As a veteran crypto analyst, Bob Loukas has his eyes firmly fixed on Bitcoin's price action, and he believes we're entering the final stage of its four-year cycle. But here's the catch: Loukas warns that Bitcoin might not have hit rock bottom just yet, and we could see another leg down before the cycle truly bottoms out.
In his latest analysis, Loukas highlights Bitcoin's recent retest of its February lows as a critical moment in the cycle. He argues that the rebound in May, which saw Bitcoin climb back towards the $80,000 range, was a countertrend move within a broader bear market structure. This is a crucial point, as it suggests that the market is not yet ready to break free from its bearish grip.
"What many people don't realize is that cycles rarely end early. There's almost always a retest and at least one lower low. It's a natural part of the market's behavior," Loukas explains.
Loukas's analysis is based on Bitcoin's historical cycle behavior, and he treats the 10-month moving average as a key indicator. When Bitcoin broke below this average, he saw it as confirmation that the previous cycle had ended. The subsequent decline into February, followed by the May rebound, fits neatly into this cycle pattern.
Despite the potential for further downside, Loukas has taken a bold step and begun reaccumulating Bitcoin. His model portfolio has made its first buy in over three years, adding 10 BTC at the $65,000 level. This move is not a declaration of a bottom but rather a strategic play to start building a position at more favorable long-term levels.
The key level to watch, according to Loukas, is $53,000. If Bitcoin reaches this area, his model portfolio will use its remaining cash to return to a full Bitcoin allocation. This level is significant because it corresponds to the midpoint of the four-year cycle structure. While it may seem extreme, Loukas argues that in Bitcoin's volatile world, a 15% drop from current levels is not unprecedented, especially when compared to the 77% decline seen in the 2021-2022 cycle.
Loukas acknowledges that a 65% to 70% drawdown is not out of the question, but he believes it's important to manage expectations. A move to $53,000 would represent a roughly 57% decline from the cycle high, which is within the realm of possibility given Bitcoin's historical volatility.
However, Loukas does leave room for a more optimistic scenario. He suggests that the current retest could lead to a double bottom, forming a base in late summer and potentially pushing Bitcoin above the May highs. While he assigns this outcome a relatively low probability of around 25%, it's still a possibility worth considering.
His base case, however, remains that Bitcoin's cycle low will form closer to the traditional window of October or November, with December also a possibility. Loukas points out that Bitcoin is currently in month 43 of the cycle, entering the zone where four-year lows typically emerge around the 47- to 48-month mark.
"The window is open, and the four-year cycle is coming to an end. But it's important to remember that this is a natural part of the cycle, and we've seen this before," Loukas reflects.
In the near term, Loukas expects Bitcoin to bounce back from its oversold condition, potentially towards the 10-week moving average around $73,000, before resuming its downward trajectory. He also believes that Bitcoin is unlikely to trade back above the May high near $83,000 to $85,000 in the next few months, unless a new cycle has already begun.
As Bitcoin trades at $62,247 at the time of writing, the market's next moves will be crucial in determining whether Loukas's analysis holds true. Will Bitcoin continue its descent towards the $53,000 level, or will it surprise us with a more bullish outcome? Only time will tell, but Loukas's insights provide a fascinating perspective on the potential path ahead.
