Summary
Highlights
Bitcoin is currently trading downwards, likely heading towards the bull market support band (20-week SMA and 21-week EMA). The presenter anticipates Bitcoin will find a low in September. The key question is whether this low will occur at the bull market support band or the 50-week moving average. Historically, Bitcoin market cycles have not ended until weekly closes fall below the 50-week moving average, as seen in 2014, 2018, and 2022.
There are parallels between the current Bitcoin cycle and the 2016-2017 cycle, especially regarding summer highs in May/June and August, followed by a retest of the bull market support band. Unlike 2017, where Bitcoin consistently held above the bull market support band, the current cycle has seen brief drops below it, though always holding above the 50-week moving average. The presenter expects a surge in Bitcoin dominance in September and October. This can happen if Bitcoin rallies from support or if it drops further, causing altcoins to lose value against Bitcoin, as liquidity flows back to Bitcoin for safety.
The presenter speculates that Bitcoin will find a local low in September, possibly bleeding into early October, before moving up. This aligns with a strong reversal in Bitcoin dominance. If Bitcoin consolidates at the 20-week moving average in September (bullish case), or drops to the 50-week SMA and then bounces (slightly more bearish case), Bitcoin dominance is expected to rise. In 2020, as Bitcoin retested its 20-week SMA, dominance bottomed out and then surged to a new cycle high as Bitcoin recovered.
The expectation is that liquidity will flow back to Bitcoin in September and October. If Bitcoin holds the bull market support band, it's positive. However, if it drops to the 50-week moving average, altcoins would likely experience a larger decline. Assuming the market cycle top is not yet in and a Q4 rally is expected, the September low could mark the last major low before the market cycle top. Based on historical trends, like 2017, the September low was the last significant retest of the 20-week SMA before the cycle ended.