Bitcoin Breaks Free: The Psychology of the $30K Barrier

By Juan Villaverde

Since debunking last week’s little piece of fiction about the approval of a spot ETF, Bitcoin (BTC, “A-”) has been on a bit of a spree, cruising past its July 13, 2023 zenith of $31,500.

As of my last check-in, it’s nonchalantly sitting near $34,000.

That’s a big, neon sign to me, flashing as brightly as it can that Bitcoin is rearing to run. 

Fueling this opinion is my understanding of the crypto market cycles … and the important psychology behind resistance levels.

Let me explain …

Just like the traditional financial market has cycles — which my colleague Sean Brodrick often breaks down for his Wealth Megatrends Members — the crypto market has cycles of its own, marked by Bitcoin’s price action.

The one I’m focusing on here is the long-term trend cycle, which lasts for just about a year, or 320 days on average. These cycles are tracked from low to low, and that’s how we determine the momentum of a cycle.

If the low you end on is higher than the one you started on, congrats! You were in a bullish cycle.

If the low you end on is lower, then you were in a bearish cycle.

But crypto also has neutral, or transitional, cycles that bridge the gap between bearish and bullish. That’s the current cycle we’re in.

And you don’t have to blindly believe me. The last 320-day cycle low was recorded on Nov. 9, 2022, at $16,000. It peaked in July 2023 at $31,000 and, as of last month, settled near the $25,000 mark — up from its previous low … but not substantially so.

So far, that’s a pretty typical transitional cycle. And usually with that type of price action, I’d anticipate our next long-term cycle low to hit in in a few months. Even then, it would likely be months of gathering positive sentiment before we saw any substantial push higher.

But Bitcoin’s price action over the past week changes the ending of this story from typical to intriguing.

See, not only did Bitcoin rally on a disproven rumor — which signifies a lot of bullish sentiment — it crossed above $30,000 … and held there overnight.

For context, Bitcoin seemed to have ongoing drama with the $30,000 threshold throughout 2023. Bitcoin retested this level time and time again between April and July … the peak of its cycle and the time when it had the most momentum.

Yet, every single attempt was met with a cold shoulder as sellers promptly pushed the prices back down. That was the threshold where bearish sentiment would take over each time. The market would not support BTC above $30,000.

Why? Because of investor psychology.

See, $30,000 was the stable support level in May 2021 when prices were on a downhill slide. It was reliable, holding each time it was tested … until the collapse of a separate blockchain network, Terra, in 2022.

The effects of the Terra collapse rippled through the broad market. But for Bitcoin, it was clear that in the aftermath, there was no stomach for a BTC price above $30,000 if that level couldn’t be held confidently.  

Please don’t mistake this as a mere dance with numbers on a screen. This type of price action is a testament to how critical psychological barriers play out in the unpredictable realm of cryptocurrency.

For over a year, there was no tolerance for Bitcoin to reclaim this level. Now, there is.

With Bitcoin seemingly bidding adieu to this particular price point, one can’t help but feel optimistic. It’s as though we’ve broken free from a gravitational pull and are now set for a new, uncharted trajectory in the crypto bull space.

Still, we shouldn’t get ahead of ourselves. My Crypto Timing Model — the proprietary tool I use to track the near-, medium- and long-term cycles in crypto — is ever the stickler for detail. It needs a weekly close above the $31,500 mark to say with confidence that we’re starting a new long-term cycle. And we’re still waiting on that.

But unless Bitcoin plans a dramatic exit before week’s end, we’re likely to see it. Circle Sept. 11 as the potential end of Bitcoin’s transition phase ... and the onset of a bullish era that should continue until 2025.

The only question that remains is what you’re going to do about it.

Will you sit and passively let the bull market run around you? Or will you prepare your portfolio now, before the next wave of investors floods the market?

I’ve been preparing my Weiss Crypto Portfolio Members all this week with analysis of specific top-performing assets to target and even recommendations on when to buy based on my Crypto Timing Model, of course.

If you want to learn the names of some of these coins and have the opportunity to get specific “buy” and “sell” alerts to let you know when to act, I encourage you to watch this urgent briefing I recorded recently with Weiss Ratings Founder Dr. Martin Weiss.

I urge you to hurry, though. We’re taking it offline at midnight tonight.

Best,

Juan