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Viewing the BTC price action on a macro level, it seems somewhat accurate to say Bitcoin has never actually been in a bear market. Recent on-chain analysis by Glassnode has shown that the current Bitcoin bear cycle is playing out as the worst one in history. Bitcoin has had its fair share of bear markets but all of these have occurred while the stock market has been in the biggest bull run in history, not during a recessionary bear market. On average it takes BTC around 1,000 days to recover from the drops we’ve seen recently. However, we also need to bear in mind the bigger macro view of traditional markets that is uncharted territory for BTC. Few predicted just how big Bitcoin and crypto would get and we are now seeing mainstream and institutional adoption and investment like never before. This is exactly like the internet in the late 90s with a similar adoption rate just a lot quicker. The crypto ads during the Superbowl gave me flashbacks to the tech bubble pop in 2000.

Looking at previous crypto market cycles, we see that it typically follows Bitcoin on a four-year cycle. Every man and their dog is waiting for the next halving as history suggests this would be the ideal time to buy. Personally, I know people who have never invested in crypto that are waiting for it. For me this is a massive red flag. Making money is not that easy. You need to think like Wyckoff’s composite man (If you don’t know what this is look it up). When everyone is expecting something to happen in my experience it doesn’t eg 100k BTC by Christmas. Over the years I have studied numerous TA titans such as Elliot, Wyckoff, Dow, Gann and Weinstein and they have all got a significant top in Bitcoin right now. We have broken all of these rules that we have never broken before because the first cycle is complete and bitcoin needs to correct the whole structure from existence.

Let me explain further the psychology behind what has happened in bitcoin thus far using Elliot Waves. Elliot Wave suggests that price patterns repeat themselves over and over again at all time frequencies. All price movements in the markets are driven by mass psychology. See if the psychology of these waves matches bitcoin’s journey.

Wave 1 (2009- 2013 Bull run) Is considered as the kick-off wave, meaning that it begins the impulse sequence. The sentiment in the market is very bearish at the start of wave one, and the fundamental and economic news is predominantly negative.

Wave 2 (2014 bear market) Wave 2 will move counter to wave one, and will retrace a large portion of wave 1. One of the unbreakable rules within the Elliott wave theory, which is, that wave two cannot retrace below the start of wave one.

Wave 3 (2015-2017 bull run) The psychology of traders during wave 3 is generally one of growing optimism. Wave 2 has completed and wave three begins to move higher, and the economic environment can also be seen as improving. Although many of the earlier bears will still resist the optimistic outlook during the early stages of wave three, it will become increasingly evident to most traders that the tide has shifted, and the markets are poised to move higher.

Wave 4 (2018 bear market) Wave four will follow wave three and will retrace a portion of wave 3. It will never enter the territory of wave 1 (2013 top at $1,100 ) Wave four is often seen as a profit-taking wave. Because those traders that jumped aboard the trend early in wave three are sitting on a healthy amount of profits, many of these traders will begin to liquidate their positions and lock in their profits. This creates a sideways price movement that is often prolonged in nature. expect wave four to transpire over an extended period of time. The price action often appears range bound with prices moving back and forth without any clear direction. Often when you are confused as to where you are within the entire Elliott wave market cycle, it’s often the case that you’re in the middle of wave four.

Wave 5 (2019-2021 bull market) Wave five is the final leg within the Elliott wave impulse sequence. During the progression of wave five the economic and fundamental news is predominantly positive and almost everyone is bullish. Wave five is often considered a retail wave, because it is during this time that most retail investors begin to flock to the markets driving prices even higher, often to extreme valuations. This is a time when even the most novice investors feel as if they are market experts, because they are making or have made sizable profits during the uptrend. But this recognition will not last for long as a large corrective phase will follow the end of wave five, which for many will serve to wipe out much of the profits realized during the impulse sequence. It is during the late stages of wave five that we will also see technical divergence patterns form between the price action and many momentum indicators such as RSI, Stochastics, and MACD. What these momentum divergence signals are telling us is that the velocity of the price movement higher is waning, and as such we should expect the upside trend to reverse its course soon. Along with momentum divergences wave five will often register lower volume than that seen in wave three. This is another indication that the trend is weakening and that profits should be locked in, as a potential reversal is imminent.

Wave A: (2021 bear market) The end of wave 5 brings with it the completion of the impulse sequence. expect a corrective structure to follow which will be a three-wave labelled as waves A, B, and C. Wave A kicks off the corrective sequence and during this phase, most traders are still very bullish, and consider the wave A pullback as just another minor retracement within the overall bull market. As a result, many traders will add to their positions averaging down as wave A progresses lower. These traders believe that they are getting a bargain because their expectation is that prices are likely to move higher in the near future. Wave A is somewhat similar to wave one in its structure and personality. During both of these wave progressions the market participants are overwhelmingly positioned on one side of the market or other depending on the direction of the larger trend.

Wave B (2023 bull market – next halving) Wave B is the second leg of the corrective structure and follows wave A. Wave B is often considered a bull trap, because it tends to draw in a lot of traders into believing that the existing trend is still healthy. However, this is far from the case. Wave B will be a fairly short-lived affair and will often fail to surpass the wave five swing high. Many traders become trapped in their positions during the wave B price action. That is to say that these traders will either enter new long positions or add to their existing long positions at the very worst time.

Wave C (2024-2025 bear market) After wave B completes, wave C will begin and this wave marks the final leg within the entire corrective structure, and also the entire 5-3 Elliott wave structure. During the early stages of wave C, many traders are still bullish on the market and believe the pullback to be a temporary one, which will eventually reverse in the direction of the larger trend. When the wave B swing low be is breached, that event will mark a turning point wherein more and more traders will become convinced that the uptrend has actually ended, and the market is poised for lower prices.

This all completes wave 1 on the larger degree. Smart money will be accumulating throughout 2025 and beyond ready for what comes next, which is Wave 3 which will send bitcoin above 100k and beyond. Do you believe the psychology matches Bitcoin’s journey?

For those looking to load their bags for the next halving I suggest learning TA so you know when to exit so you have liquidity when the real bottom arrives. I did call the top on BTC on November 14th for this reason while all the moon boys were shouting 100k by Christmas. These are just my views and should not be considered as financial advice.