Market Insight #11 — Closer to the Bottom Than the Top
Hello everyone and welcome to this week’s market insight.
Portfolio Update
No update. Still 100% in cash.
Market Update
It is becoming a bit repetitive, but nothing has changed over the past few weeks. Bitcoin is finally showing a bit of strength and is trading around $73k at the time of writing. That is broadly in line with the short-term bounce I have been expecting.
However, my broader view remains the same. I do not expect Bitcoin to sustain a move above $80k, and I still believe the market is likely to revisit lower levels before the next durable uptrend begins.
As per the previous updates, the framework remains unchanged:
• Below $55k, I begin scaling in.
• Above $55k, patience.
Education of the Week — Bitcoin Is Closer to the Bottom Than the Top
Bitcoin is now closer to the bottom than the top based on most on-chain metrics. From a macro perspective, the backdrop remains supportive. Gold is already reacting to that environment, while Bitcoin has not yet followed. That said, Bitcoin is not yet in what I would consider deep value. One useful metric for understanding this is the MVRV ratio, which compares Bitcoin’s market value to its realized value. The current MVRV is around 1.2, which historically sits in a “fair value” zone. Not deep value, but already far from overheated conditions.
Historically, when MVRV crosses certain thresholds, we observe meaningful differences in forward returns:
MVRV | 1Y Avg Return | 2Y Avg Return | 3Y Avg Return |
|---|---|---|---|
1.2 | 11% | 62% | 308% |
1 | 19% | 185% | 889% |
0.8 | 103% | 353% | 2738% |
We have now entered the ~1.2 fair value range, where forward returns have historically been positive. However, patience has mattered in prior cycles. The strongest opportunities have typically appeared when valuations fall deeper, particularly below MVRV = 1. We have not reached that level yet in this cycle. So the question becomes less about whether Bitcoin is cheap relative to the top, and more about how aggressively to allocate given the possibility of deeper value ahead.
How to Approach This
There is no perfect approach here. Each strategy involves a trade-off between deploying capital too early, missing the best entry levels and the mental pressure of trying to time the market. Below are three ways to approach this:
Buy Now and Hold Start allocating at current levels (MVRV ~1.2) and hold long term.
Value-Based DCA (My Approach) Allocate gradually, increasing size as valuation improves.
Wait for Deep Value. Only deploy capital when Bitcoin reaches historically lower valuation levels (MVRV ~0.8–1.0).
Strategy | Pros | Cons |
|---|---|---|
Buy Now and Hold | Simple Avoids missing the market Works well long term | Higher chance of drawdowns Not the best historical entry |
Value-Based DCA | Aligns with valuation Reduces regret if price drops Maintains exposure | Requires patience and discipline |
Wait for Deep Value | Historically best returns Clearer risk-reward | May never reach those levels Risk of missing the move |
Personally, I prefer the value-based DCA approach. It allows me to stay involved while keeping flexibility if deeper value appears. There is always a risk that Bitcoin does not reach sub-$55k again. But there is also no guarantee that the current range marks the bottom. In practical terms, my key level remains around $55k, which aligns with MVRV approaching 1. That is where I begin allocating. Bitcoin is closer to the bottom than the top. But based on history, the strongest opportunities have usually appeared slightly later in the cycle.
That is why I remain patient and keep dry powder.
The plan stays the same.
Trilux
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