Transcription
We are in a crypto bare market. And in this video, I'm going to explain two strategies that you can follow to handle this bare market. And which strategy you decide to follow depends on how much time you're willing to commit to managing your crypto portfolio. And in this video, I'll also explain how following either strategy is a lot better than just sitting on your hands and watching this bare market bleed your portfolio down to nothing.
My name is Frank Capworth. I'm a regulatory lawyer by trade. As a part of a band one ranked legal team, we used to advise some of the largest crypto exchanges in the world. I've also been an avid crypto investor since 2017. In the 2021 bull market, I took six figures to seven figures. And I thought I had some strategies and insight that would be helpful to others. So then I then quit that legal practice and started a crypto consultancy called Yield School. And over the last four years, we've helped over 1500 investors employ some strategies that really work in this market. And today, I'm going to talk about, at a very high level, what we're thinking about when it comes to this bare market.
The first thing to acknowledge is that markets are cyclical. Contractionary periods, bare markets, they are a very natural part of an economy and the assets that represent that economy. What we're looking at here is the expansionary and contractionary periods of the US business cycle since World War II. In the black, we see the contractionary period in months, and the gray is the expansionary period in months. Now, we are in a bare market in crypto. And so, what I'm trying to do is draw your attention to the contractionary periods in the US business cycle. And what I want to point out is that since World War II, the contractionary periods are not significantly different from each other in length. There is a consistency in the duration. It just so happens that that average duration is 10.3 months. But what's even more important than that 10-month figure is how these have been quite consistent in duration. One period is not 10 or 20 times as long as the other.
When it comes to the crypto market, the period of the bare market is even more consistent. And the reason for that is because the crypto market generally follows the Bitcoin 4-year having cycle very closely. And what the Bitcoin 4-year having cycle is, if I can try and explain it in 30 seconds, is well, what it is, is the Bitcoin network is creating and issuing new Bitcoin every 10 minutes. It's just a part of the Bitcoin network. It's literally coded into the Bitcoin software. And every four years, so 2012, 2016, 2020, the amount of new Bitcoin being created by the software and issued out into the marketplace gets cut in half. And so from 2008 to 2012, Bitcoin was issuing 50 new Bitcoin every 10 minutes. From 2012 to 2016, it went from 25 to 12.5. From 2016 to 2020, it went from 12.5 to I guess that's probably 6.25, something like that. And then from 2020 to 2024, it got cut down from 6.25 to 3.125. Let me just check. Yeah, Bitcoin issuance right now is 3.125 Bitcoin per block. So every 10 minutes, which is when a new Bitcoin block is created, 3.125 new Bitcoin are created.
And so what we've seen is that every four years, we are coming out of a bare market and going into a new bare market. We will have a high of $1,100 and then an 85% draw down. Then a high of 197, then an 84% draw down. Then a high of 69, and then a 77% draw down. Then a high of 126, which was Q4 2025, and then a draw down of 52% so far, and this is where we are. I'm of the opinion that we are squarely in a bare market and we will be for the rest of 2026. I'll also like to point out, just so you know how serious I am, I put millions of dollars in advertising so that people would know that Q4 2025, where we hit $126,000, would likely be the top of the last bull market, which it was. We predicted that correctly. And so when I take these positions, I take them very seriously. I of course hope a bull market starts tomorrow. That's always the ideal because then all of our customers start making money very rapidly. But we also want to be pragmatic and be honest about where we are. And we do think that we are very squarely in a bare market and will be for some time to come.
Fidelity in March 2026 says, "Since 2011, Bitcoin's price has moved in intervals of approximately four years. Bull market tops and bare market lows have tended to form around four years apart." That's for the wider crypto market because the wider crypto market follows Bitcoin's four-year having cycle. Kao Research February 2026 says, "Bitcoin's decline from 126 to 60,000 confirms the 4-year having cycle, which has consistently delivered 50 to 80% draw downs following cycle peaks."
So if you are willing to consider that we are in a bare market right now, the question is, what would you do in this contractionary period in order to prepare for the inevitable expansionary period, the bull market that will come? When we look at a game theory network, we see two options. So starting tomorrow, option one, it's a bare market for the next 12 months. Option two, it's a bull market starting tomorrow. Option one, you prepare for the bear. Option two, you prepare for the bull. If you prepare for a bear, and it is a bare market starting tomorrow, the two strategies I'm going to show you will get you a plus two return. The strategies that I'm going to show you, helping you prepare for a bear, will still be effective if starting tomorrow it becomes a bull market. If you don't listen to what I'm about to say and starting tomorrow you prepare for a bull market, but it's actually a bear, you're going to lose a lot of money. Or if you prepare for a bull market and tomorrow it is a bull market, then you are going to get the highest payoff possible. But what I hope I've shown is that we're most likely in a bare market. And even if we're not, under game theory, under the strategies that I'm about to show you, preparing like it is a bare market is how you ensure you get a good payoff in 2026 from crypto investing.
Strategy one, it'll take you 1 to two hours a week to execute the strategy. Your ideal portfolio is 70% cash, 30% blue chips. I understand that if you're watching this, you're likely not this heavily dry powder. You're probably mostly in the crypto market and you don't have this much cash hanging around. And that's okay if so. What I will say is that you should consider liquidating some of your underperforming, low momentum alt assets, altcoins as they're called, and rotating those into blue chips. Now, that's not entirely true. There are some altcoins that I think are going to come back and perform very strongly in the 2027-2028 bull market, but I'm not going to go into detail here on which assets those are. So, you want to try and get as close as you can to this allocation. Blue chips are what we define as Bitcoin, Ethereum, and Solana. Bitcoin, Ethereum, and Solana are blue chips because they have found product market fit and are extremely likely to come back in terms of price in the 2027-2028 bull market. And so, it's okay to hold on to these assets and try and accumulate more if you can. Bitcoin has found product market fit in that it is a digital gold. It has all of the attributes of gold, but a digital format. Ethereum is the leading smart contract censorship-resistant platform upon which people are building decentralized applications. And Solana is the second smart contract platform that is censorship-resistant but is finding itself with applications that need speed and performance, like Dpin, certain AI agents, prediction markets, meme coins.
Now, 70% cash is a very high proportion of cash. And so you'll ask, what do you do with that 70% cash? In 2026, what you do is accumulate blue chips at key price levels throughout the bear. You're going to dollar cost average in for the rest of 2026 when prices are low. You are also going to invest in the sector that is going to outperform the most in 2027-2028. And what I want to say here is that the next bull market's innovations are being built right now in this bare market. And that has always been true. Every cycle, the sector that dominates was built in the bare market that preceded that bull market. In 2018 to 2019, all of the DeFi protocols were being built that performed exceptionally well in 2020 and 2021. This is where I made most of my money from. In 2025-2026, in this bare market, all factors are suggesting to me that the crypto AI sector is the sector to be investing in now for the 2027-2028 bull market. To give you a benchmark of how interesting the opportunity can be, we'll take a look at the DeFi sector from 2018-2019 to 2021, which was the top of that bull market. January 2020, there was $630 million worth of crypto in decentralized finance. But at the peak of 2021, it was $200 billion, a massive scale up. That was 300x in value in under two years. We saw assets like aave do 300x, assets like Uniswap do a 15x, not to mention Compound, Yearn, and many others that you might recall. Now, critically, what I'm stressing here is that this innovation was not built in the bull market. That's when the price appreciation happened. It was built during the bare market, and crypto AI is most likely in that phase right now.
CZ, his name is Changpeng Zhao. He's the CEO of Binance, or former CEO of Binance, in Davos at the start of this year. "The currency for AI is crypto." He's named AI agents as one of crypto's three defining sectors. Brian Armstrong is the CEO of Coinbase. Last month, he says, "CryptoAI intersection is just getting started." Coinbase has since begun building agentic wallets. Pantera Capital, January 2026, one of the largest crypto VC firms, I think perhaps only behind Andreessen Horowitz. They say, "Five of six major institutional firms agree the AI crypto convergence will scale in 2026." You can take a look at what the centralized exchanges, the secondary markets are doing to prepare for this. This is all in March 2026. Binance, OKX, Bitget, Coinbase, all releasing technology and tooling in anticipation for AI and crypto to scale this year.
So a summary of strategy one is very simple. You want to consolidate into blue chips and hold as much cash as you can for the rest of the year. You're going to dollar cost average into blue chips and into innovations in the crypto AI sector. And I'll give you some highlights of that in a couple minutes. You also want to maintain awareness for when the next bull run is starting. And we're thinking it's going to be at the start of 2027. You can do this just one to two hours a week. If you're consistently doing this one to two hours every week for the rest of the year.
Strategy two is going to take more time, five hours a week approximately. Here's what the portfolio looks like. Lighter cash, 40% heavier into the blue chips, about 50% maybe 60% blue chips. And you can allocate 10% even right now for the top innovations in crypto AI because you're going to be able to, or you've committed more time to managing these positions because even right now in this bare market, there are crypto AI assets that are really outperforming. And I'll show you that in a moment. Now, the reason that we're going to go heavier into blue chips, we can even maybe go 60-70% blue chips and 20-30% cash, is because what you do is you go into DeFi protocols like this one and you access these high yield products in order to accumulate more blue chips. You'll see here through this product that this is paying 92.39% on Ethereum. Now, there are a bunch of considerations there, and it's not truly 92%, but you can use this as a tool to accrue more Ethereum at a faster rate than anything a secondary market exchange like Coinbase will offer you. And you should actually be employing this strategy, even though it does take more time, so that you can accrue more of these blue chip assets at a very, very fast rate. Because what's going to happen is that throughout this bare market, you're going to be accumulating more Ethereum, more Bitcoin, more Solana through those products. And because these are blue chips, the prices will come back. And so while now you've got 20 ETH, by the time the bull market starts, you'll have maybe 30 ETH because you were accumulating it through these yield strategies. And because the price appreciation will also come back for Ethereum, something that was worth approximately $36,000 when ETH was $1,800 each, becomes $150,000 when ETH is now $5,000 each.
Like in strategy one, in strategy two, you should also be dollar cost averaging into blue chips and you should be positioning into the crypto AI innovation throughout the rest of the year. Some projects that you're probably familiar with already in the crypto AI sector: Bittensor, Virtuals protocols. These projects are advancing very quickly with some pretty fundamental developments. And because their price has been decimated by the bare market, they're actually at very good valuations right now. But assets that you're probably less familiar with and that are the most interesting to me are these OpenCL agents that are building on the latest AI agent technology. These assets have managed to significantly outperform even this bare market. Kelly Claude, for example, Felix Craft, 128% in this bare market. These assets, as you can see, are listed only on very strange secondary markets. They're not on Coinbase. They're not on Kraken. And so, if you want to access these assets, you have to come into the primary market to acquire them, which is something that at my consultancy we specialize in. It is this category of innovation, crypto AI, that is probably the only category that will outperform the bare market in 2026, but is also going to have the highest potential in the 2027-2028 bull market, which is why it is so compelling and worth paying attention to now. And at 5 hours a week, it is not a huge time cost. And over a two or three-year window, it is going to be for sure the highest ROI use of your time right now.
A summary of strategy two is to have more blue chips so that you can then go and make yield on those blue chips in the primary market. You're going to accumulate more by managing those yield positions. And what you'll do is you'll actually take your cash and the yield you make from those yield positions and you'll purchase the best innovations in the crypto AI sector. You're going to be doing this throughout all of 2026 so that you're getting these at good price points. And most of all, and what you're doing by following these actions is you're preparing for the bull market in 2027 and 2028.
Down here, I have a rough calculation of what this difference could look like for you. If you had a $75,000 portfolio and this bare market lasts for, say, 12 more months, which is longer than I think it will. Under strategy two, if you were making 35% yield and you got in at the right time in the bull market, you could turn $75,000 into $101,000 through the yield accrual and then a 4x could turn that into $405,000. Compare that to just doing nothing, sitting on your hands and waiting for the bull market to eventually start, at which point you would obviously notice it late because you weren't even paying attention, which is actually an unspoken benefit of strategy two. Aside from just making yield and paying attention and getting in at good price points, you're actually paying more attention to the market through these actions, which means that when the market switches from bear to bull, you're not going to notice four months afterwards, you're going to be noticing it right then. And so if you're this person who's doing nothing and you're going to look away from crypto because Coinbase or Kraken isn't offering you any options aside from just sit on your hands and bleed your portfolio, two or three years from now, after the bear is gone and the bull market is here, you're going to go from $75,000 to just $75,000 through yield because you weren't making any yield or making like 2%, which is basically nothing. You're going to be coming into the bull market late. You'll do maybe a 1.5x, you'll end up with something like $112,000. These are just approximations and the numbers that I've just drawn up out of the air, but the point is to show how different crypto investing results can be over a one to two to three-year window depending on which strategy you pursue. Of course, if you want help implementing strategy two, the link to my consultancy will be in the description below.