This past week, Bitcoin capitulated to $34,322 during geopolitical turmoil, before ultimately rebounding 30% into the local high of $44,950. In today’s newsletter, I will cover Bitcoin with regard to its bullish cycle momentum and the altcoin season. I will also detail Bitcoin’s potential decoupling from the stock market.
Cycle Momentum & The Altseason:
When it comes to keeping track of Bitcoin’s bullish momentum on the macro, the Cycle Momentum Band comes in handy. The band consists of the 20 week simple moving average and the 21 week exponential moving average.
Historically speaking, whenever Bitcoin managed to break above the CMB and flip it into support, this was usually followed by a prolonged markup phase for Bitcoin. Interestingly enough, this typically had altcoins rally into all time highs, essentially launching the altcoin season. Bitcoin’s CMB acts as the confidence threshold for altcoins at which a break above would restore the market’s confidence in the integrity of the cycle. Bitcoin now finds itself testing the lower bound of the CMB. Knowing the bullish implications that a break above this band would have, it becomes clear just how critical this test is.
The chart above illustrates the Cycle Momentum Band and the critical Point of Control. Before Bitcoin can break above the CMB, it will face major resistance within the band, around $47,000, the price level at which the Point of Control is. The Point of Control illustrates the price point at which the highest volume node lies. Breaking above the PoC is no easy feat, but doing so will bring Bitcoin that much closer to its final target. Currently, the lower bound of the CMB is at ~$45,000 and the higher bound is at ~$48,800.
For the bullish cycle momentum to be fully recaptured, and for the altseason to come in play, Bitcoin has to:
Break through the lower bound of the CMB.
Breach the Point of Control.
Break above and establish the CMB as support.
Fulfilling all three targets would undoubtedly restore the market participants’ confidence in the cycle, just as it would re-establish Bitcoin’s bullish momentum on the macro.