Summary This article aims to show that 2 key events typically occurred in the past 2 cycles that marks the beginning of Bitcoin's attempt to claim new ATHs. The first event is a 180-day 'wait period' where Bitcoin attempted to reclaim its previous all-time high before claiming new ATHs in the subsequent 180-day window. The second event is a bullish signal indicated by the Coppock Curve within the first 180-day 'wait period' when Bitcoin attempted to reclaim its previous ATH. The current cycle differs from past cycles in which the current bull market occurred without the price bouncing off the Halving Cycle support level. Nevertheless, we think that the bull market remains intact, and we're positioning for a bullish bias when the 2 aforementioned events occur. Introduction It is great to be back here at Seeking Alpha to share our outlook on Bitcoin USD ( BTC-USD ) as we're now in what we consider the Bitcoin bull market. Considering how Bitcoin failed to initiate a runaway bull run past the $70,000 ATH from the past cycle after the highly anticipated halving event back in April 2024, we believe that many avid followers of Bitcoin are left wondering whether a bull run would come at all. Fortunately, we can say that Bitcoin's current performance still aligns with the decade-old Halving Cycle that we know today. In this article, we aim to show you 2 very important events that should occur before we expect a bull run. Background Before we discuss the 2 important events, we should outline our current findings, assumptions, and expectations for the current bull market. This is so that you can grasp the degree of conservatism/aggression we have for the Bitcoin market. This was our outlook: Any runaway bull market will probably mark the end of the decade-old Bitcoin halving cycle as we know it. This is because the current Bitcoin Halving Cycle could not account for price movements beyond the $100,000 price level (Fig 1). Nevertheless, some observations suggest that this bull market could peak at about the same $100,000 price level. Fig 1. Bitcoin's Decade-old Halving Cycle Cannot Project Prices Beyond the $100,000 Price Level (TradingView) In our most recent article on Bitcoin at the beginning of the year, we showed that Bitcoin's so-called "100x bull run" could be behind us. We observed that the magnitude of returns diminishes over each cycle. The first bull cycle saw a 100x return (from $12 to $1,200), then a 32x return (from $600 to $19,000) in 2016's bull run, then an 8x return (from about $8,500 to $70,000) in 2020's bull run. Extrapolating the observation suggests the current bull market will conservatively produce a 2x to 3x bull run, which is still pretty good. Side note: You could still magnify returns (and risk) to obtain a similar level of return as past Bitcoin bull markets through Bitcoin miners or options on ProShares Bitcoin Strategy ETF ( BITO ). For instance, our latest pick Iris Energy ( IREN ) gained as much as 3x when we expressed we changed our outlook from very bearish to bullish (unfortunately, the article could not get through the editorial process). Our BITO call position (at $13-strike, $3.90 premium) also produced a peak return of 5x from Oct 2023 to March 2024. Hence, all things considered, Bitcoin's 2x to 3x return isn't that pessimistic, but it does suggest undertaking more risk for the same level of return. Therefore, what we're trying to express is that the term 'bull run' used in this article refers to an expected ~2x return from today's Bitcoin price ($57,000 -> $100,000). This implies that the $100,000 will also be the price level where we hope to liquidate our miner positions (if any) and BITO positions. We're not going to touch our Bitcoin position as it is currently staked. Since the beginning of this year, we've also started looking at other 'traditional' and less exciting sectors to allocate our gains (you should've seen how badly we screwed up with our position on Unity Software ( U ) if not for Bitcoin, hah!). The 2 events Bitcoin’s Bull Run Could Be Waiting On As the title of this article suggests, the 2 events we're waiting on are Time and a bullish signal on the Coppock Curve . The time variable plays an incredibly significant role in Bitcoin's Halving Cycle. A Bitcoin cycle typically lasts for 4 years, consisting of a 1-year bull market, a 1-year bear market, and a 2-year recovery phase (fig 1). There are also distinctive patterns within each stage, including the bull market. Referring back to Fig 1, it is observable that Bitcoin takes roughly 5 to 6 months after the halving event to regain its ATH from its cyclical lows. Then Bitcoin typically spends another 6 months reaching for new ATHs. So when will we see a bull run beyond the previous cycle's ATH? The answer is about 160 to 180 days after the halving event, and we are actually approaching the end of the 180-day wait. 27th September 2024 and 17th October 2024 mark the 160th day and the 180th day after the halving event. During this period, we should see Bitcoin forming bullish technical signals all around the chart. Among these indicators, we put most of our emphasis on the Coppock Curve, given its more recent historical record in both the stock market and Bitcoin. The Coppock Curve is a momentum indicator that was developed in the early 1960s by Edwin Coppock. It is primarily used to identify bullish reversals during stock market cycles. The Coppock Curve is calculated as a 10-period (usually monthly) weighted moving average of the sum of an asset's 14-period and 11-period rate of change. In simpler terms, rather than computing a moving average of price , the Coppock Curve computes the weighted moving average of the rate of change in price over two specific time periods. The Coppock Curve oscillates between negative and positive values. When the Coppock Curve crossovers from negative to positive, we interpret it as a bullish reversal signal. We mark the "0.00" level in yellow for easier reference. In the stock market, it managed to provide credible bullish reversal signals coming out of major crises such as in 2008, 2016, and 2020 (Fig 2). For Bitcoin, it successfully signaled the beginning of every bullish reversal (since the first 100x bull market in 2012) and the signals occurred in both the 1-year bull market periods and the 2-year recovery period (Fig 3). Fig 2. The Coppock Curve managed to predict bullish reversals coming out of the crisis in 2008, 2016, and 2020. (TradingView, Author) Fig 3. The Coppock Curve managed to signal bullish reversals in past bull markets and recovery phases ever since the 100x bull run in 2012. (TradingView, Author) The Coppock Curve by itself is not perfect. Note that in both the S&P ( SPY ) (marked in red circle) and Bitcoin's case, the Coppock Curve does signal fake-outs (as do other trend-following indicators). However, in the right context, we can greatly reduce the probability of those fake-outs. Lately, one of our team members welcomed a new addition to the family, so we'll use that member's analogy. Understanding what a baby's cry meant is a pain! I had no idea what the baby wanted whenever she cried! Her cry could mean anything! Time for diaper change, hunger, too hot, too cold, unable to sleep, etc. People's advise are not useful because every baby could be different. I had to put my stock market experience to work. I tried to find 'signals' and define the context whenever the baby cried. Eventually I found out that the baby's cry meant "hunger" if the cry occur between 2 to 3 hours after the last feeding. - A team member of Made Easy - Finance The moral of the story is that no indicators are perfect, and indicators have to be used in the right context to work. Context is the keyword. Bitcoin's case (Fig 3), all instances, where the Coppock Curve successfully signaled a bullish reversal, coincided with 2 events. The signals occurred in one of the bullish stages in the Bitcoin Halving Cycle (the 1-year bull market, and the 2-year recovery phase). Particularly for the bull market, it occurred within the 180-day wait period. The signals also occurred when Bitcoin bounced off the Bitcoin Halving Cycle support. This price action provided the signals with a high level of credibility, given that there are only a few instances where Bitcoin broke below that support. Here's also where it gets tricky for the current bull market: Although the Coppock Curve bullish signal may still occur within the 180-day wait period, it looks quite difficult for the signal to occur where the Bitcoin price is near the Bitcoin Halving Cycle support. We felt that the optimism that came from the potential of Bitcoin Spot ETF approvals (in the US) in mid-2023 and the eventual approval of Bitcoin Spot ETF (in the US) at the beginning of 2024 caused Bitcoin to 'front-run' its original trajectory. Even though this setup may not be perfect, we can still use the 180-day wait period as a confirmation. If Bitcoin recovers back to $70,000 before 17th October and the Coppock Curve signals the bullish signal (bullish signal = signal line cross up from 0, refer to Fig 2 and Fig 3), we'll assume a bullish bias to our trades related to Bitcoin. Verdict We strongly believe in the long-term prospects of Bitcoin based on its design (decentralized, limited supply, etc.) and the utilities that are derived from its design. We also believe that one can outperform the 'market' (which is HODLing Bitcoin) by tilting one's crypto portfolio (Bitcoin, altcoins, miners, futures, etc.) based on the biases one has for the crypto market for a given period. In this article, we presented how we establish our bullish bias on 2 events: the 180-day wait period and the Coppock Curve. We have also prepared theses for several Bitcoin miners in preparation for this bullish bias. We can't wait to share them with you as soon as possible. We hope that by sharing our 'story' for Bitcoin, we can hear yours as well. "Go fast, go alone; Go far, go together." Let's go at it together. Stay tuned, and invest safely.
