Questions are already being raised about whether Bitcoin is still in the expansion phase that many market participants assume it is. However, one crypto expert took a conservative stance, arguing that when Bitcoin is analyzed using traditional cycle theory and macroeconomic indicators, the primary cycle may already be complete.
This crypto expert, Tony Severino, disputed the popular bullish claims of “snake oil salesmen” and instead pointed to economic data and historical patterns that show the Bitcoin cycle has already transitioned into another phase.
PMI and ISM Datan show where Bitcoin stands
According to Tony Severino, Bitcoin is The bullish cycle is already over, and analysts who claim the opposite are proclaiming a fairy tale whether or not it will come true. Severino’s outlook is based on the US ISM Purchasing Managers’ Index, which he considers a reliable macro indicator of cyclical behavior.
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The PMI data in the chart below shows a clear pattern of lower highs and lower lows, signaling a weakening manufacturing environment. According to Severino, real cycles are measured from trough to trough, and not based on speculative projections of future upside potential. From that perspective, the current PMI structure means the cycle has already peaked and now turns around.
At the time of writing, this index is around 47.9. Severino warned about this a sustained move below the 46 level would change the PMI from a local pullback to a more pronounced intermediate downtrend. A drop below 41.6 would have even more dire consequences, as that level would fall below COVID-era lows.
Such a move would leave only extreme historical comparisons, including conditions last seen during the Great Financial Crisis of 2007-2009 or the stagflation period of the 1970s and early 1980s. Therefore, this macro backdrop directly challenges the idea that Bitcoin is on the cusp of a guaranteed new bullish phase.
Severino also took direct aim at popular Bitcoin valuation models that compare BTC to gold or rely on long-term projections divorced from economic reality. The current reality is that Bitcoin is lagging behind gold and silver, that attract a consistent influx in contrast to Bitcoin’s fatigue around $80,000.
Bullish belief for bearish objectives
Severino’s current position is notable because it makes a significant difference from his view before the current cycle began he was very optimistic about Bitcoin. His recent analysis, shown in the chart below, shows Bitcoin moving below the moving average on the monthly candlestick timeframe. This is remarkable because similar faults previous years were followed by declines of approximately 50% on average.
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The chart highlights multiple cases where Bitcoin suffered a decline of 40% to over 60% after losing this type of technical support. Based on that historical behavior, Severino has set a downside target of at least $45,000 before another bullish reversal.
Featured image from Getty Images, chart from Tradingview.com