Unlocking Bitcoin’s Next Cycle Bottom: Crucial $60K-$80K Support Predicted
For many investors, the unpredictable nature of the cryptocurrency market can be daunting. However, understanding the Bitcoin cycle bottom is essential for long-term strategy. Diaman Partners offers a compelling analysis, projecting Bitcoin’s next cycle low between $60,000 and $80,000 by 2026. This forecast leverages advanced financial modeling, providing valuable insights for navigating future market fluctuations.
Understanding Bitcoin’s Cyclical Nature and Support Levels
Bitcoin’s price movements often follow distinct four-year cycles. Seasoned investors, particularly those who have endured multiple crypto winters, recognize this pattern. Historically, Bitcoin maintained prices above its prior cycle highs. This trend held true in 2011, 2014, and 2018. However, 2022 presented a significant deviation. The collapse of FTX pushed Bitcoin below the crucial $20,000 threshold, reaching $15,000. This event marked a notable exception to previous cycle behaviors. Many now speculate on the maximum value Bitcoin will achieve in this current cycle, likely concluding in late October 2025. Simultaneously, Diaman Partners’ research department has focused on estimating the minimum value for 2026. This comes as a potential new crypto winter could materialize.
Some experts suggest that Bitcoin’s cyclical phase might be ending. They argue for a new era of more stable growth. This thesis has strong backing. For instance, American ETFs are attracting substantial capital. Institutional demand continues to rise. More treasury companies and pension funds can now invest in Bitcoin, especially in the United States. Nevertheless, a skeptical engineering perspective suggests that Bitcoin cycles will persist. They may continue for years, albeit with reduced intensity. From a risk management standpoint, therefore, the possibility of another crypto winter cannot be ignored.
The 200-Week Moving Average as a Key Indicator
The robust 200-week moving average model is a concept widely trusted, originating from Adam Back. It frequently provides strong Bitcoin support levels during price declines. The chart below illustrates this historical reliability.
The chart clearly shows that the 200-week moving average has offered excellent support for price drops. The major exception was in 2022. During that period, prices fell more than anticipated due to the FTX collapse. The red line on the same chart indicates the percentage difference between Bitcoin’s price and the average. This suggests the 200-week average acts as a resistance point, representing a maximum expected drawdown during a crypto winter. Some observers might note that the average continues to grow as prices move from high to low. This dynamic could potentially overestimate the possible loss. Indeed, with the average currently above $51,000, a 60% loss might seem overestimated today. This observation holds true.
Forecasting with Monte Carlo Simulations
To accurately estimate where the 200-week average will stand by late 2026, Diaman Partners employed Monte Carlo simulations. This timeframe marks the estimated end of a potential crypto winter, assuming it aligns with the amplitude of previous cycles. These simulations help estimate two critical factors. First, they gauge the probability of a historical series reaching a certain price. Second, they determine a range of values for the 200-week average. This range corresponds to the moment when, based on past Bitcoin cycles, the price is most likely to find support, using the average as resistance.
For those familiar with Monte Carlo simulations, Diaman Partners utilized a specific model. It features decreasing returns and volatility. This differs from classic static mean and variance models. The model follows power law functions on annualized returns over 200-week rolling windows for consistency. This methodological precaution is vital due to Bitcoin’s technical structure. Its returns and volatility have significantly decreased over time. This trend reinforces the belief that Bitcoin may no longer experience exponential growth, at least when based on average past returns.
This graph clearly illustrates that Bitcoin returns are not exponential. As Bitcoin’s capitalization grows, we can logically expect a decrease in average annual returns and volatility. Larger assets require more energy to move. Despite this, assuming no more drawdowns of -50% or greater with current volatility levels remains unrealistic. Therefore, assessing the possible drawdown for this fourth Bitcoin cycle is crucial.
Projected Bitcoin Support Levels for 2026
The simulation involved creating 1,000 random historical series. The results are insightful for determining the next Bitcoin cycle bottom. It indicates only a 5% probability that Bitcoin’s value will fall below $41,000 by December 2026. This scenario implies the price would have surpassed the moving average, which would sit around $60,000, despite any price decline. Focusing on the 5th percentile (represented by the red line in the chart), the target price for the end of a potential crypto winter, guided by the 200-week moving average, stands at approximately $60,000.
However, if Bitcoin’s price continues to rise and then declines only in 2026, or if it generally aligns with the Monte Carlo simulations, the support value for the cycle low at the end of 2026 could exceed $80,000. To illustrate this possibility, Diaman Partners selected one simulation out of 1,000. This specific simulation depicted strong Bitcoin growth in the coming months. It was then followed by a significant decline extending almost to the end of 2026.
By reverse engineering from a potential 2026 bottom of $80,000, the table shows the maximum possible loss in the next crypto winter. This depends on Bitcoin’s peak value in the coming months. Historical drawdowns have consistently decreased: -91%, -82%, -81%, and -75%. Therefore, anticipating a -69% drawdown seems plausible. This makes a price target of $260,000 by 2025 a potentially achievable goal. Furthermore, the logarithmic chart confirms that such a hypothesized trend remains consistent with previous cycles.
This study represents an intellectual effort to forecast an inherently uncertain future. It does not constitute investment advice. The maximum and minimum values presented rely solely on models, which may not necessarily materialize. This article is for general information purposes only. It should not be considered legal or investment advice. The views and opinions expressed herein are those of the author alone. They do not necessarily reflect the views and opinions of Crypto News Insights.
