Bitcoin: The Dangers of Complacency

Hey everyone, and thanks for jumping back into the cryptoverse. Today, we're going to talk about Bitcoin, the dangers of complacency. If you guys like the content, make sure you subscribe to the channel, give the video a thumbs up, and also check out the sale on Into the Cryptoverse Premium at intothecryptoverse.com.

Complacency in financial markets is basically this widespread belief that financial stability will continue, making investors ignore various, like, very obvious threats to that financial stability. The "buy the dip" mentality continues to persist because it worked in the bull market, and in the bear market, it, it doesn't really work that well. And while it may work for a few weeks at a time, the market generally resolves lower. And a lot of these risks can range, you know, all sorts of stuff. It could be inflation, could be the labor market, it could be geopolitical uncertainty. And, you know, we don't talk much about politics here. Um, but there's no shortage of geopolitical uncertainty going on right now. And it is, you know, it is unfortunate to see how, you know, everything going on in the world right now, the price of oil spiking. Um, and again, this is what normally causes business cycles to end. It's not like this time is different. In fact, this time is more or less how things have played out in the past. Now, the narrative accompanying the rise in prices of oil might have been different, but this is how things generally play out.

And so, what you'll see with complacency is you'll see high valuations in markets, low volatility, and all this crazy stuff going on. And it then starts to make people think that because all this bad stuff is happening and markets haven't reacted negatively, it'll cause people to think that financial stability will continue, you know, perpetually, and that there, there, there won't be anything to cause prices to go lower. But I think they likely will, you know, I think they likely will.

If you look at at Bitcoin so far, this bare market, we first entered the bare market in Q4 of the post-halving year. Um, we fell below the 21-week EMA back in October, November of 2025. We then had a counter-trend rally from November to mid-January, and we found that Bitcoin got rejected by the bare market resistance band. Now, the bare market resistance band now is currently at around $79,000 and continuing to drop. So, I would not mistake this for strength in the market. To me, what's happening is complacency is taking over. People see all the stuff, you know, all the bad stuff that's happening. The labor market weakness. Um, the last labor market report wasn't so bad, but there's still a lot of weakness in the labor market. Inflation starting to go up again, the price of oil starting to spike again, and then all the geopolitical conflict. You wouldn't know it by looking at this chart that all that's going on, but a lot of times you will have this complacency period before you get another drop in the market. And we already had one of them. I mean, you can see we already went through this once where the market just kind of trended sideways for two months before trending down. In fact, if you look at a date range from this low to the high, it took around 8 weeks or so. So far, we're currently about 8 weeks in or so. So, it's not, it's what we're seeing right now isn't really that different from what we've seen previously.

In fact, if you just look at what's going on with Bitcoin in this midterm year and you look at the year-to-date ROI and compare that to the average of prior midterm years, and then you throw on one standard, standard deviation on that average, we're generally tracking prior midterm years. And in prior midterm years, we often would find complacency around this time. So, I, I do think that complacency in markets can be dangerous because what you'll see happen, and we've talked about this before as well, is that the market will generally trend up, and it'll cause people that are bullish to to develop a false sense of security, just like they developed back over here in late October, November, just like they developed from, you know, November to mid-January, and just like they're developing now. It'll make people, it'll make the bulls develop this, like, false sense of security that everything is going fine and that nothing is wrong because the market in bare markets generally spends more time trending up than trending down. The problem is that when the market does trend down, it goes down very quickly, and then you get to a new low very quickly. And so what happens is then the people that were bullish for the entire sort of local counter-trend rally, they get quiet in the downtrend, and then they start saying the same thing they said back over here again, because, you know, it'll work for a month or two before they have to be quiet about it again, and then you, you find yourself at a lower price. And, you know, you, you'll see, you'll see this stuff continue.

I'm not saying Bitcoin can't ever go higher. I mean, there's some of the best counter, some of the best rallies in Bitcoin occur in bare markets. Um, it's just that the, the, the most sharp, some of the most sharpest rallies occur in bare markets. They just usually result in lower highs. So, again, when you look at Bitcoin price action, you can see how everything changed in October and Q4 of the post-halving year is when normal, is when things normally change. Before October of 2025 or this cycle, Bitcoin would trend down and then break up, right? It would trend down and then break higher. Trend down, break higher. Trend down, break higher. Then everything changed in October 2025. Now we, now we break lower and then trend up. Break lower and then trend up. So it's basically changed the, the sort of the market structure that we're seeing. And so I just want people to be aware of of this complacency that's developing and to remind yourself that it is the, it is things like the price of oil spiking in a late business cycle environment that leads to the end of the business cycle.

One of the ways we can visualize the business cycle, I put out a video called "Visualizing the Business Cycle." Uh, the business cycle is not too long ago, and and this chart really clearly shows it, and it's not a secret formula. You can recreate it yourself. It's just the S&P 500 divided by the unemployment rate squared, multiplied by the US inflation rate year-over-year, multiplied by US interest rates normalized by the money supply or M2. And you can very clearly see every single business cycle going back to the 1960s. And you can see that every single one of them ended with a recession, and most of them also corresponded, if not all of them corresponded, to the price of oil spiking in that late, late business cycle environment. Oil spiking in an early business cycle environment because demand is going up can be bullish. But oil spiking in a late business cycle environment is not a bullish thing, right? It's not a bullish thing in general. And we are, in fact, in a late business cycle environment. That is confirmed by the business cycle, the ITC business cycle chart. And it is also confirmed by the ITC liquidity risk dashboard chart, which shows you that liquidity conditions remain tight. And, and look at what, you know, look at how this played out in 2006, 2007. Liquidity conditions were tight for years, making people believe there was this false s, you know, this false sense of security that financial stability would persist, and then everything changed. Right? The problem is that when everything changed, it happened so quickly that, you know, anyone that was basically saying that the, the, the people that were doomers back then were wrong, they didn't even have time to react. It was basically over before they even knew it. Uh, same thing with 2020. I mean, conditions weren't as tight. But the business cycle is over when this liquidity risk metric goes back down to the lows. The business cycle is over when you see the, the business cycle chart we just showed, when that's back down to the lows. We also know, if you look at the economic policy uncertainty index, it's elevated right now, just like it was elevated going into prior recessions as well. So, I know it's hard to call for this stuff. It's hard to say that things aren't great, especially when we know that the bulls, the, the, the bears sound smart and the bulls make money, but the bears are sometimes right. Right? The bears are sometimes right. And it's okay to be a bear in a bear market, just like it's okay to be a bull in a bull market. What's not okay is staying a bear in a bull market and staying a bull in a bear market. That's what's not okay.

There's a lot of people doing that. They were, they refuse to just simply look at the data because they have this delusion about about what they want the market to be and what makes sense to them versus what's actually happening. And in a late business cycle environment like we find ourselves in right now, higher risk assets bleed first. And that's why we saw interest in crypto dry up sooner. That's why we saw social interest in the crypto markets generally dropping since 2021 because we've been in a late business cycle environment for the last several years. That doesn't mean markets can't go up. It just means the markets that do go up aren't the safer ones, and the riskier ones tend to just bleed out to the lower risk ones because a lot of people don't think those markets will actually, those assets will actually survive a, a downturn in the economy or, you know, a recession. But yeah, I mean, you can see that social interest has been generally declining in the riskier asset classes first. So the froth rises to the top, the excess gets flushed out. Once that's gone, it starts making its way over to less risky assets. So after the froth in the altcoin market has been drying up, it then goes over. It starts affecting Bitcoin. That then eventually goes further down the risk curve and starts affecting the stock market. And then you keep going, and then it affects the metals. This is what I mean by rolling down the risk curve. There is no rotation from lower risk to higher risk in a late business cycle environment. The rotation is just higher risk bleeds first, and then as you get lower and lower risk, that stuff eventually bleeds. It just takes longer for that stuff to start bleeding. So this is why the cycle feels so different. It's a late business cycle environment. This is confirmed by the business cycle chart, the liquidity cycle chart. It's confirmed by looking at social interest and seeing how it's been trending down for years. And it's also confirmed by seeing the price of oil spike, which always occurs at the end of a business cycle. And it is what usually starts the beginning of the end of the business cycle. It is a long process. I'm not asking you to assume it's going to take place overnight, but this is what it looks like. And I have a feeling in 20 years, we're going to all be looking back at this moment and and, you know, 2026 and in this time frame over the next few years and saying, "Yeah, this is what it was like in the last business cycle when it came to an end." It's hard to see it when you're in it because you look at every single rally in the market and be like, "Oh, no, look at that." But this is how they play out, right? The, the business cycle takes a long time to play out. And in fact, the one in 2000, uh, if we continue to follow that, it still could play out. I mean, it could still be a little while before things, um, ultimately unwind if it follows what happened back then. And I don't know if it will. Ultimately, it, it should all resolve downward eventually. Um, but this is the way it played out, right? I mean, you had, you had very, very long periods of, you know, consolidation zones, these corrections, the "buy the dip" works, and maybe we're approaching the next opportunity. As I said, I think the next low for the stock market could occur in April. Uh, I don't know if it'll go back to an all-time high or not like it did back then, but I mean, ultimately, it seems like the S&P is in a topping process, and it's Bitcoin that's bleeding out first, right? Altcoins bleed, Bitcoin bleeds, stocks bleed, metals bleed. Rolling down the risk curve.

And this is why complacency is dangerous. Just because prices, just because assets are elevated doesn't mean they always will be. And just because they're not immediately reacting to negative things doesn't mean they won't. And in fact, you don't really need a narrative. You can look at the chart and and get all the narratives you need. Um, and the, the, the narrative right now, I don't even need to, I don't need to see the news to see that Bitcoin has just been in a bare market. Right now, I know I'm gonna, I'll get dunked on for saying this kind of stuff, but I would implore you, I would implore you to to think about this from a rational point of view, right? If you, if you followed people that told you altcoin season was coming for four years, and now they're telling you something that that's getting your hopes up again, you have to ask yourself, like, why do you continue to put so much faith in those people's opinions? Why? I don't get it. I don't get it. Um, but if it looks like a, if I mean, if it looks like a bare market, if it walks like one, if it talks like one, it probably is one. And, and that is what it seems like Bitcoin is in right now. Um, so I don't know exactly when we'll see the next, um, sort of the next big drop. But if you look at the year-to-date ROI, you know, we are elevated now with respect to prior, the average of prior bare markets, right? And we can look through each individual one and look at 2026, uh, maybe compare it to 2014, compare it to 2018, and compare it to 2022, and just kind of see that, like, no one knows exactly when the next drop occurs. But on average, right, on average, the next few months will likely be weak with a couple of counter-trend rallies. Okay? If there is no counter-trend rally, then you could have, and there's a crisis, like if there's a crisis related to oil spiking, whatever it may be, if there is a crisis, then things could be accelerated in terms of the bare market. But as long as there's not a crisis, then I think the status quo remains unchanged. So I would encourage people not to get complacent. High valuations and low volatility are, um, in a late business cycle environment, are a classic way for people to get drawn back in, only for then the market to eventually resolve lower as the, as the bare market, as the end of the business cycle continues.

If you guys like the content, make sure you subscribe to the channel, give the video a thumbs up, and again, check out the sale on Into the Cryptoverse Premium at intothecryptoverse.com. I'll see you guys next time. Bye.