Read the cyclus study from The Disciplined Trader below.
Welcome to my cyclus studies!
Forword:
In this section of my website, I showcase my studies on the cycle of Bitcoin, and I will continue to update it in the "Update on Cycle" section. This has been a long-term project, and I encourage you to pay attention to certain key aspects. Time, liquidity, and the years play a crucial role. Also, take note of how this analysis was created before Trump’s election and how I accounted for the likelihood that many would attribute outcomes to him, even though that is not the case. This is certainly worth reading.
I, "The Disciplined Trader," have been studying the Bitcoin chart thoroughly over the past few days, and I’ve noticed a few things. The study of this analysis began on 14/10/2024, when the price of Bitcoin stood at $66,800. It is important for the reader to know that this chart is based on technical and fundamental analysis. The chart is on a weekly timeframe, meaning each candle represents a week. A candle is one green or black bar on the chart. Understanding the chart as well as recording data at certain times is an art because we almost all know that the market moves in cycles. So, I started looking at the past, going back to the beginning. I ask you to look at the year before “Year 1.” I have named that year “Sell side of the curve.”
Why sell side of the curve? The sell side is a term that contrasts with the buy side. Smart money investors, like large banks, sell their shares here. These people/entities are informed and know what is happening. They have knowledge and reasons to sell. The market declines at a specific time (year), and retail investors buy in, often doing so near the peak price or just before. They, therefore, provide liquidity. What is liquidity? Retail investors like you and me often have a “small portfolio.” We have smaller positions. When there are enough people like us (retail investors), smart money investors sell their positions to us. We are liquidity. There needs to be enough liquidity to execute orders. I want you to focus on a certain rule that I will often repeat throughout this extensive analysis. As you can see, the year was bearish. A rule that interests me is that a high for the year forms during Q1 in a bearish year, while a low forms during Q1 in a bullish year. I will soon explain what Q1 is.
Year 1 - Beginning of the Bull Market:
This is where it gets interesting because a new cycle begins. This was our previous cycle, which coincided with the COVID-19 pandemic. In the first year, we immediately notice an increase. And I want to share a few points with you so that you will understand me well. Q1 represents the first three months of a year. Q2 represents the next three months, and the same applies to Q3 and Q4:
- Q1: January-March
- Q2: April-June
- Q3: July-September
- Q4: October-December
Time is an important factor to study in the market because it simply provides us with a lot of information. When we look at a bullish year for Bitcoin, we see that in every expected bullish year, the low is made during Q1! That is important information to include in our data. If the year is bullish for Bitcoin, we make the low during Q1! That’s the first point I want you to note. We didn’t make the high during Q4 (which I wanted to see), but that doesn’t matter. What I do want to note is that we ended the year on a bearish note. I call this year the “buy side of the curve.” The market rose and challenged old highs. A high is the peak point of a candle.
Year 2 - Bull Market:
As we see, the market experienced a significant decline due to a well-known “COVID crash” that had an impact! I want to study this well because it gives us information for the future. I call this move manipulation, and it is part of a concept that I have been studying for years. Before this drop, we had accumulation. You don’t need to understand this, but what I do want you to understand is that after accumulation comes manipulation. During this manipulation, we made the low of the year in Q1 for Bitcoin, as that year was expected to be bullish! Notice how that year was just bullish? What does that mean? It means that there were people (smart money investors) who bought enough shares because they were well-informed. They were well aware of what the market would offer.
I see this as a manipulation move that was pre-scripted. It filled an imbalance below, but you don’t need to understand that, and it’s okay if you don’t. I’ll explain later in this analysis what an imbalance is. There was an imbalance in orders that needed to be filled; let’s explain it simply like that. The next interesting aspect is that the market did not make any progress until Q4. So, October-December. Before that time, the market moved somewhat sideways, making it a very long year for investors hoping to make a quick return. I call this a consolidation year. Consolidation until Q4 and then an increase. I call this increase distribution. Distribution can also be bearish, so be careful! It’s just important to know whether the year is bullish or bearish. Manipulation can also be bullish, so watch out! This is because, whether the market rises or falls, there is always a party that profits. This is connected to the Bitcoin halving aspect.
What I want to indicate is this: the market rose after that low point to a certain point (Bitcoin halving). I marked the end of the rise in purple and indicated the Bitcoin halving with dotted lines. (The Bitcoin halving is an event where the reward for mining new bitcoins is halved, which happens approximately every four years, intending to slow down the issuance of new bitcoins, increasing scarcity and often leading to price increases.) Then it consolidated again until Q4, making a significant upward move. Feel free to look at the chart I shared and see what I’m telling you! Note how Bitcoin rose until Q1 of year 3. This is the most interesting part to study, so I want you to pay close attention. We’re now moving on to Year 3!
Year 3 - Sideways Distribution:
We are now entering an interesting year where a lot is happening. It is the most important year of the cycle because it forms the high point of the cycle. This year, we moved sideways. What is this sideways action? The rule of "Low point in Q1 of a bullish year and high point in Q1 of a bearish year" does not apply here because I don’t see this year as part of my concept of accumulation-manipulation-distribution. This is a sideways year. In this year, there was more price action because there was more interest and therefore more players, which made decision-making more challenging. What I see is that we made a peak in April, the market dropped slightly, and formed relative equal lows. I marked this with black dots so you know what I mean. Below lows is sell-side liquidity, and above highs is buy-side liquidity. Do you understand that we will soon attack those lows? Do you understand a bit of what I mean by the sell side of the curve, both fundamentally and technically? We took buy-side liquidity in November.
It’s a bit complex now, but I’ll explain it: The market made an ultimate peak and broke the previous one. People (liquidity) like you and I started buying here! So, there were enough people to sell to for smart money. Smart money exited the market at that moment. I call this engineers liquidity. The following year, which I will discuss in detail, was bearish. Smart money sold their positions! I call this the end of the rise in this cycle, and it was therefore a sideways distribution year. Distribution is a term used by Richard Wyckoff to visualize a phase where smart money exits the market. Interesting, right? Smart money has done their homework, and now retail investors will shout that Bitcoin is a scam, that it’s a game of uncertainty. Funny and ironic, but I won’t interfere. I have noted that there was a lot of liquidity in this year. As you can see on the chart (relative equal lows). I am convinced that the market always follows liquidity. That is a fact that I see on the chart. So, we want to discuss the next year, which has been given a general term. We call this year a bear market. A bear market is a year where all financial instruments experience a decline in value due to various factors. It is in a certain economic cycle, which makes sense because the economy doesn’t only rise. There are interest rate hikes, cuts, adjustments; the economy is controlled artificially. Is a bear market a scam? I wouldn’t call it that, as we see what happens in the years that follow. There are opportunities for those who focus on knowledge. Now let’s move on to Year 4: the well-known bear market.
Year 4 - Bear Market:
This is the well-known bear market. Year 3 was an interesting year but a boring year for investors due to its sideways movements, while Year 4 is the most interesting to study. And I said that Year 3 was the most important to study, but in fact, Year 4 is the most important. Because here, a significant decline occurs that can hurt your portfolio. We see this year happen through studies from the previous year. This becomes an interesting part, not only because it represents the bear market but also because I personally experienced this year. This year, it’s important that you fill yourself with knowledge. You have the time to study certain aspects and create a game plan for the next cycle. Unfortunately, I didn’t get that chance because I entered very uninformed. That’s why I want to give a factual overview of what happened this year.
Factual Overview: As we knew as market scholars, the year would be bearish due to the seasonality it was in, namely the bear market. A rule I mentioned earlier comes into play again.
Notice how we moved sideways for a bit (accumulation), then made a slight rise in Q1, and then continued the decline. The high point of that year was formed in Q1. This was the fake move or ‘manipulation’ of the year, after which the distribution continued downward. Notice how I mentioned earlier that manipulation could also be bullish! In this bear market (declining phase), various lows were attacked, and there was a lot of liquidity that needed to be attacked. At a certain point, there was a selling climax (SC) that I will explain. A selling climax is the first phase of the accumulation phase. This is a term from Richard Wyckoff. You don’t need to know much about it as it is too advanced, but what you should know is that a selling climax forms the end of the declining trend in the first phase of accumulation. An accumulation phase is the phase we are entering now. It is a phase where smart money players invest in the market with the expectation that the market will soon rise. And as you can see on the chart, that’s exactly what happens. I’ll point out where these players are active.
Below the selling climax is sell-side liquidity. I have indicated that on the chart as well. Below sell-side liquidity, smart money investors activate to buy: above buy-side liquidity, they activate to sell. Sell-side liquidity is therefore a zone where retail investors sell and provide enough shares/positions/bitcoins for smart money investors to buy up. Interesting, right?? The zone where smart money accumulates is marked with an orange zone below the selling climax. Subsequently, the following year began with a good rise.
5 - Start of the Bull Market:
Before I start with this year, I want to focus again on a specific aspect, namely the imbalance. An imbalance is an important factor in the market for reading price. There are, of course, more factors like order blocks that you see on my chart, liquidity, inefficiencies, but it doesn’t matter if you don’t understand those... I do want to explain an imbalance because it’s an important element in my analysis. It’s okay if you don’t fully understand it, so if you feel like you don’t get it, it’s okay. When we look at Year 1, the market rose after a declining phase. Year 1 was therefore the start of a bull market in the previous cycle. It is then logical that we compare this year to that year. It doesn’t align perfectly, which makes sense as the market grows and price action becomes older, but simple basic aspects do match!
The first thing I wanted to explain was the imbalance. After forming the low in Year 1 (Q1 of the previous cycle), we formed an imbalance. I have marked this with an orange bar. I also want to ask you to look back at Year 1 so you know what this imbalance is. It is a free space between candles where there is an imbalance in orders. Price will later return to this zone to “fill” the imbalance. An imbalance is a zone where smart money accumulates. This is why I consider the COVID-crash to be a Year manipulation move designed so that the market would drop towards that imbalance, where smart money accumulates, and then the market rises. I always say: “The market is in the right place, at the right time.” Nothing is a coincidence; as you can see on the chart, it’s all connected... I don’t need to draw extra diagrams, and even a child would understand this. Imbalances are therefore attacked sooner or later. In this case, it happened the following year. Okay, but now back to Year 5. We are in the first year of the bull market, and we compare this year to Year 1, as mentioned earlier.
This year started bullish and, like the previous cycle, formed a bullish imbalance. I marked this with a blue bar. In March, we saw a decline towards that imbalance (blue zone), and then the rise continued. The low of the year was formed during Q1. Do you recognize this rule??? It’s beautiful to see how everything comes together. It’s my way of art. The imbalance was filled, which is why the market didn’t decline as much in the second year. The imbalance had already been filled, so there was no reason to drop further. We are on the buy side of the curve. Do you remember what that means? After filling the imbalance, we had a small consolidation. I marked this consolidation with a pink bar. At the bottom of this consolidation are relative equal lows. Below this lies liquidity, and as we know, the market attacks liquidity. This was recent, so it’s now up to us to determine what will happen. In my opinion, the next cycle will be attacked, but that’s not certain. I need to do other studies for that... We are now only using the weekly chart as an indicator, so it’s difficult to determine quickly. You need the monthly, quarterly charts, but that’s for later, maybe. After the consolidation, the rise began during Q4. The market continued the distribution towards an all-time high in Q4 (all-time high not yet broken this year). Interesting, right? Right after the consolidation, we made another imbalance with a bit of liquidity above it, as indicated. I am certain that Bitcoin will revisit this price in the future (next cycle??). My reasons:
- An imbalance on the weekly timeframe
- Imbalance on the monthly timeframe
- Sell-side liquidity (low of the year during Q1 (2024))
- Important inefficiency in price from May 2022 and July 2021.
It’s more important to anticipate it than to predict it, which is why we leave this scenario for the future...
Year 6 - Consolidation in the Second Year of the Cycle:
I call this year the consolidation year in the second year of the cycle. Just like in Year 2, where the market moved somewhat sideways until Q4. At the beginning of Year 6, we saw a slight decline/correction in Q1, where the market formed the low of the year during Q1. Notice how it repeats itself. This year is certainly bullish. After making the low in Q1, it rose (buy-side liquidity) and broke the old all-time high. After buy-side liquidity was taken, it declined slightly (which is logical). Smart money investors partially sell to retail. So, the market is now quiet and consolidating. That is why I call this year a consolidation year. The consolidation starts just before the Bitcoin halving (purple zone on the chart). The same as the previous cycle, right? After the Bitcoin halving, we continued to consolidate a bit, just like in the previous cycle. At one point, there was a strong short-term decline where short-term liquidity was stopped out and drawn into a short-term imbalance (orange zone). Smart money took the opportunity to enter again. Meanwhile, most retail traders sold their positions because it “took too long.” The rest of the chart in this analysis is about the future. So, let’s move on to “Now.”
Now:
We have already consolidated like the previous cycle during the second year of the cycle. As people said that the previous consolidation came because of COVID, this cycle is due to the conflict in the Middle East. The dotted lines I marked are places where there is a lot of liquidity. I have also noted this on the chart. I expect that very soon, we will attack these highs and seek much higher prices for Bitcoin. We are now starting Q4, and as we saw in the past, Q4 has always been the driver for starting the rise, accompanied by many other aspects. So, I also expect that Q4 will bring a strong rise. People will probably attribute it to a certain event like “Trump winning the elections,” but don’t be fooled. The chart is pre-scripted. I will update the market over time, so I hope you have gained some understanding of what Bitcoin does as it ages. I expect the end of the rise in Q1-Q2 of 2025. I have named this year “End of Cycle.”
I hope you have taken something from this analysis and that you have thoroughly studied/read it, as I have put a lot of time and effort into it. Be sure to revisit it in the future, and I’ll see you in the next analysis.
Conclusion of the Analysis:
Please note that this analysis was conducted on October 14, 2024, when the price of Bitcoin stood at $66,800. While some details may be time-sensitive, the insights presented remain valuable for future developments. For the latest updates and additional information, visit the Update on Analysis page, where updates are regularly provided.
Thank you for reading, and feel free to reach out with any questions or feedback!
Explore the current analysis here and stay up to date.
In this section of the website, I will provide updates on Bitcoin within my analyses and explore other topics, such as Total3 and Ethereum, to offer insights into the current market conditions. This will help readers better understand how to anticipate certain developments. However, please note that this should not be considered financial advice but rather a personal perspective open to individual interpretation.
Copyright © All Rights Reserved