Transcription
Over $20 billion in crypto has been liquidated in the past week and a half. Part of that being the largest single day liquidation event in the market's history. All coins got absolutely smashed and Bitcoin continues to correct. Today, I'm joined by Benjamin Cowan, one of the most respected onchain and cycle analysts in crypto. To answer the question everyone's asking, is the 4-year Bitcoin cycle dead or are we right on the edge of another top?
A lot of people sort of chalk up the four-year cycle for Bitcoin to the having, but I don't even think that's the reason. I mean, if you look at the S&P in the '50s and the '60s and the '70s, you'll see that we had four-year cycles back then as well. You could argue that it's based maybe around the presidential cycle.
Ben breaks down why altcoins continue to bleed against Bitcoin, why Bitcoin dominance keeps rising even in rallies, and what history tells us about how this cycle might end. From the ETF-driven acceleration to the Fed pivot that could change everything, we dig into whether this cycle mirrors 2017. A lot of people when they think of alt season, they think of what happened like last cycle where alts outperformed Bitcoin for a really long time. But in reality, a lot of times in cycles before last cycle, it really only lasts for like a month or two, right? It's not a year-long process. Everyone fumbles into altcoins. Bitcoin dominance capitulates. It drops and then the bare market begins.
What it would take to finally trigger a real alt season. Not only do you need Bitcoin at all-time highs, you need Ethereum at all-time highs, in my opinion, to see any massive rotation into altcoins.
And why the next bare market, if it comes, could be the shallowest one in crypto history. Maybe you get a bare market next year, but it's not as deep as people think it's going to be. And maybe the reason for that is because they're just cutting rates and they're trying to keep the boat afloat for as long as they possibly can. If you want to deeply understand what happens next for Bitcoin, all coins in the market as a whole, this is the most important interview you will watch before the end of 2025.
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Ben, you've been right for a really, really long time about what the market's going to do. Obviously, harping on Bitcoin dominance and the relationship between Bitcoin and alts. Maybe you can set the table here. You know, we're now in 2025. I think a lot of people have expected to have a massive alt season or for the cycle to repeat and clearly that's not been the case.
Yeah. I mean I I feel like I've had a good streak for like the last year or two, but we all have our moments where we're wrong and I have no shortage of of wrong calls in the market at at certain points uh you know during my tenure as making predictions. But I I will say I think I think the reasoning for you know, the the reason why people are so off sides with with altcoins is because they expected it to be like 2021 when we had like you know rates at zero and money printing galore and this is more like the 2017 cycle like structurally and also in in the way that altcoins have been behaving with respect to Bitcoin. And so one of the things that I've I've mentioned a few times is how similar this is to the 2017 cycle where you have this rally by all Bitcoin pairs that starts in the summer and then it kind of like tops out in August, September and then it comes crashing back down by early November and then it got another rally and then another crash in early December. So the reasoning for kind of talking about the devaluation of all Bitcoin pairs was just saying, "Hey guys, like what if this plays out like it's always played out in other cycles besides the 2021 cycle where you continue to see altcoins drop against Bitcoin, even as late as early November of the post having year.
A lot of people when they think of alt season, they think of what happened like last cycle where alts outperformed Bitcoin for a really long time. But in reality, a lot of times in in cycles before last cycle, the alt season that that people want, it really only lasts for like a month or two, right? It's not a year-long process. It's a very short process. Everyone fumbles into altcoins. Bitcoin dominance uh capitulates. It drops and then the bare market begins, right? And during the bare market, Bitcoin dominance kind of just slowly works its way back up. Um, again, I think the reason this cycle people have been off sides is because um, they expect it to play out like last cycle. And right now we're at a very precarious position where I'm of the opinion that the only way you can even get an alt season at this point is if Bitcoin goes to all-time highs, right? And as we've seen throughout this entire cycle, the process of Bitcoin going to all-time highs is accompanied by Bitcoin dominance also going to new cycle highs, right? And you can see that this this purple line right here. Uh if we let me put Bitcoin on this chart but anytime anytime this cycle that Bitcoin has rallied to a new cycle high you'll notice that during that time Bitcoin dominance is going up and then when the when the new cycle high is breached that's when Bitcoin dominance gets a correction right and that's that also happened over here as well like as Bitcoin rallied to a new cycle high Bitcoin dominance went up and then again in 2025 right so you've seen that process this play out many many times. So from this point, in order to get an alt season by the end of the year, you have to have a rally by Bitcoin to all-time highs. And if you don't get that, if if we just kind of if Bitcoin just struggles for the rest of the year, what's going to happen is you won't have an alt season. Uh but Bitcoin dominance will go up regardless. As we saw on last Friday, we saw, you know, altcoins citulate. I think we're kind of in this defensive rotation right now and that's likely going to persist for at least two to three more weeks minimum would be my guess.
So effectively in a scenario where Bitcoin goes up, Bitcoin dominance follows and also goes up and you make a high. So we need to see much more altcoin pain before there can be an alt season. And the flip side is if Bitcoin continues to chop, there's no real interest in alts. They don't really go up. And then the third scenario, if Bitcoin drops hard, we know that that's the worst case for alts because Bitcoin dominance still rises and altcoins then drop disproportionately even harder.
Right. Exactly. Hard to handicap a scenario where from this point, Bitcoin dominance just falls off a cliff for no apparent reason.
Right. I can think of a scenario why altcoins would go up on their USD pairs, right? It would require Bitcoin to go up. But in that case, Bitcoin is still going up more, you know. Um, so I think that's kind of the the rationale that I've had for a lot of this cycle of like why even bother with with all these altcoins unless you're going to take a short-term trade, right? If you're going to take a short-term trade and trade the breakout and then get out of the altcoin before the rotation back to Bitcoin begins, you can do that. But there's not really been a time in this cycle where an individual altcoin, except for maybe like two or three, there's not really been a great time where an individual altcoin was a great long-term investment, right? It was always just a short-term trade back to Bitcoin after you after you get some some profits from it. So, I do think from this point, for the next at least two to three weeks, you should see Bitcoin dominance continue to climb. Um and and and the the the thing about it is it doesn't really matter what way Bitcoin goes, right? Every single outcome would likely yield alts uh alts fading for a little bit on on at least their Bitcoin pairs.
Okay, so let's take the optimistic view that it looks like that 2017 chart and we see a bunch of pain through the beginning of November, but then we do actually get an alt season of sorts. Is that something that's on your radar as a legitimate possibility?
Absolutely. Yeah. Like absolutely because I mean even you know for the longest time I was bearish on ETH against Bitcoin but I completely flipped that view in April and the reason I did was because you know Ethereum did what it needed to do, right? Like it it went home as I say, right? Like it went to its its lower logarithmic aggression band. And so a lot of people just thought I was just like perma bear on Ethereum. But in reality, what I was trying to communicate with people was that in order for ETH to bottom against Bitcoin, Ethereum has to go to its regression band, right? And you can see throughout all of history, every time Ethereum goes to its regression band, that's where the Ethereum valuation bottoms against Bitcoin, right? And so in April, I actually bought Ethereum, right? I thought, all right, now it's a good buy because before it wasn't a good buy because while it was going up, it was bleeding to Bitcoin, right? So you're just better off buying Bitcoin. But in April everything changed, right? I thought ETH had bottomed against Bitcoin. Therefore, it became worth the risk. Now, to what extent if you go to like modern portfolio theory and look at say what what portfolio composition maximizes your sharp ratio or sort ratio for a portfolio consisting of Bitcoin and Ethereum, the sort ratio is maximized with 83% Bitcoin and 17% Ethereum. The sharp ratio is maximized with 81% Bitcoin and and 19% ETH. So you're essentially saying that like an 8020 split kind of gives you exposure to that move by Bitcoin, but it also allows you to, you know, have something else in case we get a rotation into these higher risk assets before the end of the year like Ethereum. So Ethereum was an asset that a lot of people, you know, thought I I was never going to change my mind on, but like once it fulfilled what I felt like it needed to, I then pivoted. So yes, absolutely you could have it is possible to have an alt season, right? It absolutely is. But in order for it to happen, you have to have what happened in 2017 play out, which is essentially you have this like big Bitcoin rally that goes to all-time highs really quickly. Everyone FOMOs into Bitcoin, right? Everyone feels like they're missing out on the rally, right? Like everyone FOMOs in. They trade their altcoins and and Bitcoin just goes higher. And and what just happened, by the way, in 2017 is kind of what you could is is what's sort of happening now where Ethereum had a nice rally kind of up into August, but then it just kind of stays flat for a few months. That's why that's why Bitcoin dominance went so so much higher back in 2017 is Bitcoin went parabolic in October and early November and even going into December. And a lot of altcoins didn't really start moving until about mid November, right? Right. So, Bitcoin just kept going up and everyone was sitting around like, "What the hell am I doing with all these altcoins? They're staying flat." And then once they all finally capitulated and gave up on alt season, that's when all season actually happened, right? Is like once everyone gave up,
Right? Yeah. And so, you're kind when you look at when you look at all Bitcoin pairs, you know, this capitulation we had, a lot of people blame it on the the tariffs by Trump, but the point is there's always a narrative to support it. No one remembers the narrative in October of 2017 as to why all Bitcoin pairs had that same capitulation, right? No one remembers that, but it still happened, right? It still happened. We had very similar capitulations and ultimately they did not bottom out until early November and then a slightly higher low in early December. So, all I'm here to say is with Ethereum, I pivoted back in April. The reason I didn't pivot with alts is because I didn't think there had been enough pain. And what you'll notice is that alt Bitcoin pairs put in a lower low while ETH Bitcoin is likely going to put in a higher low, right? And the reason why Ethereum, right, a much higher low. The reason why Ethereum is able to do that is because it got sufficiently wrecked back in April, right? It was bleeding. Like look at this massive bleed out on its Bitcoin pair. It was an outright capitulation. You did not see that same thing in altcoins back then, right? Like for altcoins, total three, it was a it was a very mild bleed, right? It was never I don't think we ever truly reached the point where people thought that their altcoins were dead. We absolutely reached the point where people thought Ethereum was dead. You know, back when it was trading at $1,300, $1,400 and you had Bitcoin at like 75K, you had Bitcoin at a higher price than the the prior cycle's peak and Ethereum was still at $1,300.
It was like 60% off. Yeah. Yeah.
Right. So, you had a lot of people that that thought Ethereum was dead. I think a lot of people want to pretend like they think alt season's not going to happen so that it actually does. But there's still a lot of people holding on. And I think one way that you could get an alt season like the optimistic view. One way you get it is if Bitcoin starts to go up and it really starts to go up, it leaves people behind. They FOMO back in because look on this capitulation here, we already paved the way for altcoins. Like we already know they can go down again to new lows. We just saw it happen really quickly. Bitcoin's already showed you what it could do if liquidity flows back to it. And if if it goes back up, people will FOMO in. They'll trade their altcoins. They'll FOMO in. It'll end up marking the low for all Bitcoin pairs, the high for Bitcoin dominance, and then you could get an alt season. But again, Scott, as we said earlier, the only way you get that is for Bitcoin to get the parabolic rally first.
So all of this implies that you still believe in the cycles, right? because we're comparing this cycle to previous cycles. There there's always differences in each cycle and perhaps you know history doesn't repeat but it rhymes. Things have been slightly different this time. Obviously we wildly preempted the all-time high in Bitcoin. We can say because of the ETFs earlier than we would have ne necessarily seen it in a previous cycle. In this cycle we didn't really get the altcoin moves we would have expected maybe in January of this year, right? are January through May of this year before the summer and we have a lot more fundamental metrics I would say to look at flows of ETFs unlocks of new institutions allowing the buying of all these products. So, all of that said, we now have a lot of debate, I would say, in the community as to whether the four-year cycle itself is dead, whether the Bitcoin to alt cycle relationships are dead, whether we'll get a super cycle, whether we'll never have a true bare market. Right. So, where do you stand on the future of the cycles in general?
It's kind of a tough thing right now because like I I feel like first of all I think the answer to that question for a lot of people would be very different if Bitcoin were at 200k in December, right? Like if Bitcoin doubles up between now and December, I think a lot of people that are currently calling for an extended cycle might actually change their mind, right? Like if
Okay, yeah, probably the time will go crazy through January like it did last time and then we're done. Yeah.
And so that's why I think we need to be open like I think we should be openminded to both outcomes. The reason why I lean towards the fourear cycle isn't because that's what all Bitcoin's always done. It's also been what the S&P has historically done through many decades in its past as well. Like let me just show you a quick chart. I'm not going to spend a ton of time on it, but I just want to show you what I'm talking about. Yeah. So, if you look at like the S&P 500, a lot of people sort of chalk up the four-year cycle for Bitcoin to the having, but I don't even think that's that's the reason. I mean, if you look at the S&P in the 50s and the 60s and the 70s, you'll see that we had four-ear cycles back then as well, right? You have a low in 1950 uh 1958 1962 1964 or sorry not 19 1966 right? So you have 58, 62, 66, 1970, 1974, 1978, 1982, right? So the four-year cycle has existed before and you could argue that it's based maybe around the presidential cycle, for instance.
So
Yeah, I've made that argument.
Yeah. So I don't even think I don't even think the having is the is the culprit for the four-year cycle. I just think it has more so to do with other things, right? like other other things in the market. Maybe it's liquidity, maybe it's just the election cycle. I don't know. But that's why I sort of geared towards that. But what you'll notice with the S&P is eventually the four-year cycle did break, right? Because after 1982, you would have expected the next low to be 1986, right? But it wasn't. I mean, we had in 1986, the market, you know, didn't really move a whole lot, but then the next low ended up being 1987 instead. So my my thought process on this is that the four-year cycle will eventually break, right? It's just a matter of which cycle does it happen. Is it this cycle or is it the next cycle or is it the cycle after that? I don't know when it's going to happen. It will absolutely break. Um, the hard part for me right now with it is that like so far everything keeps like kind of playing out like you had a the way the cycle ends for Bitcoin every single time. The way it's always ended is you have a high in August or early September and then a low in late in in September or early October. So, let's just go through each cycle, right? So, in 2013, you had a high in August and then a low the week of uh September 30th. So going into early October and then you had the rally into the market cycle top. That was the first cycle. The second cycle, same thing. A high in August, a low in September, a rally into the top. The last cycle, same thing, right? A high in early September, a low in, you know, like late September, early October, and then a rally into the market cycle top. This time, you know, we had a high in August, a low in September, and then arguably a rally into the market cycle top. The only thing is that that hasn't happened just yet. So either this time is different and we don't get the rally into the market cycle top or it's still ahead of us. So I think what I'm thinking about it right now is that like when we think about cycle theory, none of the peak indicators have gone off, right? Like no indicator that anyone has created since 2019 has actually signal that the top is in, right? Um so that rally is either ahead of us or it's not going to happen at all. If it's not going to happen at all, that'll likely be obvious to me by the end of the year. If Bitcoin is still not trading to new all-time highs by mid December, it would be hard for me to like stay bullish on it past that point. Like I would have to start assuming that next year would be a bare market because with with markets, I tend to think that tops are processes and that bottoms are events, right? Like bottoms happen really quickly. Tops happen over a really long period of time. And the uncomfortable truth right now that I'm grappling with and I still have my Bitcoin position. I'm still holding on in the hopes that we can get another rally. But the the one crazy thing is that like it's only $2,000 higher than it was on inauguration day. You know, like on inauguration day, Bitcoin at 109K and right now it's at 111K. I'm like, what what the hell's been going on, you know, for the last 9 months uh to allow for this? So for me, I want to give it one final chance to get a rally right into December potentially or, you know, through this month and potentially as late as December. Like I want to give it that chance, you know, to maybe connect the dots on this or something. But I also if it hasn't done it by the end of the year, I have a feeling like a lot of people are going to start pivoting, right? Because they're looking at it the same way I am. They're like, "Well, it hasn't really moved in a while." If it moves a lot by the end of the year and it's at 200k, yeah, I feel like you have to go into 2026 assuming it's a bare market, right? If if it doesn't move for the rest of the year, then I would wonder like what like why not? Like what's going on? Like what's keeping Bitcoin from doing what it's always done? The the only way that I might be inclined to to think that it could go on longer is if you just kind of have another steady incline, right? like where it doesn't
I was going to say if it climbs a wall and let's say it like is chopping sideways into December and then 130 by December 15th and
138 by January 1st you've made a new all-time high and there's you're climbing. So maybe the steady grind through the wall of worry
is the way that it continues through. And I think it's important because as you talk about it
there's a difference between the four-ear cycle breaking and saying there's going to be a super cycle, right? You're not saying there will never be a bare market. You're just saying it might not be exactly on time,
right? Yeah. I mean, I think too like it's easy for people to get so confident in certain predictions. And usually when people do get overly confident, including myself, right? Like I find when I get overly confident about things, the market normally humbles me at some point.
Yeah, it's a signal. I mean, your own confidence, any of us, like uh the minute you're show, it's like showing your wife your portfolio balance,
right? Everyone gets wrecked at some point and and the market humbles literally everyone. There's not a single person that that doesn't get humbled at some point. I think the way I would navigate it though is at the very least I think you you have to the thing I always do in midterm years like regardless like even if I think it's going to be a bare market, I still keep some Bitcoin and I usually get out of all altcoin positions, right? Because Bitcoin, if it is a bare market next year, then Bitcoin should recover to new all-time highs first in the following cycle, right? And we saw that this cycle as like Bitcoin hit all-time highs way before Ethereum did and most other altcoins. Um, so I think you have to at least protect your downside by getting out of altcoins because if there is a bare market next year, it probably won't be as bad as the last bare market, right? Because the last bare market was a little bit more bearable than the one before that, right? If you look at it, every bare market gets a little bit easier to to manage. The first one was like 94% down. The next one was 87. The next one was 84. The next one was 77. So I'm I'm saying if there is a bare market next year from the high in Q4 to the low in say late 2026 I would say probably about a 70% draw down but that doesn't mean it has to be a 70% draw down from 126 like it I mean it could be but it also could be a 70% draw down you know from a higher price if we can get you know if we can get one final push uh before the end of the year. So again like a lot of these numbers don't always make sense. Imagine in 2017, imagine it's October 2017, right? It's the exact same week, right? The week of October 16th or whatever. Bitcoin was sitting at $5,000. Now, imagine I came on your channel and said Bitcoin is going to drop 80% next year. That would have sound crazy, especially because Bitcoin then rallied 300%. It still dropped 80%, but it only dropped 40% from where the price was in October, right? So again, I I I think this is one of those things where a lot of people disagree, but maybe by December more people will be on the same page if if the optimistic if the bullish view actually plays out.
How do you in your analysis, how do you consider ETF flows and all these other fundamental things that we're discussing? You know, City Bank announces this week they'll be custoing Bitcoin and crypto. Morgan Stanley this week is unlocking crypto services to all their clients. You know, we have Paul Tudtor Jones and Citadel's Ken Griffin and JP Morgan talking about Bitcoin as a hedge against inflation, inflation in the debasement trade, right? These are obviously the reasons that many people look to a potential super cycle or at least to much less aggressive bare market draw downs in the future when they happen. Do you consider any of that or is it a if it ain't broke don't try to fix it view with the charts?
It's more like if it's not broke don't fix it. But also the argument has always been for me of um like you need all that to support everexpanding Bitcoin prices, right? Like we like the the way to continue to grow the market cap is is you have all these larger and larger institutions getting interested in Bitcoin, right? Like if you it's like it's just the natural progression of things. It starts off, you know, with the really niche, you know, crypto cryptography nerds back in, you know, 2010, right? Um, and then it kind of just slowly expands to to, you know, to investors that are willing to put more and more into it until last cycle you got to a company like Micro Strategy, a really large company that was willing to bet a lot on it. And then now, who I mean, I don't know if either of us thought I mean, maybe a couple years ago, we would have thought this, but back in 2020 or 2021, I think the idea that, you know, the US government would be promoting Bitcoin would have sounded absolutely absurd. um you know back then but yet here we are right so I think a lot of it is just kind of it's the natural progression it's the natural adoption process of an asset that's that's going higher I don't put a lot of faith into the idea of like you know will it continue to make it go higher because again the same thing happened last cycle right people were talking about micro strategy and there was even rumors you know that like Apple was going to be buying Bitcoin and all these other companies were going to be jumping on board and then none of that stuff ever ended up happening right it doesn't mean it won't happen just like a lot of the things that people are talking about today, it doesn't mean that some of the things might not happen and just maybe they maybe we get a little ahead of ourselves and it doesn't happen as early as we think. You know, maybe it happens in 2027 or 2028 and it requires kind of a reset between between now and then. I mean, one thing to consider though is that a lot of the resets that we've had typically happen after the froth of of altcoins like reach extreme levels and like we're not really at that point like right at this moment,
right? Yeah. like we're not. The only thing that has me questioning any of that stuff is like if you look at um if you were to just look at like monetary policy, which you could argue is just a narrative in and of itself, but if you were to look at monetary policy and and say like quantitative tightening and and interest rates, you know, one of the things that happened last cycle is that Bitcoin kind of like had this rally right here, this Bitcoin dominance rally, and then it eventually faded and then we got to QE and it went even higher. right? Um when when interest rates went back to zero. So one argument and I know it kind of sounds insane and I'm not completely married to this idea. It's just something to think about like what if we're like this Bitcoin dominance rally right here. This is a Bitcoin rally but is also a Bitcoin dominance rally, right? Like Bitcoin outperformed basically everything. What if this is just a larger version of it because QT is also continuing right now, right? It's probably going to end soon. And then maybe maybe what happens is you have a top in Q4 and then you get like a 2026 bare market and then Trump replaces Powell and they turn the money printers back on and then you get quantitative easing that sends price even higher into the next cycle and then you know maybe you get a a a more standard bare market um after that. Like that's also a possibility where technically like kind of everyone's right. Like you maybe you get a bare market next year, but it's not as deep as people think it's going to be. And maybe the reason for that is because they're just cutting rates and and and they're they're trying to keep the boat afloat for as as long as they possibly can. There's one piece of evidence uh that I can find, another piece of evidence that would support a view like that, and it's basically this S&P divided by M2 correlation because it's playing out exactly how it played out in the late in the late 1990s. Um where you have like this um and I don't I mean, if you look at at what the S&P did from 1996 up until this point, like you could argue this is a carbon copy. I mean, even that 20% drop we had in April is like the same like basically the same timing on it. And in that case, what happened was the S&P would get a correction in what's now going into about, you know, early 2026, right? You would have a short-term correction right now, another rally into the end of the year, a drop into early 2026, but then maybe things just stay elevated even until mid 2027 or something before it all comes uh crashing down. That's if they were to play it like that. So, I mean there there is evidence to support views like the one you're you're expressing. I just think that if you are like if the view of of Bitcoin doing well in 2026 is right, I think there's a good chance that it would start off 2026 kind of weak because there's going to be a lot of investors like me that are probably going to to think that it's going to play out like that, like it's just going to be a bare market. And I think it would take a lot of proof by the market that that view is not correct.
A lot of things to unpack. So we also have a history of Fed pivots being bearish in the short term, right? Which I I think most people don't realize. You have uh the yield curves inverted. It generally cor it it generally uninverts and normalizes so to speak. Then the Fed pivots. Then you actually get a stock market correction. And we kind of had this half-assed pivot at the end of last year. obviously. And now I think we're getting the true pivot. And usually that's because the Fed is potentially pivoting when something's broken. And this has happened every time for decades, right? We haven't really gotten the stock market correction that usually comes after the yield curve normalizes and the Fed pivots. And I think we all believe probably that if we see a significant stock market correction, we're very likely to also see at least a temporary Bitcoin correction. So that could be potentially the catalyst in this scenario where we see a draw down or a you know some sort of bare market. I'm not sure it would be an extended bare market as you said I don't think we're getting 80 and 95% draw downs anymore.
Right. I'm not looking for anything like that. I I will say though that when the Fed pivots for the wrong reasons as you said like if there's a really bad data point absolutely you cannot count on
I mean the job market has been yeah pretty atrocious. We just have a good way of uh whitewashing bad data now.
Right. Well, and and two, like hires are down, like hires are really low. Um layoffs are not as high as people might think they are. But one of the things to look at is um uh like yeah, if you look at at job openings, right? They're really low right now, right? They're really low. Hires are really low. And so it it kind of like is like why why is the market holding up so well? Like no one's hiring. There's no job openings. I think the reason is because layoffs haven't really happened in in in a way that it feels like they probably are, right? Like layoffs are still relatively low against historical standards. They're trending up, but they're low. And I think the reason they're low is because layoffs occur after lower stock market prices, right? You get lower prices, the market leads, right? Lower prices then lead to layoffs and then mass layoffs lead to less demand which then lead to the companies making less money which then lead to more layoffs. Right? You get into this like negative feedback loop which we're not in a negative feedback loop yet. Initial claims are still low. The unemployment rate is trending up but it's in a controlled manner. One of my favorite charts is to look at the the states like a map of the states where the unemployment rate is rising over the last 6 months. And like right now it's about half the country, right? If you look at prior recessions like in 2008,
it's the entire country, right? Like it's the entire country. If you go back to the dot era, it's the entire country. This cycle, if I just play this starting in say, let's just play this starting in 2021. No matter what, you'll always find pockets of the country that are not contracting, right? There's always like small pockets. It's never the whole country. And in order for the for the the market to really roll over into a recession and and the stocks to crash, I feel like it has to be the whole country, right? You cannot the stock market loves to look for optimism anywhere. If there's optimism anywhere, it likes to climb the wall of worry. And I think that's the reason why it continues to do to do well. But I mean, there certainly are things that are starting to roll over. Like if you look at at at labor um if you look at um uh what what is it? uh the employment level for construction, that is kind of a a sign of a a market that is starting to to change. And if you zoom in here, it is starting to plateau. And if you look at the year-over-year change on this, you know, when it goes negative, that's when you get your recessions. It's not negative right now, but it is heading in that direction. So again, for in the short term, I don't think it makes a sense to try to be a hero calling the top on the S&P because again, the topping is a is a long process that takes like 6 to 12 months to play out. But to your point, and then I'll and then I'll stop rambling. To your point about pivots, look in the 1990s, we had pivots, but it was pivots for, you know, basically it was a riskmanagement pivot. It was a pivot to keep the party going on, exactly like what PAL's doing right now. And then what happened is they realized that they needed to actually destroy the animal spirits once and for all after lowering rates. They ended up raising rates and then finally the party ended, right? And then by the time they cut again, it was far too late. So again, you could argue that the rate cuts we're getting right now, the market the market continues to interpret as bullish because initial claims are still low, layoffs are still low. How I mean everything's at an all-time high basically, right? I mean, silver's at an all when you're cutting I was going to say cutting into an all-time high in the stock market,
right? If everything's at an all-time high, like why are you cutting, right? They're they're cutting in terms of as a risk management, not because
he said that. I mean, at the last one, he literally said a risk management cut. He used those actual words. So, we don't need to really uh
I'll give Trump credit for one thing. He always tells you exactly what he's doing.
Yeah. I But again, that's that's exactly what it is. It's a riskmanagement cut. And when you get riskmanagement cuts, a lot of times risk assets do well.
So one argument that I've been making for a while here is that even if the cycle is intact, the alt season people were looking for has just been happening elsewhere. And I think that became clear when we saw euro go public and circle go public and bullish go public. And then we saw treasury companies before even buying a single underlying asset going up 28 30 35x on announcements before crashing. Basically anything crypto adjacent in public markets has behaved like all seasons of the past. Massive pump and then a cool off. Massive pump cool off rotation from miners to treasury companies to miners and back and forth. So maybe because we're playing in a bigger pool and now there's exposure to a different investor class, maybe a lot of what we were looking for to happen in all coins has happened somewhere else.
It is possible. I will say this, if Bitcoin does not go parabolic into the end of the year and we just get a bare market next year, then I think your view would have been like that's kind of the view to have going forward, right? like to be like, "Yeah, maybe you get maybe you get these moves, it just doesn't happen in the assets people want it to happen in." Even if you look at the miners, right? A lot of the miners, while they've done well,
they've done well, but they're still bleeding to Bitcoin over the last four years, right? Like they're still dropping against Bitcoin. You could argue that some of the charts, like if you look at like um like say like MEA divided by Bitcoin, like it doesn't even really look that much different than an altcoin chart in a lot of ways, right? like how how like through like I mean look at this you know like how is it really that much different if you think about it it's not really if you zoom in it's doing well and it usually does well at the very end of the cycle right like the last quarter of the cycle you'll often see these types of moves in in miners but you could argue that even in a lot of the miners you haven't really seen these large rallies so I would say yeah like if if we get to the end of the year and altcoins are still not moving against Bitcoin coin, then I think your view is probably the right view to have. But I also think that, you know, if if Bitcoin were to go up between now and the end of the year, like let's say it goes up 50% or whatever, whatever it ends up being, um, then there is still room for an alt season because you could argue the alt season in 2017 didn't really fully start until early December. like it started kind of in early November, but even then, Bitcoin took most of that liquidity right back as it rallied into its all-time high. So really, even in the 2017 cycle, you would have been just fine holding Bitcoin up until early December and then selling it and then maybe, you know, taking 10% of it and gambling in the altcoin market, right? But just and then securing the profits on the rest. So, let's see what happens. Let's see what happens over the next two months. If if you do see Bitcoin go higher, there still is a chance that that you have a rotation into altcoins, but it's not going to happen in in October.
You obviously mentioned that we've had reduced draw downs each cycle, 95, 80, you know, 75. You kind of mentioned maybe 70 this time. Do you think that with the dampened downside volatility in bare markets that the upside volatility is also now capped as the asset gets bigger and the cycles, you know, continue to repeat forward? I mean, we all know that in the early days,
you have hundreds or thousands of percent gains from Bitcoin low to all-time high. Last cycle was a two and a half, you know, three and a half, whatever it was. It's not the same upside as before. And maybe that's why people are so desperate for an alt season because they still want those 100x upside gains.
Yeah. I mean, no matter how you measure it, we've had diminishing returns, right? And and this cycle looks no different. This is the scariest chart I can find for this cycle. Uh is is that like, you know, the last two cycles lasted approximately the same amount of time that we just had that top at 126K. Um but there are some silver linings. cycle one and cycle two in this case maybe should combine should be combined into a single cycle. Uh and the reason I say that is because you know that entire like cycle one I'm I'm saying is basically this top in 2011 and then I'm saying this the second cycle is that one. You could argue this should just be one cycle you know um and you just had a large draw down kind of in the middle of it but that's not really a normal year-long bare market. It was just a sharp correction and then we continued.
Last cycle we had 65,000 down to 28,000 back to 69,000 over a summer and fall. That wasn't a new bare market. It was a 55% bull market correction,
right? So if you combine cycle one and cycle two, it it's a little bit more optimistic, right? The other way to measure it is if you measure it from the peak and you go peak to peak, which is something you just mentioned, like the peakto peak ROI, like you know, it was like a 2 or 3x um from the cycle before. If you measure that and you look at this cycle compared to the 2017 cycle, there still is a little hope, right? that you could get you could get one last leg up and it just be kind of like the last move of the cycle. What I will say is this. One of the one of the things I'm looking at to tell me I'm wrong or just to say, look, this is when you need to get out. And I know this is a little hand wavy and and moving averages really aren't that great, but at the end of the day, every single cycle, I've noticed that when you get two weekly closes below the 50week moving average, the cycle's over, right? Every single time. So, I'm basing it on that right now. I'm saying as long as we're above this, and even this cycle, you can see we keep holding support at that 50week moving average, right? Um, as long as we're above that, which is currently at around 102K, then I think there's reason to be optimistic. If we got if we start getting weekly closes below 100K, it it's going to be really hard to to not assume the bare markets already begun.
It's really really interesting. It's incredible to me how much history repeats itself even when the narratives or the flows or the fundamentals don't. But I really what's sticking with me is the point you made before is that those are the things that are necessary as the asset class becomes bigger to move it enough to have a
cycle because right a billion to two billion on an asset is very different than two trillion to four trillion.
Oh yeah.
Four to eight because we we have to start eating into like the other monetary assets of the world and not playing in our own pool for those things to happen. The cycles we've had so far, crypto is small enough that they can just happen with some new money coming into crypto without having to take that money from really significant money from elsewhere.
Yeah. What's interesting is that despite the fact that you don't need nearly as much money to move altcoins, they've still been bleeding against Bitcoin the entire cycle.
I mean, like I mean, it just shows you how much more interest there is in in uh in Bitcoin.
Yeah. I mean, before I let you go, let's talk about what the alt season itself could look like because we've had the 2017 ICO craze where it was literally like throw a dart and your name eventually moves, right? Zero, turn your brain off, be become a lizard brain. Don't think, wait till your thing does a 5x and sell it into something else and wait for that thing to do a 5x. I'm struggling to believe with the size of the altcoin market now that everything's going to move or that most old things with massive bag holders can get past a certain point where all those people decide to sell. So, I guess what I'm getting at is maybe even if we have an alt season, it's going to be surrounding very select coins and narratives.
I mean, I don't I certainly don't think that all million altcoins will rally, right?
Yeah.
Um, so yeah, I mean, and and actually that's kind of been a lot of this cycle. I mean, think about what happened in 2023, it was like Solana was going up and that was outperforming. And in uh 2024, at the end of 2024, it was XRP. And then in 2025, it was Ethereum. And then recently, it's BNB, right? We just keep rotating which altcoin is rallying and it's not the collective market. You could reach a point where it is the collective market. Uh but again really not only do you need Bitcoin at all-time highs to see that you need Ethereum at all-time highs in my opinion to to see any massive rotation into altcoins. So if you kind of if if if what you said earlier ends up playing out which I don't even know if that was your base case but if if Bitcoin just kind of slowly marches up to like 130 or 140K you're still probably not going to get like you know the alt season that people want. It might just be a continued selective uh selective move by a few altcoins. The only way you're going to get you're you're only going to get a collective major move by altcoins is if Bitcoin shocks everyone and just goes up way quicker than anyone thinks it's going to. If that happens, it's possible to to to see an alt season. But again, you know, you can at this point in time, you can literally just hold Bitcoin and wait for confirmation one way or another, right? Because if if we go up, you have a lot of upside. If we get a weekly close below 100K, that's just like a 10% drop. So, you could always cut your losses 10% lower. The problem is if Bitcoin drops 10%, alts are down another 50. So, that's kind of how I think you play it is you just mostly stick with Bitcoin and and hope we get one more move. And if we don't and we get weekly clos, we go, you know, we do something else, we we build character in 2026 and come back in in the end of the day, we're all just Bitcoin maxis, you know, buy and hold Bitcoin.
Exactly.
One one way or another, it's where we all land. I mean, the other thing is is for those cycles to continue, even if Bitcoin does skyrocket to new highs, people have to be willing to sell their Bitcoin to buy altcoins. The the money has to go into the washing machine. And I have a feeling that money sitting in people's 401ks and IBIT is not going to sell to buy coin 97 on Coin Market Cap.
You're right. You're right. You're right. So, we even have to have so much more money come in and it has to be like onchain to some degree or we'll see what I said and we'll all of a sudden get a huge pump in like Solana ETFs or something, right? It has to be the the way that people do it is Bitcoin has to go up so much that people just get absolutely convinced that the top is in, right?
They're just so they're so convinced the top has to be in. The reason why you haven't seen an alt season this cycle is because there haven't been enough people convinced the top is in. So think about it. The people that have that call for alt season for the last 3 to four years, they're effectively calling for the end of the cycle every time they call for it because every time you have an alt season, that marks the end of the cycle. So that's kind of one of those things where it's like be careful what you wish for because if and when it happens, that's likely it for a year or three.
Hopefully not, but yeah, anything's happen. I I I I'm I'm hoping that's not the case. Bad man, I want to be respectful of your time. I really appreciate you breaking this all down. I haven't uh been able to dig so deeply into your entire thesis. So, it was great to hear it in one place and get to ask you all the questions. So, thank you for taking the time. And we'll have to get back together end of the year, top of next year, and uh revisit and see where we actually are.
Sounds good to me.
Thanks so much.
Thanks.
[Music] That's dope.