Bitcoin Doesn’t Need A Parabolic Move

Bitcoin Expectations

A quick surf of social media indicates that many analysts and investors are calling for a Bitcoin super cycle or parabolic move to the upside.

They have expectations of what the bitcoin price should be (based on previous cycles) and assume that the market has to follow those exact expectations.

As noted in a previous post:

Suppose the BTC price doesn’t align with their expectations, and they see data that tells them that they might not be correct. In that case, the danger is that they keep applying their expectations, like a natural bias, rather than allowing the market to tell them what is happening.

Expectations are what we want to happen. However, the market does what it does.

Many people expect BTC to go higher. We agree.

However, it’s not going to keep rocketing to the upside.

The law of large numbers means that chop consolidation will happen to find an equilibrium level.

There is a place where the market wants to mean revert to. That is driven by the capital being invested.

Most of the capital invested in bitcoin occurs during chop consolidation, not rallies.

Bitcoin doesn’t need a parabolic and euphoric move.

A parabolic move will likely end with an extended bear market.

BTC has been in a 16-year super cycle.

Bitcoin In Consolidation

The current cycle, and as part of that super cycle, is short windows of price appreciation following a long period of consolidation.

This stair-stepping trend is healthy. It allows support to form and confidence to build in the price.

The end of the consolidation period is marked by a shakeout lower that is just low enough and long enough to shake out the less convicted.

The current path and the sequence of returns may be frustrating for some.

There’s an expectation that a major rally must follow a retracement and/or consolidation period.

As the cycle progresses, this continues until a major regime shift occurs, and the market stops doing so.

What Next?

Every bull market exhausts itself to the upside eventually. On the flip side, every bear market exhausts itself to the downside.

The bull market shapes the bear market that follows. If the bull market follows the stair-stepping trend that is currently in play, then the probability that an 80% correction will inevitably follow becomes smaller.

If Bitcoin can maintain its current level and withstand any sell pressure, then the weight of probability suggests a price of $125k in this quarter.

Should there be a correction from the current level, then the probability balance points toward a correction of no more than 40% to the $75k level.

The next 60 days will likely determine the direction of the bitcoin price.