Bitcoin Falls Below The Bull Market Support Band

Summary

In this video, the presenter discusses Bitcoin’s current market status, particularly the recent drop below the bull market support band and its potential implications. They compare the current cycle to previous ones, including the 2016-2017 cycle, and explore Bitcoin’s one-year ROI and potential outcomes based on past trends. Emphasizing the window of weakness for Bitcoin between February and March, the video outlines scenarios for Bitcoin's price trajectory and suggests that its performance will be largely influenced by broader stock market movements, particularly the S&P 500. The presenter concludes with insights into the impact of quantitative tightening and its possible effects on Bitcoin’s future direction.

Takeaways

• 😀 Bitcoin's first weekly close below the Bull Market Support Band outside of Q3 is a significant deviation from previous cycles.
• 😀 The 1-year ROI for Bitcoin has started to decline, showing a different pattern compared to 2017, where it continued to rise in early months.
• 😀 Bitcoin has fallen below its ROI from the low, suggesting diminishing returns, but is still outperforming the 2016-2017 cycle in terms of peak ROI.
• 😀 Bitcoin could drop to around $69k, which is the prior all-time high, without deviating too much from the 2016-2017 cycle's pattern.
• 😀 A drop to the low 60s would likely signal the end of the cycle, while a wick below $73k would still allow for a potential bullish scenario.
• 😀 The window of weakness for Bitcoin likely continues until March options expiration, with the possibility of extending into early April due to the labor market print.
• 😀 The stock market's weakness in post-election years typically impacts Bitcoin's performance, as the two markets tend to move in correlation.
• 😀 The S&P 500's decline has affected Bitcoin, with Bitcoin holding up better than the stock market, which has given back all post-election gains.
• 😀 A wick below the 2017 high, like the one seen in January 2017, could still be a healthy correction for Bitcoin, but a further drop below $62k to $63k would suggest a larger cycle shift.
• 😀 A potential rally after Bitcoin's current correction could align with past cycles, particularly the 2019 Ethereum price behavior during quantitative tightening.
• 😀 Bitcoin's current drop below the Bull Market Support Band mirrors past behavior seen during quantitative tightening, suggesting that a recovery could follow similar patterns.

Q & A

What is the significance of Bitcoin closing below the bull market support band?

Bitcoin closing below the bull market support band is noteworthy because it marks the first time Bitcoin has closed below it on a weekly basis outside of the third quarter of the year in the current cycle. This deviates from previous market behavior, indicating a potential shift in trend.

What does the one-year ROI trend suggest about Bitcoin's performance in the current cycle?

The one-year ROI for Bitcoin has started to decay in the current cycle, which contrasts with 2017 when the ROI continued to rise in January, February, and March. This decline suggests that Bitcoin is experiencing weaker performance in the early months of this cycle.

How does Bitcoin's current cycle ROI compare to the 2016 cycle?

When comparing the ROI from the low of the current cycle to the 2016 cycle, Bitcoin has fallen below the previous cycle's ROI, which is in line with the idea of diminishing returns. However, if we compare the cycle from peak to peak, the current cycle is outperforming the 2016 to 2017 cycle.

What does the potential drop to 69k mean for Bitcoin's market cycle?

A drop to 69k would bring Bitcoin's price in line with the peak from the prior cycle, and the market would still be tracking similarly to the 2016-2017 cycle. This suggests that Bitcoin could experience a brief decline to test prior highs before continuing its cycle.

What are the key concerns if Bitcoin's price falls below 70k?

If Bitcoin falls below 70k, it could signal the end of the current market cycle. A drop into the low 60s, for example, would likely indicate a macro lower high and signal that the cycle is over. A wick just below 73k would be acceptable, but any deeper fall would be concerning.

Why is there a window of weakness for Bitcoin between February and March?

The window of weakness between February and March is driven by factors like stock market weakness, especially following options expirations. Additionally, Bitcoin tends to perform poorly during this time due to macroeconomic conditions such as recession fears.

What role does the stock market play in Bitcoin's price movements?

The stock market has a significant influence on Bitcoin's price movements. In periods of stock market weakness, Bitcoin tends to follow suit. For example, the S&P 500's decline has been mirrored by Bitcoin's underperformance in recent months.

What does the comparison to the 2017 cycle reveal about Bitcoin's future performance?

The comparison to the 2017 cycle shows that Bitcoin's price behavior in early 2025 is similar to 2017 in terms of testing prior highs and experiencing weakness in early months. This suggests that Bitcoin could follow a similar pattern of testing lower levels before a potential rally.

How does Bitcoin's current performance compare to Ethereum's performance in 2019?

Bitcoin's current performance mirrors Ethereum's 2019 performance during quantitative tightening, where Ethereum faced a breakdown similar to Bitcoin's recent decline below the bull market support band. This could indicate a similar market trajectory in the near future.

What should Bitcoin investors look for to determine the cycle's direction?

Investors should monitor Bitcoin's price relative to key levels, such as the 69k to 73k range. A wick below 73k would still keep the cycle intact, but if Bitcoin falls into the low 60s, it would likely signal the end of the cycle. Additionally, the direction of the stock market and upcoming options expirations will be crucial indicators.