Short-Term Weakness, Long-Term Cycle Questions for BTC

Key Takeaways

• Sharp pullbacks in BTC and equities amid weak jobs data and tariff concerns
• Neutral short-term outlook for BTC with seasonal and positioning headwinds
• Cycle high debate hinges on price action into November and Q4

‍

Digital Asset Commentary

Bitcoin experienced a sharp move lower last week following an extended period of volatility compression just below all-time highs. Simultaneously, the S&P and Nasdaq saw their largest declines in months, suggesting signs of temporary bullish exhaustion across broader markets. The decline coincided with the implementation of Trump-era tariffs, a disappointing July jobs report, and significant downward data revisions in the previous two jobs reports, all pointing to a potentially weaker economy than previously expected. The Fed’s meeting, held just two days earlier, now appears outdated, with no further FOMC decision until September. Any forward guidance may now come via Jackson Hole in August. Current interest rates may be overly restrictive and could further weaken the labor market, as noted by dissenting Fed members Waller and Bowman.

Last week’s developments triggered broad risk-off positioning, though this has yet to spill over into Monday. The dollar has strengthened, gold prices have edged higher, and Treasuries have attracted modest bids for the first time in weeks. If gold breaks out from its multi-month ascending triangle, BTC may underperform over the coming months. Seasonality for BTC is already skewed bearish in August and September, while October and the fourth quarter have historically been stronger periods. Meanwhile, BTC Commitment of Traders (CoT) data shows weakening bullish positioning for the first time since April. A wildcard for renewed bullish momentum could come from a surge in ETF inflows or continued accumulation by the growing number of BTC treasury companies.

With historical price cycles in mind, many investors are now questioning whether the cycle high has already been reached. If the current rally continues another 90 days, mirroring the trough to peak run of the 2015 cycle, it would place a potential cycle top around November 2nd. A breakout beyond that timeframe would lend credence to the idea of lengthening cycles or even a breakdown in BTC’s historical cyclical behavior. A daily close above $120k, more likely in Q4, would strongly support the case for continued upside into year-end.

‍