Timing the Crypto Market Using our Rate of Change system

Timing the Crypto Market

Using our ROC (Rate of Change) system to look at the two biggest cryptocurrencies, i.e., Bitcoin and Ethereum gives us a unique insight to these Crypto Currencies. Our charts are now using the weekly prices so we can get a bit more precise timing.

So, let’s look at Bitcoin first. Bitcoin is EXTREMELY volatile, so the first thing we had to do to adapt it to the ROC analysis was to smooth out some of the volatility by using averages. Also, because Bitcoin has increased so rapidly since its inception we are plotting it on a “Logrithmic” scale. That means that the distance between every horizontal line is 10x bigger than the previous one. If we didn’t do this the early line would look flat in the beginning and the last part of the chart would shoot straight up. By using the logarithmic scale we can see much more detail in the early chart.

We averaged the ROC index to smooth out the bumps so it wasn’t crossing its red moving average lines 100 times. What we came up with was nice distinct crossings and a nice cyclical pattern. BTC is known for its cyclical nature due to the intrinsic code that created it. It is also to a great extent, outside the influence of government manipulations and this results in a much cleaner pattern. Basically, Bitcoin has a 4-year cycle, with three years up and one year down. Despite Bitcoin’s massive drops, had you bought at any point during BTC’s history (even intermediate peaks) and held for 4 years, you would have made a profit.

Typically, BTC has enjoyed double-digit upsides in a February following Post-Halving years.

February:
• 2013 (+61%)
• 2017 (+23%)
• 2021 (+36%)

But 2025 didn’t follow that pattern. On February 1st, BTC was $97,600, and within the first week, it had peaked at $102,390, but on February 28th it made a low of $84,116 before closing at $86,382. So, rather than the expected double-digit gain it actually lost $11,218 or 11.49%. Some commentators are suggesting that this signifies that Bitcoin has made its cyclical top and is preparing for its typical 50% to 75% correction. But, historically BTC never has corrected below its previous pre-rise high.

As we can see from the above weekly chart, the previous peak in March 2024 was at $73,794 (number 1). The weekly low in February 2025 (number 2) was at $78,197, and in the week of March 11^th it made a slightly lower low at $76,600 which, based on historical patterns, is probably about as low as it should go. This was a drop of almost exactly 30% from the all-time high. But this creates a conundrum. Although a 30% drop is a significant drop in traditional finance (Trad-Fi), it is nothing to Crypto. So, either the creation of the Bitcoin ETF has converted BTC into a traditional investment with typical highs and lows OR Bitcoin is just taking a temporary break in its upward trajectory, and it still has a ways to go up before returning to the $75,000 level (when that drop will be a 50% or 75% fall).

Interestingly, based on this drastic drop, our BTC-ROC chart issued a sell signal in February. So, although BTC is down this sell signal could very well be a false sell or an accumulation opportunity. signal.

Bitcoin (BTC)

Sell Signal

It is possible that the ROC index is bottoming and getting ready to issue another buy signal.

BTC vs. Global M2

Some analysts like @ColinTCrypto believe that Bitcoin is correlated to the global M2 money supply, i.e., when the money supply rises Bitcoin rises a little while later. The question is how long the lag is. Estimates range from 70 to 108 days. The following chart shows Global M2 (yellow) shifted right 108 days (so BTC is lagging M2).

Based on the M2 Money Supply predictor shifted 108 days we see a bottom on April 6th (point 1) with more bottoming through the end of April (point 2) and from there, M2 shows a strong rise and so possibly also Bitcoin.

This daily chart also shows Bitcoin is well below its 50-day, and 100-day, moving averages. Bitcoin is also flirting with its 200-day moving average. Plus the 50-day has crossed below the 100-day and is approaching the 200-day moving average. This indicates that BTC has been in a downtrend for a while, but doesn’t mean that this can’t simply be a consolidation like we saw last year. At that time the Global M2 was relatively flat from April through October. And the 50-day average crossed below the 200-day in August and stayed there until the end of October.

Fear & Greed Index

A month ago, the “Bitcoin Fear and Greed” Index, was at a very fearful 15. This month Fear has subsided and people are a bit more optimistic at 44.

Fear & Greed April 1 2025 — Source: alternative.me

Ethereum (ETH)

Sell Signal

Bitcoin itself opened the floodgates for Crypto and decentralized finance (defi), but BTC functions almost entirely as an alternative currency. Ethereum has built on that foundation and is much more functional. Rather than being strictly a currency, Ethereum allows applications to be built upon its code to enable almost anything you can imagine to be done in a decentralized fashion. This makes ETH even more useful than BTC.

The one difference is that there is a limited supply of BTC built into the algorithm, but the same limitation is not built into ETH. But ETH does contain supply-limiting factors, which include “burning ETH” when it is used to provide services. So, when demand for ETH is high, the price rises. However, some recent changes to ETH to enable layer 2 have temporarily created some lower profitability for ETH.

Looked at simplistically, ETH is useful, and BTC is scarce. Recently, the FTC has determined that both BTC and ETH are “Commodities,” so we can think of them like the electronic versions of Silver vs. Gold, or perhaps even better, Copper vs. Gold. Just as Copper is necessary for all sorts of building, and Gold is a store of wealth, ETH is becoming necessary for electronic transactions, and BTC can be used as a store of wealth.

On the ETH ROC chart, we see the same pattern as on the BTC ROC chart. First, it generated a sell signal in June, but it took until December 2024 to generate a buy signal, and then it generated a Sell signal along with BTC in February 2025. The question remains is the current level a good buying opportunity for long-term accumulation?

Crypto Stocks

There are several ways to invest in various Cryptos via the stock market. Recently, there have been Exchange Traded Funds (ETFs) created for Bitcoin. And subsequently, an Ethereum ETF was created, giving both cryptos access to increased liquidity.

Prior to ETF approval, a company called Grayscale created “Trusts” that owned a fixed amount of various cryptos and then sold shares of the Trust. Unfortunately, those shares often cost more than the underlying value of the assets the Trust held, often many multiples of the cost. For instance, at one point, Grayscale Solana Trust (GSOL) had a Net Asset Value (NAV) of $50.56/share. But it was selling for a whopping $425.00/share. That is absolutely insane. That would be like me walking up to a guy on the street and saying I have this beautiful $50 bill and I will let you have it for only $425. No thanks!!!

But occasionally, it works the other way around when market sentiment turns negative. As of 7/7/2024, there were three Grayscale funds that were selling at a discount. They were Grayscale Ethereum Trust (ETHE), Grayscale Ethereum Classic Trust (ETCG), and Grayscale Digital Large Cap Trust (GDLC). You can view all the current Grayscale NAVs and current prices here.

Another way to invest in Crypto besides an ETF or a Trust is through a company that holds a significant portion of the assets on its balance sheet in Crypto. The biggest example is Microstrategy, which we discussed at length in our article What Makes Microstrategy Special.

Coinbase is the largest Crypto Trading platform in the U.S. It works like a brokerage account and offers trading of a large selection of cryptos. You can find more information about it here. (Follow our link for signup bonuses and incentives.)

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