Market Analysis: Cycle Indicators and Rotation Thesis

Hey DeFi fam, sharing some key insights from our live call earlier today that could impact our strategies moving forward.

🎯 The Cycle End Signal to Watch

The most reliable indicator for timing cycle ends? Weekly closes on BTC below the 50-week moving average. Historically, when we see a couple of consecutive weekly closes below this level, it's been a consistent signal that the cycle is over. We're nowhere near that yet.

🚀 Why This Euphoria Has Legs

With the current administration's plans to expand credit impulse in the US, we're likely looking at several more months of real euphoria before any major correction. When that correction comes, expect it from much higher levels than where we are today.

💡 The MSTR Debate

While MicroStrategy (MSTR) gets a lot of attention as a Bitcoin proxy, consider this perspective:

Spot holdings offer more direct exposure without the complexity
Digital asset treasury companies represent an unproven model
For those already comfortable with buying, lending, and hedging crypto directly, MSTR might be unnecessarily complicated

As one community member put it: "Why get cute with MSTR when you already know how to handle the underlying assets?"

🏆 The Gold-to-Bitcoin Rotation Thesis

Here's something fascinating to monitor: Liquidity has been flowing into gold rather than Bitcoin recently.

There's historically been a lagging correlation where:

Gold rips first
Gold consolidates gains
Bitcoin starts moving upward (potential rotation from gold → BTC)

How to track this: Watch Bitcoin priced in gold terms. If BTC breaks above 36 in gold terms, it would invalidate the current head and shoulders pattern and confirm the rotation is happening.

📈 Treasury Yields: The Hidden Variable

Remember last September when Powell cut rates by 50 basis points? Long-end yields pushed higher, driving the dollar up - but Bitcoin rallied anyway.

We're seeing similar dynamics now after the recent 25 basis point cut. This could create near-term headwinds, but history suggests Bitcoin can power through.

🧮 Level Up Your Strategy: Expected Value Framework

Instead of just thinking about probability or expected moves, consider implementing an expected value (EV) framework for your positions:

Calculate probability of different scenarios
Estimate the expected move in each scenario
Determine the expected value of your positions

This mathematical approach helps remove emotion from decision-making and provides a clearer framework for position sizing.

🎬 Action Items

Monitor the 50-week MA - We're safe while above it
Track BTC/Gold ratio - Watch for breakout above 36
Keep an eye on long-end Treasury yields - Short-term headwind potential
Consider spot over derivatives if you're comfortable with direct exposure
Implement EV calculations in your portfolio management

The cycle isn't over - we're likely just getting to the good part. Position accordingly and remember: the rotation sequence typically flows from Gold → BTC → ETH → SOL/Large Caps → Alt Season → back to BTC.

What's your take on the gold rotation thesis? Anyone else tracking these correlations?

Drop your thoughts below! 👇

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