Is Bitcoin at a Bottom? 3 Tools That Help Answer That Question

I remember back in 2022 we were in the doldrums of the bear market and for me personally, I felt it weighing down on me like elephant sized bricks.

Then one day I was talking with one of my coworker’s and he said something that unlocked Bitcoin for me.

He said and I’m paraphrasing here… “has Bitcoin fundamentally changed at all? Is the thesis still there?”

For me, the answer was and still is “Nothing has changed about Bitcoin so the thesis still holds.” 21 Million is still 21 Million and it’s still one of the best hedges against inflation I’ve ever seen.

And I did my largest purchase of Bitcoin ever on the day that FTX collapsed.

Now don’t get me wrong, the stomach it was a churnin’ and I probably walked into my kitchen and poured a big shot of whiskey but I did it and by 2024 and even in this bear market, I’m damn glad that I did.

But that was an important turning point for me and my conviction and ever since then I’ve looked at what feels like an endless line of indicators about where the cycle tops and bottoms are for Bitcoin and the 3 I’m about to share with you today fit 3 simple criteria.

1.) Simple.2.) Easy to read. 3.) Work no matter the price of Bitcoin.

Now here’s the thing… an indicator is just that. It indicates.

Just like how that car in front of you may have their left signal light on but they end up going into the right lane.

But they have a long track record of telling you something real about where Bitcoin is in its cycle — and whether the price is trying to scare you out of a position you should be holding or even adding to.

Let’s get into it…

Forget daily charts. Forget weekly charts. Zoom way, way out.

The 200-week moving average (200WMA) takes Bitcoin’s price over the last 200 weeks — about four years — and averages it into a single line.

It moves slowly. It doesn’t react to a bad CPI print or a whale moving coins to an exchange or any of that mess.

And here’s what makes it remarkable: in Bitcoin’s entire history, the 200WMA has functioned as the ultimate floor.

Chart available at: https://charts.bitbo.io/ma-200w/

You see where that little orange line, that’s Bitcoin’s price.

The blue line is the 200 Week Moving Average.

Every bear market has tested it. In 2015, Bitcoin crashed below $200 and touched the 200WMA before turning around. In late 2018, the price collapsed to around $3,200 — right at the 200WMA. In 2022, during one of the most brutal bear markets in Bitcoin’s history, the price dipped below it briefly during the cascade of FTX, Luna, and Three Arrows Capital. Even then, it didn’t stay there long.

And now for some emphasis…

That’s a striking stat. It doesn’t mean it can’t happen. Past performance, etc. But it’s a pattern that has held through multiple cycles, multiple macro environments, and multiple “Bitcoin is dead” news cycles.

So what do you do with this information?

When the price approaches or dips below the 200WMA, historically, that’s when long-term buyers have gotten in at the best prices available in that cycle.

So if you’re looking for in the past when a good entry point has tended to be at the cycle lows, the 200 Week Movinga Average has been one of the best signals.

Now there’s no way to tell how many people are sitting on the side lines with cash reserves waiting to deploy at those prices but the fact that every time in the past when it’s dipped below this line it has not stayed there for long is probably a really good sign that this will continue to be true.

Think about it from a different angle. When Bitcoin is below its 4-year average price... you’re paying less than the average of everyone who bought in the last four years. You’re getting in cheaper than the average buyer across an entire market cycle.

That’s not a bad place to start.

If you ever want to see a dramatic group of people, look no further than the crypto investor.

My joke is that soap opera actors can take acting lessons in being dramatic from Bitcoin investors.

But the fact is people’s emotions do move markets which is why I find the Fear and Greed Index to be such a fascinating look at how this dynamic effects the market.

The Fear and Greed Index is a daily score from 0 to 100 that measures where Bitcoin market sentiment sits on that spectrum.

Zero is extreme fear. One hundred is extreme greed.

The index pulls in data from price volatility, trading volume, social media activity, Google Trends, and a few other inputs to spit out a single number.

Check it out here: https://alternative.me/crypto/fear-and-greed-index/

It sounds almost too simple but boy howdy does it work.

The logic is contrarian by nature.

When the index is deep in “extreme fear” territory — we’re talking scores in the single digits or low teens — everyone is scared.

People are selling. Capitulation is happening. The news cycle is full of obituaries for Bitcoin.

Well if you have a strong conviction about the thesis and future of Bitcoin, those teens and single digit number have proven to be historically when the best long-term entry prices have appeared.

When the index is screaming “extreme greed” — when everyone is euphoric, when your coworker who never talks about investing is suddenly asking you which altcoins to buy — that’s historically when cycle tops have formed.

Not really at the cycle peaks though, funny enough but I’ve done the math on some of those trades and it’s not uncommon to make a 200% return over 2 years just following this simple strategy.

The famous Warren Buffett line applies perfectly here: “Be fearful when others are greedy, and greedy when others are fearful.”

He was talking about stocks and is known to hate Bitcoin but the Bitcoin market lives this dynamic more intensely than almost any other asset class.

A few data points worth knowing:

In November 2022, right before Bitcoin bottomed near $15,500, the Fear and Greed Index hit 6.

If you bought then and waited until now, in the depths of this current bear market with the price at around $75,000 you’d be sitting at a 500% return on your investment over that time.

In November 2021, right around Bitcoin’s all-time high near $69,000, the index was deep in greed territory.

Anyone paying attention to the signal had a reason to be more cautious, not more excited and take their ball and go home as they say.

The index isn’t a trading tool in the precise sense and you’re probably not going to use it to time a perfect entry but as a temperature check on market psychology, it’s one of the most honest gauges out there.

If you understand one thing about how Bitcoin’s price behaves over time, make it this.

Every roughly four years, a built-in rule in Bitcoin’s code cuts the reward for mining a new block in half and miners get 50% fewer new bitcoins for the same work. T

his event is called the halving.

The first halving happened in 2012. The mining reward dropped from 50 BTC per block to 25 and in April 2024, dropping the reward to 3.125 BTC per block.

Supply shock logic says this matters because if demand stays the same or grows, and new supply suddenly gets cut in half, price tends to adjust upward.

Basic economics.

What makes the halving cycle especially interesting is the consistency of what happens after each one:

After the 2012 halving, Bitcoin went from around $12 to over $1,100 in about a year.

After the 2016 halving, it climbed from around $650 to nearly $20,000 in late 2017.

After the 2020 halving, it rose from around $8,700 to $69,000 by November 2021.

Each cycle has produced a new all-time high. Each cycle has also produced a brutal bear market in the aftermath — a 70-85% correction that shakes out weak hands before the next accumulation phase begins.

The cycle framework gives you a rough map of where you are:

Accumulation phase: Price has bottomed. Sentiment is terrible. Nobody is talking about Bitcoin. Historically, this phase runs roughly 12-18 months after the bear market low.

Expansion phase: Price starts climbing. Volume picks up. Mainstream media starts paying attention again. The narrative shifts from “is Bitcoin dead?” to “wow, Bitcoin is back.”

Euphoria phase: Everything is going up. Retail piles in. Predictions of $500K Bitcoin are everywhere. This is the phase where emotional discipline gets hardest — and where the 4-year cycle framework reminds you that these runs don’t last forever.

Reset phase: The correction comes. It always has. The cycle resets. Repeat.

Is the 4-year cycle guaranteed to keep playing out exactly like this? No. As institutional adoption grows, as Bitcoin ETFs pull in billions from traditional finance, as nation-states begin accumulating... the dynamics are changing.

The cycles may compress. The volatility may smooth out. The bear markets may get shallower.

But the underlying logic of the halving — fixed, predictable supply reduction against growing demand — doesn’t disappear. It’s baked into the code until the last Bitcoin is mined, sometime around 2140.

Some people say the 4 year cycle is based off of US Presidential elections, others think that it’s probably more related to the growth and re-financing of global liquidity (the camp I’m in) and there are other theories out there.

But basically you have the halving, wait a year, reach the cycle top and sell. Then wait another year and buy at the bottom. So basically you wait 4 years for each bottom and top.

Each of these tools is useful on its own and most traders who have picked one and stuck with it and have done pretty well for themselves.

Together, they’re significantly more powerful.

Call it confluence. When multiple signals point in the same direction at the same time, conviction builds.

Think about late 2022 into early 2023. Bitcoin was trading at or below its 200-Week Moving Average. The Fear and Greed Index was in extreme fear territory for weeks on end. And the 4-year cycle framework said we were deep in the bear market reset phase, approximately in line with where the previous cycle lows had formed.

People who understood these indicators looked at that environment differently than people who just saw a number going down. They saw an accumulation window. Not a guarantee — nothing in markets is guaranteed. But a historically significant setup.

That’s the advantage these signals give you.

Context changes everything about how you respond to price moves. Instead of reacting to fear, you can ask: what are the signals telling me? Instead of chasing euphoria, you can check the temperature of the market and make a decision you’ll actually be able to live with.

The question is whether you’ll have the discipline to hold — and add — during the moments when the market makes it hardest.

These three tools help with that.

Anthony

Want the full framework behind why Bitcoin is on a path to seven figures? The Million Dollar Bitcoin is on Amazon now. The seven pillars that drive the thesis, all in one place.