Transcription
Hey everyone, and thanks for jumping back into the cryptoverse. Today, we're going to talk about Bitcoin, the psychology of a bare market. 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.
In case you missed it yesterday, uh, or maybe two days ago, I did announce that I'm planning on throwing, uh, my first conference, hopefully later this year. I mean, things are kind of up in the air at this point, but if you are interested in attending, um, you can sign up to receive updates. It'll probably be, it'll probably be in Q4. Uh, maybe Miami. We're still trying to figure that out. But if you're curious and you want to get updates about it in case you want to go, uh, you can always just add your email in the, um, in the form, and that way, in the future, you can get, uh, updates. I'm sure I'll also tell you here as well, but just if you want to get updates there.
Let's go ahead and jump in here. So, so Bitcoin is trading just below $78,000. And I just sort of want to reiterate the psychology of a bare market and why it is so hard. Um, there's a few points I'd like to make, right? And one of those is that bare markets always, and I mean always, make fools of both bulls and bears. So sometimes it actually is psychologically, emotionally easier being a bull in a bare market because often times in bare markets, the market will actually trend up. So if you're a bull in a bare market, you feel like you're the one that's right for a long time, and then there's just a few weeks where the market breaks down and it proves you wrong. But that doesn't mean that you weren't like cashing in on the credibility of being the bull for several weeks or several months before the market eventually proves that it was still, in fact, a bare market. So bare markets make fools of both bulls and bears. They make fools of the bulls because, well, the market keeps breaking down eventually. They make fools of the bears because the market trends up for months at a time.
Now, I wanted to push back a little bit because there, there's some, um, sort of sentiment going around that this is different, right? Like this time is different, and we've never trended up this long in a, in a bare market in the past. And I, I would say that's just objectively not true, right? Like it's, it's not true that we haven't seen these types of rallies in the past. In fact, in 2018, Bitcoin found a low in February, found a higher low in late March, early April, and did not even take out the February low until June. And it, and it was late June. And when it took it out, it only barely took it out, right? Like imagine if you flipped bullish on Bitcoin at, say, $6,000 in February 2018. You were right to be bullish during many of these rallies. The problem is, while you felt like you were the one that was right, eventually the market broke down in Q4 and it led to, sort of, the market cycle bottom.
Um, now back in 2018, that was when I was in my last year of grad school, and I, I honestly, like, I didn't even look at the market from, like, I think it was like from like March until September because I had other things to worry about, frankly. And, but, but I mean, I was working on my dissertation, right? I mean, the bigger thing is, you know, there was just nothing I could do about it. I didn't know exactly what the market was going to do, but I wasn't just going to waste my life watching the bare market play out. I, I had other things I wanted to accomplish. So, some of the times it's okay to just kind of like take a step back for a while and just let the markets do their thing. I mean, it's going to, the market's still going to be there, hopefully, um, you know, if you take a break. Uh, so, just consider that.
So I would say the psychology of a bare market is so difficult because you get so many of these rallies. And if you look at the amount of time it will take in a bare market to put in a new low, I want to show you how this time is not really that different. Look in 2022, when we put in the low in June. How long did it take to put in a new low? About 21 weeks. How long in 2018, after the February low, did it take to put in a new low? About 19 weeks. If you look at 2022, it didn't take as long, but still took about 15 weeks from that, you know, from that low. If you go from the June low in 2018 to then when we took that low out, took about 21 weeks. So in 2014, from the low in April to take that out, it took about 25 weeks. So you can see that, you know, we've had some of the longer ones, 19 weeks, 21, 21, and 25. Yes, there was also this one that was 15 as well, but it can often take 19, 21, 15 weeks to put in a new low. And when you look at how long it has been, it's only been 14 weeks, right? Like it, it hasn't even been 19. It hasn't been 21. It hasn't been 25. If it takes 19 weeks, that would put the next low in June. And note that major lows have occurred in June before, right? June of 2018, June of 2022. There is a chance, and again, this is where the, you know, sort of the, um, the snide comments come from here, saying it could go up or down, but there is a chance, like in 2014, that a high was set in June and then you went down into October. June is often a turning point for the market, um, in a lot of the bare market years, right? It'll often put in lower highs in June. Even in 2019, the high came in June. So I think you'll likely either see a high or a low in June. Um, but regardless of what happens in June, I still think you'll go lower into October. Okay? And, and so if it took 19 weeks, it'd be about mid-June. If it took 21 weeks, you're looking at at late June. And if it took 25 weeks, you're talking about late July.
Now, here's the thing. In 2014, when June was a high, right here, you still had a pretty big drop the following week, right? Like after that rally into very early June. By the way, the, the rally topped in early June. It's only like two weeks from now. Right after that, you had about a 23% drop, a counter-trend move, and then from that top, then another 30% drop very soon thereafter. So, look, right now, Bitcoin is still struggling with the 200-day moving average. And that is an area that it often struggles with in bare markets, is that 200-day moving average. You can see that it provided resistance, uh, in 2022, and it also provided resistance in 2018. Now, in 2019, you can see we got through the 200-day moving average, and in 2014, we got through the 200-day moving average very briefly. Right? So like it, it can happen. I'm not here to say that it's impossible for it to happen. In fact, again, looking at the fib retracement stuff, you can see that often times Bitcoin does rally back up to the 382 before then going down into the next sort of the leg of the bare market. In 2014, that high came in June. In 2018, after that initial drop into February, the rally to the 382 came in February and March. In 2022, the rally to the 382 occurred in April, right? In 2019, it went a little bit higher, right? It actually rallied all the way up to the 0.5 before it went down. The point is, is like, no matter how high it rallied in those bare markets, it then eventually rolled over. And so for me, like, I can't sit here and tell you with, you know, a strong, you know, strong confidence that that I know exactly where Bitcoin will find that resistance at. I mean, could it be the 200-day moving average like it was the last two cycles? Absolutely. Right. I mean, when you look, you know, if you look at at say, the year-to-date ROI of Bitcoin in midterm years, we are getting pretty extended. If you want to compare it to prior midterm years, right? Like if you, if you add one standard deviation, we're actually outside of those bounds. And so if we're going to set a low in June, we need to start going down very quickly because if we just bounce back next week, then you likely set the high in early June and then go down into October like we did in in 2014. So I think my argument here is that right now, when you say compare, um, like if you compare this 2026 to 2014, we've already had that rally to the level that we're current, you know, that we had to in 2014 by June, which is why I'm not a huge fan of that, of that model.
In 2018, you can see the lows kind of line up. February low, late March, early April low, put in a high sort of in the May time frame, and then head back down into June. And then if you look at 2022, you can see that we actually level, we actually rallied to levels even higher than where we are right now, um, earlier in the year before the next leg of the bare market began. So bare markets are, are tough psychologically. And one of the things I said back in Q4 when we said we were going into a bare market, and a lot of people faded it and thought that we were going into a super cycle, what we said was, look, there's no point in really trying to time these things from a trading perspective. It's more of like, for me, it's just more of an academic exercise. I don't know exactly when the counter-trend rallies are going to happen. It's more so just looking at the market and saying, look, we're most likely in a bare market. You will likely have rallies that they're, that are tactical, that will then likely lead to a lower low.
One of the things about Bitcoin is there's two examples to take from to compare the current price action. There's the 2018 bare market. Trump was president back then during the midterm year, and Bitcoin was bouncing off a 6K. This time, Trump is president during the midterm year, and Bitcoin is bouncing off 60K. You could also compare it to 2019 because the 2019 top, right there, was an apathetic top. There was no rotation into altcoins, and the top occurred two months before quantitative tightening ended. So there's relevance to compare the current bare market to the one in 2018 because of seasonality in terms of midterm years, but also to compare the one in 2019 in terms of how it played out with respect to monetary policy. And if you look at the 2019 bare market compared to the current one, you can see that we dropped. We then got a little bit of a rally, um, and, and then we ultimately went into the, the pandemic-induced recession. The point is, is like, yes, clearly I'm not saying that this would have happened if we didn't have the recession, but the point is, is we had two bare markets where you found support at 6K, and now you have this bare market where we found support at 60K. In both cases, in both cases, Bitcoin eventually went below $4,000. In both cases, one of the times it was due to a pandemic. The other time it corresponded to a correction by the S&P in the second half of the midterm year. So, when we had the 2018 bare market, you can see that Bitcoin, it's not fair. It might not seem fair, but it's just the way the market works. The S&P got a drop early in the year, and that corresponded to the first leg down by Bitcoin. And then the stock market got a second leg down in the year, and that corresponded to Bitcoin going even lower. So this time, Bitcoin went down first with the first drop in the stock market. And then if there's another drop later in the year, which I think there will be, that would correspond to the second drop by Bitcoin in the bare market. The point is, is Bitcoin found support at $6,000 in both 2018 and in 2019, just like it found support at 60K in 2026. And in both cases, regardless of the narrative, Bitcoin eventually went below $4,000.
Now, the reason why that's interesting is because if you look at the balance price of Bitcoin, Bitcoin historically goes below the realized price and the balance price in a bare market. You can see it did in 2011, 2014, 2015, 2018, even in 2020, also in 2022. And right now, the realized price for Bitcoin is at around 54K, and the balance price is around 39K. So if there is a narrative to accompany Bitcoin on another leg down as we go into October, if we're sitting here and it's October or Q4 and Bitcoin is trading around like 40K, it will not have been any different than either 2018 or 2019. The only difference is the exact path we used to get there. And my guess is that it won't play out like either 2018 or 2019 exactly. And it already isn't. Some of the differences between say 2018 and this and 2026 is in 2018, the high we had in March was higher than the high we had in May. But in 2026, the high we got in March was lower than the potential high we have in May. In 2019, when we dropped down to 3K or below 4K, we dropped to like 3,800. It was because of a recession where the unemployment rate spiked to like 15% overnight. I don't expect that to happen, right? But I, I could see a, you know, a large correction, um, sometime, you know, later this year.
And look, there's a couple of ways this could play out. You know, one way is it plays out like it did in 2018, where where Bitcoin kind of drops back down, sweeps the low from February. Maybe it then goes all the way back up and goes up to 85K. That's where the 382 is. And then it drops, right? Like it could absolutely play out like that. That's a possibility. It could also do something like this, where it just goes straight up to slightly above the 200-day moving average before dropping down here. The point is, is every bare market, every bare market, and I don't know if it doesn't have to go to 85. I'm just saying historically we've seen resistance at the 382, which this cycle corresponds to 85K. We also historically find resistance at the 200-day moving average, which historically occurs now. The point is, is every good bare market has a few very convincing counter-trend rallies that make the bears look dumb. And that's why I say in bare markets, bare markets make fools of both bulls and bears. You can't go through a bare market as a bear and feel like you're smart the entire way and like you're on the right side of the market because the reality is the market spends more time going up than going down. And you can actually see the bull market was the exact opposite of that.
Look at this. So let's mark the market cycle top, um, in October, and look at how things shifted after the market cycle top. All right, look at this because it becomes very obvious. In the bull market, Bitcoin would trend down and break up. Trend down for a long time, break up. Trend down, break up. Then when the bull market ended, we now trend, we now go, we break down quickly and then trend up. We break down quickly and then trend up. So the bull market made the bulls feel like they were on the wrong side for months at a time, and then you would go up very briefly, and then trend down for a long time, and then go up very briefly, right? The, the bare market is the opposite, right? You break down very quickly, and then you just spend a lot of time trending higher. You break down very quickly, and then you just spend months trending higher. So, if the bare market view is right, if the bare market view is right, then you know there's going to be a lot of people that are going to look at this in in a few months and be like, "Oh, they were the bulls that thought they were right for months and months and months." But then in reality, the bare market continued on.
Anyways, now look, I could be wrong. Maybe I'm on the wrong side of this. I'm not completely oblivious to that potential outcome. Um, but if you are an investor, then it makes sense, in my opinion, to not just be all in on one asset. And, you know, if you have things in your portfolio besides Bitcoin, you can see that Bitcoin has been bleeding to a lot of other things in your portfolio. Like if you've had exposure to gold or or the S&P or international markets or emerging markets, um, or even silver, right? Even, even, even though it had a big correction, Bitcoin is down against all of those things this year. So, if you went into midterm years and just thought, you know what, I know Bitcoin's going to have some counter-trend rallies, let it, right? I'm going to focus on where the bull market is and, and, and what is actually bullish. I'm not going to try to lose all my money trading counter-trend rallies than something that's just putting in lower highs while these other markets are just putting in new all-time highs. It's cope, right? Like, it's cope that people rely on these counter-trend rallies. Like, I mean, think about it. Like think about how far we've dropped, and, and for the, for the bulls to look at 77K, I know 77K or 80K or even 85K feels like a win, but the reality is Bitcoin was trading at at above these prices for basically all of last year. So like all the bulls over here haven't made any money. You know, they've just been bulling about Bitcoin hasn't gone anywhere, right?
I, I mean, the reality is, and, and here's the thing. I'm not going to, you know, I'm, I'm not here to, you know, to just tell you that every, you know, the asset that that I'm talking about is is only ever going to go up. That's not true. I mean, for as much as Bitcoiners dunk on gold, you know, since December 2024, Bitcoin is down 58% against gold, right? I mean, so there's the narrative, and then there's what actually happens. And even the rally that Bitcoin has has had right now, you can see that Bitcoin has rallied about 45% against gold. So what it rallied 47% against gold in July 2022. In March, it rallied 38% against gold. In 2018, Bitcoin rallied almost 100% against gold. Then it rallied about 50% against gold. Then it rallied another 50% against gold. And yet it still eventually broke down. In 2019, Bitcoin rallied about 50% against gold. And then another right here about about 39% against gold. And yet all of these eventually broke down. So, it's hard to look at that and, and, and think that that this time is different. What I see with the Bitcoin gold valuation is I see a pretty well-defined high up here and potentially a well-defined low down there. Which means the most likely outcome, as far as I'm concerned, is that Bitcoin trends down into Q4 while gold probably goes up. And then when you get that collectively, it means that from the current valuations, Bitcoin dropped another 45% against gold. Seems like a likely outcome to me.
So those are my views. If you know, if you like that, then you might like the conference that we're going to try to put on because again, the conference is not just going to be Bitcoin. We're, we're going to try to talk about different things. Um, try to get like-minded people together. That's the goal, right? That's the goal. We're not going to be there to just shill random narratives that no one really cares about. You know, the reality is, is a lot of a lot of things that are talked about and in the markets and the like, people just don't care about those narratives. They want to actually have realistic dialogue, um, about, about the markets without feeling like they're doing something that's going to get them hated by everyone, right? It's okay to be long-term bullish on an asset like Bitcoin, but to recognize that there are times when Bitcoin underperforms the market, and midterm years, that's the main year that Bitcoin underperforms. And that doesn't mean that Bitcoin is a bad asset. It just means that this is the market that we have. And if anything, it represents opportunities. The people that got rich on Bitcoin over the last 10 years are, are, are the people that bought it at the end of midterm years. Yes, if you just DCA as well, but imagine if you just went, I, if you took on strong vets for Bitcoin at the end of every midterm year. That's when all the money was made. You know, midterm years provide opportunities, and some people fight the trend the entire way, and then other people don't. 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 the sale on Into the Cryptoverse Premium at intothecryptoverse.com. And if you are curious about the conference, go to bingjaminc.com, and then you can click on the conference tab, or you just go to bingjaminc.com/conference, um, and you can, you can put in your information, and then we'll get you the details once we actually have the details, um, as to how, you know, what this is going to look like. And nothing here is set in stone. It's probably going to be in Q4. It's probably going to be in Miami. Both of those could change, so don't get married to that. Uh, but I, I would like to have something where we can all meet up and, and, and, and talk about the market. So, we'll go ahead and wrap it up there. Thank you guys for tuning in. I'll see you next time. Bye.