measure of how spread out numbers are. Used here to assess the range of typical midterm year performance.
• Permabulls: Investors who consistently maintain a bullish outlook, even during bear markets.
• Pivot: The ability to change investment strategy based on market conditions.
• Weekly Candles: A charting technique representing price movement over a week, used to identify patterns.

Bitcoin Midterm Year Returns: Navigating Potential Traps

This video analyzes historical Bitcoin price action during midterm years (the year following a halving) to identify recurring patterns and caution against common investor pitfalls. The core argument is that despite current narratives, Bitcoin frequently exhibits a predictable pattern: a low in February, a rally into early March, followed by a correction and eventual decline throughout the year.

Historical Patterns & Data Analysis

The speaker highlights a consistent pattern observed in 2014, 2018, and 2022:

• February Lows: Bitcoin consistently finds a low point in February. Specifically, lows occurred on February 10th & 25th (2014), February 6th (2018), and February 24th (2022).
• Early March Rally: Following the February low, Bitcoin typically rallies into early March. Highs were observed on March 3rd (2014), March 5th (2018), and March 2nd (2022).
• Subsequent Correction: The early March rally is often followed by a correction and a general downward trend as the year progresses.

This pattern is further supported by analyzing Bitcoin’s year-to-date (YTD) Return on Investment (ROI). On average, the low occurs around the 56th day of the year, with a rally peaking around the 62nd day. While each year varies, the speaker emphasizes the consistent pattern of a February low and March rally.

2024 Context & Current Positioning

The speaker applies this historical analysis to the current market situation (as of the video’s recording). He notes that Bitcoin’s YTD ROI in 2024 has been closely tracking the average of prior midterm years, even during the recent downturn. Currently (day 57 of the year), Bitcoin is trading within one standard deviation of the average midterm year performance.

He estimates that if Bitcoin were to rally to around 74K, it would still be within the historical range observed in prior midterm years. He points out that 74K could act as resistance, as it was a support level in April 2025.

Investor Psychology & Narrative Traps

A significant portion of the video focuses on the psychological factors influencing investor behavior. The speaker cautions against being swayed by prevailing narratives, arguing that:

• News Cycle Irrelevance: The news cycle often provides post-hoc rationalizations for market movements, but doesn’t drive them.
• Permabull Bias: Investors who remained bullish throughout the 2022 bear market are now desperate for a rally to justify their positions, making them susceptible to false signals. He contrasts this with investors who successfully pivoted to a bearish stance, giving them more flexibility.
• Supercycle Misconceptions: Many investors are incorrectly framing the current market as the beginning of a new bull supercycle, leading them to overestimate the potential for sustained gains.

Quote: “People will try to explain what's going on in the market based on the news cycle, but the news cycle just simply doesn't matter, you know.”

Technical Analysis: Weekly Candles

The speaker reinforces his analysis using weekly candle charts. He demonstrates how these charts visually confirm the pattern of red (downward) candles in February followed by a bullish candle peaking in early March in 2014, 2018, and 2022. This visual representation further emphasizes the recurring nature of the pattern.

Actionable Insights & Cautions

The speaker advises viewers to:

• Remain Level-Headed: Avoid getting caught up in hype and narratives.
• Recognize Potential Resistance: Be aware that the 74K level may present resistance.
• Expect Weakness in March/April/May: Prepare for a potential correction after the initial March rally.
• Use the Chart for Realistic Expectations: Utilize historical charts to manage expectations and avoid chasing unsustainable rallies.

Quote: “I just want to caution people into, you know, believing that just because you have a rally because of some narrative that's being spun as the reason doesn't mean that's the case.”

Timeframe & Conclusion

The speaker emphasizes the short timeframe for this potential rally, noting that the average local top occurs around the 62nd day of the year (approximately 5 days from the video’s recording date). He concludes that understanding these historical patterns is crucial for navigating Bitcoin bear markets and avoiding common investment mistakes. He stresses the importance of time in investing, acknowledging that while Bitcoin may eventually recover to previous highs, it’s unlikely to happen within a midterm year.

This analysis provides a framework for understanding potential Bitcoin price action in the short term, emphasizing the importance of historical data, investor psychology, and realistic expectations.