Dear Bitcoiners,
Over the past weeks, we’ve discussed the importance of reclaiming the ETF Cost Basis, and more importantly, finding support above this level. Last Thursday, on the same day my BTC Sessions podcast went live, Bitcoin experienced a quick drop toward $80k, and today, once again. Both drops came right above the ETF Cost Basis. So far, support is holding up!
In the bigger picture, not much has changed. Bitcoin is consolidating between the ETF Cost Basis and the On-Chain Value Map’s Fair Value. These are exactly the levels we’ve been tracking over the past three newsletters.
Let’s now look at what this consolidation means for Bitcoin’s recovery and which other levels are important.
Testing the ETF Cost Basis
In the chart below, we can see Bitcoin’s price together with the ETF Cost Basis and STH Cost Basis, two important levels to watch during this recovery.
👉 For paid subscribers: The FULL Key Levels chart, including all the important support and resistance levels and the accompanying step-by-step table, is available live on the Bitcoin Strategy Platform.
The ETF Cost Basis, currently around $80k, has now been tested twice within a week. Finding support at this level would be a very bullish development, especially considering the importance of ETFs as one of the main gateways for demand this cycle.
Interestingly, it’s exactly when these levels are being tested that investors become cautious. Understandably, because we can never be sure whether support will hold. However, successfully testing and finding support at these levels is also an important part of establishing a more sustainable uptrend.
A Healthy Consolidation
Two weeks ago, we compared Bitcoin’s current recovery trajectory with previous cycles, aligned by their cycle bottoms.
One of the observations was that Bitcoin’s recovery had been moving rather quickly. Historically, these recoveries have followed a general trajectory. If we move too fast, we often see a stronger consolidation afterward.
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The 2018 cycle is a good example. Bitcoin initially recovered very quickly, but this was followed by a much longer consolidation before the recovery continued.
Our current recovery has also been moving quite fast since the June bottom. Therefore, some consolidation around these levels is actually a very healthy development.
👉 Key insight: Based on our cycle comparison, some consolidation was likely after such a strong recovery. Finding proper support around the ETF Cost Basis, rather than continuing to move higher, will allow for a healthier and more sustainable recovery toward new ATHs.
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What If Support Doesn’t Hold?
I believe the bottom is in, and establishing proper support around these levels is exactly what Bitcoin needs for a continuation of the recovery. But, of course, we also need to consider the bearish scenario, even though I don’t think this is the most likely outcome.
If Bitcoin does break below the ETF Cost Basis, the next important level is the STH Cost Basis. This is the level we broke through back in August, which initially turned our outlook bullish.
Interestingly, the STH Cost Basis has been rising and is moving closer to the ETF Cost Basis, giving us two important support levels relatively close to each other.
Holding the ETF Cost Basis would be the most bullish outcome. Dropping below it but finding support at the STH Cost Basis would still be a reasonable outcome. Dropping below both levels, however, would be a much more bearish development. Whether this changes the recovery outlook would also depend on macro developments and require a deeper analysis.
For now, the most likely outcome remains a continuation of the recovery after some consolidation.
See You at Bitcoin Amsterdam! 🇳🇱
I’m also excited to announce that I’ll be speaking at Bitcoin Amsterdam on November 5–6!
I’ll be sharing my latest Bitcoin cycle analysis and charts, looking at how this cycle is different.
You can get 10% off your tickets using code: ROOT.
Hope to see you there!
Last Week’s BTC Sessions Podcast
Last week’s podcast with Nathan Fitzsimmons from BTC Sessions has already reached 25k views and remains highly relevant!
We walked through many charts covering Bitcoin’s bottom formation, the recovery trajectory, key resistance levels, institutional demand, and the macro outlook.
If you haven’t watched it yet, definitely check it out! 👇
Wrap Up
Over the past three newsletters, we’ve discussed Bitcoin reclaiming the ETF Cost Basis, the recovery trajectory compared to previous cycles, and the key levels to watch.
Those insights remain highly relevant. Current price action hasn’t changed the bigger picture. We’re still consolidating between two important levels, with Fair Value as resistance and the ETF Cost Basis as support.
Ideally, Bitcoin finds support here before continuing its recovery. And if we do lose this level, we still have the STH Cost Basis below as another important support level.
👉 As I’m preparing for my Bitcoin Amsterdam presentation, I might skip next week’s newsletter or the one after, unless Bitcoin makes an unexpected move worth covering. In the meantime, you can continue tracking all the important levels and indicators live on the Bitcoin Strategy Platform.
I hope you found these insights useful. As always, your thoughts are appreciated. 🧡
Until next time, 👊
-Root