Lows, Leverage, and the Last Pullback: Why the Data Says a Turn Is Near
I finally got the Altcoin Screener algorithm to work again so I can provide the full data in addition to the rest of the newsletter.
1. Sentiment Washout & Capitulation Signals
Fear peaks first. Bottoming signals often follow.
Across Bitcoin, equities, and cross-asset ratios, we’re seeing the deepest cluster of bottom indicators since late 2022. Markets are flooded with fear but the data overwhelmingly contradicts the emotional narrative.
Market Psychology (Investor Behavior)
Peter DiCarlo reminded investors why emotional selling blinds people to opportunity during market stress.
Bitcoin (STH/LTH Profit Ratio)
Short- and long-term holders in profit below 8 — historically a perfect signal. Forward 2-month returns: 100% positive, avg +39%.
Bitcoin (Weekly RSI)
Weekly RSI has fallen to bear market lows, matching past capitulation events.
Bitcoin (14-Day RSI)
Oversold at the same levels as every Bitcoin local bottom since 2023.
Bitcoin (Daily RSI < 21)
Historically positive 1-month returns when RSI dips this low.
Bitcoin (Mean Reversion Oscillator)
Matches all local bottoms from Dec 2022 → Apr 2025.
Bitcoin (Fair Value Gaps)
Current setup resembles the structure from August 2024 and April 2025 bottoms.
BTC/Gold (Monthly RSI)
RSI is scraping levels last seen at the major lows of 2014, 2018, 2022.
Taken together, these metrics show one of the strongest fear-driven capitulation clusters of the entire cycle. When fear and oversold readings converge this aggressively — across RSI, mean reversion tools, profit ratios, and cross-asset relationships — markets have historically been near major local bottoms, not tops.
2. Leverage Unwind & Market Mechanics
The reason for the drop and why it’s a bull market continuation, not the start of a bear market.
Bitcoin (Open Interest vs 180DMA)
Open Interest (OI) continues to unwind from the October 10 liquidation. Whenever OI falls below the 180DMA, a bottoming process begins.
Bitcoin (ETF Holder Profit/Loss)
ETF holders are underwater. The last time this happened was Aug–Sep 2024 and Apr 2025, both bottom zones.
Bitcoin (Futures Structure — Backwardation)
Backwardation rarely appears during bull markets except near local lows. Last occurrence: March 2025 bottom.
Bitcoin (Net Short Interest)
30× more shorts than longs — extreme enough to spring-load a reversal.
Sentiment Spiral Scenario (Crash → V-Shape)
PlanC warns BTC could wick to $70K–$75K in a fear spike, similar to March 2020, then sharply recover.
Narrative Uncertainty (Regulation Imperative)
Bull Theory highlights how multiple contradictory explanations for the October 10 crash show why the Clarity Act matters. Crypto regulation could prevent future leverage manipulation.
Bitcoin (Mechanics vs Macro)
Tom Lee argues October 10 was mechanical, not macro-driven — similar to the reflexive deleveraging during FTX.
The October 10 liquidation continues to ripple through market structure, but the evidence overwhelmingly points to a mechanical deleveraging, not a breakdown in fundamentals. Extremes in OI, backwardation, short positioning, and ETF losses have historically marked the end of corrections in bull markets — not the start of bear markets.
3. On-Chain & Market Internals Turn Upward
Quiet shifts beneath the panic.
Bitcoin (Bid/Ask Ratio Flip)
Bid/Ask ratio turned positive — every flip since 2023 marked a local bottom.
USDT Dominance (Oscillator)
Back to the same level as Aug 2024 and Apr 2025 local BTC bottoms.
Bitcoin/S&P 500 (RSI)
BTC/SPX ratio hit bear market level RSI without a 70–80% BTC crash, showing this cycle is structurally different.
Bitcoin (Bollinger Band Deviation)
BTC trading >10% below the lower band which typically precedes violent mean reversions and suggests a rally soon to 95K–100K.
Bitcoin (Short-Term Risk Score)
Identical levels to the local bottoms of Dec 2022, Sep 2023, Jul 2024, and Apr 2025.
These internal shifts are the “quiet signals” that typically turn before price does. When bid/ask flows, dominance oscillators, Bollinger Bands, SPX pair ratios, and short-term risk scores all flip simultaneously, it suggests the market has completed the bulk of its structural reset and is preparing for a move higher.
4. Equity Market Breadth & Volatility
Stocks support the same reversal thesis.
S&P 500 (VIX Regime — 4 Weeks Up)
SPX within −5% of ATH while VIX rises 4 straight weeks → historically +13%, 93% win rate 1 year later.
Nasdaq (McClellan Oscillator at –62)
1 month later and it’s 80% positive with an average return of over 3%.
Nasdaq (McClellan Oscillator at –80 + BPI –30)
Historically rebounds within 4 trading days, avg +4.5% in a month.
S&P 500 (Put/Call Ratio Above 0.7 for 2 Days)
100% positive 2-month returns, greater than 7% returns on average.
S&P 500 (1% Gap Up → Close Red)
1 month later and average return of +4.7% and 86% chance of positive returns.
S&P 500 (Close Below 50DMA After 138 Days)
Historically +3.5% returns on average 1 month later.
S&P 500 (Seasonality Bottom — Nov 20)
Historically one of the most reliable bottom windows.
S&P 500 (Zweig Breadth Thrust Watch)
10 days left to confirm this rare signal — one of the most powerful in history.
S&P 500 (Volatility Regime → Forward Returns)
Seth Golden shows strong volatility clusters often precede large 6-month gains.
The equity backdrop remains supportive: breadth washes, volatility surges, high put/call readings, and seasonal patterns all historically precede strong positive forward returns. Crypto rarely bottoms in isolation. These equity signals reinforce the probability that this correction is approaching completion across risk assets.
5. Macro Tailwinds Quietly Improving
Despite the fear, liquidity is shifting in the background.
Global Macro (Financial Easing Shift)
Wu Wei Trades outlines a quiet pivot toward easing — most are too distracted by fear to see it.
US Economy (Empire Manufacturing → PMI)
Julien Bittel notes a major beat, supporting his thesis that PMI rises into 2026 which is when risk assets really start to perform.
Crypto/Macro Composite (RSI + PMI + Sentiment)
Julien shows Bitcoin has historically bottomed when RSI is low, PMI is weak, and sentiment collapses — the same setup we have now.
Although fear dominates headlines, macro data is slowly turning in favor of risk assets. PMI momentum, easing conditions, manufacturing surprises, and liquidity dynamics are beginning to inflect upward — forming the macro foundation that typically powers the next leg of a crypto and equity rally.
6. Altcoin Landscape: Rotation, Risks & Selective Winners
Bitcoin season is back but selective altcoins may still lead.
Altcoins (Market Cycle — Bitcoin Season)
Joao Wedson: BTC season first → sector-specific altcoins later which has been the pattern since 2023.
Altcoins (OTHERS Index vs 200DMA)
SuperBro warns a breakdown would confirm mid-cap and small-cap weakness.
Bitcoin & Altcoins (Supertrend + Dominance Combo)
Sykodelic shows supertrend + dominance resembles May 2021, when BTC and alts rallied to new ATH despite bearish structure.
MSTR (Leading Indicator for Bitcoin)
Brett suggests MSTR price behavior supports BTC returning to $75K in coming months.
Altcoins remain in a Bitcoin-first phase, consistent with every major cycle structure back to 2023. While broad altcoins face risks, selective leadership, especially in structurally strong sectors, is likely as Bitcoin stabilizes and begins its next expansion phase. For now, rotation still depends on BTC strength.
7. Bitcoin Cycle Structure & The Big Picture
The most tightly clustered bottom signals since 2022.
Bitcoin (Futures Backwardation)
A rare bull-market bottom signal repeating from March 2025.
Bitcoin (Multi-Signal Alignment)
RSI, Bollinger Bands, Mean Reversion, ETF losses, Risk Score, Bid/Ask, and OI structure — all bottom-aligned.
Bitcoin (Cycle Behavior)
Julien Bittel shows prior cycles had multiple deep corrections before new highs.
Bitcoin (Volatility)
Mark Moss reminds us that volatility is the price paid for asymmetric upside.
Every major bottom signal — technical, structural, sentiment, derivatives, and on-chain — is syncing at once. This is the same signature seen at the strongest local lows in 2022, 2023, 2024, and early 2025. The cycle remains intact, and the depth of this alignment argues strongly for continuation, not reversal.
8. Regulation at a Turning Point
The Clarity Act could permanently reduce leverage manipulation.
Bull Theory notes that contradictory explanations around October 10 only amplify why transparent leverage rules are needed. This may become a defining inflection point in crypto history.
9. The Final Synthesis: All Signals Point the Same Way
Oversold + Deleveraging + Macro Easing = Classic Bitcoin and Equity Bottom Structure
Converging evidence across:
- On-chain analytics
- Macro liquidity
- Derivatives structure
- Futures backwardation
- Market breadth
- Sentiment collapse
- Historical return studies
- ETF buyer capitulation
- PMI turning up
- 30x short interest
- Bollinger Band extremes
- Volatility thrust regimes
- Seasonal patterns
- Cross-asset RSI washouts
Collectively, this is the most compressed cluster of bottom-timing signals since the late-2022 & mid-2023 cycle reversals. December–January historically delivers some of the strongest returns, and the current setup aligns with that pattern.
Indicators & Forward Returns Summary
| Instrument + Indicator | Historical Forward Return & Insight | Source | Link |
|---|---|---|---|
| BTC — STH/LTH Profit <8% | +39% avg in 2 months (100% positive) | Subu Trade | Tweet |
| BTC — RSI < 21 | Nearly 8% avg in 1 month (67% positive) | Market Stats | Tweet |
| BTC — Weekly RSI Lows | Matches historical bottoms | Geometric | Tweet |
| BTC — Bollinger Band >10% Below | Sharp bounce historically | Great Martis | Tweet |
| BTC — Mean Reversion Oscillator | Matches all local bottoms from Dec 2022 → Apr 2025 | OnChainMind | Tweet |
| BTC — Fair Value Gaps | Matches bottoms from August 2024 & April 2025 | StockMoneyLizards | Tweet |
| BTC — Spot ETF Holder in Loss | Matches bottoms from August 2024 & April 2025 | Jim Bianco | Tweet |
| BTC — Open Interest vs 180DMA | Matches all local bottoms from Dec 2022 → Apr 2025 | Darkfost | Tweet |
| BTC — Short Term Risk Score | Matches all local bottoms from Dec 2022 → Apr 2025 | OnChainMind | Tweet |
| SPX — VIX Up 4 Weeks | +13% avg in 1 year (93% positive) | Market Stats | Tweet |
| SPX — Put/Call >0.7 for 2 Days | avg >7% in 2 months (100% positive) | Market Stats | Tweet |
| SPX — Close Below 50DMA After 138 Days | +3.5% avg in 1 month (83% positive) | Subu Trade | Tweet |
| SPX — 1% Gap Up → Red Close | +4.7% avg in 1 month (86% positive) | Subu Trade | Tweet |
| NDX — McClellan Oscillator –80 | ~4.5% avg gain (1 month) | Seth Golden | Tweet |
Large Caps
For large caps, here’s the ones that stand out on a long term timeframe:
- WhiteBIT Coin
- XRP
- TRON
Bitcoin Update
Bitcoin has had a very volatile week. It went lower than I expected and touched between $80k-$81k. All these indicators triggered in the past couple weeks:
- $90,000 = MVRV – 1 standard deviation (shifted lower since last week)
- $92,000 = CME Gap
- $98,000 = Short Term Holder – 1 standard deviation
- $100,000 = AVIV Z Score reaches 0 (reached on November 13)
- $102,000 (already hit) = 365 DMA
- $103,000 (already hit) = 50W SMA
- Short Term Holders already in capitulation similar to previous local bottoms since 2023
Plus these ones most recently:
- $82,000 = True Market Mean
- $82,000 = Spot ETF Cost Basis
It’s possible Bitcoin still trends a bit lower before finding a bottom:
- $74,000 = April 2025 lows (needs to stay above this level for bull cycle to remain intact)
From the April lows to the October highs, Bitcoin also hit the golden pocket zone (fib retracement 0.618-0.786). A multitude of data is lining up for this to be another bull market local bottom.
Ethereum Update
Ethereum fell lower to $2,700 as one of the scenarios called out last week. Either it goes sideways here for a bit to form a bottom otherwise the next level it could fall to is $2,100.
Solana Update
Similar to Ethereum, Solana went lower to $120 as a potential scenario called out last week. Either it goes sideways here for a bit before going higher or it could go lower to $100-110.
Sui Update
Sui fell close to the bottom of the regression channel near 1.30. Either it goes sideways here for a bit before going higher. If it can’t hold above 1.35 then next level would be 1.10.
Dogecoin Update
Dogecoin revisit the lows around $0.14 as a scenario we identified last week. I think there’s a good chance it holds here as it’s been using this $0.14 level as support since March 2025. If this fails to hold then it will go down to $0.10-0.12.
Pepe Update
Pepe has lost the April 2025 lows which is a very bearish sign if it’s unable to reclaim this by the next weekly close. If it can’t reclaim 0.55e-5 level then I would recommend reducing this position as a precaution and rotating into a lower risk option such as Bitcoin or Solana.
Model Portfolio Update
Despite all the fear, I think this is still a good spot to add more to positions if you can stomach it. Open positions are -25%.
The overall portfolio performance considering closed positions is roughly a -18% return:
