Aug '23 in General Discussion
How To Determine Market Tops/Bottoms
There are a few factors that I weigh heavily to indicate cycle tops or bottoms.
1. QE or QT
Basically whether the Fed is in risk-on or risk-off mode.
Money printing mode or money saving mode.
If you think about it in terms of your personal finances...
When you are short on cashflow, what do you do?
• You start saving money
• And spend less
• You might even sell some of your assets when you need the cash
The Federal Reserve / all central banks in the world operate with the same modus operandi.
When times are tough... they sell assets to create cashflow and increase interest rates so that everyone struggles to get enough cash to buy assets.
All market cycles can be traced back to QE QT cycles by the fed.
$BTC and crypto is no exception.
Read Lords of Easy Money before the next bull run and it will guarantee you make easy money during it.
2. Bitcoin Halving Cycles
For those who don't know.
The Bitcoin halving is an event where the reward miners get for mining a block (excluding transaction fees) gets halved.
In 2008 it was 50 BTC per block.
2012: 25 BTC
2016: 12.5 BTC
2020: 6.25 BTC
2024: 3.125 BTC
It's a similar dynamic to QE QT cycles whereby it's just simple supply and demand.
Low supply makes it easier for demand to move the prices.
Look for the bottom for BTC to form 2-3 months before every halving event (historically speaking).
3. Interest rate cuts.
This ties back into QE QT.
QE = low interest rates = easy supply of money for everyone.
QT = high interest rates = very expensive to borrow money for everyone so most people don't borrow money to buy assets.
Interest rates for the past 20 years ish have pretty much been close to 0%.
So it was freeflow money galore for anyone and everyone.
If you were a bull you'd think you were a genius for buying/going long on assets.
But now interest rates are at 20-year highs.
As long as it remains high and the fed does not start cutting it...
No reason to be a buyer now.
Patience is key here.
Look for the bottom to come a few months after the first rate cut.
Fun fact rate cuts are not a bullish event for price.
Historically speaking all assets go for a sharp nose-dive for a few months after rates start getting cut.
CONCLUSION
Neither of the 3 factors are remotely whispering that it's bull run season.
If anything I expect prices to continue lower.
If you read until this point.
This text was taken from a Twitter reply I gave to a member of Trading Accelerator.
Go drop a like and RT it if you want to show appreciation :)
But it's your choice!
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How To Determine Market Tops/Bottoms
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