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Please Don’t Buy the Bitcoin Dip
Please Don’t Buy the Bitcoin Dip
BY MICHAEL SALVATORE, EDITOR, TRADESMITH DAILY
In This Digest:
- Bitcoin is not a buy until this happens
- Stop buying downtrends and start buying these surprising new uptrends
- How to find tomorrow’s “household names” with our Quantum Score
Our warning about Bitcoin is looking better by the day…
Last August, we warned you that the crypto party was nearing its end.
We urged you to treat any further rally in the crypto market as an opportunity to sell ahead of a painful bear market.
At the time, Bitcoin was trading at $110,000. Today, it’s at $69,000 – a drop of 42% in just six months.
What made us turn bearish when Bitcoin was still flying high?
We were simply keeping an eye on Bitcoin’s regular price cycle…
Bitcoin prices have tended to peak in the last quarter of the year after the halving – a regular, programmed event that cuts the supply of new coins in half. The last one occurred in April 2024.
The year after Bitcoin’s peak, a bear market has always hit. The data shows it clear as day:
- Bitcoin’s $1,250 price peak in December 2013 was a year after the November 2012 halving. Then it dropped 85% in 2014.
- The $20,000 peak in December 2017 was the year after its July 2016 halving. It fell 84% the next year.
- The $69,000 highs in November 2021 came the year after the May 2020 halving. Then Bitcoin crashed 77% in 2022.
- Last October, Bitcoin peaked at $125,000. And it’s down 45% from that high.
But here’s the thing…
If you had access to TradeSmith’s tools, you didn’t need to even know what the halving was, much less care what it meant.
You could’ve followed our Short-Term Health indicator instead.
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“AI is a bubble – sell!” one analyst says. “AI has room to run – buy!” says another. The confusion you’re feeling isn’t random. It’s the warning. When investors can’t tell what’s real, they follow momentum… right off the cliff. Happened in ‘99. Happened in ‘07. Happening now. See the signal that cuts through the noise.
This indicator tracks the health of short-term trends…
It works on a simple traffic-light system.
When the signal is green, a stock or other asset is a buy. When it’s yellow, it’s a hold. When it’s red, it’s a sell.
Bitcoin slipped into a Red Zone on Oct. 10, 2025, at $113,000 – a month and change after our warning and just weeks after retreating from an all-time high.
It’s all in the green, yellow, and red bar at the bottom of the chart below…
Bitcoin stayed in a Red Zone until Jan. 3 – helping you sidestep a 20% drop.
Then, after brief stints in Yellow and Green Zones, it reentered a fresh Red Zone in January – ahead of another 20% drop – where it sits today.
Investors in “crypto treasury” stocks have done even worse…
These are companies whose core business model is to buy Bitcoin and other cryptocurrencies and then hold them on their balance sheets. They do this by selling bonds or issuing new shares.
That turns these companies into a leveraged bet on Bitcoin.
When Bitcoin prices rise, the gains stack on top of borrowed money. But when prices fall, the debt stays put. So these stocks rise faster than Bitcoin on the way up… and sink much faster on the way down.
Strategy (MSTR) – run by Bitcoin evangelist Michael Saylor – is the pioneer of this business model. It used to make enterprise software. But after Saylor got bitten by the Bitcoin bug, he dedicated the company to accumulating the cryptocurrency.
This worked great on the way up. From its 2023 lows, MSTR shares soared by almost 3,000%.
But that leverage has since cut the other way. And MSTR has plunged more than 70% from its all-time high in July of last year.
But if you followed our Short-Term Health signal, which flashed on Sept. 3 – well before the signal in Bitcoin – you’d have avoided most of that downturn.
Because MSTR’s Red Zone signal flashed just 27% below the all-time high.
And as you can see, both Bitcoin and MSTR are still in Red Zones. That means their bullish trends remain broken, and they remain short-term sells.
So don’t go buying the dip just yet.
Here are five fresh buy signals to watch instead…
Short-Term Health is great at helping you avoid losses on stocks or other assets you’re holding as short- to medium-term trades.
It’s also great at signaling new short-term entry points.
So, let’s flip the Short-Term Health signal around and look for stocks flashing fresh Green signals.
Here are the top five most recent Short-Term Health buy signals for stocks in the S&P 500, the Dow, and the tech-focused Nasdaq 100. All five turned Green on Friday:
Those stocks are consumer goods titan Procter & Gamble (PG), building technologies and HVAC conglomerate Johnson Controls (JCI), wholesale drug seller Cencora (COR), construction and industrial supplier Fastenal (FAST), and multinational HVAC and security equipment company Carrier Global (CARR).
What sticks out about these stocks is the unsexy, un-techy nature of them. They’re positioned to better withstand the accelerating march of AI algorithms that quickly disrupted the software business over the last several weeks.
Maybe investors are flocking into Main Street-style businesses because they don’t seem to be under immediate threat of AI disruption, like many software companies are.
No matter the reason, the momentum is there. These stocks and others like them should be at the top of your watchlist as Wall Street continues to err toward “risk off” on tech.
But what if you want fast-growing businesses in strong uptrends?
That’s a rhetorical question – of course you do.
Anyone who’s watched the last decade of market action wants these stocks, because they’re where the biggest money has been made.
Think about the Magnificent 7. All of them have benefitted from fast fundamental growth rates and strong technical price action. That’s why they’re multi-trillion dollar companies today – and were a fraction of their current size just 10 years ago.
Finding great stocks means laser focusing on these two factors. And nothing focuses on these two factors better than Jason Bodner’s Quantum Score.
Before joining TradeSmith, Jason served as Head of Equity Derivatives at Cantor Fitzgerald. There he executed multimillion- and even billion-dollar trades for Wall Street’s wealthiest investors… while expertly concealing their buying activity to prevent other traders from driving up prices ahead of them.
Now he uses those same skills to detect when institutional investors are taking unusually large positions in stocks. And he alerts his subscribers to these money flows through his Quantum Score system.
The Quantum Score first ranks thousands of stocks by fundamentals like revenues, profits, and margins. Then it evaluates the top performers’ technicals – where a high technical score indicates heavy institutional buying.
This combination produces a simple 0-100 rating – higher numbers indicate better buying opportunities.
Using the Quantum Score, let’s revise our earlier search for Short-Term Health Green stocks with a simple filter – we want stocks with a Quantum Score of 90 or above – placing them in the top 10% of stocks in the market on the most important metrics.
We’ll also expand our search to the S&P 400 mid-cap and S&P 600 small-cap indexes, to look for smaller companies with big potential:
Those stocks are industrial equipment distributor MSC Industrial Direct (MSM), animal nutrition and medicine company Phibro Animal Health (PAHC), major pharmaceutical player McKesson (MCK), Euro and Asia-Pacific soft drink bottler Coca-Cola Europacific Partners (CCEP), and water management and bottling company Zurn Elkay Water (ZWS).
What do you notice here? Once again, not an AI or tech firm in sight.
It’s all real, Main Street-style businesses – and ones hitting on high fundamental growth rates, strong price performance, and the telltale signs of Big Money.
Combining TradeSmith signals like this has such high potential to lead you to the best trades.
And with this focused study, we can see that not only is the price action leaning toward stocks outside of tech – the Big Money is leading it.
Keep these stocks on your watchlist, especially as the latest AI disruptions continue blowing holes through the stocks Wall Street has flocked to in recent years.
To building wealth beyond measure,
Michael Salvatore
Editor, TradeSmith Daily
P.S. Do us a 15-second favor?
Email us a stock you’re thinking about trading. The address is Feedback@TradeSmithDaily.com.
Something you own, something you want to own, something you hate and want to bet against – doesn’t matter. We want to know.
Why?
Because later this week, I’ll be sitting down with Lucas Downey – TradeSmith’s master of signal studies and editor of our Alpha Signals advisory.
We’re testing a big upgrade to TradeSmith’s software that automatically shows us dozens of useful trading signals on thousands of stocks every single day.
And I want to get as many ideas as possible from you so we can see which ones are popping up on this new screen…
We’re recording this week, and cutoff for submission is Wednesday at market close. So don’t delay.
If there’s a stock you’d like us to “battle test” our new software with, please send it to us at Feedback@TradeSmithDaily.com.
