The Path to the Bottom
Decoding the Bear Market Rally: KPI Update & My Current Portfolio Allocation
Aloha friends,
We have seen some positive momentum over the past few days. As mentioned previously, this was an expected counter-reaction of the market from an oversold territory. However, this is a standard movement that we have seen in previous cycles. Today, I want to look at what we might expect over the coming months, review the KPI table I monitor, and provide an update on my personal positioning (It is getting serious).
Disclaimer: Views expressed are the author’s personal views and should not be relied upon as investment advice.
Cycle Awareness
At the time of writing, Bitcoin is trading around $68k, down 46% from its ATH set on October 6, 2025 (153 days ago).
To put this into perspective:
2021 Cycle: Bitcoin was down 43% at this stage.
2017 Cycle: Bitcoin was down 59% at this stage.
Having been in this bear market for 5 months, Bitcoin is very much aligned with what we have seen in the past. While we started with a very fast pace, we seem to have fallen back into the familiar rhythms of previous cycles.
We have seen strong run-ups within bear markets: The so called bull-traps. I have seen many traders chasing these retracement rallies, but it is cruical to track the upside limits. Many people still refuse to think this is a bear market, keep their longs and will get “rekt” or forced to sit on losses for a long time.
Based on current patterns, we may have finished the second of three expected bear market rallies. However, the structure remains bearish. As I noted in my previous letter, I expected a reclaim in the $74k–$80k range. The fact that we topped out perfectly at $74k suggests to me that the uptrend probably has concluded.
Where do we go from now?
Looking back at 2022, when Bitcoin first crossed the 111 WMA (red line), it took six weeks to plunge below the 200 WMA (orange line). That was followed by an almost 150-day sideways phase before the final capitulation crash (FTX). If we extrapolate that six-week timeframe (yellow frame) to our current setup, the next 2–3 weeks will be critical. We need to observe if history repeats and we fail to hold the $60k range, dropping below $58.500. Projecting the 2022 timeline forward, we could potentially see the cycle bottom around late August or early September this year.
The Dashboard KPIs
As mentioned in the previous letter, I am looking at the following table (“Today’s” numbers are from the time of writing), compare the current situation with past movements and try to make a decision based on this data. Yes, last time I had further data points - which I am looking at as a support - however, these here are my main focus:
As you see, compared to previous cycle lows, there is still space for a further decrease. The 12-Month RSI has been lower some weeks ago and in the 2018 range, which is why I put it orange. All the others are still not close the previous cycle lows.
What does this mean?
I am observing how the market plays out and how these numbers evolve. If I see major changes, I get myself ready to deploy.
Final Thoughts
If I see a drop below the 200 WMA, I get a portion of my Cash ready to deploy. Not everything, but this will be on a long run, a very good entry point.
There is always the tension between deploying capital too early, not deploying enough in the bottom area and trying to get the right entry. I always mention to remain patient, but I mean this if you have some allocation already. If you are totally out of the market, the above tension kicks probably more. That’s why this time, you will find my %-allocation below, to give some more guidance here.
Portfolio Management
I personally used this recent run-up into the expected supply zone to scale into my short positions (with disciplined risk management, of course). This may not be what everyone wants to hear, but for me, this is not the right time to buy big. If the relief rally continues, I will act accordingly, but I currently see no reason to believe this bear market is over.
Therefore, patience remains king (I must sound like a broken disc at this stage).
How are my positions right now (excluding my shorts)?
BTC: 15%
ETH + SOL: 5%
CASH: 80%
I am watching other projects, but I do not believe the moment is right for Altcoins yet.
That’s it for today - I hope I could deliver some valuable insights.
Maloha
Stay Humble. Stay Curious. Enjoy the Journey.
Disclaimer: Views expressed are the author’s personal views and should not be relied upon as investment advice.