The Bitcoin market is showing a frightening structural similarity to the bearish scenario of 2022. The current recovery from the June low, in my assessment, could turn out to be the largest bull trap of the current cycle. Behind the apparent rescue, a sharp reversal downward and a final capitulation will follow, which, paradoxically, will pave the way for the true bottom.
The 2022 Fractal: History Repeating?
Bitcoin's price dynamics are copying the 2022 chart with frightening precision. First, we saw the June low, followed by a bounce that retail traders hastily called a reversal. Now, BTC is again testing the 200-day moving average, retail is actively opening long positions, and euphoria is building. However, the key signal I see is the RSI divergence that preceded the crash in 2022. Back then, after the June low, Bitcoin lost another roughly 28% in November-December. If the fractal is confirmed, we are in for a similar drop with subsequent liquidation of longs, and only after that will the real reversal begin, which I expect in the third or fourth quarter.
Strategy: Catch Liquidity, Not the Trend
My tactic for now is to enter a long position targeting $67,000–70,000. It is in this zone, according to my calculations, that the market will gather liquidity before the inevitable reversal. After reaching this target, I plan to start accumulating shorts. The key confirmation level is $65,000. If Bitcoin fails to hold above this mark, I will exit the long early and switch to a short strategy, without waiting for $67,000. This is a pragmatic approach: we do not predict the future, but react to market structure.
Arguments for a New Bottom
Macro indicators also point to the proximity of a bottom, but not the current one—a future one. The Spent Output Profit Ratio (SOPR) has fallen to a 20-month low of -0.35. We have only seen this level once before: in December 2022, after the FTX collapse, when Bitcoin fell below $16,000. Historically, this indicator has accurately identified market bottoms in 2015 and 2019. Now we are seeing a similar picture, indicating an extreme degree of capitulation among short-term holders.
Additionally, Bitcoin is trading only 16% above its realized price. Historically, when the price was this close to this zone, the average return after six months was 41%, and after a year—81%. However, this scenario only worked after the market had gone through a final phase of panic. Until we see this capitulation, any rally will be nothing but a trap.
My expert opinion: The current recovery is a classic "bull trap." Investors should prepare for one last sharp drop that will shake out weak hands from the market. Only after that, in the fourth quarter of 2024, can we talk about the start of a new sustainable bull cycle.