- Passionate Income
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- Bitcoin Smashes $100,000
1,073 Words | 4 Min 27 Sec Read
Welcome to another issue of Passionate Income.
Today we’ll be discussing Bitcoin surpassing $100,000 and what comes next.
In particular, we'll discuss where we are in the cycle and which narratives are hot as we head into 2025.
Let’s dive in.
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Disclaimer: We are not financial advisors and we are definitely not your financial advisor. Crypto investing is high risk and can result in you losing 100% of your capital. The information contained in today's issue exists for entertainment purposes only, and shall in no way be considered financial advice.
First of all: Congratulations!
If you’re a long-time crypto participant, you know how significant of a milestone it was for Bitcoin to reach the $100,000 mark.
Yesterday was a truly historic day, celebrated by everyone in the industry.
But the question now is: What comes next?
As usual, we cannot provide personalized financial advice, nor can we predict the future.
What we can do, however, is provide a brief summary of what experts think based on historical precedent.
First things first, while Bitcoin climbed to over $103,000 yesterday, today it dumped as low as $92,300—a stunning 10% drop less than 24 hours after reaching its peak.
But that doesn’t necessarily mean the party is over.
In fact, most people who understand trading expected this. Why?
Because of what’s known as liquidity hunting.
If you buy crypto or stocks without using margin or leverage, you (you and you alone) decide when it’s time to sell.
However, when using margin or leverage, you are essentially borrowing money from the exchange so you can trade with more capital than you actually have available.
That said, these institutions would open themselves up to massive losses if they allowed any random person to borrow money so they can do this type of aggressive trading.
Instead, to trade with margin or leverage, you have to provide collateral (which, in most cases, is dollars or a smaller amount of the asset you’re trading).
Further, unlike buying on what we call "spot" (meaning with no leverage), since you’re trading with borrowed money you can be forced to sell if the trade goes against you.*
*Meaning your trade is losing so much money the capital you have available no longer meets the exchange’s collateral requirements (at which you point you get 'stopped out').
I explain this because, at any given moment, there are billions of dollars of leveraged trades in the crypto ecosystem.
More important, both the exchanges themselves—and the heavy hitters in the industry—benefit when everyday traders are liquidated out of their positions.
So, combine billions of dollars with an incentive for violent price adjustments, and you can see why these "flushes" are so common in crypto.
So, if you’re one of the people who decided to invest when Bitcoin finally climbed over $100,000—and your investment is now at a loss—there’s no need to panic.
While it might take some time for $BTC to climb back over $100k, technical indicators are not flashing any kind of warning signs that yesterday was a top.
Admittedly, there’s a very important Non-farm Payrolls report being released later today (Friday).
If that report is worse than expected, it could negatively affect all risk assets, including both the stock market and crypto.
If the report aligns with expectations—or is better than expected—it should have a positive effect (sending our magic internet monies higher : ).
The reason this matters is because, recently, what happens on Fridays determines what happens over the weekend.
While the stock market is only open Monday through Friday, crypto trades 24/7/365.
So if there’s a big downturn on Friday—and no economic news to push the price back up over the weekend—crypto is likely to follow Friday's negative momentum lower (from the close of the stock market on Friday until the release of stock market futures on Sunday evening).
On a slightly more positive note, history shows Bitcoin traditionally reaches its lowest point of the month during the first week of December before starting an upward climb through the end of the month.
Because of that, if history is any indicator, Bitcoin should reach its December low sometime between today and Sunday before continuing higher.
And the further we look into the short-term future, the brighter the picture looks.
Historically, Bitcoin is known to endure an approximately 30% correction during the first quarter (Q1) of its final bull run year (which as we discussed in a previous issue, has historically occurred once every four years).
In 2017, that crash happened during the first two weeks of January.
In 2021, it happened during the second and third weeks of January.
Does that guarantee we see the same/something similar next month?
No, of course not.
However, more than any other asset, Bitcoin has an almost eerie tendency to closely follow historical four-year patterns.
More important, after making those corrections, Bitcoin went on to gain 260% by May 2017 and 77% by February 2021.
Last, YouTuber Jason Pizzino identified a trend where Bitcoin puts in a big drop once every 30 days going back to August.
And if you go back, all of those downward moves happened on the 4th or the 5th of the month. Meaning, when combined with Erik Krown's analysis that Bitcoin tends to achieve a monthly low during the first week of December, it's possible the worst is behind us (for this month at least).
In conclusion, while it’s not guaranteed, if history is any predictor the price of Bitcoin could be much higher by the spring of 2025.
More important, it's likely we get an approximate 30% correction sometime in the next 60 days (and potentially before the end of January).
So if you haven't bought any crypto yet - but you'd like to - that could be your opportunity.
In fact, while I'm enjoying the profits I'm making for the time being, I personally be making some extremely aggressive buys if we get anything that even remotely resembles a 30% correction between now and January 31st!
💡 Takeaway: Similar to Roger Banister breaking the 4 minute mile - which set off a chain reaction of other runners doing the same - Bitcoin breaking $100,000 was a massive psychological hurdle. However, now that it's been achieved, all signs point to much higher prices over the coming months.
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