Transcription
Hello, followers of the four-year journey. This is Bob Lucas, April 8th, in New York, 2025. I hope you're doing well.
This is a follow-up to the short post I did on, I think it was Sunday or Monday, about a portfolio change. I want to go over the reasoning and the thinking behind that, and know some people don't take it so well when I sell some of my portfolio. I'll try and explain the logic behind doing something like that, and then, of course, we'll talk about where we stand in the four-year cycle.
I'm still bullish on this cycle. I still think we have the ability to push later in the year, or if not even early next year, to a high in the four-year cycle. But I want to talk about some of the headwinds we're seeing, some of the structural, uh, problems in the charts as well that led me basically to, uh, to the portfolio change this week. And then I'm just going to cover real quick kind of an alternative view that I've been thinking about that makes a little bit more sense now, given kind of what's going on here at the moment. And I'll present that idea as just a possibility and something for us to really think about.
So let's go into the portfolio change. So the model portfolio now stands at 27 Bitcoin, and a combination of Bitcoin and cash has the value at 3.44. Uh, the action here was to sell 1/3 at 79,500, and that cash will remain in sort of the model portfolio, looking for redeployment at this stage. The redeployment is really going to be the next cycle low, but there will be a situation where if we hit some significant lows over the next month or two, if that even transpires, to possibly redeploy some of that. I'll, I'll go over that in the chart to follow.
So, uh, another target at the moment is set for 148. That is subject to change. That is based on a certain extension in the next possible cycle. I'll cover that also in this upcoming analysis.
The first thing to note, looking at this weekly chart regarding the portfolio change, is to understand that that is not a decision I came up with in the last week or so, or a rash decision, decision based on market action, although that is part of it. In the last video, if you go back and watch that from, I think it was February, I mentioned pretty clearly, as we were dropping down here, that we were looking for this weekly cycle low to develop, and I believe we saw that here in February with a deeper retest two weeks later. Regardless of where that weekly cycle fell, it was of my opinion that the cycle ended, and I mentioned in that video that we were looking for sort of a bounce back up to this higher level, um, and then obviously a continuation. And that if we saw a bounce in a new weekly cycle and then came back and took out this level, wherever it formed, that it would be a very bearish signal, at least for an intermediate time frame, and that would be suggestive of possibly a four-year cycle top, but at least a deeper correction and prolonged period of downside action. But ultimately, in a, in the third year of a bull market in a rising cycle, you don't want to be seeing significant lows like the one we had in February, that weekly cycle low, to come back to rally back up and then to be taken out. Uh, it doesn't happen often, and the third year is supposed to be the expansive year, the year that the gains begin to really accelerate. And seeing that come back and take out those lows is more of a protective move on my behalf to, uh, shield or protect some of the account from the possibility that the four-year cycle has peaked.
Now, again, want to reiterate, I don't, I'm not saying that the cycle has peaked. It's not a confirmation of a cycle being peaked, but I think to ignore what is going on in the macro environment, in the equity markets, in the risk markets, and also in this Bitcoin chart itself, I think is to basically be investing with blinders on. Now, the portfolio is designed to make few changes over a long period of time, so I don't make those changes, um, easily. So obviously, uh, I put a lot of thought into this from the last video, and this to me is just a level where, uh, once you come back down and take out kind of those key levels that you, uh, have to at least believe there's a possibility that the cycle has peaked and that we're now in a declining cycle. On the monthly chart, you'll also notice that we have, you know, a little bit of a trend line breakdown, um, on the monthly as well, and that is not necessarily indicative of, um, a top in the cycle. Trend lines, they break often enough, is that that in itself is not a reason to make a trade action, but it is just adds to kind of the evidence or possibility that we have to take the idea of a cycle peak, uh, a little more seriously. Also, it's not the second year or the first or second year of the cycle where you really expect the cycle to continue moving higher. We're in the third year, and we've actually had a good cycle. Even though I think hodlers have done really well, four-year cycle followers have done very well, I get the impression from talking to a lot of people and just hearing of the performance and stories out there that the cycle has been very, very difficult as a whole, and, um, you know, people haven't done so well. But the reality is that Bitcoin itself, from the lows, has done really well, and it moved up to a high on month 26, so the midpoint of the cycle was right here, uh, in August of 24, and then it came out of that in the second half of the cycle, so it's already formed what we call a right-translated cycle. It has satisfied that requirement for, uh, moving higher for longer than it will be eventually in the declining phase of a cycle. In addition to that, of course, from a gain perspective to a peak, not shabby at all, 600%, so many multiples higher. Also, from the last cycle, we exceeded the last cycle higher, not by a huge amount, but not by a little either, 60% above the last cycle. The asset class is obviously maturing, market caps are a lot higher, so, um, you know, again, just want to, I need to be very, very clear because people don't represent sometimes what I'm saying very well, um, I'm not calling for this to be the top in the cycle, but I'm saying that the probability of it being a top has increased from where it was, say, 10 to 15% chance, which it always is, kind of a 10% chance, but you know, from that low-risk possibility to something that is maybe more like a third, you know, a 33% chance that we've seen a peak. And of course, even if we had a peak, it probably would see some pretty sharp moves before kind of rolling over something like this. But the point is that the risk that the market has peaked is higher, and therefore, getting in at this last trunch at the near the lows of the cycle, I want to protect some of that capital. Right, it's grown well, it's up a lot, and we are now, as I said, a good almost 30, we are 29 months into the cycle, so it's deep enough now where I just need to take this a little more seriously, and this is the reason why the portfolio has chosen to reduce the position by a third.
Now, if you think that I want price to go down as a result of that, you'd be mistaken. I want price to go up. I want price to do this, and yes, it means I would have less of a position if that were to happen, but I'd much prefer to ride two-thirds of a position up to 150, 200, or even more thousand, than I would to be able to say, well, you know, Bitcoin's back down to 48 or lower in the next six months or a year, and I, great, I sold a third of the position. It doesn't really work that way. It's protective more than anything else, banking some, uh, but expecting and really hoping that we find an end to this declining phase that we've seen over the last three or four months and the resumption of the bull.
Just a couple other, um, points for why the possibility of a top is greater now. I mean, there's a serious macro issue going on here with tariffs, trade, and the economy. It is, it is generational. Uh, we haven't seen an impact, uh, or disruption like this to world trade in decades, and that is significant. And depending on how long that goes on for, how much disruption and uncertainty that creates, that could potentially, I mean, obviously equities are down 20% from the highs, but that could end up bleeding in and becoming a full-blown global recession, and equity markets down, you know, 25, 30, 35% as a result. Now, of course, Bitcoin could decouple from sort of acting as, as a risk-on asset, but, uh, with ETFs being so new and sailor and others, uh, the institutional or TradFi involvement in Bitcoin leads me to believe that a full decoupling from a sort of meltdown in the equity markets is probably unrealistic, although it would be great to see it act that way. To expect that it would is, uh, I think again unrealistic. And therefore, in combination with the technical bro break breakdown that I showed, um, I, I think it's just prudent to just take some profit and sit in cash and wait for, uh, this sort of dust to settle and to see how it shakes out and unfolds.
Of course, on the, on the flip side, there's a lot of bullish reasons, uh, out there still, of course, including the fact that when I flip the narrative on the bullish side of things, we still have a president that is very, very pro-Bitcoin, pro-crypto. We have a lot of institutional flow still coming in. We, uh, price is sitting still only at the 10-month moving average, which is still kind of rising at this point. So at the moment, it still feels like a just a good pullback in a bull market, something like a 30% pullback from the peak, which we've seen many times in prior bull markets. So I'm, I don't want you to come ac, I don't want you to think by just selling a third of the position that all of a sudden I'm a bear on this market. I am essentially an allocator of risk and capital. I, I try to allocate capital at a more opportune time to take advantage of a trend, and this trend has run for a good amount of time. So as you get deeper and deeper into the cycle, the higher you go, the risk-reward, of course, changes as a result. And these events that I've described lead me to to get a little more defensive, but still very much a believer and bullish on, on what we're seeing right here.
From a downside perspective, right here, uh, I'm not interested in necessarily adding back to that position again, as I mentioned. Quite happy, uh, very happy to see this reverse and start making a run back to the 100,000 level and hopefully an all-time high and a push to a more traditional cycle high. But these cycles at, say, 35 months, like it's done in the prior cycles, is by no means any guarantee that it'll happen this way. I think I've tried to put this point across in many videos in the past. This is just a guide, and this is where prior cycles have peaked in the cycle. They, they, they will be different in cycles to come, and they may well be different in the current cycle that we're seeing right here. So we can't get so hung up on the idea that it must peak around month 35, give or take a couple of months. And therefore, because it hasn't gone to the October time frame, uh, sorry, this is that that was moved accidentally, uh, November is around the 35-month time frame. The fact that we haven't hit the November time frame yet or even come close is not enough in itself to simply say, well, I can ignore everything that is going on. And that's essentially what I'm trying to say here, um, but we would like to see a traditional four-year cycle that spent three years going up and one year going down. And if that's the case, this will reverse soon and continue moving higher. On the downside, so th, that just covers my view on the cycle. I still am bullish on this, still think we are heading higher, just that there's a lot of warning signs out there.
On the downside, on the downside, I'm seeing the low that we had last summer as a potential full reset of sentiment, full shakeout of, uh, uh, of pretty much the whole industry, um, in the, in the environment that I described where sort of this trade war and tariffs really slow the economy down into a recession and equity markets get slammed. There is a scenario for Bitcoin that can still remain bullish but can really get hit as a result in the short to intermediate term, so over the next, say, 1 to 4 months period, and down around that 52. And again, this is not a prediction. I'm just saying on the bare case, or at least the downside, getting down to a $52,000 level gets us down almost or around 50% from the highs. We actually have done a 50% retracement within a bull market in the past. We've certainly done 40% retracements many, many times. So if, by some chance, that Bitcoin over the next month to three months makes its way down to, say, the 54,000 level, I would be thinking at that point a 50% retracement is enough in a more mature asset class like this with all the institutional adoption and the TradFi, uh, involvement in this where I would want to redeploy some risk and put, put it back to work. But it would have to probably come in the next month or two. It would have to be as part of this continuation. I wouldn't want to see a move back up to, say, a 100,000 over the next month or two and then yet another subsequent rollover. To me, if that were to happen again, then I would say once it takes out the low, kind of what I talked about two months ago with this low, if it were to happen again, then you have a clear pattern of higher, sorry, lower highs and then lower lows. So we already took out kind of one key area right there. If we were to come back, if rally back up and then come back down and take out whatever this low candle is for the month, um, and take that out, then for me that would be a four-year cycle high. That's enough evidence on a monthly chart, which obviously is only printing one each month, uh, it's that would be enough of a trend change to see that to say that the four-year cycle has peaked back here in January. At the moment, we only have an elevated risk of that happening, but a big move up and then a subsequent move down to me is pretty much sort of the final nail in the coffin, and that would change my view. So this is why I'd want to see a continuation of this existing move, the one that really began with the January peak and is still now in the third month of decline. If this were to continue for the rest of the month down to 54, I would be interested in certainly picking back up, uh, with the remaining sort of cash in that model portfolio and buying back for a snapback towards the peak of the four-year cycle later in the year. Not interested if it happens, say, around the August time frame after making another big run up. That would be a rejection at the highs, and then a breakdown would lead me to a lower low, and that to me signals a top in the four-year cycle.
So I know this is going to kind of piss off quite a few people, just the act of selling a third of the portfolio. I think pissed off some people, but just the fact that I'm not uber bullish like I have been pretty much the entire cycle since the lows, uh, pisses people off, right? Because they're like, "Give me an answer. Are we going to the highs? Are we going to 200,000 in by the end of the year, or are we crashing? What are we doing?" The simple answer is we don't know. We never do really know. But the real answer is simply that I'm not as bullish as I was before. I'm still very bullish. I still think this can unfold the way it's been described throughout the cycle and like prior cycles, but there are risks that are creeping in that lead me to kind of look the other way and say, "What if?" Okay, and, uh, that's the reality of an investor, um, if otherwise just go straight huddle, right? If you don't want to or don't care about structure, price action, uh, or don't even care about the drawdowns that we see historically in, in this asset class, then these videos really wouldn't be for you anyway, because these videos try to extract, uh, the most value. Of course, you're never going to pick the top. That's very difficult to do, uh, picking a bottom is certainly a lot easier, and the goal of, of, of this, uh, strategy is mostly to pick up when as much as possible at the very bottom of a cycle and to start to sort of reap the rewards or harvest the gains as it goes up. But of course, you don't want to harvest too early, because as I said, we could be moving much, much higher. But this is just one of those times. So sorry if it pisses you off. I can't really, can't apologize for it. That's just the way I allocate capital, and if it was to continue, which I think it will, that two-thirds of the allocation from here is still more than enough juice for this to be a phenomenal cycle if we go up into the six-figure range and beyond.
The last thing I want to talk to you about was just an idea in general about an alternative view, and this sort of goes back to some of the action that Bitcoin showed, I think back in 2012-13, and kind of like a double pump, actually, it would probably be a triple pump, uh, now this is a very kind of alternative view, a speculative view, uh, maybe a super cycle kind of view, but the idea would be that we actually have an extremely right-translated cycle, let's say just for argument sake, something that peaks around about kind of month 41 or 42, that spends only around six months sharply declining and then moving up into a following four-year cycle that is left-translated and is the blowoff phase of the cycle. So pretty much what we're saying here is that it, it gives room for, for this to kind of maybe crash or be very weak with an economy that's weak over the next three months or so, with equity markets sort of crashing. So maybe a move down, kind of like an attempt back up, another move down, and then something kind of like this back up a little bit tight there, but you get the point, up to a high, down a massive sharp correction, and then sort of your blowoff phase of the cycle that lasts around 12 to 14 months in a peak. So ends up being from this cycle low, a first move up in the cycle, a big 50% correction, and then a deeper, wider cycle up to around 42, 43 months, and then pull back sharply into the four-year cycle though, and then this looking as if it's all part of the one kind of move interrupted by yet another sharp, but not so lengthy decline into a four-year cycle low in preparation for that final blowoff in the four-year cycle that corresponds to kind of this administration that we're currently in, the Trump administration, and how, how much they're getting behind crypto, the TradFi, uh, movement behind it as well, eventually leading all of Bitcoin and to some extent crypto into a major, major peak by say the 27, uh, time frame, uh, even maybe into the early sort of 28 time frame. That covers most of this administration's, is period, pro-crypto period, and sets up Bitcoin for a major, major peak in a left-translated cycle fashion in the next four-year cycle, followed by a more substantial bare market in the years that follow.
Now, again, alternative view, um, maybe a little form-fitting to support a sort of corrective phase that we're going through right here, um, but that is something I wanted to sort of share with you as well that I've been thinking a lot about, and not too dissimilar to kind of what we saw back in 2021, um, with a 50% retracement before moving to an all-time high, whereas this one kind of maybe doing something like that but pushing higher this time, um, and not a great example, but back all the way here in 2020, sorry, 2013, there was something like a 60 or 70% retracement before the next leg up in the cycle. So just something to sort of think about, um, not much you can do to plan around that, but again, that's why I think a move down to this low 50 would be an area where I'd say we're down 50%, we still got a lot of time left in this cycle, not a bad spot to possibly pick up a position again and look for a good sizable bounce, I think, in worst case back up at least to sort of a double top, maybe kind of similar to what it did back there in the hopes that it continues. But if it does sort of double top there, may be some good chances or signs that it's breaking down again and be able to protect that position. So at 50% off the highs for an asset class like this with the ETF in place, uh, I think is a good re-entry. Otherwise, as I mentioned, we ride, well, I ride at least, uh, in the model portfolio on the assumption that we're heading higher and with two-thirds of the initial position in the bag still and taking advantage of the cycle that is still to come.
So with that said, I hope this, uh, trade rhetoric settles down and people come to their senses and we get some sort of stabilization and we don't sort of slip into a significant kind of recession, um, and then I think Bitcoin can turn and resume its trend and everything will be kind of okay obviously at that point and moving up to highs or testing highs by the early summer months, maybe even, maybe even sooner than that, maybe by May, and then not looking back from that point and then being able to focus on where does the cycle potentially peak by that point. So until then, um, wishing you all the best, stay well, and I'll do a video in the next month or two as the market evolves. Um, I will update the model portfolio with any buy, uh, automatic kind of buy levels on the downside in case this market does somehow fall to that level. Otherwise, we'll just, um, wait and see what, what unfolds over the next few months. Take care, everybody. Wishing you all the best.