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| By Juan Villaverde |
As Bitcoin (BTC, “A”) rallied back to its all-time high earlier this week, the most frequently asked question I’ve gotten has been “Is this the top?”
Judging by recent price action, a lot of folks certainly thought so.
On Tuesday, minutes after Bitcoin touched a new all-time high, it was pushed into a violent sell-off.
Does this mean our incredible rally is over?
Not even a little bit.
First, it’s important to recognize the force behind this sell-off.
It wasn’t institutional investors getting cold feet and reconsidering Bitcoin as an investment.
And it wasn’t retail investors taking gains.
No, this downside pressure is due to the $1 billion in crypto derivatives that were liquidated.
In English: Overleveraged players bet big and lost.
That means this pressure is temporary. And there’s much more ahead that is likely to push BTC higher.
Second, while this rally has been impressive, we haven’t yet seen the kind of strength prior bull markets have shown.
For example …
The last bull market began in December of 2018 with Bitcoin just under $4,000 … and it ended with Bitcoin planting a kiss on $69,000.
That’s a 17-to-1 move.
Moreover, as the ascendant Bitcoin approached $20,000, the high-water mark of the previous bull market, a funny thing happened. A host of “experts” and talking heads popped up on Twitter and YouTube, screaming, “Bubble!”
Of course, they were wrong. Bitcoin simply ignored them, rallying another 250% over the next 12 months.
Now, let’s look at Bitcoin’s 2017 bull market, which was even more impressive. Bitcoin began this up move near $150. And by December 2017, it was flirting with $20,000.
Again, a funny thing happened along the way. As Bitcoin approached $1,000 (the top of November 2013), self-appointed experts once again popped out of the woodwork to declare a Bitcoin bubble.
But undeterred by the uninformed, the King of Crypto marched up another 20-fold — to a top near $20,000, the following December.
You can see a similar pattern in the brief, but ferocious sell-off triggered by BTC touching its new all-time high of $69,210.
Mark my words, by the time this bull market is over, Bitcoin will exceed current levels by at least twice.
You heard right. My minimum target for this rally is $150,000. But it’s likely to rally much higher than that.
With its track record, suggesting Bitcoin's bull run is over because it's "too early" in its cycle to hit an all-time high is like saying you've seen everything at Disneyland because you've been on Space Mountain.
There's a whole theme park left to explore, folks.
And it’s in the rest of this crypto park where the biggest gains will be found.
That’s right. For those outsized profit opportunities that crypto is known for, we have to turn to the altcoins (or all other cryptos besides Bitcoin.)
Below is a chart of Bitcoin dominance back to the early days of crypto.
BTC Percentage of Total Crypto Market Cap
Observe the three arrows. The first red arrow highlights a sharp drop between July 2016 and January 2018.
When Bitcoin dominance falls, that means altcoins as a whole outperforming Bitcoin.
Traders often call periods like this “altcoin season” or “alt season.”
Keep in mind, alt season doesn't mean Bitcoin must be in bad shape.
During the interval beneath the descending red arrow, for example, Bitcoin returned to a robust 2,800%. But the altcoins did much better, outpacing Bitcoin by over 400%.
Indeed, since the bear market low of November 2022, Bitcoin has been leader of the crypto pack. Alts followed, but Bitcoin has been the place to be.
This is another indication we’re still early in this bull market! We haven’t even seen altcoin season yet!
Some folks when they see this chart say: “That just shows how Ethereum (ETH, “B”) did better than Bitcoin in the past two bulls.”
But that’s not true. Below is a chart of the market cap of altcoins — excluding Ethereum — plotted against Bitcoin, going back as far as my data provider allows.
BTC vs. Altcoins
I’ve highlighted the same three arrows in this chart also.
Notice that in this case, when the chart goes up, altcoins are outperforming. When it goes down, Bitcoin is leading the market.
The red arrow highlights the bull market from 2016-2017 — when the alts (excluding Ethereum) were outpacing Bitcoin by orders of magnitude.
The same thing took place between 2019 and 2021. The altcoins left Bitcoin in the dust.
And the blue arrow again points to what hasn’t yet happened in this cycle. But almost certainly lies ahead.
While each cycle is different — history rhymes, it doesn’t repeat — some things have remained consistent in each crypto four-year cycle:
- Bitcoin doesn’t stop at the all-time high from the previous bull. It exceeds it — and by orders of magnitude.
- At some point during the bull market — and this can vary a bit — traders and investors begin shifting their attentions to the altcoins. And these then outperform Bitcoin’s already stellar returns by a mile.
Neither of these has happened yet. So, calls for a top in this cycle by social media influencers and other self-anointed analysts have no basis in fact.
No matter how you cut it, the conclusion is still the same: Bitcoin is nowhere near a top.
And the best part of this crypto bull hasn’t even started yet.
Believe it or not, we’re still early.
If you want to take advantage of being early in a bull market to maximize your profit potential, I urge you to check out my Weiss Crypto Investor newsletter for specific “buy” and “sell” recommendations.
Best,
Juan
