Why Bitcoin's Current Weakness Shouldn't Worry You

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Market Overview

If you’re a trend-following investor… the trend is over.

Bitcoin is officially in a negative trend no matter how many ways you look at it.

This is a fact, no opinions or discretion involved.

But…

That doesn’t mean the bull market is over.

That doesn’t mean the top is in.

A trend ending doesn’t mean it can’t restart.

In every single previous bull market, there was a period (or two) where Bitcoin kicked into a negative trend.

EVERY.

SINGLE.

TIME.

I’ll show you.

2017

FOUR times.

Four times Bitcoin went down 30% or more in the middle of the 2017 bull market.

And each drawdown lasted over 30 days!!

Can you imagine the sentiment shift when Bitcoin goes down 30% for 1 straight month?

Imagine how bearish people got.

But you shouldn’t have lost conviction. Because bottom to top, Bitcoin went up ~3000% in this time period.

2019

Even in the mini bull market in 2019 there was a period of 26 days where Bitcoin went down 18%.

(Bitcoin now hasn’t even gone down 13% top to bottom.)

2021

January 2021. Bitcoin went down 30%. 1 full month.

Imagine losing conviction there.

Bitcoin went out to do a 90% rise.

September 2021

Even in the second leg of the 2021 bull market in September:

A 23% decline over a period of 24 days. Bitcoin then went back up 63% and made new highs.

2024

And finally, the most recent example: January 2024.

Bitcoin went down ~20% over 32 days before going back up 83% to make new highs.

CONCLUSION 

What all this shows is that the current decline and weakness in Bitcoin is totally normal and expected in the context of a bull market.

This leads us to believe Bitcoin will rise between 40-60% after bottoming out some time around the start of the year.

We believe the top will be between $120k and $140k as shown below:

This is not a prediction. This is an expectation.

This is not a full-cycle top. This is a mid-cycle top.

Although macro conditions are looking less favorable for risk-on assets, a drawdown in December-January for Bitcoin is typical behavior that leads to continuation.

Bull markets never end before testing out the patience of holders.

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