One of the hardest things for any investor is ensuring a well-thought-out exit plan. My own investing journey has taught me that the challenges often lie more in the timing of selling an asset than in the initial purchase. I’ve learned that it’s essential to have a clear exit strategy before buying in, defining the circumstances under which we’ll sell. This approach does two critical things: it helps avoid emotional decisions amid market fluctuations, and it provides a structured timeline to exit, effectively removing emotion from the equation.
We made a significant investment in crypto back in November 2022 (an extension to our 2017 investment), which we intend to exit by mid-2025. Since this was designed as a 2.5-year investment, we didn’t set an exact exit date or target price. Instead, we aimed to exit around the Distribution Stage of Bitcoin’s 4-year cycle. Based on past cycles, this peak typically falls around mid to late 2025. Our plan to exit hinges on the timing of previous cycle peaks in the last three crypto cycles.
Our Scenarios for an Exit:
- Scenario 1: 15 months after the next Bitcoin halving (around July 2025).
- Scenario 2: 336 days after Bitcoin surpasses its previous all-time high (ATH) from 2021 at $68,789, which would place the exit around February 14, 2025.
Following this exit plan, the peak of the cycle would likely fall between February 14th and early July 2025. Examining the cycle data, we see Scenario 1 could hold, as it aligns with previous timing patterns post-halving. However, Scenario 2 is less likely since, in this cycle, Bitcoin reached a new all-time-high (ATH) well before the halving, a rare occurrence across previous cycles.
This shift likely happened because BTC ETFs were approved in January 2024, causing a surge in Bitcoin’s price. This was an external boost, leading to an early ATH and creating an extended accumulation phase for Bitcoin, lasting from March 2024 up to the U.S. presidential election in early November. If we disregard this premature ATH and set a new ATH based on the November 6th ATH peak, it adjusts the cycle peak to early October 2025.
With this in mind, our target exit window now ranges from early February (old scenario 2) to October 2025. During this period, we plan to sell 80% of our crypto, keeping 20% invested across Bitcoin, Solana, and Sui. We’re confident in these assets’ potential and believe they will appreciate further as we enter new cycles.
This 8 month timeline presents a question: do we start gradually selling down in February, or do we rely on additional indicators to guide us?
Some investors set price targets, often ranging from $100,000 to $700,000 for Bitcoin in this cycle. Personally, I think forecasting specific price points is speculative; instead, we’re focused on timing the cycle peak to maximise our investment.
Here is a graph that shows where we are in this Bitcoin cycle post-halving compared to other cycles in relation to Bitcoin ATH.
Updated Exit Strategy
Upon further reflection on past cycle trends we have determined four primary factors to guide our exit:
1. Rebalancing to 15% of Our Portfolio: We aim to keep crypto at a maximum of 15% of our overall assets. Once we reach this target, we’ll rebalance monthly, likely just before the end of each month to avoid major hedge fund portfolio rebalancing.
2. Bitcoin Cycle Peak Indicators: Given Bitcoin’s 4-year cycle, traditional financial indicators are surprisingly applicable. In our earlier article, we discussed 14 key indicators we believe best signal a cycle peak. We’ll plan to exit once at least 10 out of these 14 indicators suggest a Bitcoin cycle peak, signalling it’s time to start liquidating.
3. Tax Optimisation: To minimise taxes, we’re mindful of holding assets for over 12 months, allowing us a 50% capital gains tax discount. Throughout 2024, we gradually shifted from Ether to Solana and Sui, benefiting from the discount on these gains. We’ve also been staking Solana and Sui, earning monthly rewards that come with their own tax timing considerations. By selling only 80% of our crypto, we can avoid selling staking rewards within the 12-month holding period.
Key Dates for Tax-Optimised Sales:
- December 2024
- May 2025
- June 2025
- September 2025
- November 2025
4. Google Search Trends: Analysing Google search trends has proven insightful for identifying Bitcoin’s market peaks in past cycles. Historically, significant surges in search interest for terms like “Bitcoin” have closely aligned with Bitcoin’s price reaching all-time highs.
For instance, during the 2017 bull run, Google Trends data showed a sharp increase in searches related to Bitcoin, peaking in December 2017 at 100 when Bitcoin’s price approached $20,000. Similarly, in the 2020-2021 cycle, search interest escalated alongside Bitcoin’s price, culminating to 84 in the March initial peak and then hit 100 in late May prior to the peak around November 2021 as Bitcoin reached approximately $69,000.
This correlation suggests that heightened public interest, as reflected in search trends, often coincides with Bitcoin’s price peaks. Monitoring these trends can provide valuable context for understanding market sentiment and potential turning points in Bitcoin’s price cycles.
If we look closely at trends in 2024 we can see that during the 3rd and 9th of March in 2024 google search trends reached 100 for Bitcoin. This was just before a new ATH for Bitcoin was reached on 14th of March at just over USD73,000.
Once this figure reaches 100 again then it is a good sign that we are around a cycle peak.
Note: In past cycles, the number of newly created blockchain addresses and active addresses has been a reliable indicator of cycle peaks. However, with the introduction of Bitcoin and Ether ETFs in the U.S., much of the demand for these assets now flows through centralised exchanges or directly through ETFs, making these metrics less accurate indicators of demand. For this cycle we will ignore these metrics.
Conclusion
To determine the optimal timing for exiting our Bitcoin investment, we’ve identified five key factors that provide a balanced approach, combining both data-driven insights and strategic considerations. Each factor is grounded in historical analysis, current market dynamics, and our long-term goals. Here’s a summary of our exit strategy:
1. Historical Cycle Timing: Based on Bitcoin’s 4-year cycle pattern, past bull markets have typically peaked between 12-18 months after the halving event. We’ll monitor this timeframe closely, with a tentative exit range set between early to mid-2025.
2. Market Sentiment and Google Trends: We’ll watch for extreme levels of optimism and FOMO, as seen through Google Trends and other sentiment indicators. Historically, when this reaches 100 it has correlated with cycle peaks, offering a real-time measure of when interest may be overextended.
3. On-Chain Indicators: We’ll use on-chain metrics such as active addresses, the MVRV ratio, and the Mayer Multiple. If these indicators collectively point toward overheated market conditions and 10 out of 14 are turned on this will be a signal to begin scaling out of our position.
4. Tax Optimisation Strategy: To minimise capital gains taxes, we’ll aim to hold our crypto investment for over 12 months from each buying period. This will allow us to benefit from tax discounts, particularly for assets we’ve acquired in 2024, while strategically timing our exits to maximise returns.
5. Portfolio Rebalancing: Make sure the crypto portfolio stays below 15% of the net value (assets less debt) for the portfolio.
We feel that together, these five factors give us a robust framework for navigating the market’s volatility, aiming to exit close to the peak.
We will review these factors each month and move to fortnightly once some of them commence to turn on.
Current Value of Factors
- Historic Cycle Timings – Until mid Feb 2025 this factor still is pre-peak as can ben seen by this graph.
- Market Sentiment – Google trends did hit a peak of 100 on Nov 12 on a 30 day timeframe. But over a long term timeframe (since 2017) it currently sits at an estimated 51 which is below the previous 2 peaks.
- On-Chain Indicators: At present values, 0 out of 15 indicators have turned on. (note: we’ve added an additional indicator making 15 now not 14)
| Indicator | Cycle High Value | Current Value |
|---|---|---|
| Puell Multiple | 3.5 | 1.07 |
| MVRV Z-Score | 7 | 2.72 |
| Mayer Multiple | 2.5 | 1.35 |
| Mayer Multiple Price Bands | Overbought | Bullish |
| Golden Ratio Multiplier | 3 | 1.4 |
| SMA 1458 Days (4 Years) | 5 | 1.75 |
| 1Y+ HODL Chart | 15-25% divergence from long-term holders | 9.3 % divergence |
| Halving Price Regression | Orange and Red Zone (3-4 years ahead) | Green Zone |
| Bitcoin Long Term Power Law | Midway between Regression Line & Resistance | Below Regression Line |
| Bitcoin MACD | -7,000 to +7,000 | -5,176 |
| Pi Cycle Top Indicator | 111DMA crosses above 350DMA x2 | Large Divergence |
| Thermocap Multiple | 200 | 131 |
| Bitcoin Power Law Oscillator | 0.5 | 0.07 |
| Net Unrealised Profit Loss (NUPL) | 75% | 60% |
| MVRV Score | 3.8 | 2.73 |
4. Portfolio Rebalance: At present value the crypto portfolio makes up 13.07% of the net value of the portfolio and is below the 15% maximum target.
5. Tax Optimisation: The first trench of crypto could be sold in December 2024.
TheBucket 