What if the next Bitcoin all-time high sets up the biggest trap of the cycle? One of crypto’s most-watched cycle analysts, Benjamin Cowen, warns that after fresh highs, Bitcoin could suffer a brutal 70% drawdown—right in line with its halving-driven boom/bust history. Here’s what that means for positioning into late-cycle strength, protecting gains when euphoria peaks, and timing a smarter re-entry when the dust settles.

The Setup: Halving Cycle Playbook

Bitcoin’s market rhythm has historically followed a four-year cadence: halving, expansion, euphoria, then a deep reset. Previous bear markets saw drawdowns of 94%, 87%, and 77%. Cowen expects an advance into potential highs around Q4 2025, followed by a large reversion into mid-2026. His approach: harvest profits into strength, stand aside during the unwind, and redeploy when risk/reward resets.

Why This Matters to Traders

Late-cycle rallies can erase months of gains in weeks. Altcoins typically fall more than BTC during drawdowns, while rotation windows can still deliver outsized opportunities if you anticipate them. Cowen also notes that Ethereum might lag BTC near-term but could gain a late-cycle edge—valuable context for ETH/BTC watchers.

Actionable Moves to Consider

• Pre-plan exits: Ladder profit-taking into strength (e.g., 10–20% tranches) as price accelerates toward late-2025, rather than guessing the exact top.
• Protect the upside: Use trailing stops on a portion of spot or hedge with options/perp shorts during parabolic extensions.
• Map re-entry zones: Place staggered bids 60–80% below potential peaks to capture high-conviction pullbacks without chasing.
• Rotate with data: Monitor ETH/BTC. Sustained higher lows can signal late-cycle ETH outperformance while BTC cools.
• De-risk leverage: Into euphoria, reduce exposure, cap position sizes, and keep dry powder for dislocations.
• Use timeframes, not dates: Treat Q4 2025 and mid-2026 as guideposts; adjust if the market invalidates with structure changes.

Signals That the Party Might Be Ending

• Derivatives froth: Funding rates persistently high, open interest surging, and basis premiums widening.
• Trend breaks: Parabolic runs followed by the first weekly lower high or a loss of key moving averages with rising volume.
• On-chain heat: Spike in realized profits (e.g., elevated SOPR), extreme MVRV, miners increasing exchange flows.
• Dominance shifts: BTC dominance topping or sharp reversals often precede broader risk-off phases.
• Macro headwinds: Stronger DXY, rising real yields, and liquidity tightening can pressure crypto multiples.

Late-Cycle Edge for Ethereum?

Cowen’s framework expects ETH to underperform BTC near-term but potentially shine as late-cycle rotation kicks in. Watch the ETH/BTC trend for higher lows, L2 activity, and staking dynamics as catalysts. Still, alt exposure carries higher beta risk—size positions accordingly and prioritize liquidity.

Bottom Line

You don’t need to time the top; you need a rules-based plan. Define profit-taking bands, hedge into euphoria, and pre-plan where you’ll buy fear. If the cycle repeats, the best trades may arrive after the peak—when volatility hands disciplined traders their edge.

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