Bitcoin: Inflection Point

“Be fearful when others are greedy, and greedy when others are fearful.” —Warren Buffett

[two minute read]

Introduction

In my November article, I discussed technical weakness in the Bitcoin chart.

At the time, Bitcoin was trading at $88k. I noted it was deeply oversold, and that I was looking for a bounce back towards the psychologically significant $100k level.

Since that time, Bitcoin recovered to a local high of $98k before losing momentum. It’s now sitting at a key inflection point.

The Chart

I’ve traded this market for nearly 13 years, most of Bitcoin’s existence. Over that time, I’ve observed that Bitcoin reliably follows classical charting patterns.

At present, the chart has formed a potentially significant and reliable topping pattern. The pattern closely resembles the technical breakdown in May of 2022 that led to a 55% drawdown:

As I type, Bitcoin is hanging on by a thread at $78k. I see two potential scenarios from here:

1. Base / Expected Case: Topping pattern confirmed with a price target of $40k, 50% below the current level.

2. Optimistic Case: Bitcoin finds support near the April ‘25 lows of $74k, invalidates the top, and reverses higher.

Positioning

If a breakdown is confirmed, I’ll start adding to my position around $63k (50% below the all time high). I’ll continue to purchase through the bear market, preserving my largest purchases for the $40k target—if we are lucky to get such an attractive entry.

If Bitcoin can stabilize around the current level, long term holders are well positioned to benefit from continuation of the multi-year uptrend.

Conclusion

There’s no change to my long term thesis for Bitcoin. Recent developments have strengthened the investment case:

1. Persistent and widening fiscal deficits

2. Concerns about the independence of the federal reserve

3. Elevated geopolitical risks

4. More attractive entry prices

The best opportunities rarely feel comfortable when they arrive.