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| By Juan Villaverde |
After briefly trading above $80,000 and hitting $82,000 on Sunday, Bitcoin (BTC, “A-”) has mostly drifted lower this week.
As I write, it’s hovering above $79,000.
This isn’t a surprise.
For weeks, I’ve been calling for an 80-day-cycle high around May 9. And indeed, Sunday’s jaunt above $82,000 — just a day later — was the high point for the past week.
Liquidity indicators also suggest a multi-month high is in the process of being established.
All the data suggests Bitcoin has likely reached the top of its recent run. We even got a corresponding narrative this week.
Every cycle top comes with its own headline that signals the fun is over. My expectation all along has been that renewed Mideast tensions would trigger a deep risk-asset correction heading into late June.
And now, hostilities have indeed resumed.
One of the biggest actions taken was by United Arab Emirates’ (UAE). It struck deep inside Iranian territory — an act that has shifted the market's focus back to the worsening economic impact of the Strait of Hormuz closure.
This has long been on my radar. The disruption to the physical flow of goods through the Strait was always going to take months to filter through into the global economy.
Now, it has.
That’s a key reason the Producer Price Index — a measure of inflation at the wholesale level — rose over 1.5% in the past month to its highest level since February 2023.
That followed a nearly 1% jump in the Consumer Price Index (CPI) between March and April.
All this correlates directly with surging oil prices. Which my Crypto Timing Model says are likely to remain elevated at least through July, and possibly longer.
As a consequence, inflation is back. And there is little hope it comes down anytime soon. And that's translating into rising interest rates across the entire yield curve.
As you can see …
Federal Interest Rate Policy Follows 2-Year
Treasury Yields … with a Few Months Lag
The 2-Year Treasury rate has been rising since the Iran war started. While the Federal Reserve has been on pause since.
As inflation keeps ticking higher, this will translate into rate hikes by the Federal Reserve.
And that will dump a bucket of cold water on the red-hot stock market and on crypto. They’ll jerk the rug out from under a rally built on the assumption the oil disruptions are merely temporary.
Are rate hikes permanently bearish for stocks and crypto? Not necessarily.
The last crypto and stock market rallies actually began between October and November of 2022 — even as the Fed was still raising rates!
What changed that October … was the yield on 2-Year Treasurys, which finally halted the relentless climb it started in mid-2021. (I marked this inflexion point with a dotted vertical red line in the chart above).
This wasn’t quite the final historical top in interest rates; that came in September 2023. But October 2022 was the moment investment markets began pricing in an impending slowdown in rate hikes.
And that was enough for Bitcoin to bust out in a bull market that ran all the way to October 2025
The lesson: Markets are forward-looking.
They won't wait for the Fed to actually hike rates before pricing it in. They'll start the moment the 2-Year rate begins to tick higher.
That moment is now.
According to my new Forecasting Model (which I showcased at last week’s Weiss Investment Summit), the bond rally that started last October is set to end sometime between September and October of this year.
So yes, higher rates are coming. And yes, that will likely be what slams the brakes on the crypto and stock rallies that started in late March.
But these will not be the same kind of aggressive rate hikes that prevailed in 2022 rate hikes.
More likely, they’ll be a mere echo rather than a repetition.
Because of this and the fact that the rally was pretty tame for Bitcoin, I don’t expect to see BTC drop off hard from its current price.
Instead, I believe Bitcoin will correct modestly, and the $70,000 support level will hold.
Especially since something else is coming, too: A significant low by late July.
My Crypto Timing Model suggests this is likely the 320-day-cycle low. Which means it’ll be the official end of our current cycle … and the start of a more bullish one.
To be clear, that doesn’t mean a run will start right away. But the upcoming low should represent the cheapest Bitcoin’s price will be for a few months.
And that’s a solid entry opportunity for long-term investors.
My Crypto Timing Model has called the past three such lows with incredible accuracy. And helped my Weiss Crypto Investor Members load up on my recommended coins at discounted prices.
To see how you can benefit too, click here.
Best,
Juan Villaverde
