Transcription
Hey everyone, and thanks for jumping back into the cryptoverse. Today, we're going to talk about Bitcoin, and we're going to be discussing the fear and greed index. To some degree, it feels like we're living in a simulation. Like, I, I've, I've seen this story before, and, and so we're going to talk about that.
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So, Bitcoin right now has had a nice bounce here off of 60K. So, that's in fact where we have formed, at least the low for now. And I saw a lot of people posting about the fear and greed index and how it had dropped. Um, let me just reload the page. It had actually dropped all the way down to, I believe it was 9 yesterday. Nine. What's interesting is if you zoom out, and actually the day before, on the wick down, it was 12. But what's interesting is that the fear and greed index was nine on February 6th. Fear and greed, February 6th, nine. If you go back to 2018, on February 6th, the fear and greed index was eight.
Now, if you look at Bitcoin, what you'll notice is that Bitcoin also had this capitulation into February of 2018. Right there, this is the same thing we're looking at. And coincidentally, this is essentially where the fear and greed index begins. The earliest data we have for it is February 1st of 2018. And you can see that Bitcoin capitulated down. And what's more interesting is that Bitcoin, back then, when it found a low, it happened to be right around $6,000, which is just one-tenth of the price that Bitcoin just found a low at. So, it just, in a lot of ways, it just feels like a simulation, right? Like, it feels like I've, I've read this story before. It's just prices are 10 times higher.
Now, what's interesting is that there are a couple of differences, right? So, one of the, one of the big differences is that in this case, it took Bitcoin, um, from the highs, it took Bitcoin about 17 weeks to get down there, and it, and Bitcoin had dropped about 52 to 53%. Okay. Okay, but about 17 weeks. Now, if you look at 2017, 2018, to get to that level in February, we dropped 70% over 8 weeks. So, let's go through that again. Right. So, in 2018, in 2018, it was -70% over 8 weeks. And in 2022, it was negative 52%, or let's just call it negative 50% because we're just rounding here. Negative 50% over 17 weeks. So, what's interesting is that Bitcoin dropped a lot more back in 2018, by this point, and it also did it over a shorter period of time.
So, I saw some people say that they were like, "Well, we, if we tapped on apathy, why are we dropping so quickly?" You know, that's kind of what I, what I saw some people arguing is like, "Well, what happened, right? I thought we were dropping slower." But if you go look at the bare market that Bitcoin had in 2019, I mean, it's not that different from the one we have right now, right? Just slightly lower lows and slightly lower highs. But when you're going down, it obviously feels like the world's ending to a lot of people. But in reality, in 2017, 2018, Bitcoin dropped 70% in about half the time, in less than half the time. To give you an idea of 70% from the current, from the highs, that would put Bitcoin at 37, 38K. That's a much larger drop than where we are right now. But it goes to show you how different the path has been since we tapped on apathy rather than euphoria. Right? You can see it took about twice as long to drop 50%, and then back then we dropped 70% um over, you know, over half the time it took us to drop 50% this cycle.
So, obviously, people want to extrapolate like, what does that mean? Does it mean we get a big rally like back then? Um, certainly, one of the things I've noted is that a lot of times Bitcoin in the midterm year will find resistance in the month of March. So, March 2022, you can see back then we rallied into March 2018. And then if you go to this prior cycle, we rallied into March 2014. Now, the rally in March 2014 was a lot less. It wasn't nearly as impressive. The 2018 rally was pretty impressive. The 2022 rally was also kind of impressive. But the one in 2022 feels a little different. Uh, because the one, the rally we had in 2022 was before we broke through support. And this one, you can see that we already broke down below it. So, if you're going to compare to 2022, it almost seems more relevant to compare it to this part of 2022 where we had this big breakdown and then we just consolidated there for a while. So, note the differences, right? You have the 2022 version, you have the 2014 version, and then you have the 2018 version. Now, 2018 had the sharpest climb, but it was also off of a 70% drop. If you want to take the one in 2018, we can, but instead of looking at say, like the price rally of 100%, like some people reached out and said, well, could it go up 100%? Highly doubtful. Highly doubtful. What I think you should look at is the extent. So, if you look at maybe, let's look at a, a fib retracement, right? So, if you take the, the fibs from the, the tops to that low, you can see that we actually rallied back up to the 382. Okay. But in this, in this cycle, if that is in fact that short-term low, the 382 would only be about 85K, right? Like, it wouldn't be that, that much, um, you know, it wouldn't likely be a 100% rally. It would be a much smaller rally, more commensurate with the drop that we had.
So, my base case, which could be wrong, could be wrong. My base case is that Bitcoin is likely still in a bare market. I do think it makes sense to be a little bit less deterministic. The main reason is because going with the 2019 drop, we know that it bottomed out at around 50 to 55% down. So, that comparison always still seems relevant. Even in that case, you know, Bitcoin had a rally up, and then it came back down, and then swept the low. So, you know, who knows exactly how it's going to play out, but what I would say is the eyes should be on the prior bull market support band, now bare market resistance band. So, if you look at 2018, when Bitcoin had that rally, it basically got rejected at the 20-week moving average. Okay. Um, in 2022, we frequently, we got, you know, rejected at that 20-week moving average a couple of times. In 2018, we got rejected at it multiple times. Sometimes we would get right above it, but then it would just be a fake out. And then if you look at 2014, kind of the same thing. We had multiple rejections of it. There was at one point where we did get back above it, but that didn't happen until the summer. We still had sort of a low in February, a rally into March, and then a lower low in, in April.
What's interesting is if you look at the 2014 comparison instead of. So, now it's 60,000. 2018 it was 6,000. 2014, not as obvious, but you could argue it was more so like 600 was, was that low that we were trying to hold in February. On weekly closes, we were holding it a lot, but there were a lot, a lot of these wicks down. But it is interesting how, you know, you go from one cycle to another and it seems to be a 10x move. The only thing is is we did skip a cycle, right? Because it was 600, you know, it was, it was approximately, right? Like, I mean, it's not a perfect match, but it was approximately 600 as support in 2014, and then it was 6,000 as support in 2018, and then 6,000 in 2022. So, clearly, you know, in, in 2022, that level, arguably that we were trying to hold support was maybe like 30,000. So, it, it did slow down a little bit here. So, you have 30,000 in 2022. But sometimes it really does feel like we're in a simulation because of how repetitive the cycles tend to be. What you'll notice in all these cases, Bitcoin had a counter-trend rally that lasted a few weeks, kind of into March, and then it led ultimately, uh, to a lower low. So, that's probably how this is going to play out if I had to guess. I mean, I know a lot of people are upset. They're like, "Well, that could, that be the bottom?" Yeah, it's always possible. But remember, when you're in a bare market, um, the bare market resistance band is essentially a resistance band until proven otherwise. And I just think there's a higher chance than not that it will still act as resistance, uh, for at least a little while. Maybe later this year, it would make a little bit more sense to get optimistic about it about it breaking through, but right now, it just seems like we didn't even give it that much of a chance. The last one, we just wicked up to the 21-week EMA and then immediately got rejected. So, if Bitcoin is able to work its way back up, um, that's most likely where it would get rejected, the bull market support band. And if we make it through the rest of February and we're into the first week of March, and the price really isn't that different than today, you still likely would have a drop going into late March or going at least going into April. Um, so the, the point is is like, you know, how high can, how high can Bitcoin go?
Now, in 2018, when we had the rally off of 6K, the drop into April was actually a higher low. We didn't get a, a lower low until the summer. You see that? So, relevant to, to consider. And then in, in 2022, we had this rally off of February into March, and then the drop into the summer. We had a drop into May that was in fact a lower low. In 2014, the move from February to the low in April was also a lower low. So, you have, you have basically have two examples where the low in April or May was a lower low than compared to February, and then you have one example where it was in fact a higher low. Some of the times it seems like we, like, like we flip, which we're doing, like maybe like we sort of skip a cycle, and, and so perhaps it'll play out like this, where it puts in a higher low and then puts in a lower low in the summer. Um, especially given how similar some of these things have played out.
But the thing about, you know, the fear and greed index that is interesting is that in 2018, the fear and greed index hit 11 in February, but then after that, I don't know if it ever went below that level. Let's look at the raw values. You can see that the fear in February was the lowest the fear and greed index got for the entire bare market, despite the fact that it eventually dropped another 50%. So, the fear and greed index by itself is not always the best indicator. Um, and that's kind of proof, right? Like, if you can have a 50% drop, but the fear and greed index be higher, you know, perhaps that's like a divergence you're looking for. Um, but the low over here was, was what, eight? And then in, in 2018, later in 2018, it ended up being nine.
So, I don't know exactly how it's going to play out, but my guess is that we're going to have plenty of tests of the bull market support band, just like we have in prior cycles. And it's always possible we get, we get one of these larger fake outs at some point, like we did in 2014. But if we do, I would guess it might happen a little bit later this year. Uh, for now, this low here, we're trying to build off of that. Hopefully, we can continue to build off of it for a few more weeks, potentially into early March. Um, and if we make it to early March and prices haven't really moved from, from these levels, then you still likely uh, continue down, and, and that would, that would be more similar to, uh, 2014, right? So, like, like in 2014, we had a, we had a rally off of a, a February low, um, and then we just rallied back up to the bull market support band, got rejected, and then went down into April. And of course, in 2022, when we dropped, we rallied, we got above it into March, and then we dropped into April, May. So, some of those times you'll get these, like, these deep drops and these long wicks down, and then it feels like a counter-trend rally as the price goes back up, but then it like just continues to bleed. You get a quick wick up and then you sell off. That's happened so many times where you get this long wick down, and then the next two weeks continue to bleed, rally, drop. That's another pattern, and that's why don't be too deterministic about this. I know everyone wants a larger rally, and I honestly, I hope we get one. But if you look at 2022 and you look at 2014, there are examples where you get these long wicks down, and then you just get a small rally up to the bull market, and then drop. So, again, feels like we're living in a simulation.
What the, the crazy thing about Bitcoin to me is that like, everyone can just sit around for, for three years say that the top's going to be in Q4 of the post-halving year, just like it always is. There's a, a group of people that will always say, no, that's wrong. But then every cycle, it just ends up being the same thing. And what's funny is it, it just drives people crazy. Like, it's like, can it really be that easy? But it's also evidence that like, a lot of people want to try to use like the news and narratives to really drive, to try to figure out to explain price action. But the fact that it's happened now four cycles in a row, is that not yet proof that the news just simply doesn't matter? Like, what are the chances that every Q4 of every post-halving year, there was something awful that happened that ended the Bitcoin bull market, right? Like, it just seems unlikely that it's the news cycle causing it. It seems more likely that Bitcoin is just behaving on, you know, some type of cyclical pattern. And if you look at the ROI from the low, you know, I mean, is it really a coincidence that all the tops basically occurred at the exact same time in the cycle, in terms of ROI from the low? They all occurred within one or two weeks of each other, at least these, these three cycles that you see right here. I don't think it's a coincidence, right? And I, I certainly don't think it's based on the news. And so, you know, I sit here thinking like, all right, well, it played out like it always does. Maybe the bare market will play out like it always does. And yes, there will be people here the entire year that will say it's not a bare market. Um, I will not be as deterministically bearish as I was. As I said, once we have that 50% drawdown, I want to tone it down a little bit. Like, I don't just want to come out here and, and, you know, be, be a perma-bear every single day. I think it's good to have relief rallies. I think that's actually a really good thing for the market right now, um, to kind of delay the inevitable eventual drawdowns, but it's too, it'd be really difficult, I think, for, you know, put it like this. Typically, when you have a three-year bull market, it doesn't just bottom that quickly. Typically, okay, in Bitcoin's history, when you have these longer bull markets, these like three-year bull markets, the bare markets last about a year. And that, that's why I've said October makes the most amount of sense, but I could see it happening as early as May. I, I could see a low as early as May. And one of the ways it could be May is if, like, let's say, let's say, let's look at the more optimistic case of it still being a bare market, right? Like, the optimistic case is that the low is in, and then we just go up. But if we look at the optimistic case of the bare market and it just being like a normal bare market, you would want to see Bitcoin kind of come back up here by March, sell off into April, maybe put in a higher low like 2018, rally back up, then a lower low, and then it just kind of does something like that, and then sells off into the end of the year. That would be one way in which I could see it being more of an October low. But what if instead of that rally, like, so, so what if instead of going like up into early March and then down into April, like, what if instead of doing this, it does say, like this, where it like goes up, but then it doesn't go to the bull market spread, and it just kind of like hangs out here, and then just, and then all of a sudden we just find ourselves lower, and it just capitulates? That would be a scenario where you might have a low earlier, right? Like in, in May, and, and that would be if, like, we're here, like, if, if that's where we are rather than up here. If we're here and we just consolidate here for a few weeks before Bitcoin drops again on a low like that. If you were to get a low like that in May, I don't know. You know, that would be really difficult to remain, um, super bearish on at that point, even though it did technically go lower.
So, those are my thoughts, and I just wanted to express, you know, those thoughts, and I, I know it's a hard time. One of the quotes that you'll hear me say a lot, and, and you'll hear other people say a lot, is that bare markets make fools of both bulls and bears. They do. If you're a bear in a bare market, you're often a fool because in bare markets, a lot of times the market spends actually more time going up than it does going down. That's kind of a crazy thing to think about. There are so many times where the market just simply trends up for weeks, if not months, right? Right? I mean, the market just trended up for two months, and then it just sold off for three, you know, for three weeks, basically. So, in bare markets, both bears and bulls are looked to made like fools because the amount of time actually spent going down often pales into comparison the amount of time trending up. And so you'll have these, you know, like, these two-month windows where the bears look like morons, and then all the arguments get made, right? You know, the academic discussions happen. Maybe it's the not-so-academic discussions happen, and then Bitcoin is forced to make a decision when it hits that bull market support band/bare market resistance band. It's forced to make a decision, and then we go down. And so then the bears are right for a few weeks, and then you spend several weeks going up again, right? And then the bears look like idiots again. That's how bare markets work where the bears only look like they're right for a very few short periods here and there, but the bulls spend a lot more time thinking that they are right. Right. A lot more time thinking that they are right. Um, because the market generally trends up, and that's kind of how it, how it typically works.
So, those are my views. Um, in the absolute best-case scenario, where the low is in, which is not my base case, but in that scenario, you would still likely be testing that low in 2019 after the 50% drop. We had a rally. We then tested that low again. Coincidentally, I know it's crazy. Coincidentally, that low was around $6,000 as well. Um, so, it's just kind of funny how it, how it all plays out. Um, you know, like, are, is this, like, the, the low, the rally to the bull market support band, and then down? Is that what we're doing? Just kind of like a larger version of it. If it is, what we would expect would be a brief move up, a brief move back down, and then maybe a larger move back up to these levels right here. Who knows? My base case, strength into early March, sell off into April, May. Don't know exactly where price is going to be. That's my best guess.
If you're going to trade these things, just know no one has any clue what the hell is going to happen. Don't take what I'm saying as, as a crystal ball because it certainly is not. I have no idea where the price is going to go in the short term. As I've said, short-term price action is akin to geometric bounty in motion. It's a random walk, right? For any of the physicists out there, it's a random walk, and there's no way to know exactly where it's going to go. So, if you are going to try to play the short-term moves, I would recommend, not financial advice, but I would personally only use small amounts, you know, if you just want to try to have some fun. But at the end of the day, in terms of, you know, getting through this year, the main focus is to get to survive this year because midterm years, midterm years are notorious for chopping up both bulls and bears and, and they destroy both sides. So, by the end of it, if you're a bear, just because you're a bear doesn't mean you're going to be on the right side of the market if you end up trading every counter-trend rally and then failing. Like, yes, Bitcoin is up to 71K, but think of how many times people thought the low was in, right? I mean, you could have, a lot of people thought the low was in at 85K. A lot of people thought it was in at 80K. A lot of people thought it was in at 75K. And a lot of these guys are going to end up being those resistance levels on the way back up. Like, the guys that, that, that bought the low, the dip, and then it just kept on dipping. Like, they will end up being some of these resistance levels that Bitcoin has to work through because while you might be up if you bought the bottom, a lot of people are not, right? Like, a lot of people were buying all the way down, and they're trying to get back to break even right now. And so, you know, there's a lot of different emotions that are going on. You have the people that are euphoric that bought here. You have the people that keep buying the dip that just kind of hopes that the market bails them out. So, there's a lot of competing forces right now. Um, but those are my views.
If you guys like the content, make sure you subscribe to the channel, give the video a thumbs up, and again, check out Into the Cryptoverse Premium at intothecryptoverse.com. Links in the description below, ITC50 code at checkout to get 50% off. And then also check out the new website, benjaminc.com. As I mentioned, uh, we did publish a report there last month, which explains a lot of what's happening. We published it on the 15th of January, I believe, and Bitcoin was actually at 97K. I published the report literally at this wick high on January 15th, right here. I published it right there. I guess it was on the next day. It was not, it was not the, this was the 14th. I published it right here. And in that report on the website benjaminc.com, if you want to read it, it kind of explains what's happening, explains why this is happening, and, and, um, you know, like, what we would expect, uh, throughout this year, or at least through the quarter. But those are my views. Both of those links in the description below. Check it out. Thank you for tuning in. I'll see you next time. Oh, by the way, subscribe. We're going to a million. Only about 20, a little over 20,000 to go. So, let's hope we get there. I'll see you next time. Bye.