Seeing Through The Boredom
The moment in which the markets reaches peak boredom is just before everything shifts
Gm everyone, and welcome back to another edition of Syko Therapy!
Quick note - I really appreciate you guys being part of Syko Therapy, and I really enjoy providing this content for you. I want to provide as much value as I can on this newsletter, so in case you missed it before, I will sending 2x newsletters per week from this week, with the second one covering different specific topics. Ok, back to it!
Another week of not too much happening price wise whilst the timeline reaches towards peak boredom and hopelessness. And it is no surprise when you consider the last few months. Overall now, we have been trading around the $60,000 level for 6 months. We had one decent rally that unfortunately ended up being a fakeout, and other than that, it has been never ending sideways chop. Since we hit $58,000, it has been 60 days trading between $58,000 and $66,000. That is just over a 10% trading range for about 2 months. Very very low volatility for such a traditionally volatile asset.
But during times like these we have to ensure that we remember what it actually means. It is a known fact that within investing, at peak pivot points, the majority lose. So we have to always consider that we are not following along with the majority. We have to remember that this kind of boring price action does not mean that we will get boring price action forever. The longer it goes on, the more bored people get and the more they check out. When in reality, the longer this goes on, the closer things are to becoming explosive again. These kinds of periods in the market where we consolidate for ages after massive amounts of liquidations and losses, are almost always periods where we solidify a new floor to eventually break higher from. We must be most interested and least bored at times like this because it is within these periods that we position ourselves for when the fun starts again.
Therefore today, I’m going to give us our usual market breakdown, but dive deeper into these periods of low volatility consolidation and take a look back into the past when we were similar environments, and what happened after. We will discuss the overall macro situation and I will attempt to cover when I think this chop comes to and end and what sort of price action we might expect in the short term, if things all go to plan.
Let’s crack on into it!
The Never Ending Chop
As mentioned in some previous editions, these periods in the market are designed to break you. First you get the red candles that hurt you, then you get the sideways boredom and hopelessness that creates, which eventually breaks you. It is the same situation every single time we get a macro bottom like this. And right now, Bitcoin has been doing a great job of that.
Since we hit $60,000 in Feb we are now at 180 days of trading mostly sideways, with the recent drop and chop from $58,000 hitting 60 days. By all accounts, this is brutal price action that at every single turn, is designed to break your spirit and your belief that things will never improve again. You only need to spend 10 minutes on Crypto X to see how effectively that has worked. However, people have short memories. Contrary to what most believe, they can’t remember or recognise that it is like this every single time there is macro low of this form.
Each major bear cycle and subsequent low we have ever had on Bitcoin has contained two periods of consolidation/chop, with the first period lasting between 147 days to 217 days, and then the second part between 49 days to 112 days.
Each time the sentiment has been the same across the board with frustration, anger, apathy and then hopelessness. And every single time just as the sentiment reaches a fever pitch, Bitcoin rallies aggressively. There has not been a single time that it has not worked out that way, and that is by design. You need to ensure you become conscious of is that fact. That you can take control of your own individual sentiment and realise that the more hopeless things feel, the closer things are to becoming exciting again. That you do not sink into the collective emotions of hopelessness with everyone else. Everyone else is reacting emotionally, and that is not how you win in this game. During these periods of time you need to be as conscious as possible of your own thoughts and feelings, and force yourself to understand this mindset.
The longest period that Bitcoin has ever consolidated after hitting HTF oversold was in 2022, and that was 203 days. And all everybody was doing during the end of that phase was predicting that $12k was coming next. It didn’t. But that is how every single bottom is formed, with the crowd cheering for lower. The unending drop and chop infects the minds of all market participants and they cannot remember anything other than that. They have been utterly brutalised and conditioned into only expecting more pain. Every rally has failed for so long, every headline has made no difference. And everyone collectively loses any level of belief they have because they cannot remember that markets do actually go up.
That is where I believe we are right now.
We are at 182 days since the Feb bottom and oversold conditions, and although I cannot say to you for sure that the bottom is in, the technical, on-chain and my overall instincts as an investor, are telling me that we are very close now. We have covered the fact that $60k is our major pivot low for a long time, and beyond a worst case scenario drop of $54,000, I do not see us pushing much below $60k any more.
Let’s now dive into the data on Bitcoins recent lack of volatility, and what has happened every single time in the past that Bitcoin has become this stable.
This is really great data and I have a free indicator which highlights these bottoming volatility periods for all paid subscribers.
Above is the indicator - I will go into more details below about what it is, how it works, and how to get it for free.