I wrote three books about bitcoin and publish a newsletter about cryptocurrency. I'd love for bitcoin's price to reach the lofty expectations everybody else seems to have.
When you look at the data, trends, and patterns of behavior we saw as bitcoinâs price approached its four previous market cycle peaks, you will see the same things today as you did for each of those other times.
Sure, it's cooled off for the past two weeks, but the trajectory hasn't changed. Still parabolic and coming out of a bull flag.
The last time bitcoin did this (February), its price doubled. The time before that (December), its price tripled.
If bitcoin comes even close to those targets in April, its bull run will end.
I realize that seems crazy. On March 11, 2021, I published a detailed post for subscribers of my Crypto is Easy newsletter going deep into the data and correlations. I summarize them below and recommend you read that other post for a more nuanced and informative explanation. This article hits only the high notes.
Also, make sure you caught my post from last month, Bitcoinâs Market Cycle Peak is a Lot Closer Than You Think.
Mark, donât even bother. Institutions will never let that happen!
Yes, some say institutions will never let the price crash. No more bear markets. Only up forever. Theyâre all FOMOing in, buying up even the slightest dip. âWall of institutional money.â
Sounds great.
To sustain this bull market, we need institutions to HODL, not just buy. After all, they canât push prices higher when theyâre selling their bitcoin right after they get it.
Look at the realized cap HODL waves, which show the movements of bitcoin among older and newer wallets based on the value of the bitcoins that move.
Unlike the HODL waves youâre probably used to, this metric quantifies the influence those HODLers have on the market. Rather than calculate a percentage of people or wallets, it calculates the percentage of bitcoinâs market value.
We know institutions accumulated a lot of bitcoin from September to December.
If theyâre still HODLing that bitcoin, we should see it reflected in some growth in the band that represents people who acquired bitcoin in the past 3â6 months.
As of mid-March 2021, we didnât see that at all.
In fact, we saw a steep drop dating back months.
This chart lumps all the short-term HODLers, people whoâve had bitcoin for three months or less. Blue circles are market cycle peaks.
Those shorter-term bands keep widening, resulting in spikes on this chart. You can see the spikes lead to market cycle peaks.
As you can tell from the arrow, this most recent spike is approaching (but not quite at) levels we only see at market cycle peaks.
As I explained in previous updates, itâs unlikely institutions or their custodians are moving money from old wallets to new ones within their own portfolios, at least not in any significant amount.
In other words, those short-term bands are not rising from big HODLers moving to newer wallets that they control. Rather, theyâre shipping off their bitcoin to somebody else.
Certainly, some institutions are HODLing. Itâs just not enough to change the trend.
Yea, but moneyâs pouring into Grayscale and the ETFs!
It was until February.
Since then, flows into Grayscale bitcoin trust have fallen off a cliff and even went negative in March.
Flows into the Purpose bitcoin ETF have dried up, too â from 2,200 bitcoins on the first day to an average of 200 or less since then. On top of that, 3iQ sold some bitcoin from its fund.
That signals fatigue or disinterest among institutional investors and traditional retail speculators, at least in the very short-term.
(Yes, NYDIG says it has a few billion dollars of institutional money lined up. For a $1 trillion asset like bitcoin, a billion dollars doesnât seem like enough to move the market.)
Ok, that doesnât matter, that data models predict higher prices for longer
Sure, depending on which model you pick. S2F, expanding cycles, hash cycles, four-year cycles, halving cycles, the list goes on.
Thereâs a model for every outcome you want to see, and they all disagree with each other.
While I donât make decisions based on data models, I found a few that fit my bias. They all tell us the marketâs approaching its peak.
- Pi cycle, a mathematical formula that maps the intersection of two specific moving averages. When those averages converge, the market is near its peak. Today, those averages are 5% apart and getting closer with each passing day. All four previous times we saw that pattern, the market peaked within weeks.
- Two-year moving average multiplier, a line bitcoin breaches only when it reaches market cycle peaks. Weâre very close to breaching that line.
- Logarithmic growth curve, an algorithm that marks the big peaks. When bitcoinâs price hits the top of the curve, it signals the absolute peak and triggers deep, long bear markets. If bitcoinâs price remains on this trajectory, we will hit the top of that curve in a month.
- Golden ratio multiplier. Whenever bitcoinâs price goes above that line, it hits a market cycle peak. That line projects to hit the top of the logarithmic growth curve at the same time as you would expect the lines of the Pi cycle to converge.
All of these signals meet next month at a price of roughly $90,000.
For this summary, Iâll overlap all of them on one chart so you can see the trajectory:
In my longer update, I delve into this data more deeply. Really interesting stuff.
Bottom line?
Every time we see those signals converge, we get a crash of +77% and a bear market.
Coincidences! Anybody can pick whatever data they want
Yes. Anything you can do, I can do better đ
I donât offer predictions or statistical proof, just food for thought. The more coincidences you see, the more likely it is that they mean something.
Weâre long overdue for a severe crash (not a dip) or at least a long consolidation, and maybe we will get that before the market cycle peak. If so, you can throw out all this data. Bitcoin will crash, the market will reset and lay a strong foundation for that big, long bull market that everybody expects.
Without that crash or multi-month consolidation, we will head to the market cycle peak a lot sooner at a much lower price than you expect.
But the bull market just started
Are you sure?
Bitcoinâs price has gone up for more than two years. In January 2019, it was $3,200. In January 2020, it was $7,000. In January 2021, it was $25,000.
On those dates, the total altcoin market was $37 billion, $53 billion, and $215 billion.
Higher each year.
Weâve been in this bull market for a while, even if it hasnât felt like one or it hasnât met the dictionary definition of âbull market.â
Now, the momentum has shifted. This planeâs running out of fuel.
Itâs ok to refuel
Do you want to hop on a plane when itâs already running out of fuel? Or do you want to wait until it lands so you can fill up the tank and then start zooming again?
Bitcoinâs price can go a lot higher, but it needs to land and refuel. Otherwise, it will crash.
Not a 30% crash like weâve seen so many times. Not even a 50% crash like we got in 2020 and 2019.
A far bigger crash.
We still have room to run. You can realistically double your portfolio in a month or two, and if you have a lot of altcoins, you could do even better. Thatâs an opportunity you canât get in any other market.
At great risk, though.
HODLers donât care
Long-term, none of this matters. Bitcoinâs price will almost certainly go way higher in the future than it is today.
If youâre willing to HODL the peak and wait six months to three years for your investment to get back to even, then you donât have to worry about a thing. No matter what happens in the coming months, youâll be fine in the long run.
For me, thatâs a big risk to take and a long time to wait. I donât want to be underwater for that long.
You probably donât, either.
Itâs different this time
No. If we keep this pace, we will soon reach the same place weâve been four times before, with each market cycle.
Four times.
Same patterns, Same relationships. Same things we see at the end of each market cycle.
Itâs not different. Itâs not different at all.
Itâs exactly the same.
Why should we expect a different outcome?
Mark Helfman publishes the Crypto is Easy newsletter. He is also the author of three books and a top bitcoin writer on Medium and Hacker Noon. Learn more about him in his bio.
Originally published at Voice.com.