Flashback to early 2021 when many people expected to have a blowoff top for Bitcoin similar to 2017.
But then came a brutal 50% pullback.
Savage, savage market conditions and the expectations shifted towards a double top scenario like we had back in 2013.
But what we got instead was a rather lackluster double top, but kind of a double top nevertheless.
Let’s look at how the current market cycle is shaping up and if we can identify the likelihood of each scenario.
Let’s go back to the days long, long ago, a time when things were simpler before I was even paying attention to the markets and most of you probably weren’t either.
2013, what a year that must have been to carry your crypto bags or Bitcoin bags.
There wasn’t much crypto back then.
If you could manage without going insane, congratulations.
In January 2013, the 2013 bull run, Bitcoin price hovered around $13 mark.
It shot straight up in a line basically to more than $250 on April 10th, doing more than an 18x in just three months.
Then it suddenly crashed viciously, more than 80% in just two days, wicking down below $50.
You can’t even see the flash crash on this chart as it’s the weekly, but man, those were the days, guys.
Wild times back then as tough as we might think we are having lived through 2018 and the 2022 bear markets.
Hodling in 2013, those people were made of something different.
It was altogether a different experience back then.
Anyway, then for half a year, Bitcoin just danced around the hundred dollar mark before shooting up again for a second time, pulling another 10x, topping out close to $1,200.
This double bubble of 2013, as it became known, created almost a 100x for BTC in just a 12-month period.
Wow, those were the days, huh?
By the way, it was at the tail end of the second run-up that the term “hodl” was coined by a user on the Bitcoin Talk Forum.
He wrote his post as something of a drunken rant, and the deliberately misspelled title would go on to become the battlecry that we all know and love in the cryptocurrency markets.
He wrote it around the time that the price had already begun crashing again after the second run-up, setting the stage for a brutal, savage, disgusting bear market.
Back to the question we try to ask here: is such a double bubble scenario possible again?
I’m not talking about 100x, obviously, which is simply not in the cards at the current levels of Market, at least not for decades to come.
Okay, keep in mind that at the start of the 2013 Bull Run, Bitcoin had a market cap of only around a billion dollars.
Okay, now the question is: could we have a scenario where a first pump is followed by a few months of, let’s say, a cooling off period, brutal crash potentially, before a second pump actually comes in?
Monthly RSI for previous cycles
Well, to get an answer, let’s look at the monthly RSI for 2013 and later cycles.
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Now the RSI, let’s get back into this.
The RSI is the relative strength index.
It measures the magnitude of recent price changes and is a tool to analyze overbought or oversold market conditions.
At a very simple level, traditionally, the RSI is considered to be overbought when it’s trading above 70.
When we look at the 2013 run-up, you can clearly see two peaks.
Between those peaks in 2013, the monthly RSI sat below the value of 70.
Now, this didn’t happen in the 2017 bull market, where the RSI stayed in the 70 overbought zone for more than 12 months in a row, running with leaps and bounds to a clear single peak.
So, where does this put us with regards to the likelihood of a double top cycle this time around?
Well, as you can see, the early 2013 RSI shot up in a straight line to almost 100.
Currently, we’re seeing different behavior.
After reaching a 76 reading this spring, the monthly RSI corrected and is now retesting the 70 level.
This is more like the run-up of 2016-2017.
Based on this, noteworthy is that back then, the retest of the 70 RSI level came roughly 10 months prior to the top.
Interesting food for thought
Now, weekly charts for 2013 and 2017.
Let’s zoom in on a bit here and pull out the weekly charts.
In early 2013, there were 13 weeks in a row that closed higher and an exponential run-up.
Now, look at 2016-2017.
In 2016-2017, we don’t see a similar long stretch of crazy green weekly candles and an exponential uptrend.
Instead of a multi-month parabolic uptrend followed by a multi-month correction, the 2016-2017 run from October 2016 onwards is really just a pattern of multiple, roughly two months upwards price action followed by a correction of a few weeks or a month.
It’s really two steps forward, one step back, wasn’t it?
And finally, that brings us to the current cycle.
It’s a nice staircase climb, but no multi-week green exponential price action like in early 2013.
It looks a lot more like the 2016-2017 run.
But now, let’s look at a different metric.
Here’s a chart of the Relative Volatility Index (RVI).
Very high readings indicate that the market could be near a top, whether that is a single top or a double top, it’s up for debate.
Last month, while not crossing the 80 level, the RVI reached a point historically not possible outside of the final year of the bull run.
Whenever in previous cycles the RVI touched 80, the cycle has always been over for within a year.
So, judging by this indicator, like the RSI, you can make the case for the hypothesis that we are currently in an accelerated cycle.
In previous cycles, the top came roughly 500 days after the halving.
Translated to the current cycle, this would put us roughly in like September 2025 for a bull market top.
Not too bad, right?
But as mentioned, evidence from indicators like the RSI and the RVI point toward the cycle top being nearer.
In other words, price action has been so strong and so volatile already in the cycle that it is reminding us of previous years’ prior to the top.
Notice, by the way, that as with the RSI, also the toppy RVI level has reset recently.
So instead of jumping through the roof, things have actually calmed back down considerably.
Who knows, maybe from here, the volatility and the price are going to jump up again, creating a pattern of the RVI such as in 2017, bouncing off the yellow moving average for many, many months.
An alternative scenario, such as in 2021, is also possible.
In 2021, the RVI peaked in early 2021 and then kept dropping after that.
But the price made new highs in the fall of 2021.
Which brings us to a second double top scenario that is definitely worth considering.
Prior to the 2021 bull run, we had the built-in assumption that every bull market price peak was supposed to be a blowoff top.
Well, the 2021 cycle showed us that the price can basically just reach a new high and a calm, lackluster way and have a bit of a rounded top and just… okay, that’s of course still on the table here.
Alright, so final thoughts.
When looking at momentum and volatility indicators, the current cycle has some similarities with how previous cycles have looked roughly 10 months before they topped.
But will it be a double top like in 2013 or a straight run-up like 2016-2017 or something of a muted double top per se like we saw in 2021?
Well, price action currently looks a bit more like 2016-2017.
At the same time, we can’t rule out the hypothesis of a super cycle in which, of course, the price just keeps grinding upwards because that Bitcoin ETF inflow is just so strong.
We’re not going to have a 75% bear market correction because the maturation of Bitcoin as an asset and all the liquidity and money flowing in, the growing institutional adoption, all that kind of stuff.
There are many roads that lead to Rome, as you may want to say, or maybe many ways to climb Everest.
The market seems to have a bit of a habit of finding a new route to the top each time.
Heck, we might even see a triple top scenario.
Wouldn’t that screw everybody up?
Here’s the thing, just keep your eyes open.
Keep your eyes on the metrics.
Don’t stress too much about any of this stuff, okay?
You’ve got to enjoy the rodeo and make sure you’re good no matter which way the cookie crumbles because it is going to crumble at some point, okay?
And whether it’s an accelerated cycle or a double top or standard four-year cycle or a super cycle, whichever it’s going to be, it’s going to be one of those.
Whatever plays out, be ready, okay?
Because the market is full of surprises.