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, which, based on historical patterns, is probably about as low as it should go. This was a drop of about 24.5% from the all-time high. But this creates a conundrum. Although a 25% 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 but it could very well be a false sell signal.

Bitcoin (BTC)

Sell Signal

The Daily chart shows that in early February, BTC broke through the 50-Day moving average. And in Mid-February it broke through the 100-Day moving average. And then over the last week, BTC has tested the 200-day moving average three times and so far the 200-day moving average is holding support. So, is our BTC-ROC just “crying wolf” or do we have a really sell signal? Well, if the 200-day moving average is successfully breached and BTC falls below $73,794 it may be that “this time is different” and BTC has fallen under “Trad-Fi’s” spell.

Looking at the “Fear and Greed” Index, Crypto is currently well into the Fear zone at a very fearful 15.

Bullish Factors:

Markets don’t top in the Fear Zone, they top in the Greed Zone when everyone and their cousin are talking about how they are going to get rich on Bitcoin. And that hasn’t happened yet in this cycle. So that indicates that this is probably just an interim shakeout before climbing to new highs. It is always necessary to shake out the “weak-hands” before any market can begin its next wave up. It is also hard to fathom that with all the talk about governments and sovereign wealth funds planning to accumulate Crypto how it can’t go up from here. UNLESS, all that talk is actually the form that the “greed” took this cycle. If that is the case, it would have to be that it was just talk and nothing comes of it.

Another argument for the thesis that we haven’t seen the peak yet is the typical cycle timing, which should run through the 4th quarter of 2025, not the 1st quarter. So, we should have 6 to 9 months to go yet in this Bull run. It is possible that this could very well be the last buying opportunity below $100,000 but only time will tell.

Strategy (formerly MicroStrategy) Buys $2B in Bitcoin

Strategy has acquired 20,356 BTC for $2 billion at an average price of $97,514, bringing its total holdings to 499,096 BTC, now worth over $47 billion. The purchase was funded through a $2 billion zero-coupon convertible note offering, with an option to issue an additional $300 million in notes.

With this latest acquisition, Strategy now controls 2.3% of Bitcoin’s total supply, maintaining a cumulative average purchase price of $66,357 per BTC. This move reinforces its long-term bullish stance on Bitcoin as a key corporate treasury asset.

Rezolve AI Plans to Accumulate $1B Bitcoin

Rezolve is creating an AI driven payment platform allowing merchants to accept Bitcoin and Tether with instant fiat conversion and no merchant fees. Starting by accumulating $100,000 of Bitcoin they plan to accumulate $1 Billion Bitcoin.

El Salvador increased its BTC holdings to 6,088 BTC.
Metaplanet bought $13 million BTC, bringing its total to 2,225 BTC.
Oklahoma is one step closer to becoming the first U.S. state to invest in Bitcoin as public funds. The Strategic Bitcoin Reserve Act (HB 1203) cleared the House Government Oversight Committee with a 12-2 vote and now moves to the House floor. Utah and Arizona are moving forward with similar proposals.

Bearish Factors:

Three states rejected bills to create state BTC reserves including Montana, North Dakota, and Wyoming.

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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