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 looking at the on-chain risk metric.
If you guys like the content, make sure you subscribe to the channel, give the video a thumbs up, and check out the sale on Into The Cryptoverse premium at intothecryptoverse.com. You can get access to this chart via the website. Check out the link in the description below or the pinned comment. Let's go ahead and jump in.
So, there's a lot of on-chain indicators that we can use in the cryptoverse. There's things like the MVRV Z-score. You have things like the PE multiple and terminal price, uh, the supply and profit and loss, the market cap to thermal cap ratio, the miner cap to thermal cap ratio. Just to give you an idea of what some of those are.
If we go over to the crypto tab and then scroll down, what you'll see, especially if you go all the way down to the on-chain stuff, there's so many different things that you can look at to look at what's going on in Bitcoin, right? There's things like, um, HODL waves. Uh, there's things like supply and profit and loss, right? This is another great chart, uh, that you can follow, and we've done plenty of videos on this as well. Um, but some of them are things like, you know, the MVRV Z-score. This is one example. And there's others as well.
But the point is, is there's so many different on-chain metrics. And so what we did a while back was we took a look at all these and we normalized their prior moves to between zero and one. And so the goal is to then get an idea of where we are within any market cycle.
Now, normally, the on-chain risk goes to at least above the 0.8 risk level at a euphoric top. Now, Bitcoin has had euphoric tops many times in the past, right? Many times. In fact, you can see pretty obvious euphoric tops in Q4 of 2013, Q4 of 2017, Q4 of 2021. But this one was not really a euphoric top. And in fact, in 2021, you could argue the more euphoric top was actually earlier in the year. And you can even see that with the on-chain risk because the actual euphoric top was back in the early part of the year. And then it was still relatively high back in November. We got to the 0.7 to 0.8 risk band.
So then, what does this compare to? As we've said many times, the closest thing that we can find in Bitcoin's history that this looks like is the 2019 non-euphoric peak. And the similarities between the current one, the current cycle, and then what happened in 2019 include things like topping on apathy. And if you go to the social interest, you can see what I'm talking about. How in 2019, we also generally topped on apathy as well. And there was no immediate move in the altcoin market. That doesn't mean that altcoins can't go up. There's a good chance that all, some altcoins will put in new all-time highs potentially in 2026, right? Like that can happen. We've, we've seen that happen before.
But the point is that when you get a non-euphoric top, a lot of people, it's hard for them because you don't, it's not like you have all this new influx of retail investors that are coming in and capitulating and leading to this prolonged bear market. You basically just have people that have been holding Bitcoin for essentially the last year and then they realize, wait, hold on a second. Bitcoin was at the same price a year ago, right? Like if you look at where Bitcoin is today in December 2025 and then you go back to December 2024, Bitcoin is actually lower, a little bit lower. And so there sometimes you get time-based, um, capitulation where people just kind of give up after a little while. And that's essentially what happened in 2019, where we just started slowly going down. And it's not like we knew exactly why.
But what's interesting, and one of the reasons we compare this frequently, is Bitcoin also found that non-euphoric top back then just before the Federal Reserve ended quantitative tightening. And we know that the Federal Reserve is ending quantitative tightening in December, though you might not see the balance sheet reflected until January. And so what happened back in 2019 was Bitcoin then bled into the end of QT, just like it's doing now, right? Like it's all very familiar if you understand what was actually going on in 2019.
Now, when you overlay Bitcoin dominance onto this chart, what you'll see is that Bitcoin dominance back then also went up into that non-euphoric peak. Right? There was this non-euphoric peak. Bitcoin dominance went up. Same thing happened, uh, in this cycle as well. And then Bitcoin dominance in 2019 continued to go up even after Bitcoin USD had topped. And that was one of the things that I said three to four years ago was that, guys, if you stick with Bitcoin, at least until QT ends, then you're likely going to outperform most other assets in the cryptoverse. Now, obviously, back then, people didn't really want to listen to that, but it does seem a lot more prevalent now. It seems more obvious now, even though it maybe didn't, uh, back then.
So, when you look at that, it really does make you, it makes me believe that the best example we have for the current macro environment for Bitcoin is like 2019. I've heard a lot of people say that, you know, if they're, if they're trying to figure out whether to start their own YouTube channel or not, like, well, these market conditions kind of, you know, aren't that great. You should know that I started my YouTube channel in 2019, right? So, it's actually kind of similar market conditions to when I started my YouTube channel. And, you know, we kind of just bled for a while. Eventually, the Fed cut rates more aggressively, and eventually, the money print, the money printers came on, and things eventually changed, right? But it's a process, you know, I can't speed it up. And again, there's probably going to be counter-trend rallies along the way.
But one of the things to think about as it relates to the on-chain chart is that when you look at it, the price, and what we just went through, it seems like 2019. And so when you go look at the on-chain risk, risk, what does that look like the most? It looks kind of like 2019. 2019 also saw the on-chain risk go up to the 0.6 to 0.7 risk band, and then it came back down. We also went to the same risk band this cycle. It just happened many different times, right? It happened more than once. And you could argue that the reason it happened more than once was because the Federal Reserve continued quantitative tightening far longer than they did back in 2019.
Furthermore, not only did they not only does it look similar in that regard, but you could also argue that one of the reasons the Federal Reserve became more dovish back then, um, in 2019, was because there were signs in the economy that things were starting to weaken a lot earlier in that four-year cycle for Bitcoin rather than this one. And that's why this has taken a lot longer to play out. What's interesting is despite the fact that it is a four-year cycle top, more than likely, it is non-euphoric, but you could still have the bear market regardless. It just maybe, you know, maybe it just is a slower one where we just kind of slowly go down, just like we did in 2019.
So, the on-chain risk, I think, is an interesting indicator. You can see it's actually coming into the level that it was at back in August and September of 2024. Historically, some of the best times to buy Bitcoin are when the on-chain risk drops to between zero and 0.1. So, if it does drop back down there sometime in 2026, just know that usually that's a pretty good time to buy Bitcoin. A great time to sell is often when you go to the euphoric levels above 0.8 risk. But as we've said before, dynamic DCA is the way to go. That way, when you get non-euphoric tops, it at least allows you to skim something off so you're not just sitting there taking no profits at all, um, as the market comes back down.
So, generally speaking, like, I mean, I do think Bitcoin, you know, will have a relief rally at some point in the next couple of months or so. Um, but ultimately, it, it does seem likely that we are going to watch the on-chain risk continue to drop more, especially in the first half of 2026.
If you guys like the content, make sure you subscribe to the channel, give the video a thumbs up, and check out the sale on Into The Cryptoverse premium at intothecryptoverse.com. I'll see you guys next time.