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- Bitcoin Cracks New All-time High
1,073 Words | 4 Min 28 Sec Read
Welcome to another issue of Passionate Income.
Today we’ll be discussing recent developments in the crypto market.
In particular, Bitcoin's new all-time high, where we are in the historic four-part cycle, and whether or not it's too late to get involved.
Let’s dive in.
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It’s been a little over two weeks since our last crypto post and Bitcoin is flying.
In fact, if all you did was buy $BTC on the day of our last post, you’d be up 29% at the new ATH earlier this week and up around 23% as of this writing.
So, the question is:
Is it too late to get in on the action?
While we can't provide financial advice, there are several data points that indicate we still have months of price gains ahead of us.
First, understand crypto operates on a four-phase cycle.
You can think of them like the seasons: summer, fall, winter and spring.
In line with the idea of summer being hot and exciting, summer (which is the fourth phase) is where we see rapid price gains and what’s known as investor euphoria.
If you participated in the 2020–2021 bull market, you know what I mean.
From crypto bros buying Rolexes and supercars, to celebrities like Justin Bieber dropping six and seven figures on NFTs, the euphoria phase is marked by big profits and extravagant spending.
But as we know, after summer comes fall.
And while it’s a bit of a play on words, the summer comes to an end when crypto prices start to fall.
And not just a little, but crash through the floor.
During the last cycle, the fall phase started in November 2021, with prices continuing to drop through December 2022.
Once prices stabilize, we enter what is arguably the most difficult phase of all:
Winter
While decreasing prices can be painful, day traders are able to make money whether is going up or down (given they can short the market).
But when prices go sideways, there are very few (if any) opportunities.
And if there’s one characteristic that marks a winter phase, it’s months and months of brutally boring sideways price action (where absolutely nothing happens in the industry).
And because there’s so little action, crypto becomes a barren wasteland where most traders and investors abandon the industry.
Hence this phase being referred to as winter.
But similar to a blade of grass poking through on the first sunny spring morning, eventually prices show signs of life.
Because of that, the spring phase is a time for accumulation.
Similar to a farmer planting seeds, spring is when investors make investments they don't plan to cash out for 1-2 years down the road (during summer).
And of course, over time spring gives way to summer. At which point the cycle repeats itself.
While that was a bit of a tangent, understanding the four-phase cycle is critical to your ability to succeed with crypto.
Mainly because the explosive price movement we’ve seen since the US presidential election marks the end of spring and the beginning of summer.
The good news is industry veterans have noticed approximately “80% of profits are made during the summer.”
Meaning, as long as the industry follows this historic four season pattern, we have months and months of price gains ahead of us.
The bad news is that time is running out.
If you’ve been paying attention, you may have seen Bitcoin just experienced its largest-ever one-day gain on a pure dollar (not percentage) basis.
In fact, after seven months where Bitcoin repeatedly failed to break through its previous all-time high (around $73,000), $BTC not only broke that level but blasted all the way to $93,500.
I mention this because this type of price action is a very clear indicator we've transitioned from spring to summer.
And for better or worse, summer is the shortest of the four cycles.
Further, neither the stock market nor the crypto market rises in a straight line.
Instead, there can be brutal corrections where Bitcoin drops 20% or even 30% on a short-term basis (despite its long-term trend toward higher prices).
As you’ve likely heard: “The best time to plant a tree was 20 years ago. The second best time is today.”
Applying this to crypto, the best time to buy was anytime between December 2022 and before the election. But with prices climbing as much as 33% since November 1st, it’s possible we’re due for a quick downturn.
Along the same lines, it’s possible we push up to $100,000 (which is a round number and psychological resistance level) and then move downward before continuing the journey higher.
Again, we’re not financial advisors and cannot tell you how to invest here.
What we can tell you, however, is that there are pros and cons to both waiting to invest and taking action now.
At the end of the day, what matters is that you take an appropriate amount of risk relative to your financial situation and goals.
That said, as someone who’s been involved in the industry since 2021, I can tell you I’m 100% focused on crypto right now.
And the reason I'm so focused on it right now is because I believe in the four year cycle.
So, while history doesn’t repeat itself per se, it tends to rhyme.
And if this “summer” is anything like previous crypto bull runs, there’s an insane amount of money to be made over the next 6 to 10 months.
💡 Takeaway: Crypto has officially entered the final phase of it's historic four-part cycle. On the positive side, we're only eight days in, meaning we likely have another 8-10 months of parabolic gains ahead of us. On the downside, the higher prices go, the riskier it becomes to jump in late.
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