Bitcoin Lao Dốc: Important Support Levels for the Next Cycle

Now, most investors – especially those who have experienced one or more "crypto winters" – recognize that Bitcoin (BTC) moves in cycles of about 4 years. Before 2022, many people still believed that the price of Bitcoin would always stay above its previous peak. This belief was true in the years 2011, 2014, and 2018. However, by 2022, the collapse of FTX had pulled the price of Bitcoin down to $15,000, breaking through the $20,000 mark which had been considered a "doomsday threshold" since it was first reached in December 2017. While most investors focus on predicting the next peak of Bitcoin – likely to occur at the end of October 2025 – the research department of Diaman Partners is interested in the opposite: what level BTC might hit the bottom in 2026, if a new crypto winter truly arrives. Some experts believe that the four-year cycle has ended and Bitcoin is entering a more "mature" phase, with more stable growth. There are many reasons to support this argument, such as: ETF funds in the US attract strong capital, demand from financial institutions and companies is increasing, and pension funds in the US can now hold Bitcoin. However, with a cautious perspective, many analysts still believe that the Bitcoin cycle will continue to exist, although it may be less volatile. At the very least, from a risk management standpoint, the possibility of a crypto winter is a risk that always looms. An important model mentioned is the 200-week moving average, an idea proposed by Adam Back and trusted by many.

Historical charts show that, apart from the drop in 2022 due to FTX, the 200-week moving average has always been a strong "support" for Bitcoin prices. The red line in the chart represents the percentage difference between the price and this average - indicating what the maximum possible drop could be when the market enters winter. However, it should be noted that the process of moving from peak to trough often takes a long time, while the average line continues to rise. This means that the rate of decline may be exaggerated. For example, the average line has currently surpassed $51,000, so a forecast of a 60% drop may be a bit pessimistic. To estimate the 200-week moving average by the end of 2026 – the expected end of the next crypto winter – Diaman Partners used Monte Carlo simulations. This model not only provides the probability of prices falling into specific thresholds but also establishes a reasonable range of values based on developments in previous cycles. To estimate where the 200-week average will be at the end of 2026, the expected end of the crypto winter ( if it occurs ) and whether it will follow the range of previous cycles, Diaman Partners conducted a Monte Carlo simulation. This model not only provides the probability of prices falling into specific milestones but also constructs a reasonable range of values based on the developments in previous cycles.

Unlike the classic static mean-variance model, Diaman Partners uses a Monte Carlo model with decreasing returns and volatility over time, accurately reflecting the reality that the returns and volatility of Bitcoin have significantly decreased over the past several years.

This chart shows that as market capitalization increases, the profits of Bitcoin do not grow exponentially. Indeed, it is reasonable to expect that the average annual returns and volatility will decrease over time. The larger the market capitalization of an asset, the more energy is required to move it. However, the expectation that Bitcoin will no longer experience deep declines of over 50% is unrealistic. Therefore, estimating the potential bottom of the fourth cycle is still very necessary. The results of simulating 1,000 scenarios based on historical data show that: Bitcoin has only a 5% chance of falling below $41,000 in December 2026. This means the price could still remain above the 200-week average, which is predicted to be around $60,000. If we take the 5th percentile mark ( the red line in the chart ), the next cycle bottom for Bitcoin will be around $60,000. In another scenario, if the price of Bitcoin continues to rise sharply before a correction in 2026, or follows closely the Monte Carlo model, then the support level at the bottom of the cycle could be even higher, above $80,000.

In 1,000 simulation scenarios, there is one scenario that shows Bitcoin will grow strongly in the coming months, then decrease sharply lasting until nearly the end of 2026.

If this scenario occurs, with a bottom of 2026 at around $80,000, the data shows that the maximum decline in the next crypto winter will depend on the peak price that Bitcoin reaches in the coming months. In the past, previous cycles recorded a gradual decline of (-91%, -82%, -81%, -75%), so the expectation of a decline of around -69% is entirely justified. Therefore, according to the data from the statistics table above, the price target of $260,000 may not be unattainable in 2025.

On the other hand, if we consider the logarithmic chart, the trend as hypothesized does not deviate from previous cycles. Of course, this study is not investment advice, but simply an analytical effort to outline a capital future full of uncertainties. The peak-bottom figures are merely the results of the model and do not necessarily become reality.