We all know the saying: “Time in the market is better than timing the market.”
Yes, this works for your average Joe who is just looking to maximize their retirement account by contributing on a regular basis.
However, when you’re dealing with a different animal of a market such as crypto, timing the market can mean everything when it comes to making exponential gains and keeping them.
Countless times I have made the mistake of playing the market while the sentiment was horrendous, coupled with an obvious downtrend.
I don’t care how skilled you are as an investor/trader; we all prefer easier conditions.
Sure, we like to test ourselves against the best opponents at times, but if our main goal is to make money, and a lot of it, we're all going to prefer easy mode.
Easy mode is just as you have guessed: the opposite of hard mode. It's a combination of excellent sentiment coupled with an obvious uptrend forming or already formed.
Above, you will see the Bitcoin weekly chart depicting the end of the last cycle, the beginning of our current cycle, and where we are at the time of this writing.
The first box on the left depicts consolidation after a horrendous 9-week downturn, which is expected after a raging bull run. Sentiment, of course, was horrible, and everyone thought it was “over,” as they always do.
Had it not been for the FTX implosion (how we got to the second box), there's a high chance that the first box could have been the bottom around $20-22k per Bitcoin.
However, if you had bought Bitcoin in the $20k region, I'm sure by now you would have been satisfied with this entry.
The large green candle that took us out of the green box created a much-needed relief period where sentiment quickly started to flip.
Much of the crypto world flipped from having that doom & gloom feeling to a healthier, optimistic outlook that great things were coming that year.
This is when you’re going to want to deploy as many horses as you can.
You don’t want to fight against the current; rather, swim with it.
Every market presents some sort of opportunity by exposing heavily mispriced assets that you can take advantage of.
These inefficiencies are usually easier to spot in the crypto markets because we have been blessed with 4-year cycles that have played out rather spot-on ever since the beginning of Bitcoin in 2009.
There are many other factors that come into play when trying to decide if it’s time for risk on.
Some of these factors include:
- Post-halving price action
- Summers
- Crypto Twitter sentiment
- Normie sentiment
- Institutional sentiment
- Money supply
- Interest rates
- Obvious price action
The 4-year cycle provides a longer time horizon but is mostly limited to the underperformers of the cycle such as Bitcoin, Ethereum, and Solana.
I refer to these as underperforms because throughout a regular crypto cycle, there are other altcoins that perform 1000x better but, of course, are riskier.
However, these “underperformers” offer great sentiment as to what the general market is going to do.
There are a few times throughout a typical 4-year cycle where we see periods of downturn known as “corrections.”
In these cases, sentiment might be negative, but the long-term uptrend has not been compromised.
Identifying when this period is going to start is key for maximizing gains throughout a bull market.
If we zoom into current prices, we can see that after 4 straight months of upward movement, we consolidated around Bitcoin's previous all-time high of around $69k.
This is typical of previous price action post-halving.
We see consolidation with a slight correction before we resume upward movement.
Bitcoin will correct ~25%, while other riskier altcoins can correct 80-90%.
If you’re playing further out on the risk tails, then you’re going to want to become an expert at identifying these things so that your portfolio doesn’t correct 90%, like mine has plenty of times.
As the price started to correct to the downside after its consolidation in the red bubble, sentiment started to become very poor.
However, the trend was still intact, and this correction was actually healthy for price action.
Technically, it would have been risky to buy into those weekly red candles, but now it is deemed much safer due to the two big weekly green candles that followed.
Sentiment has turned around, and the price action looks a lot better.
Now is a great time to deploy all of your horses.
If you were attempting to deploy your horses within the red bubble, you would have driven yourself mad.
I don’t like to make predictions, but I would like to use one as an example for educational purposes.
If the 4-year cycle theory is still in play, we should top out around late 2025 in Q4.
I am using the 2013-2017 cycle as a projection due to the similarities in these cycles.
A lot more money is coming into the space compared to the last cycle, even with the COVID liquidity event we saw.
We could see a mania-like run where things just go up from now until the end of 2025, with 2-3 corrections of about 25-30%.
There is usually always one factor that is obvious in hindsight that ends these cycles.
In 2017, it was Bitcoin hitting $20k with a parabolic rise.
In 2020, it was the Fed raising rates and constricting liquidity.
In 2025, I can see Bitcoin hitting $500k with a similar mania-like phase due to the egregious amounts of money coming into the space via institutions.
Again, it’s important to play the mid-cycle downturns but not to lose sight of the big picture.
If we don’t get this mania cycle, then I am sure there will be countless other indicators that things need to cool down for a while, i.e., the end of the 4-year cycle.
Start considering that we are nearing the end next summer in 2025…
The Pi Cycle Top Indicator and the MVRV Z-score are two charts that I will be looking at closely as indicators for when things are nearing the end.
https://www.bitcoinmagazinepro.com/charts/pi-cycle-top-indicator/
https://www.bitcoinmagazinepro.com/charts/mvrv-zscore/
