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Weekly BTC Cycle Update · Week 44

Bond Markets Are Signaling a Correction: What It Means for Bitcoin

By Tom Snellman · · 4 min read

In short: Bitcoin has rallied 46 percent from its June low, but the bond market is flashing warning signs. The riskiest corporate debt is under heavy pressure and France is testing Europe’s debt markets. If risk is repriced across markets, Bitcoin could test its 200-week moving average again before a new cycle starts.

Where Bitcoin stands in its cycle

Bitcoin closed last week at $84,022, up from $81,576 the week before and 46 percent above the June low of $57,740. The weekly SMI, a momentum indicator that measures where the price sits within its recent range, is now at +65. That is above the +40 level for the third week in a row.

That is typical of a relief rally late in a decline phase, not yet the start of a new cycle, which my model puts around 18 November. It could take until January or February 2027 to build a bottom if risk is repriced in all markets.

Weekly Bitcoin candles since the November 2022 cycle low, with the 200-week moving average at $67,200 and the weekly SMI. The accumulation phase is shaded green, the current decline phase red, with the next cycle start estimated for November 18, 2026.
This cycle so far: weekly candles, the 200-week moving average and the weekly SMI. Data: Kraken.

Key levels

  • Resistance: $87,000
  • 200-week moving average: $67,200

Bitcoin entry zone: a weekly close below the 200-week moving average, now at $67,200. Historically, this has been a good place to buy.

Bitcoin could test it again or go even lower if markets reprice risk.

The 200-week moving average is the average weekly close of the last four years, roughly one full halving cycle. Bitcoin has touched or dipped below it near every cycle low, most recently between June and August this year. You can see it on the long-term chart on the homepage.

Working against a deeper fall, institutional money is rotating out of the Magnificent Seven and AI stocks and into Bitcoin and the leading altcoins. The weekly SMI will need to correct below 0 before we can see which force wins.

Junk bonds are cracking at the bottom

The gap between the riskiest CCC-rated bonds and BB-rated bonds is the widest since the pandemic, and one credit investor’s morning message called it a “total meltdown”. CCC yields are at their highest since 2020, deals are being pulled, and software and AI-exposed companies are under the most pressure. When the weakest borrowers struggle to refinance, it is often an early sign that risk appetite is turning.

This is the same pattern I wrote about in CoreWeave: The Needle in the AI Bubble? The debt market tends to notice trouble before the stock market does.

France could ignite a debt crisis in Europe

The French 10-year yield has risen above 5 percent for the first time since 2002, and the spread over German Bunds is above 1.7 percentage points, with the budget stuck in parliament and protests growing. The ECB meets on 29 October. If the stress spreads to other euro countries, it may have to step in, and that would bring new liquidity.

Both point to the same theme this week: markets are starting to reprice risk, beginning with the weakest borrowers.

What I am doing

I am not buying yet, because I want to see how this plays out. The recent rally broke the market structure of the decline with a higher high. Now the market needs to confirm it by staying above the June low at $57,700, while the SMI corrects and builds a healthy bottom zone.

The Model Portfolio applies this method to twelve tokens with US spot ETFs, with entry, hold and exit zones every week. Launch price $49 a year until 17 November.

Sources

This article is for educational purposes only and is not investment, tax or legal advice. It does not take your personal situation into account. Do your own research and speak to a qualified advisor before making investment decisions. The author may hold the assets discussed.