Let’s take a look at the recent trends in Bitcoin and the overall crypto market. Bitcoin typically operates on a 60-day cycle, and we’re currently on day 26, placing us right in the middle of this cycle. Traditionally, this phase indicates a downturn, but the severity of the decline varies based on the prevailing market conditions—whether bullish or bearish.
Mid-Cycle Bottom: Time to Seize Opportunities or Exercise Caution?
The mid-cycle bottom on day 44, Feb 12, 2023
In a bullish cycle, the mid-cycle low can be an excellent buying opportunity. A notable instance is February 12, 2023, when Bitcoin reached a mid-cycle bottom on day 44. The following market movements demonstrated a clear bullish trend.
For example, the mid-cycle peak occurred on day 34, reinforcing the bullish nature of the cycle. After a brief pullback lasting about 10 days, Bitcoin rallied again, reaching its peak on day 53. This cycle exhibited a clear and straightforward pattern that was relatively easy to trade profitably.
However, not all cycles are as simple. Let’s look at a different example.
The 3D Cycle shows a selling opportunity around day 30, June 10, 2022
Bearish Example: On June 10, 2022, Bitcoin reached its mid-cycle peak around day 30, but the outcome was markedly different this time. Instead of continuing to rise, the price plummeted, highlighting the necessity of integrating the 60-day cycle with other technical indicators. In this case, the 3-day (3D) cycle peaked, indicating a short-term reversal. For traders who recognized this signal, it was an opportune moment to sell.
However, exercising caution is vital when attempting to buy in a declining market, often referred to as “catching a falling knife.” Entering the market too early can result in unnecessary losses. In this scenario, Bitcoin fell below its previous 60-day cycle low (which had lasted 59 days), emphasizing the importance of patience. The best strategy was to wait for the next cycle bottom. Within just a week, both the daily and 3D cycles dipped below the 20 level on the oscillator, indicating a potential bottom.
Most Anticipated Coin: #1 Hamster Combat (HMSTR)
Nobody wants to see such a price development…
Hamster Combat (HMSTR) recently attracted significant attention with its innovative tapping game and made headlines after being listed on major exchanges like Binance and MEXC. However, as is common with many altcoins, it has experienced volatility, with its price dropping by 38%.
While a 38% decline may seem drastic, it’s not unusual in the crypto market. For context, consider PEPE’s performance in May 2023. Following its initial listing, PEPE experienced a sharp 65% drop within a week, but it ultimately rebounded and reached new highs. PEPE’s experience highlights the unpredictable nature of altcoins; a coin can decline significantly and still stage a remarkable recovery if market conditions are favorable.
7 days of hell after the initial listing of PEPE
PEPE’s Comeback: Despite its initial challenges, PEPE formed a bullish flag in 2024 and surged, reaching new highs just before summer. This illustrates that even after a significant decline, some coins can rebound and become profitable for those who remain steadfast.
PEPE has shot up and never looked back
Altcoin Market Analysis
For insights into the altcoin market, the TOTAL3 chart is a valuable tool as it tracks the market capitalization of all cryptocurrencies, excluding Bitcoin and Ethereum. This week, TOTAL3 has indicated a sell-off based on the WaveTrend Oscillator. This indicator, used to spot overbought or oversold conditions, reveals that TOTAL3 has entered overbought territory and is starting to decline.
Red dot signals a Sell signal
The Daily Chart: A red dot on the daily chart indicates a sell signal. Previously, when this occurred, the altcoin market fell by 19%, and current trends suggest we could see a similar decline. While monitoring daily signals is crucial, examining the weekly chart offers a more comprehensive perspective.
Reversal pattern on the Weekly chart
Weekly Chart Insights: The weekly chart presents a more positive outlook, showing signs of a reversal from a downturn, reminiscent of September last year. At that time, the altcoin market experienced a decline for several months before bouncing back, ultimately leading to significant gains in 2024.
In addition to TOTAL3, it’s also useful to examine the “OTHERS” market cap index, which tracks the market capitalization of coins outside the top 10. The weekly chart indicates that this index reversed two weeks ago and is currently on an upward trend. However, recent price movements have pushed the oscillator back into the green zone, reflecting a pattern similar to what was observed in April 2022.
Current behavior reminds us of 2022…
Strategies for Identifying Promising Tokens
When exploring the altcoin market, our goal should always be to find tokens that exceed the performance of both the broader market and Bitcoin. An effective approach is to evaluate how specific altcoins perform against Bitcoin. Altcoins that outperform Bitcoin often also surpass the overall market.
For example, consider Solana (SOL). In 2022, Solana encountered major difficulties when FTX went bankrupt, as the exchange was heavily linked to SOL. The future looked bleak at the time, but two years later, Solana has emerged as one of the top-performing coins in the crypto market once again.
Solana looks incredibly bullish
Solana’s Recovery: The Wavetrend Oscillator has been essential in pinpointing buying and selling opportunities for SOL. It signaled two bottom points almost perfectly at market lows and issued sell signals at the market peaks in both 2021 and early 2024. In each instance, these signals were notably accurate, enabling traders to take advantage of significant market fluctuations.
A noteworthy comparison between 2021 and 2024 reveals that when SOL received a sell signal in 2021, the oscillator took about 2.5 months to return to zero, during which SOL dropped roughly 30%. In contrast, the recent sell signal took around six months to reach its bottom, yet the price has seen minimal movement, indicating a possible rally for SOL once the oscillator enters the green zone again.
Final Thoughts: As we approach the next phase of Bitcoin’s 60-day cycle, the crypto market finds itself in a precarious situation. Whether you’re trading Bitcoin, altcoins, or both, timing is crucial. By combining various cycle theories, such as daily and 3D cycles, with additional technical indicators, traders can better identify profitable entry and exit points while steering clear of costly mistakes like “catching a falling knife.”
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