Navigating Bitcoin Market Cycles: Strategies and Key Indicators

Introduction: A Rule Shift in the Crypto Market

The crypto market appears to be undergoing a significant 'rule shift.' While previous market surges were exhilarating, the real challenges are just beginning. All signs currently suggest that Bitcoin is in 'safe haven' mode, with echoes of the 2021 market resurfacing: Bitcoin rallies significantly before stock markets peak, and stock markets haven't performed ideally in recent months. As of this writing, Bitcoin's price is down approximately 30% from its all-time high. We reached the anticipated market high in early October. Some succeeded in selling above $100,000 or taking profits (well done!), but now, the inevitable question looms: 'What's next?'

Unlike April of this year, I’m not rushing to allocate a long-term holding position (though I currently hold a long position, targeting a bounce to the $95,000-$100,000 range). I know many readers hold Bitcoin as a core asset and may dabble in some altcoin trades. You might be thinking: 'Where's the bottom?' or 'When to buy?' The correct answer is, nobody can know for sure. But there are plenty of strategies to help maximize your returns while ensuring you don't miss the next run-up. My goal is to provide some insights to help you form your own market judgment and understand when market rules might shift again. I'm a 'left brain' trader, not delving into complex data like order books. I am a 'market sentiment' expert and data simplifier, and here’s some of my experience.

First, the core assumption of this article is that Bitcoin will make new all-time highs, and the market cycle is still valid. Based on all current information and market reactions, we should treat this as a basis of reality. This article also acknowledges that Bitcoin is a remarkable savings technology for patient investors, and a 'wealth destruction' tool for those lacking patience or over-leveraging. This article will expand on Bitcoin as the core because, frankly, for the past 36 months, outside of Solana and a few short-term hype spots, 90% of your altcoins have done next to nothing. We also have 1-2 years to wait for new altcoin narratives to form, at which point you can choose whether to bet on those opportunities again.

We will explore the following aspects:

• Investment Strategies
• Cyclical Expectations and Time Horizons
• Where to Park Funds While Waiting
• Key Indicators of a Market Bottom

Investment Strategies

When I say 'strategy,' I'm referring to your attitude and method toward buying, selling, and holding. In this market, there are many ways in and out, and the ultimate choice is yours. Your strategy boils down to one question: 'Are you confident in accurately timing the market?' and able to execute your market judgment. If not, what other viable options exist? Currently, there are several time-tested Bitcoin investment methods, the most popular of which is HODLing (long-term holding). HODLing is one of the earliest investment creeds in the Bitcoin community. If you are confident in Bitcoin's long-term prospects and your daily cash needs are met, this strategy may be highly appealing to you. Additionally, HODLing is also an extremely tax-efficient investment method, because as long as you don't sell, you don't need to pay taxes. Some investors can withstand the pain of an 80% portfolio pullback and tactically add during each market dip. If your fiat needs are met and you can commit for many years, this method can almost certainly bring you generational wealth accumulation over a long enough timeframe. This strategy is particularly suitable for those who want to grow their wealth gradually and incrementally increase their Bitcoin holdings through the power of time. Of course, this method requires extreme patience, some are capable of doing it, and some cannot commit. But if you're patient enough, it's certainly feasible. Committing to HODLing was my starting point when entering this space, but obviously, over time, my strategy has evolved.

Dollar Cost Averaging (DCA) aligns with the philosophy of the HODL (long-term holding) crowd, but is not limited to it. Some people buy Bitcoin every day regardless of the price; others choose to buy weekly, monthly, or during market volatility. The goal of DCA is to continuously increase your Bitcoin holdings while minimizing upward pressure on your average cost; and if you previously bought at a high, you can also lower your holding cost through DCA. For example, I bought Bitcoin at the top in 2013 and then DCA'd all the way down until the price hit $200. Eventually, this strategy proved to be successful.

Figure: Investing $1000 Monthly Reaches a Peak of $1 Million After 9 Years

The figure above illustrates a typical Dollar-Cost Averaging (DCA) scenario. While this result is obviously based on a hindsight perspective, it clearly demonstrates that investors who have continued to purchase Bitcoin on a regular basis, even after this month's market correction, have still achieved wealth growth and have not paid any taxes. If you have a certain understanding of the market, adjusting the timing of your DCA strategy can significantly amplify your unrealized fiat gains. Of course, you don't need to invest in a completely mechanized way, you have more options available today. But for those investors who want to 'set it and forget it,' there are some simple tools that can help achieve this. Platforms like Coinbase, Cash App, and Strike offer automated buying options that you can turn on or off at any time as needed. However, these services each have different trade-offs, fees, and limitations, so it is recommended to do thorough research before setting up. Particularly the fees, if you continue to run automated purchases for months or even years, the fees can accumulate into a significant expense. You can set up a low-frequency small plan or set up a large-scale aggressive plan with a short execution time. If you are good at market timing and believe the bottom is coming soon but don't know the exact timing, I would tend to choose the latter. You can also skip third-party platforms and manually DCA yourself. Through your exchange of choice, place an order when you think the Bitcoin price is at a 'discount,' or even set up laddered buy orders based on your market analysis and technical indicators. This is entirely up to your personal preference. Whether automated or manual, as long as you maintain a certain degree of consistency, the end effect will be the same. The core idea behind DCA is: 'Time in the market' beats 'attempting to time precisely,' and data typically supports this view.

Whether it's long-term holding (HODL) or DCA, you can flexibly adjust the size according to your financial situation. The market may drop deeper than expected or bottom out faster than expected, so it is particularly important to find a balance that suits you. Not everyone falls completely within the framework of HODL or DCA. Many investors tend to a hybrid strategy that falls between the two: you don't try to time perfectly, but you don't buy blindly either. Your buying decisions are based on liquidity conditions, volatility spikes, or when market sentiment has completely collapsed. This method is an effective strategy that often outperforms the two extremes because it respects both patience and opportunity at the same time. It can be regarded as rule-based accumulation rather than mere blind guessing. Another angle that is rarely discussed is: the choice of buying in a lump sum and entering in batches. From a purely expected return perspective, buying in a lump sum tends to outperform in a market with a long-term upward trend. However, most people cannot withstand the emotional impact of buying in a lump sum 'all the way'. Entering in batches can reduce feelings of regret and make the entire investment process easier to commit to. If you have a considerable amount of cash on hand, using part of it for the initial purchase and gradually investing the remaining funds in stages is a more realistic option for ordinary investors. You need to take your liquidity discipline seriously. One of the biggest reasons people are forced to sell is that they mix daily working capital, emergency savings, and Bitcoin investments, and put them in the same 'mental account'. When life inevitably presents you with financial surprises, Bitcoin may become an 'ATM' you never expected. To avoid this, divide your cash into different uses so you don't have to sell assets in moments of weakness or desperation. This point in itself is a competitive advantage.

In addition to this, your investment strategy needs to have a certain sense of proportion. People are not 'liquidated' because Bitcoin falls, but because they: emotionally increase positions; turn to altcoins (Alts) to chase short-term excitement; use leverage to try to 'make up for losses'. The harshest penalties of a bear market are often aimed at overconfident investors. Keep your positions rational, be wary of narratives that 'sound too good to be true', and always stay grounded. Bitcoin Cycles and Timing: Will the Cycles Be Shorter? I have talked about Bitcoin's 'cyclicality' many times, but what is slightly worrying now is that everyone seems to be well aware of these cycles. So, will this cycle be shorter? Don't know. Simple simplification for those unfamiliar: Bitcoin, for better or worse, is a time-based cyclical asset, and its ups and downs are closely related to halving cycles. So far, Bitcoin's price movements still follow these cycle laws. As mentioned earlier, we should temporarily assume that this regularity will continue. If the cycles continue to work, then we may usher in a macro bottom in early Q4 2026. However, this does not mean that you should wait until the first day of Q4 2026 to start buying, but it provides you with a reference, telling you that it may be too early now. Of course, the cycle may have already ended, and the bottom may arrive as early as this summer, at which point other technical analysis (TA) and signals need to be re-incorporated into consideration. Overall, I don't think Bitcoin will return to a long-term bull market until the end of 2026 or 2027. Of course, if I am wrong, I would be happy to see it.

Where Should Funds Be Placed When Waiting for Market Opportunities?

As interest rates continue to fall, 'safe but uninteresting' yields are becoming less attractive. However, before Fed Chairman Jerome Powell 'takes action,' we still have a few months to enjoy yields above 3%. Here are some options to consider, suitable for those who have already withdrawn some funds from the market and are waiting for their opportunity. Please be sure to research these options yourself. SGOV and WEEK offer the simplest monthly and weekly payout options, holding boring but stable government bonds. Other options include ultra-short-term treasury ETF, such as SHV and pure short-term treasury funds, or slightly longer-duration bond ETFs, such as ICSH or ULST. SHV provides almost identical exposure to SGOV because it holds very short-term treasury bonds, which act as a cash substitute but with a slight yield boost. WEEK also belongs to the same category, but is structured with a weekly distribution, which is suitable for investors who need more frequent cash flow. However, the trade-off is that weekly payouts may fluctuate with interest rate fluctuations. If you are familiar with on-chain operations, even though DeFi yields have fallen, they still offer some options: AAVE currently offers a yield of about 3.2% on USDT. Kamino offers higher-risk but higher-return options, and yields are usually higher than 'risk-free' returns, but also come with additional risk factors. It should be noted that these on-chain platforms are options but are not suitable for full investment. If you choose the DeFi path, it is recommended to diversify investments to reduce risk.

Figure: The Higher the Yield, the Higher the Risk

Many exchanges (such as Coinbase) will offer rewards for keeping your USDT on the platform. And Robinhood can also offer a yield of 3%-4% if you have a Gold membership. In an economic downturn, you don't need to overthink, the goal is very clear: to protect purchasing power while fighting inflation.

How to Judge a Market Bottom?

Suppose now that nine months later, the market has experienced multiple headwinds, and perhaps the Bitcoin price is close to $50,000. In this case, how do you judge whether you are approaching the bottom? It should be noted that the market bottom is never determined by a single signal. Forming a multi-faceted investment logic (THESIS WITH CONFLUENCE) through the following indicators can help you enter with more confidence and wait for returns.

1. Time: How long has it been since the all-time high (ATH)? If it's been more than 9 months, it may be time to start thinking about buying.
2. Momentum: Bitcoin usually peaks when momentum runs out, and vice versa. Buying Bitcoin when the weekly RSI (Relative Strength Index) is below 40 is often a good choice. Zoom in and combine the momentum indicator scripts you use to find an analysis method that suits you.
3. Market Sentiment: Cycles are often accompanied by certain catastrophic events that trigger extremely uneasy market sentiment. For example, the FTX collapse, the outbreak of the epidemic, the Terra Luna event, etc. When the market is shrouded in a dark moment and no one is willing to buy Bitcoin, this is your chance to be bold, especially when you can get confluence from multiple signal sources. For example, at the bottom of the previous cycle, we saw an unknown internet celebrity promoting a mattress. If you bought Bitcoin at that time, you should be very satisfied now.
4. No need to buy the bottom: You don't need to be obsessed with buying at the lowest point in the market. If you want to be safer, you can wait for Bitcoin to regain the 50-week exponential moving average (50W EMA) or the 365-day volume-weighted average price (VWAP), which are good confirmation signals.
5. Bitcoin's risk preference indicator (Beta): If Bitcoin-related stocks like MSTR (MicroStrategy) regain the 200-day simple moving average (SMA), it may mean that market interest and the Bitcoin premium have returned.

My goal is to help some people lock in profits at the top of the market, and I hope this article can help you prepare for the future. Disclaimer: This article is for information sharing and educational purposes only and does not constitute any financial, investment, or legal advice. Before making any financial decisions, be sure