Why people lose money in a bull market

If you’re new to crypto, you probably pull up a Bitcoin chart and wonder… How the hell did anyone lose money in this?

From your perspective, it’s just a beautiful, upward-sloping line with a few bumps along the way.

Seems simple, right? Buy the dip, hold on, and ride it all the way up.

If you did that, you’d be sitting on a 10x… maybe even a 20x.

Wild when you consider that the S&P 500—the gold standard of “safe” investing—averages around 10% per year.

Crypto flips that on its head: 10% annually vs. 10x your money? No comparison.

But here’s what most people don’t realize… until they’re living through it.

Those "small bumps" on the chart? They’re not small when you’re in them.

Those dips are 30% drawdowns—sometimes more. And they don’t happen once.

They hit over and over… and over again.

Take the 2017 bull run as an example

Bitcoin had six major pullbacks—each over 30%, each lasting weeks.

Now think about that: the biggest drawdown so far in this current cycle is around 30%.

Imagine surviving that six different times during the bull run. That’s where most people fold. Fear kicks in. Emotions take over. People sell at the worst possible time… and boom, they’re out.

And just like that, they lose money in a market that should have made them rich.

I bet you during the next bull market, the new wave of investors will ask the same question: "How did anyone lose money back then?"

Hindsight always makes it look easy. But when you’re in the trenches, living through the volatility, it’s a different game.

That’s why we’re here—to help you stay level-headed, understand what’s really going on, and see the bigger picture.

Let’s Talk About Where Bitcoin Stands Now

On Wednesday, we pointed out that Bitcoin might’ve found its local bottom around the 50-week Simple Moving Average (SMA)—a level that’s historically acted as a lifeline during intense pullbacks.

So far in this cycle, Bitcoin has tapped that level twice. Both times, it marked the bottom… and both times, the market rallied hard afterward.

There’s another important signal:

The RSI. Specifically, the 44.70 level has been rock-solid support during this bull market. Every time RSI hits that number, it bounces.

And here’s where it gets interesting—both times Bitcoin dropped to the 50w SMA, RSI also landed perfectly on that 44.70 mark.

Lastly, for each of those times mentioned above, the Stochastic RSI was in the oversold region.

That’s not a coincidence. That’s confluence—a powerful one.

That’s why we were confident that the local bottom was in on Wednesday.

Zooming Out: What’s the Bigger Picture?

If you pull back the chart, things get really interesting.

Toward the end of 2024, Bitcoin consolidated in a range between $57k and $72k for nine months.

When it finally broke out, it ripped higher and hit a new all-time high (ATH). But by doing so, it formed a bearish divergence on the RSI.

If that sounds familiar, it’s because the exact same thing happened in 2021… right before Bitcoin topped out for that cycle.

Right now, though, Bitcoin’s price action looks solid. Here’s why:

• During the recent pullback, BTC found support at the 50w SMA.

• RSI is currently bouncing from the 44.70 zone—historically a strong support area.

• Both previous times RSI bounced from 44.70, Bitcoin shot up 180% and 100% respectively.

• The Stochastic RSI is also oversold and starting to curl back up—another bullish sign. In short, the stars are aligning for a potential bounce.

But we’ve got one critical hurdle left.

For the bullish case to truly play out, the RSI must break the bearish divergence trendline. 

Without that move, the shadow of the bearish divergence still hangs over the market—and Bitcoin remains at risk of breaking down further.

So, even if Bitcoin rallies to a new all-time high (ATH), if the RSI hasn’t broken the trendline yet, it still faces the risk of dropping back down.

This demonstrates how powerful the bearish divergence structure can be.

What Needs to Happen Next?

Crypto always looks easy in hindsight. But surviving the journey—the fear, the greed, the drawdowns—that’s the real challenge.

Right now, all eyes are on Bitcoin. If we break through that resistance and continue to push upward, the bull case strengthens. If not… buckle up.

We’ll be here breaking it down every step of the way.

That’s all we got for you today.

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Catch you soon.

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell assets or make financial decisions.