Original article from Blockworks Research
Compiled by / Odaily Planet Daily Golem(@web 3_golem)
Key Takeaways:
- Bitcoin's current price is down 50% from its all-time high, and the bear market has lasted over 40 weeks. A series of long-term cycle indicators suggest that the market may be at or near a low point in terms of both price and time cycles;
- This month, Bitcoin reached its most oversold level on record against the Nasdaq index, and in February this year, it also recorded its most oversold level on record against gold. Previous periods of data approaching these extremes have typically signaled the emergence of long-term cycle lows and heralded superior performance and positive returns for Bitcoin over the next 1-3 years;
- Bitcoin's Realized Price (i.e., the total on-chain cost basis of the circulating Bitcoin supply) is currently $53,000, 18% lower than the spot price. Historically, every bear market low point has seen Bitcoin's price fall below the Realized Price, and Bitcoin's price has only been below the Realized Price for 12% of its history. Starting from such periods, Bitcoin has delivered substantial returns over 1-3 year timeframes;
- Historical bear market cycles typically bottom around week 60 after the all-time high, which suggests the low point for this bear market cycle could appear by the end of November 2026;
- Taken together, the current confluence of factors suggests that the period from now until December 2026 could be an extremely attractive time for long-term re-accumulation of Bitcoin.
The Law of Diminishing Returns and the Necessity of Conditional Investing
Since March 2021, Bitcoin's price has remained flat; since November 2017, Bitcoin has also remained flat against the Nasdaq index, a span of nearly nine years. On the current time scale, Bitcoin's performance against equity indices is quite flat, yet its volatility is significantly higher than that of equity indices. On a risk-adjusted basis, Bitcoin has underperformed equity indices.
This context is crucial for how to hold Bitcoin. As Bitcoin's price rises and falls, its marginal returns diminish. The passive, always-long strategy that has delivered gains for holders in past cycles is now failing. Therefore, achieving outperformance increasingly requires identifying opportunities to strategically increase or decrease Bitcoin holdings.
To find these windows of opportunity, the indicators presented in this article are based on conditional signals. These signals remain "silent" for the majority of historical time, with their strongest signals appearing in the tails, occurring only a few times per decade.
Currently, these signals have appeared simultaneously and all point to the same conclusion: Bitcoin is likely at or near a long-term cycle price low.
Indicator One: Nasdaq/Bitcoin Relative Strength Signal
The first signal is constructed based on the ratio of the Nasdaq 100 Index to Bitcoin, calculated using weekly closing prices for the past 875 periods. We compute the 14-period Relative Strength Index (RSI) of this ratio and smooth it using a 14-period Simple Moving Average.
A rising RSI indicates the Nasdaq is overbought relative to Bitcoin; a falling RSI indicates the opposite. This indicator is not an intraday trading tool; it is a 14-week moving average of a 14-week oscillator, with its overbought and oversold transitions occurring over multi-year market cycles, not days or weeks.
Nasdaq/BTC RSI
Nasdaq relative overboughtness is a rare event. The RSI moving average has only been above 65 for 5.78% of its history and above 70 for only 0.35% of its history. These thresholds have only been breached during four periods: February 2015, February 2019, August 2022, and the period beginning in late January 2026, which continues to the present.
The current reading needs to be analyzed from three aspects:
- First, the current level of 72.6 is at an all-time high, 4.1 points higher than the previous peak of 68.5 set in September 2022. All observations above 70 have occurred within the past month;
- Second, the current phase of this cycle has lasted 24 weeks, a record duration, far exceeding the 11 weeks in 2015, 4 weeks in 2019, and 10 weeks in 2022;
- Third, this has only occurred four times in the past 16 years. The current situation is one of the rarest phenomena for this indicator. By this measure, this is the most severe overbought condition ever for Nasdaq against Bitcoin. Conversely, as the pair and its RSI can be viewed inversely, from a longer time frame, this represents the most severe oversold condition ever for Bitcoin against Nasdaq.
Indicator Two: Long-Term Expected Returns
Marking each occurrence of the Nasdaq/Bitcoin RSI reading above 66, in the three historical cycles that have appeared, the expected return curves for both BTC/USD and BTC/NAS100 have shown upward asymmetry, but only over longer time horizons.
BTC/USD vs BTC/NAS100 Expected Return Curves
Nasdaq/BTC RSI Expected Returns
This table has two important characteristics:
- The first is the time horizon. Short-term expected returns have almost no informative value, as returns over 30-120 days are small and directionally inconsistent. For example, Bitcoin held in 2022 fell 29.1% over 120 days but rebounded 397% three years later. The relative strength signal provides little directional indication for the next one to three months.
- The second is the decay in return magnitude. The three-year Bitcoin return for each cycle is about one-quarter to one-third of the previous cycle's return, consistent with the law of diminishing marginal returns discussed above. Across all observations, Bitcoin significantly outperformed the Nasdaq over the subsequent three years.
Indicator Three: Gold/Bitcoin Relative Strength Signal
If the Nasdaq represents Bitcoin's status as a risk asset, then gold represents its status as a monetary store of value.
Constructing a similar indicator on the Gold/Bitcoin ratio, we observe analogous data: readings above 66 are rare, exhibit mean-reverting properties, and cluster around extremes. According to this indicator, February 2026 was the most overbought period in history for Gold/Bitcoin.
Gold/Bitcoin RSI
Elevated RSI readings for this pair have coincided with long-term cycle price lows for Bitcoin, demonstrating typical characteristics. The expected return curve for this indicator is similar to the results studied for Nasdaq above. Over 1-3 year timeframes, looking from periods where the RSI data was similarly extreme, Bitcoin has historically outperformed both gold and the US dollar.
BTC/USD vs XAU/BTC Expected Return Curves
Indicator Four: Bitcoin Realized Price (On-Chain Cost Basis)
Bitcoin's Realized Price estimates the total on-chain cost basis of all circulating bitcoins. Unlike spot price, which reflects Bitcoin's current market value, Realized Price measures the average price at which the existing supply last moved on-chain, thereby estimating the on-chain cost basis. Historically, the Realized Price has represented Bitcoin's deep value.
Bitcoin On-Chain Realized Price
Realized Price is a reference, not a floor. Currently, the Bitcoin Realized Price is $53,000, 18% lower than the spot price. Bitcoin's spot price has only been below the Realized Price for 12% of its history.
Similar to the RSI indicators mentioned above, this situation belongs to a tail-of-cycle signal. Every historical bear market low point for Bitcoin's spot price has been below the Realized Price, and historically, prices have typically fallen further after entering this zone before forming a bottom. Therefore, falling to or below $53,000 aligns with historical patterns rather than contradicts them.
Starting from entry into this zone, long-term expected returns have consistently been considerable.
Bitcoin Price Trajectories After Spot Price Falls Below Realized Price
Starting from the first weekly close below the Realized Price in each cycle, historical data shows that significant positive returns have occurred within the next 150 weeks. The magnitude of these numbers has decreased cycle-over-cycle, aligning with the decay trend observed in the RSI indicators, but the direction has been consistent.
Historically, Bitcoin's first close below the Realized Price has marked the final stage of a bear market, not its beginning or middle. Nonetheless, the multiple of Bitcoin's spot price to Realized Price has fallen significantly from the previous high of 2025x, indicating a reduction in market risk.
Indicator Five: The Cycle Clock
The final indicator is the most straightforward. It showcases the historical structure of Bitcoin bear markets, measured in both price and time.
Bitcoin Bear Market Durations
In the cycles of 2013, 2017, and 2021, Bitcoin's price lows typically occurred around week 60 following the all-time high. The current cycle is at week 40, with a drawdown of 50%, broadly consistent with the trajectory of the previous three cycles. If the week 60 pattern holds, then Bitcoin's low point would be formed by the end of November 2026.
Although the Nasdaq 100/Bitcoin and Gold/Bitcoin RSI indicators have already shown extreme readings, the drawdown of this cycle still fits within the historical drawdown path.
The time dimension also compresses the intervals between cycles, with each cycle retracing to a new all-time high in successively shorter timeframes. In other words, the time required to reclaim the previous all-time high is shorter than in the previous cycle. Assuming this trend continues, a new all-time high should occur within 120 weeks of the previous one, implying a new high before February 2028.
These two observations themselves contain no mechanism; they are merely empirical regularities from a small number of cycles. They serve as temporal anchors, layered on top of the conditional signals described above, constraining the remaining downside for Bitcoin. If the historical structure holds, Bitcoin is approximately 20 weeks away from its low point, and may even have already bottomed.
Bitcoin Price Paths Going Forward
Given the current situation, the following scenario set combines the context and historical outcomes described earlier to paint a range of paths Bitcoin could take over the next three years. This is not a prediction or assertion of likely outcomes but aims to answer a question: If the current situation resolves similarly to past comparable situations, where could the price go?
Assuming diminishing marginal returns on the upside and downside, a discount to Realized Price persists, and referencing historical drawdown paths in both price and time, we construct possible Bitcoin price paths under these conditions. Each possibility is taken from Bitcoin's three-year trajectory following the occurrence of a given signal, scaled at varying intensities from 0.33 to 0.80 based on cyclical return compression. The bands in the chart mark the boundaries of the scaled-down historical distributions, not boundaries within which the market might fluctuate.
The shaded bands show the range of these possibilities.
Bitcoin Future Price Path Projection
These shaded bands are proportionally scaled reproductions of historical paths following indicator signals. All these possible outcomes are satisfactory; they describe plausible scenarios of history repeating, not all possible outcomes, and do not include scenarios where the signals fail.
While returns are expected to be mixed by the end of 2026, by 2027 and 2028 the return distribution clearly shifts towards positive and asymmetric upside. Given the current market context and projected paths, the coming quarters may present a highly attractive opportunity for long-term investment in Bitcoin.
Bitcoin Price Forecast for the Next 3 Years
Risks and Limitations
Each indicator should be evaluated and weighed on its own merits. These indicators should not be interpreted as mechanisms or causal drivers of Bitcoin cycle lows, but rather as manifestations that have coincided with and characterized historically observed long-term cycle lows.
Furthermore, the listed indicators are not an exhaustive set for approximating long-term cycle price lows. The analyses are based on small sample sizes: the RSI moving average presents an effective sample of four independent cycles, one of which is yet to be determined; the Realized Price study is based on four cycles; and cycle symmetry analysis is based on the first three completed cycles. With such a small sample, historical expected return distributions can describe past movements, but a deviation in one cycle would significantly weaken all presented relationships.
Additionally, the presented signals should not be seen as independent corroboration. The RSI indicators, proximity to Realized Price, and position on the cycle clock largely measure the same fact: Bitcoin has experienced a significant and sustained drawdown from its highs. In any deep, prolonged drawdown, each indicator should trend towards extremes. Therefore, their simultaneous occurrence is more akin to measuring the same observation in multiple ways rather than multiple independent and unique observations.
Structural changes could cause this cycle to diverge. The current cycle is the first with ETF holdings, significant corporate holdings, and more complex derivative trading like options and perpetual futures. The four-year cycle framework may ultimately prove to be merely a description of four observations, not a persistent feature of the asset.
Finally, the RSI indicators are relative. Bitcoin outperforming Nasdaq or gold can happen in an environment where both assets are rising, or where both are falling at different rates. Even if RSI signals favor Bitcoin, nominal Bitcoin prices could be pulled down if equity or gold markets decline from current high levels. The signals presented here have little predictive power for movements leading up to November; they merely reflect the asymmetry in price trajectories over a 1-3 year horizon.
Conclusion
However, when considering the above indicators, the conclusion we reach is that Bitcoin is likely at or near a cycle low, which could form before year-end, after which an upward trend could resume.
Each signal is present at or near historically rare extremes, and each previously signaled substantial returns and outperformance versus equities over the coming years. If the low has not yet occurred, the period between now and that low is likely a highly attractive range for long-term Bitcoin re-accumulation. These signals have been dormant for the majority of history, but now they are flashing "green light" signals.
