Is the crypto cycle top in??

Digging into the possibility that the crypto cycle top is already in

Author

Justin
May 05, 2024

Hey everyone,

In the past week, many crypto investors have been worried that the crypto cycle top may be in.  A lot of people are feeling like this tweet while the prices bounce around:

Let’s lay out the facts and see where they lead us.

Historical Crypto cycles: Bitcoin price chart in log scale

Bitcoin price action over the last couple months

The arguments for cycle top already being in, include:

1. End of bullish Bitcoin price movement

The price movement we're seeing is not what a typical bull market dip looks like.  A normal bull market dip will drop 20-30%, and over a few weeks rally to a new high.  This has been going on for longer than that.  Also we can see the price action is making lower lows, and lower highs - classic bearish price action.

2. Bitcoin bull market top metrics looking toppy

There are metrics that have done a good job pointing out when the Bitcoin market top has occurred.  These metrics have been looking “stretched” for the last few weeks, but not so stretched to look like a clear top.

3. US government has gone from a pro liquidity, to neutral liquidity

Remember, liquidity is how much cash is floating around to buy assets.  It’s influenced by cash created or reduced by governments and banks.  Last week the US government flipped from being pro liquidity, to being neutral over concerns about inflation. 

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Ok - so Is the crypto cycle top in?  Is it time to be scared and hide?

Let’s also look at ol’ reliable supply and demand

Supply - Bitcoin supply will be increasing at a slow stable rate

We just had the Bitcoin halving which cuts the rate of increase in supply in half. This rate won’t change again until the next halving 4 years from now.

Demand - Demand is largely driven by liquidity

As we’ve talked about in prior articles, cyclical demand is driven by liquidity…and liquidity cycles up and down roughly every 5 years.

So where are we at with the liquidity cycle?

Every liquidity cycle in the last 50 years, except for one (2014-2016), has reached higher levels than where we’re at…this means there is potential for liquidity to still head higher.

Investing is never 100% certain, so we should all reflect on the info above and come up with our own conclusions here.

So what do you think? Is the crypto cycle top in? or is it likely to go higher?

If you’re interested in hearing my personal conclusions, check out this week’s premium subscription (will be sent out on Monday).

Cheers,

Justin

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