Lark Davis, a long-term investor in Bitcoin (BTC), crypto and stocks, explains why the ongoing bullish euphoria is likely to end in a matter of months—and why the next bear market may not be so brutal.
Bitcoin (BTC) bull run may end between December and March
According to the tweet storm by Mr. Davis, Bitcoin (BTC) bulls have three to six months left before this rally will be over. This estimation is based on a combination of previous observations and the striking growth in the maturity of crypto markets.
First, let's be clear. No one really knows for certain. No one can predict the future.
I shared this chart at the start of the year.
Basically it shows lengthening cycles and diminishing returns percentage wise.
Bull run ends from December to Marchhttps://t.co/JtXjarDOl2— Lark Davis (@TheCryptoLark) September 3, 2021
As markets become more mature and manipulation-resistant, the cycles are getting longer while the returns become less and less impressive. Also, the "bear" and "accumulation" stages have become shorter.
The "moving averages" of the Bitcoin (BTC) price can be considered yet another reliable indicator of the bullish run phase: every previous run finished 3-4 weeks after crossing the line of the 5x 2-year MA.
The Puell Multiple, an integral metric that displays the strength of Bitcoin (BTC) miners' selling pressure, should also spike to the "red" zone (the highest value).
Don't try to sell the top
Also, the popular net unrealized profit/loss indicator should move to the "euphoria" stage to mark the top of the ongoing rally.
The net unrealized profit loss chart is another great indicator. All previous tops were marked with a cross into Euphoria. This tends to a shorter blow off indicator. When this hits it basically screams time to get out! pic.twitter.com/0sgEJyn5oO— Lark Davis (@TheCryptoLark) September 3, 2021
That is why the next few months may be "insane" for cryptocurrency investors.
However, as more and more money flows from the traditional segment to the digital one, the next bear market will be different from 2018's Crypto Winter.
Institutional money is here, defi is here, gaming, NFTs. Why "cash out"? More money will stay in longer IMO thus creating a high low compared to previous cycles. Super cycle theories still in play. Bear may be much shorter and shallower. Central bank insanity continues.
Finally, Mr. Davis recommends avoiding trying to sell the very top. Instead, traders should be ready to sell at some point and have an escape plan ready.