This article focuses on the Bitcoin market cycle from 2020 to 2021, deeply analyzing the investment logic contained within. Additionally, the cycles of 2017 and 2018 featured a rare sharp peak pattern, which has limited reference value, and thus will not be included in the discussion.
Looking back at the last Bitcoin market cycle, many people viewed October 2021 as the second peak of the bull market. However, from a professional perspective, if we exclude the interference of special historical events, the bull market was nearing its end as early as May 2021. This conclusion can be confirmed by the momentum energy indicator. Observing the data, it can be seen that since May 2021, the yellow waveform indicator representing momentum energy began to sharply decline from a high position, falling below the zero axis. Even though the price briefly broke through previous highs afterwards, the peak of this indicator never surpassed the previous high and continued to oscillate near the zero axis, which is a typical characteristic of the market entering phase B.
Subsequently, a series of black swan events such as the Luna crash and the FTX collapse followed in quick succession, triggering severe market turbulence, a significant price drop, and a rapid depletion of momentum energy. It was not until the major positive news of BlackRock applying for a spot Bitcoin ETF was released that market expectations were reignited, and momentum energy began to gradually recover, marking the market's entry into phase C.
The logical evolution of this cycle has many similarities with the current Bitcoin market cycle. Before the trend peaks, momentum decay often manifests first, and if negative events occur subsequently, the price will plummet; if there are no significant events affecting the market, it tends to remain in a sideways oscillation. Players can analyze different cycle data in comparison to uncover patterns.
Summary: When Bitcoin shows a decline in momentum while the price rises against the trend, or when the price has limited decline but momentum rapidly diminishes, it serves as an important early warning signal from the market that should be given high attention by everyone.