Is the Bitcoin bottom already in, or is the market setting up one final opportunity before the next major cycle begins?

Welcome to this week’s market recap. It was a mixed week across markets. Equities remained strong, with the Nasdaq continuing to push closer to a new all-time high, while crypto stayed under pressure and Bitcoin remained below several important technical levels. At the same time, there are some improving longer-term signals developing beneath the surface, which is why I continue to see current and lower levels as increasingly interesting for gradual accumulation.

The question everyone continues to ask is whether Bitcoin has already established its final bottom.

My view remains that the current area represents an increasingly attractive zone to begin building long-term exposure, but I am not treating the bottom as fully confirmed yet. This is exactly why I prefer accumulating in tranches rather than attempting to identify the exact low.

Bitcoin is currently trading below its 200-week moving average and is likely to close the week beneath it. From a short- to medium-term technical perspective, that remains a bearish development and should not be ignored.

At the same time, the broader structure is beginning to improve. We have already seen a bullish divergence develop on the weekly timeframe, and another divergence could potentially form over the coming weeks. That would further strengthen the longer-term reversal case.

The bull market support band remains one of the most important levels to watch. Until Bitcoin can decisively reclaim that area, I am not expecting a sustainable new bull-market expansion.

From an accumulation perspective, however, I believe beginning with smaller allocations at these levels is reasonable. A move toward $50,000, and especially into the $45,000 region, would make the long-term risk-to-reward profile even more attractive. The objective is not to perfectly time the final dollar of downside. It is to gradually build exposure while retaining enough capital to take advantage of lower prices if they arrive.

One of the more interesting developments this week is appearing in Bitcoin relative to the S&P 500.

The BTC/SPX chart is approaching the confirmation of a bullish divergence on the weekly timeframe. We still need the weekly close to confirm the structure, but if it does, it would be an important relative-strength signal for Bitcoin.

This also aligns with my broader thesis that Bitcoin can materially outperform the S&P 500 over the next approximately two years, particularly as we move deeper into the next phase of the market cycle.

Institutional ETF flows were weaker this week.

After the inflows we saw during the prior week, Bitcoin ETFs returned to net outflows, with several hundred million dollars leaving the products in aggregate. This remains something I am watching closely because sustained institutional inflows would provide much stronger confirmation that demand is returning.

For now, ETF flows are not yet providing that confirmation.

Equity markets remain remarkably strong. The Nasdaq is once again approaching new all-time highs, and momentum across several major indices continues to look constructive.

At the same time, conditions are becoming increasingly complacent.

The VIX is currently around 14, putting it below the 15 level that I personally consider an important profit-taking zone. Historically, periods of extremely low volatility have often coincided with excessive investor confidence and have frequently preceded renewed volatility.

We saw similar conditions around December 2024, August 2025 and December 2025 before volatility subsequently returned.

That does not mean every stock needs to be sold simply because the VIX trades below 15. But from a portfolio-management perspective, this is exactly the type of environment where I prefer reducing risk, taking profits on extended positions and rebuilding some dry powder rather than becoming more aggressive.

I still believe there is a meaningful possibility of another correction or volatility event before the end of the year. The key is not to become so focused on timing that correction that we miss attractive long-term entry opportunities in the meantime.

The major macro focus this week was CPI and PPI, and both reports were broadly constructive.

Headline CPI came in at 3.4% year over year, down from 3.5% in June and exactly in line with expectations. Core CPI also moved lower to 2.5% from 2.6%, again matching consensus.

On a monthly basis, headline CPI increased 0.1% after June’s 0.4% decline, while core CPI rose 0.2% following a flat reading the previous month.

The PPI report was arguably even more encouraging. Headline PPI was unchanged month over month, below expectations for a 0.2% increase. On a year-over-year basis, PPI cooled significantly to 4.7% from 5.5% in June and came in below the 4.9% consensus estimate.

Core PPI increased 0.2% month over month, slightly below the expected 0.3%, while the annual rate came in at 4.2%, matching expectations.

Taken together, the data continues to support the disinflation narrative. Rate expectations have adjusted accordingly, with the market currently pricing no rate hike at either of the next two FOMC meetings and only one additional hike toward December.

That outlook, however, remains highly dependent on energy prices. The conflict involving Iran continues to create upside risk for oil, and a sustained move higher in crude would eventually feed back into headline inflation and potentially force the market to reassess the current interest-rate path.

Overall, this was a constructive week.

Bitcoin continues to show improving longer-term signals, although the bottom is not yet fully confirmed. Equity markets remain strong, but extremely low volatility is becoming a warning sign and supports taking profits selectively rather than chasing extended positions.

At the same time, inflation data continues moving in the right direction, giving the market more room from a monetary-policy perspective.

My strategy therefore remains balanced: gradually build exposure where long-term risk-to-reward is becoming attractive, keep sufficient capital available for lower prices and reduce risk where markets are becoming overly complacent.

The objective is not to perfectly predict the exact bottom or the exact top. It is to position intelligently enough that we can benefit from the next cycle while still being prepared if the market gives us another major opportunity.

Economic: Empire State Manufacturing, NAHB Housing Market Index, Net Long-Term TIC Flows
Earnings: Fabrinet (FN), H World Group Ltd. (HTHT), XP Inc. (XP)

Economic: Building Permits, Capacity Utilization, Export Prices, Housing Starts, Import Prices, Industrial Production, Pending Home Sales
Earnings: Home Depot Inc. (HD), Keysight Technologies Inc. (KEYS), Baidu Inc. (BIDU), Amer Sports Inc. (AS), ZTO Express Inc. (ZTO), Jack Henry and Associates Inc. (JKHY), Klarna Group PLC (KLAR), Toll Brothers Inc. (TOL), Hesai Group (HSAI), Pony AI Inc. (PONY), VNET Group Inc. (VNET), La-Z-Boy Inc. (LZB)

Economic: EIA Crude Oil Inventories, MBA Mortgage Applications Index
Earnings: Analog Devices Inc. (ADI), TJX Companies Inc. (TJX), Lowes Companies Inc. (LOW), Target Corp. (TGT), Estee Lauder Companies Inc. (EL), Full Truck Alliance Co. (YMM), Viking Holdings Ltd. (VIK), Nordson Corp. (NDSN), BILL Holdings Inc. (BILL), Coty Inc. (COTY), ZIM Integrated Shipping Services Ltd. (ZIM)

Economic: Continuing Claims, EIA Natural Gas Inventories, Initial Claims, Leading Economic Index, Philadelphia Fed Index
Earnings: Walmart Inc. (WMT), Alibaba Group Holding Ltd. (BABA), Deere and Co. (DE), NetEase Inc. (NTES), Ross Stores Inc. (ROST), Futu Holdings Ltd. (FUTU), Atour Lifestyle Holdings Ltd. (ATAT), Advance Auto Parts Inc. (AAP), Autohome Inc. (ATHM), OSI Systems Inc. (OSIS)

Economic: S&P Global U.S. Manufacturing Index, S and P Global U.S. Services PMI
Earnings: Ubiquiti Inc. (UI), KE Holdings Inc. (BEKE), BJs Wholesale Club Holdings Inc. (BJ), MINISO Group Holding Ltd. (MNSO), Buckle Inc. (BKE)

Everything you just read is what we do every single day at Sonderberg Research. The difference is timing and depth.

By the time analysis like this reaches a newsletter, the move has often already started. My private clients don't wait. They get:

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Kind regards,
Diego Sonderberg

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