Above the trend, between cycles: Sober thinking on Bitcoin's "pullback moment"

This morning, the price of Bitcoin fluctuated again, falling below the $77,000 mark and currently fluctuating around $80,000. The market seems to have entered a "correction moment" again. Facing the ups and downs of prices, I believe many friends are thinking about the same question:

Should we "get out of the car and avoid risks" or "buy in at a low point" now?

This question seems simple, but it is actually complicated. Especially in the cryptocurrency market, short-term fluctuations are drastic, and various information noises are intertwined, which can easily make people lose their way. When we are in the "correction moment", we need to think calmly, take our eyes off the current price fluctuations, and look at it in the larger "trend" and "cycle" framework.

Indeed, whether the Bitcoin "car" can continue to move forward is a common question for all "passengers". But as we will discuss today, the key clues to answering this question are hidden "above the trend and between the cycles".

Today, I will use the framework of "trends and cycles" to help you clear the fog and think about the "pullback moment" of Bitcoin. First, let's start by understanding the basic concepts of "trends" and "cycles".

A picture is worth a thousand words. The following picture can give us a quick intuitive understanding of "trend" and "cycle". Please note that the vertical axis of the following picture is a logarithmic coordinate, and the height from 0 to 1 is equal to the height from 1 to 10, which is to see the early price changes clearly.

Trend: The red arrow pointing upwards represents the long-term upward trend of Bitcoin prices. Will this trend continue? This is the question we want to answer today, and we will talk about it in detail later. Several important long-term indicators will give you confidence in the future of Bitcoin.

Cycle: Four blocks of different colors. Each represents a different stage of a cycle. The stage division of the first three cycles is relatively clear, but the division of the fourth stage starting in 2023 is not only not completed, but also very controversial. This is also what I need to explain to you today. An important reverse indicator should make it easy for you to make the decision to "get on board".

Through the above charts, I believe you should have a more intuitive understanding of trends and cycles. Now let’s take a closer look at what trends are and what cycles are.

1. What are trends and cycles?

To understand any market, we should first distinguish between the two key concepts of "trend" and "cycle", and the crypto market is no exception.

Trend: Trend is the long-term direction of the development of things and a great and lasting force. It represents the most essential and core direction of things, just like a surging river, which is difficult to reverse once formed.

Cycle: A cycle is a short-term fluctuation in the development process of things, and is a rhythmic change that swings up and down around a trend line.

Simply put, the cycle is within the trend. However, simple inclusion is not enough to express the complex relationship between them. If the "trend" is compared to the trunk of a tree, the "cycle" is like the annual rings on the trunk.

Just like the trunk of a tree determines how tall it will eventually grow and where it will grow. However, the growth of trees is not always smooth sailing. It is affected by various factors such as seasons, climate, soil fertility, etc. These factors will leave "annual rings" on the trunk.

An analogy can be applied to the Bitcoin market.

The long-term trend of Bitcoin is jointly shaped by macro factors such as technological innovation, global adoption, institutional entry, and policy evolution, which determine the long-term upward or downward direction of Bitcoin prices. Once this trend is formed, it is like a river that never stops flowing. Even if the road ahead is tortuous, it is difficult to change its grand direction of finally flowing into the sea.

The short-term cycle of Bitcoin is affected by short-term factors such as market sentiment, macroeconomics, emergencies, and capital flows. It is like the rolling waves in the river. Although it is magnificent, it is ultimately a short-term phenomenon in the long river of trends. In the Bitcoin market, the alternation of bull and bear markets, and the rise and fall of short-term prices, all belong to the category of cycles.

However, many times, we cannot distinguish between trends and cycles. Why is this?

2. Why is it difficult to distinguish between “trends and cycles”?

The reasons are simple, yet deeply rooted in human nature and the complexity of the marketplace.

The human brain is naturally more sensitive to "change", especially short-term, drastic changes. Imagine that you are standing in a forest. The first thing that attracts your attention is the leaves swaying in the wind and the squirrels jumping on the branches, rather than the towering century-old tree. Similarly, in the "digital forest" of cryptocurrency, our brains are more likely to be attracted by daily price fluctuations and confused by short-term "waves", while ignoring the long-term "rivers" behind them - long-term trends.

Especially in the Bitcoin market, the volatility is so violent that it can be called a "storm" in the "digital ocean". It is common for prices to soar or plummet by 10% or even 20% in a day. Under such violent fluctuations, investors' brains are like small boats in the stormy sea, constantly being hit by the huge waves in front of them. How can they have the leisure to take care of the vast ocean currents?

What's more, human nature is naturally averse to loss, seeking profit and avoiding harm. When prices fall and accounts shrink, the instinct of "loss aversion" will make us extremely anxious, and we just want to "stop loss" and leave the market as soon as possible, so how can we care about the "long-term trend"? When prices soar, the desire of "greed" will drive us to enter the market because of FOMO (Fear of Missing Out), for fear of missing the opportunity to "get rich quickly", and we will not think calmly. Is this the power of the trend, or just the pulse of the cycle?

What’s even more bizarre is that the cyclical fluctuations in the Bitcoin market are usually extremely deceptive. They often “change their faces” and disguise themselves as “trend reversals”, making it difficult to distinguish between the real and the fake and to see the truth behind them.

To make matters more complicated, the Bitcoin market is full of various "noise" information. These "noises" are like "fog", interfering with our judgment and making it difficult for us to capture the real "signals" - guidance for long-term trends.

What’s worse is that a lot of “noise” information is usually artificially created. It is a “smoke bomb” deliberately released by market “dealers” or “institutions” to confuse the public and mislead retail investors, so as to achieve their ulterior motives. For example, when the market falls, they will spread all kinds of FUD (Fear, Uncertainty, Doubt) information to create panic and induce retail investors to sell at a low price; when the market rises, they will issue all kinds of optimistic news to create a pleasant atmosphere and attract retail investors to buy at high prices.

Therefore, it is understandable that sometimes we cannot distinguish whether the current decline is a "cyclical correction" or a "trend reversal."

So, what is the current situation of Bitcoin?

Periodic callbacks.

In fact, this answer hides an important premise - the general upward trend of Bitcoin has not changed. Is this really the case? This may be the biggest question mark in your mind. Therefore, we should first figure out this question. Because only when you first figure out where a "ship" is heading, you need to decide whether to get on the "ship".

3. Why hasn’t the upward trend of Bitcoin changed?

The answer lies in those grand, enduring forces, the cornerstones that shape Bitcoin’s long-term trend. Even in the fog of short-term market corrections, these cornerstones remain as solid as a rock, shining brightly in the direction of the trend.

3.1 Global adoption rate: 96% “no man’s land” indicates a vast space for growth

By 2025, only 4% of the world's population will hold Bitcoin.

This data may seem disappointing at first glance, but from another perspective, it contains incredible growth potential!

Imagine a huge market with a population of 10 billion, of which only 4% has been developed so far, and there is still 96% of "no man's land" waiting for us to explore and cultivate. Isn't this an exciting "blue ocean" market?

River's research report also confirms this: Bitcoin has only achieved less than 4% of its maximum adoption potential. This means that Bitcoin's global popularity is still in its infancy, with a long way to go and extremely broad room for growth.

It is particularly noteworthy that developing countries and regions will be the main force in the growth of Bitcoin adoption in the future. The report shows that North America is currently the region with the highest Bitcoin adoption rate, while Africa's adoption rate is only 1.6%. This just shows that Bitcoin still has huge room for popularization in economically underdeveloped regions.

So what does this global adoption rate of just over 3% actually mean? River's report gives an analogy, see the figure below.

Such a low adoption rate is equivalent to the Internet in 1990, online banking in 1996, and social media in 2005. In other words, this is an era full of opportunities. Even if you haven't boarded yet, it's not too late. Taobao is not the first to do e-commerce, Google is not the first to do search, and Naife is not the first to do online video.

Everything is just beginning. This 96% "no man's land" will be the most solid "demographic dividend" for Bitcoin's long-term upward trend!

3.2 Three pillars: institutional entry + clear supervision + national reserves

Bitcoin, which was once "sneered at" by traditional financial institutions, has now become a "hot commodity" that they are scrambling to pursue.

Standard Chartered Bank predicts that the price of Bitcoin will reach $500,000 during Trump's term, and clearly points out that "institutional adoption growth" is one of the key driving factors. Geoffrey Kendrick, head of digital asset research at Standard Chartered Bank, believes that institutional participation will not only reduce the volatility of the crypto market, but also increase the security of the market. In addition, Standard Chartered is also the only institution that has accurately predicted the current bottom of Bitcoin - 69,000 to 76,500.

Standard Chartered believes that another driving factor is the establishment of a clearer regulatory framework in the United States.

The Trump administration has not only established a "strategic bitcoin reserve", but is also actively promoting stablecoin legislation. U.S. Representative Bryan Steil has publicly stated that the United States has huge legislative opportunities in blockchain technology, Web3 and cryptocurrency. Steil currently serves as the chairman of the U.S. House of Representatives Digital Assets, Fintech and Artificial Intelligence Subcommittee.

CoinShares' research report also pointed out that establishing a strategic Bitcoin reserve in the United States will have a more profound long-term impact on Bitcoin adoption than the launch of ETFs. The current market seriously underestimates the value of the United States' strategic Bitcoin reserve, and is more trapped by short-term liquidity. For a more detailed interpretation, I recommend you to read "Digital Fort Knox: The White House's Conspiracy to Lock Up 190,000 Bitcoins".

In Europe, banks such as DekaBank have begun to support cryptocurrency transactions, and Boerse Stuttgart Digital is also actively promoting institutional applications of cryptocurrency. All this indicates that institutional funds are pouring into the Bitcoin market at an accelerated pace, and traditional financial giants are "running into the market."

As regulatory policies become clearer, the share of Bitcoin held by institutions and countries will become larger and larger, becoming the dominant force driving the long-term rise in Bitcoin prices.

3.3 Macroeconomic situation improves: PMI and M2 point to a "positive reversal"

Although in the short term, the Trump administration’s tariff policy and the strengthening of the US dollar index have brought certain “headwinds” to the Bitcoin market. However, from a more macroeconomic and policy perspective, Bitcoin’s long-term upward trend is still strongly supported.

The U.S. manufacturing PMI has entered expansion mode (greater than 50) for two consecutive months, which is seen as a signal of a "positive reversal of the business cycle." Raoul Pal, founder of Real Vision, pointed out that the PMI is about one month ahead of the economy, and it is not just ahead of the economy, it is ahead of all assets. He believes that with the upward trend of the business cycle, Bitcoin is expected to peak at the end of 2025 or even early 2026.

Research from S&P Global Market Intelligence supports Pal’s view, as shown in the figure below. You will find that when the PMI on the right is greater than 50, GDP will grow to varying degrees. The study believes that PMI data predicts “every turning point in earnings over the past 14 years.”

Another indicator worth watching, the global M2 money supply, has also seen a “sharp rise.” Research by Real Vision shows that Bitcoin’s price typically reflects changes in global M2 in about 10 weeks.

Analyst Colin Talks Crypto even used data analysis to accurately calculate the "46-day and 72-day lags" in the impact of global M2 changes on Bitcoin prices. Lyn Alden also pointed out that "Bitcoin moves in the same direction as global liquidity 83% of the time during any given 12-month period, making it a powerful barometer of liquidity conditions."

This means that the improvement in global macro liquidity will provide a strong "boost" for the rise in Bitcoin prices.

3.4 Summary: Three cornerstones of Bitcoin’s long-term trend

Bitcoin's long-term upward trend remains unchanged, and its core support comes from three irreversible macro forces:

96% blue ocean market: Currently, there are only 4% of Bitcoin holders in the world, and the adoption rate in developing countries is less than 2%. Its penetration rate is equivalent to that of the Internet in the 1990s, and its growth potential far exceeds short-term market fluctuations.

Institutional and national strategic entry: Standard Chartered Bank predicts that Bitcoin may reach $500,000 during Trump's term. The United States is establishing a "strategic Bitcoin reserve" and accelerating stablecoin legislation. European banks such as DekaBank have opened cryptocurrency transactions, forming a triple push of "institutions + supervision + sovereign reserves."

Macro cycle resonance: The continuous expansion of the US PMI indicates a reversal of the business cycle. The global M2 growth rate has a 46-72 day lag correlation with the Bitcoin price. The loose liquidity and Bitcoin's "digital gold" attributes form a long-term synergy.

Therefore, the short-term 77,000 pullback is just a cyclical wave, and the trend is still surging forward. So, has the price of 77,000 hit the bottom? Is now a good time to enter the market?

In fact, if you agree with my argument about trends above, the answer is self-evident. Although you may not be able to buy at the lowest point, you will not buy at the highest point either. The only thing you need to control is your desire and don't add too much leverage.

Conclusion: Be friends with time and dance with trends

History doesn’t repeat itself, but it always rhymes. When gold flowed from the Americas to Europe, it created the myth of wealth in the Age of Exploration; when the Internet moved from the laboratory to thousands of households, it reshaped the way human civilization connects. Today, we are standing at the forefront of the digital asset revolution, witnessing the epic leap of Bitcoin from code to a global value carrier.

When 96% of the world's population does not yet hold Bitcoin, when sovereign funds begin to include crypto assets in their balance sheets, and when blockchain technology becomes a new battlefield for great power games - this speeding "digital ark" has just sailed out of the dock where it was built.

The secret to dancing with the trend is not to predict the shape of the waves, but to understand the rhythm of the tide. Those investors who held on to Amazon when the Internet bubble burst, and those visionaries who invested heavily in Apple in the early days of mobile Internet, all knew a truth: the trend is never a smooth straight line, but an upward spiral composed of countless periodic fluctuations. Just as the fluctuation of $77,000 at this moment is just a short chord in the symphony of crypto civilization, the main melody has always been rising towards the high ground of trust built by hash computing power.

A true dancer never needs a spotlight to illuminate the entire road. When 96% of the audience is still watching from the sidelines, when sovereign funds begin to adjust their dance rhythm, smart people have already marked their own notes on the blockchain score - they may step on the wrong beat, or stumble for a short time, but as long as they always stand on the crustal movement belt of the technological revolution, they will eventually witness the reassembly of the financial continental shelf.

The trend is the sea, the cycle is the boat, the fool calculates the height of the waves, the wise calibrates the angle of the sail. The trend determines the overall direction of the market, and the fluctuation of the cycle is a short-term phenomenon that rises and falls along the trend. When the dusk of the legal currency system meets the dawn of the crypto economy, instead of chasing shadows in the K-line maze, it is better to jump into the torrent of digital civilization and board the ark held up by the tide of the times.

Every pullback at this moment is a ticket reserved by history for those who are sober.