Between the deluge of sensational narratives, extreme retail sentiment swings, and the overall uncertainty of how Trump’s macro-economic policies will affect the US and global markets as a whole, it’s no surprise everyone has their own theories of where things are going from here. One thing is certain though, history may never repeat; but it sure does rhyme. The great and illustrious Warren Buffett once said: “Buy when there’s blood in the streets, even if the blood is your own.” The difference between those that survive multiple cycles and those that chop up their gains in this game are the ones who look at the bigger picture, seeing where we were before and where we’re going from here. As are many things in life, consistency is key, and if nothing’s changed – we keep stacking. Despite our BTC price pullback of 30% and our predicted mid-cycle highs at $102K, if we look back historically, we can see that we’re well within historical tolerances for a BTC retracement. Such optimal buying opportunities are generally rare in the later stages of a bull run and we don’t plan on letting it slip away from us! Let’s take a look at how this mid-cycle correction stacks up over Bitcoin’s 15-year history as an asset class.
We can see in the last two cycles where Bitcoin started to reach the mainstream, during the early stages of its maturity Bitcoin has always taken the opportunity in its later stages of a bull run to have a sizeable correction before creating what’s known as a “blow-off top,” going on to print eye-watering all-time high prices before eventually topping out. Back in 2017, this happened in September of that year giving us a whopping -40% correction before then going on to gain a blistering +560% gain in just the following three months.
A clearer view of the chart can be found here:https://www.tradingview.com/x/QtmXYQPP/
Being someone who was buying hand-over-fist as a bullish market participant back then too, watching this all unfold; those bears who sold their bags too early were absolutely livid to say the least. It was the “China-Ban” narrative back then which caused the sell-off, of which might’ve sounded daunting to newbies at the time, but it ultimately didn’t change anything in the long run for ever-growing demand to acquire BTC globally. Ironically, similar FUD (Fear, Uncertainty, and Doubt) surrounding China creeps into every market cycle. Historically, those who’ve bought these dips have always done well. I suspect the current rhetoric in relation to Trump’s Trade War with China will fare no differently as BTC demand is largely very correlated to the exponential expansion of currency circulation globally, in turn creating a perpetual risk-on environment where BTC thrives in the long run. Bitcoin was created as a remedy for reckless currency expansion and as much as the market is hanging out for further rate cuts from the US FED and here locally by our own RBA, the stark reality is that while this makes the cost-of-living more affordable in the short-to-medium term, lowering rates is a sure way to devalue your local currency further, and this devaluation is exactly what makes Bitcoin and other risk-on assets extremely bullish long term.
Going back to the bull cycle in 2021, during the month of April the markets were at a point where they had been climbing aggressively for 6 months straight, so much so that we got retail euphoria almost too quickly which led to an overabundance of retail leverage trading which in turn created an inevitable yet brutal correction seeing BTC declining a staggering -55% in just three months. When the market eventually recovered after this correction in the following months, although it printed a marginally higher-high and all-time high of $69,000, unfortunately the momentum had mostly already been lost as retail had less new capital to enter the markets after the huge liquidation surge and ultimately new capital was scared away as the macro-economic narrative also started to shift towards a rising interest rate environment in the later part of the year.
A clearer view of the chart can be found here: https://www.tradingview.com/x/Q2vPFVCC/
This was the nail in the coffin for risk-on and speculative assets such as cryptocurrency and is the primary reason why the 2022 bear market followed swiftly thereafter. With this being said however, it’s clear that in both the 2017 and 2021 cycles, when the inevitable mid-cycle correction came in, once averaged out, both had average corrections of approximately 47.5%, of which new all-time highs still were printed that cycle within the following months before the new top was in. This current cycle correction has seen us pull back so far only a mere 30% from $109,358 down to $76,555; therefore, we’re well within expected tolerances for a mid-cycle correction. It’s still possible with the uncertainty in the market currently that we might want to make another local lower-low. If this is the case, we’re looking at headhunting a retest from the breakout of the previous highs. This would land us around $72K, which also coincides with a very juicy 0.618% Fibonacci retracement.
A clearer view of the chart can be found here: https://www.tradingview.com/x/fQsoA5rf/
If prices go here however, we will need to see a significant bounce because any further short-term bearishness at this stage will make us lose trend on higher timeframes and consequently force us into a bear market cycle. In the end, these types of “must hold” supports end up serving as great opportunities to see some quick gains as a large bounce from here is likely, given its high importance to hold.
Ultimately, this means our projections for a continued bull run in the coming months remain unchanged and serve to prove the age-old adage that if history rhymes yet again, that any buying here would be highly opportunistic and may make for some excellent and potential fast gains for risk-tolerant traders given the advantage of prices having had come down to these levels across the board first before moving higher. Given that these sell-offs are generally emotional and sentiment-driven, funnily enough we can chart this too with something known as the “Fear & Greed Index” which is also publicly available and provided by coinmarketcap.com.
This is an excellent tool we can use in order to gauge retail sentiment for the crypto market as a whole, giving us a clear indication based on order book volumes and buying/selling metrics on-chain to determine if crypto may be either overbought or oversold at any point in time. This index gets updated daily and we’ve used it with a high degree of accuracy in conjunction with technical and macro-economic analysis to predict market tops, bottoms, and even mid-cycle corrections in between, the latter of which we’ve been experiencing post-Trump victory rally.
Inexperienced retail traders tend to buy into the hype narratives, usually when everyone has found out about "x" opportunity, at this stage everyone is convinced it’s a sure bet and everyone’s already bought. Therefore, all that’s left is for sellers to come in and take profits. This is how a market top forms; because at a certain point you reach peak-market saturation where the only people filling the order books are sellers, whereas the buyers that haven’t got much capital left to keep adding to their positions quickly get overwhelmed and price spills back over to the downside. The opposite can be said for bear markets and mid-cycle corrections. When all the "paper hands" in the market have been shaken out due to uncertainty surrounding macro-economic narratives, fear, and doubt, all that’s left is for buyers to swoop in, scoop up all the good deals, and very quickly the few sellers that remain are overwhelmed by the enormous buying power and prices reverse back to the upside.
This index is rated on a scale between 1-100; and as you can see the last time the index went well into the "Fear" territory, it was back in August of 2024 right at the bottom where I was also predicting our BTC bull flag where price eventually tagged $50K USD, and quickly got bought up and pumping massively thereafter in the lead up to Trump winning the US Elections. At the bottom in August, the index reached a low of 26. If we take a look over at the current mid-cycle correction that I predicted would happen eventually once BTC hit $102K, you can see the healthy correction that we’ve since had has led us to a low on the Fear & Greed index conversely at similar levels, in fact we reached a low of 15 on the index right on March 11th just a few weeks ago. If history is to repeat, once you reach these "Extreme Fear" levels where we are now, it’s not too far-fetched to think that the opportunity for many becomes too tempting, usually followed by prices quickly reversing back to the upside. I suspect this is what we’ll see again now, given that nothing has changed in terms of the fundamentals for BTC and the macro-economic landscape still remains bullish market-wide.
In the words of the great Warren Buffett “Be fearful when others are greedy and be greedy only when others are fearful.” This couldn’t ring truer with where the market is at right now. Currently at these Extreme Fear levels, we’re at a pivotal point in the market where if the macro-economic conditions remain in favor of risk-on assets just as we’ve seen them be after every uncertain market correction, well; these entries here will be talked about with a lot of reverence one day. If nothing’s changed, our strategy remains so too. Keep stacking, keep learning and growing, because if history taught us anything, it’s that a lowering of interest rates and global currency debasement doesn’t solve itself overnight with a few tariffs. The long-term direction of the economy and broader markets are crystal clear, just like how we believe Bitcoin and other fundamentally sound cryptocurrency projects will have clear skies ahead, along with new all-time high prices to come with.
Written by James Ryan
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