Has Bitcoin Peaked?

Bitcoin is in a period of chop consolidation.

Some commentators point to the fact that bitcoin is only 40% above the previous cycle’s all-time high, which suggests that bitcoin has failed to deliver on expectations.

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

If the bitcoin price doesn’t align with their expectations and they see data that tells them that they might not be correct, 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 just does what it does.

A lot of the expectations are that bitcoin will be going higher. We agree.

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

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

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.

There is a period when the market rises to a new level and then has to prove it belongs there. That takes time and is part of a process built into markets.

Much of the current price action is driven by the uncertainty surrounding tariffs, which is compounded by a strong U.S. dollar and higher bond yields.

The uncertainty surrounding the Trump administration was always going to impact markets. Markets don’t know how to price uncertainty.

However, the bond yields and the strength of the dollar are the real problem.

Bond yields are the bedrock of the financial system. Rising yields mean lower bond prices and create stress due to the increase in the cost of capital and higher borrowing costs.

If you look at BTC/USD as a pair, it’s harder for the numerator to keep going as the denominator gets stronger. That applies to all assets.

A strong dollar is a point of stress for all assets.

The dollar wants to get stronger; however, as it gets stronger, it breaks things. At that point, steps are taken to weaken the dollar.

In the short term, the strong dollar is bearish for risk assets. In the medium to long term, we believe the dollar will weaken.

In dollar weakness periods, bitcoin has some of its best returns.

The current price action signals caution. It’s not clear if there are sellers in play. Bitcoin could go lower and continue to chop. The bitcoin price will move higher once economic factors allow.

That is part of the journey.