Dear Bitcoiners,
Crazy price action for Bitcoin these past few days, as we fell below the Key Levels needed to comfortably maintain the recovery outlook. Is Bitcoin on its way to a new cycle bottom, or will this become the first higher low? In today’s Bitcoin Strategy newsletter, we’ll discuss the latest insights!
Last week in Amsterdam, I presented the case that the cycle bottom was likely in, even if Bitcoin were to fall below key levels, which is exactly what we’re experiencing today. Sentiment surely turned bearish with this move, but is the recovery thesis still intact? Let’s discuss what is going on. Cycle-wise, we are at the time of historical bottoms. However, from a market-structure perspective, we might be making the first higher low!
Cycle Timing vs. Market Structure
From a cycle perspective, Bitcoin is supposed to make a bottom right around now, at the end of the bear market year 2026. This would keep Bitcoin perfectly within the 4-year cycle. To further back that up, looking at on-chain valuation levels, Bitcoin could still drop toward the Heavily Undervalued level, currently sitting around $48k.
But looking more closely at the cycle timing, each 4-year cycle bottom historically came slightly earlier than the one before it. That would have put the current cycle bottom around mid-October, more or less a month ago. Hence, we are slightly late if the bottom still has to come, or roughly four months early if the June bottom was already in, as suggested by the breakout above the Key Levels.
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Bottom In or New Bottom?
The animation above shows how both scenarios would look. The 4-year cycle would imply that current price action is about to make the cycle bottom. Structure-wise, however, the bottom is likely behind us, with Bitcoin forming its first higher low.
Looking at both scenarios side by side, do you agree that the structure where the bottom is already in looks like the more likely outcome?
Thinking in probabilities, even including today’s price action, I still believe a continuation of the recovery and the formation of the first higher low remains an extremely likely outcome. It is not uncommon to see Bitcoin break back below key levels during a recovery. In fact, we’ve seen this happen in every cycle. Looking at market structure, and given the breakout we’ve seen, this creates an extremely interesting setup for a higher low.
Current fear and sentiment in the market are among the worst I’ve seen in quite some time. While we can’t entirely disregard the bearish scenario of making another cycle bottom, this is starting to become a very interesting opportunity. Looking at historical recoveries, these prices could look extremely attractive in hindsight over the next 6 to 12 months.
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👉 Key takeaway: If Bitcoin is able to establish a convincing higher low here, sentiment could turn bullish very quickly.
