Transcription
Hello followers of the four-year journey. This is Bob Lucas on February 5th, 2026. I hope you're well.
And this is a follow-up to the, I think it was around the Christmas period video discussing the bare phase that's coming up. So the charts are ugly. There's no doubt obviously about that. We're clearly now in a bare market decline. And I covered this in the last video where the 4-year cycle structure had topped and we were in a declining phase. This has now accelerated and we're at the point where there's beyond any doubt. Of course, we've lost the 10-month. We did lose 10 month in the last few months. We've lost the 20-month moving average and we're now clearly in and deep into the declining phase of this 4-year cycle.
The unfortunate part is from a timing perspective and the most accurate component of any cycle analysis is the lows, not the top, the lows. And we're still well short of the typical place where things will bottom out. From a sentiment perspective, we feel like we're very, very close. And in these short and intermediate time frames, we're also significantly oversold, which means that these five red monthly candles that we're seeing are probably we're probably going to reverse it temporarily this trend and possibly even close this current month, which only started 5 days in the green. So, I think a big counter trend move is probably now overdue. But in a bare phase, in a capitulation kind of environment, that's not something you can bank on as well. The first kind of uh rule in in in a declining phase is that surprises come to the downside. The selling can always get worse than what it seems, and you're not trying to sort of just pick bottoms. Certainly not from a short-term perspective.
Looking at the cycle count, we are now sitting on month 39 of the cycle. That is measured of course from the bare market lows with a peak of 35 months, which is matching the prior 4-year cycle highs. Now, as you all know, people have been following for the longest time, I don't get married on the highs. It so happened that this one peaked on month 35 again. I think in future cycles that would not be the case. But for now, we can leave that aside and focus on the declining phase. Month 39, which means we've now closed more than 3 years. The window for where the next cycle low forms, however, is technically not until October of this year, which is still a long way out from this point forward. So technically, this 4-year cycle declining phase still has a number of months to go and, you know, these bare market declines are a process. They take time, even though sentiment today feels as if it can't get worse. Uh, generally, it's a process on the way down. It's a step-down process. But in between that, there are these counter trend moves that help to sort of bring sentiment back more towards a neutral posture, allowing for the bare phase to then continue on. So it's not just one straight move down, is the point. And you see that in prior cycles as well, where you get these sharp moves down, then you get the counter trend move. You get the counter move, and it's a process. This is the first big leg down that hasn't really given us much of a move higher, and I think we're going to get one of those moves soon. We just don't know from where that comes. Does it come from a lower level, maybe around the 200-day moving average, closer to the low 60,000s? Nobody knows in the short term in an environment like this. But I think we will see at least one big sharp move higher. That's probably a multi-month, even a multi-week for sure, for for sure, but a full monthly candle, maybe two monthly candles to the upside that would draw everybody back in and get them to start believing again in some of these washed-up narratives like liquidity cycle and business cycle and and cycles extended and all these narratives that I've been hearing and frankly over the last four or five months, uh, received a lot of kind of hate on the four-year cycle. Uh, it was very, very vocal, very loud from very, very many, uh, prominent people in the space, and the the price action here is showing us otherwise that this is a regular four-year cycle from this perspective, and the declining phase is now firmly in control.
Uh, I will say though that this, you know, and many people have pointed this out, this cycle from an on-chain perspective, from an on-chain metrics perspective, was not like the prior cycles, and I agree with that. From a topping perspective, we didn't hit the euphoria that we expected or had seen in prior cycles. Uh, some of the on-chain metrics that just didn't come anywhere near your traditional top levels, and and my, and I introduced this in in a prior video, but my logic or reason for that is simply that this was a bare cycle. Doesn't look like it from a Bitcoin-only perspective. We made a clear all-time high over many, many months over the prior cycle high. But when you factor in that we had a president of the United States, the most powerful nation in the world, win an election and was extremely pro-Bitcoin, pro-crypto, we had a change in the SEC from an extremely, um, um, you know, negative, uh, crypto perspective to a very pro-crypto. We had the ETF that was approved and launched. We had DAxs bringing in tens of billions of dollars, the ETF bit bringing in tens of billions of dollars, and again, a regulatory change. This move that you saw since those changes really occurred, which was in this cluster, does not match this price appreciation, does not match, come anywhere near close to matching what we saw in those regulatory and institutional changes. And that's why this was and is, in my opinion, a bare cycle. We got off to a very fast start. For me, it was going to be a left-translated cycle that I don't think eventually simply because of the tailwind provided by the, uh, those changes I just mentioned. When you look at Total 3, for example, right? What we did, what we saw here was basically a double top. And and again, given all those changes, the speculative side of this market couldn't even make a new high or barely made a new high from a market capital perspective. That speaks volumes, and to me, this would have been yet another double top, and we would have seen much lower prices if it wasn't for all of those changes.
So the reason for saying that is I do think that we have seen a radical major shift in the whole space. A shift from the cypherpunk era of freedom and individuality to a capture, uh, by TradFi and Wall Street institutions of this market. So the structure, the the nature of crypto has changed, and I I think they are going to pump this up in the next cycle and cycles to come. But for now, we're going to have to deal and work through a complete wash-out of this space over the coming months.
The other concern, and I know this looks attractive, 67,000, uh, on on Bitcoin, and and let me say, if you have a very long-term view, you're a pure hodler, this is not a place you want to be selling. Uh, I'm not even going to be looking at selling any more in the four-year cycle active huddle strategy at these levels. No way you're selling at a 45% off the highs. Even though I expect lower prices this year, the risk-reward just does not warrant selling at these levels. At a high level, yes, but not at these levels, not 5 months into this decline and five red candles. I'll talk about a little later on about some exit strategies, some more exit strategies perhaps coming up. But for now, if you're purely looking at hardling, then you're starting to nibble in the 60s. You're certainly going to be buying in the 50s if we get there, or when we get there, more likely in the coming months. So again, this is oversold significantly.
But the main concern that we have is that the S&P 500, the equity market, stock markets also follow a four-year cycle. They have for many, many decades. Although the last few haven't been as clean, we still have a 4-year cycle here in, uh, in the equity markets. That does line up as well where with where Bitcoin found its its, um, its cycle low, and right now, this just made an all-time high in January and is threatening perhaps. It's still a very perfect bull trend, as far as I'm concerned. There's no real sign that's broken down. But if we get into the declining phase of the four-year cycle for the equity markets, then that's certainly going to hammer crypto at the same time. Maybe not to the same extent. And the argument could be made that crypto or Bitcoin is leading, or has certainly is leading in at the moment. This divergence is clear. The argument could be made that Bitcoin bottoms out sooner than equity markets. But I think, make no mistake, if if the equity markets start to trend down, it'll probably be a two-step process down, first, initial move lower, and then a bounce, and then another move lower. If that were to occur, I see a situation where Bitcoin follows in the first big move lower, and then possibly diverges out as the equity markets make a secondary or subsequent move lower, that Bitcoin can bottom out at that point before that move and not follow down and continue to move higher. So, this is still a risk. Equity markets haven't really broken down at all. They are certainly historically overvalued, and they're in the timing band for a peak of their own. So, this is something we're going to be watching.
But just switching back to Bitcoin here on this on this chart, this to me looks like every other cycle is behaving like every other cycle. And if you look at the carnage in the altcoin space, which still has a long way to go, perhaps some of those big names are down 65% from the highs, but they they have chart structures that look to me as if they're going to fall yet another 50% at some point. Now again, this is oversold. They're all oversold, and I think a sharp move's coming.
So from a from an exit strategy, last video, it sold some more at the 90,000 level, and I clearly stated in that video the reason for selling at 90,000 was I was concerned that we may not get the big counter trend move I was hoping for to exit some more, and just in case I wanted to lighten up some more in case we got this type of move that we're seeing right now. So that's the reason for that move that was met with some pretty brutal kind of commentary in general, uh, for selling. But, uh, such as such as, um, investing, I'm pretty happy with with that. Uh, what I wish happened differently and where I think this could have been done, um, better from my perspective is I did have a significant U order in, uh, to sell at 100,000, and that counter trend move made it back to 98, just 2,000 shy of unwinding more of the position, which in hindsight, probably at the 90 or even the 95 or some level up there, should just start reducing positions. Uh, my thought here was that we'd get a good counter trend move back into that 100,000 range, that didn't eventuate, and now we're at 67. Again, the active huddle strategy is trying to unwind when the trend breaks. Not trying to pick a top. It's not trying to say it's month 35, the calendar's hit, let's just sell arbitrarily. It's not the strategy. The strategy is to wait for clear evidence of breakdown and then start to unwind as much as possible that makes sense in preparation for the next four years cycle low where we can buy back in. So we have what we have at the moment, about half of that strategy has has unwound. Uh, there was even a lot of hate back in April of last year at 80,000 selling. Uh, and most of that heat came from the strategy followers, uh, because I did post about strategy there, and strategy since then is down 56 from the April sell and down 75. So, if they had panic sold at that point, they'd be saved themselves around 60%. But again, water under the bridge at the moment here on on Bitcoin.
Again, this looks just like every other cycle. I think what we're going to see at some point, I don't know if that's from a 60,000 level, maybe even lower than that. Who knows? But at some point, I think, uh, by March, April, I think we'll see a bounce back. We may get back to the 90,000 level. We may even get back to 95 or so. This is a process on the way down. And any move up here will just get bulls excited again and create a new narrative about what just happened and a new narrative of why we can be a super cycle way, why the four-year cycle is is broken, even though, uh, the evidence here is pretty clear, and I think what you'll see after a countdown move is the final move down, another 3 or 4 month move down.
Now, the October lows is starting to become a focus again, right? Because people were saying, well, the four-year cycle is right, and October's the next low because it happened, you know, around the four-year mark in that cycle. It happened the four-year mark, the prior cycle, just like the peaks happened. And just so you know, cycle lows generally are way more consistent. And, uh, you you want to kind of focus on that being the higher probability time frame for the next low, but they can fall much sooner and later too. A 10% swing on either side of that from a timing standpoint, bringing you four to five months sooner than where the sort of the ideal timing is. So four to five months there get you to a May time frame. Now, the only way I see something like a May or early cycle low form is if this doesn't give us a good bounce back. A good bounce back over a month or two-month period allows then for this to develop into a more prolonged bare market. A much a continuation without any bounce gets to the type of wash-out type of sentiment levels where a cycle low can form sooner. So, going to be watching out here over the next couple of months to see how this develops. But a situation where we have say seven red candles and we're at the 50,000 level or so by the May time frame could well induce an early cycle low in the 4-year time frame. And a situation like that would basically look like a move down into say May around that maybe 50,000 level, maybe lower. Then what happens is you get a big bounce, and then instead of making a new low, you form a higher low around that 48-month mark, and then the next cycle begins. I'm not going to talk about what I think the next cycle might look like. I'll save that for this to unfold, to develop, to get a better feel and read for how this could be unfolding. But right now, it's just a matter of, uh, being more in this sort of protective mode. Long-term holders are looking at this more from an opportunity standpoint. Whatever selling was to be done has is over. This is well and truly into the bare phase of the cycle and again too far down. If you're in altcoins though, I think the narrative still is that yes, you're hurting. You're down significantly, but it's not too late to at least come out of it with some of your of your capital intact in preparation for the next cycle low.
With that, I want to wish you all the best. Take care.