Is Bitcoin Season Upon Us?

Since the ~$15.5k bottom in November 2022, Bitcoin has witnessed a more than formidable recovery. By late April, BTC nearly doubled in price from its November low. And since the start of 2023, it is up 72%.

In comparison, ETH posted a 55% recovery, while the rest of the crypto market only managed a 22% return. As you can see in the chart above, it wasn’t until early-mid March that BTC started to deviate from rest.

In our April Chartbook, we explain why this may have taken place. “Interestingly, ARKK and Bitcoin traded in line for most of Q1. Investors were clearly using them somewhat interchangeably to express a risk-on bias. This changed after March 8th as BTC ripped and left every other risk asset in the dust. Amid the bank stress, it appears Bitcoin’s “outside money” narrative became an attractive refuge for investors looking to hedge systemic TradFi exposure.”

So if the banking crisis was one of the catalysts behind BTC’s recent divergence- will the trend continue or is it simply a knee-jerk, one-off reaction?

Although Bitcoin dominance is somewhat of a meme, it does at least give us a reasonable estimation of where speculators are placing their bets within the crypto market. And after the small alt rally we witnessed post Shanghai, BTC dominance has continued its trend upwards, where it now sits at ~48%. And we all know that when BTC pumps hard, the majority of alts will bleed against its strength. So what can previous market cycles tell us about where we are at currently?

Despite the fact that BTC market cycles are mainly driven by the underlying macroeconomic influences of a specific time period (such as global liquidity, dollar strength, market volatility, and central bank policy), it’s hard to ignore the similarities in timing between cycles.

In the previous two market cycles, a new bottom was found 59 and 53 weeks following its cycle top. Coincidentally this cycle cemented a bottom 54 weeks from its top (provided the low is already in). If we use the timing from the previous cycle- it would place us right now in June 2019-right before BTC dominance broke above resistance and BTCUSD jumped 70%. I am not saying this is about to happen, but I do think BTC’s strength against the market will continue in the short to midterm.

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