Transcription
Bitcoin's price dropped 50%, and when it looked like it was recovering, it started dropping again. Now, right now, everybody's asking the same question: "Where's the bottom?" But that's the wrong question. And that question is going to cost you because while you may be asking the wrong question, there's a different question that's not based on guessing chart analysis, but actual data behind it. And that shows us the repeating pattern over the past 15 years, and it's telling us what comes next. Now, understanding this is the difference.
So, in this video, I want to break down what signs we're looking at to find the market tops and the bottoms. We're going to look at the charts and the onchain data in three signals and the one line that's been proven to be the best entry and what type of returns it's produced. So, let's go.
All right, it's time to look into that fuzzy crystal ball and see where Bitcoin's price is going. Cuz everybody's asking me, "Mark, should I buy now? Is it going to keep crashing? Is it going to go lower?" All these things. Well, I don't like to run my business off of my gut or my guesses, and I don't want to run my money or my investments off my gut. Let's look at the data behind that. Okay.
Now, what everyone's asking is, "When will the bottom be?" They want to catch the very bottom. They want to catch the floor, if you will. And so, "Is this the bottom? Has the bottom come in? Will it go lower?" Well, as you've probably heard before, hindsight is 20/20. What that means is, obviously, looking backwards, it seems so obvious, but it's never obvious moving forward. So, what does that mean? What that means is that we don't know tops or bottoms until we look backwards on them. We can make all types of guesses, but we don't know until it goes up and until we look backwards. And part of the reason why is, as we're making new all-time highs, it goes like this, or even if we're crashing, it goes like this. And so, we never really know, "Is there going to be another bounce?" Now, there's a lot of data we can look at. I'm going to break it down for you right now, but we don't know for certain until we look backwards.
So, since we don't know the exact top or bottom, we have to look at the data around it. And more specifically, what we're looking for is understanding what actually drives tops and bottoms. Okay? So, it's super simple. I'm going to break this down for you. Just like price is super simple: Supply and demand imbalances there. Okay?
So, what drives tops and what drives bottoms? Pretty simple. What drives the top? And what you'll notice is markets, especially like Bitcoin, typically gets like this run up and then it gets like this parabolic run and then what we call a blowoff top. And the reason why is because it starts attracting more and more buyers because humans are real simple: We rush to pleasure. We run from pain. So, as the price is going up, we hear about everybody getting rich. More people buy. More people buy. More people buy. And it starts sucking in more and more and more. And eventually, the market runs out of buyers. There's no more buyers to buy. And so, the price stalls out, and it can't maintain that pace anymore. Then it starts to roll over. And because humans also run from pain, the ones that don't believe in it were the last ones to buy. They start selling, and it pushes the price back down.
So, markets stop going up when it runs out of buyers, and markets also stop going down when it runs out of sellers. Pretty simple, right? So, if we can understand the buyers and sellers, that's a really big key, a really big piece. We're going to look at that specifically. So, that's what we can use to measure it. Okay.
Now, I'm going to show you a bunch of data. There's a lot more data than what I'm going to show you, but what I'm also going to show you is there's one line that we've looked at that's pretty consistent over time. Now, don't run your life or your business or your investments off of one chart or one indicator, but this one indicator is super reliable. It boils it down. So, you can follow along pretty simply. Okay, let's take a look at this.
So, the first thing is, markets stop going up when there's no more buyers. Markets stop going down when there's no more sellers. So, when will the sellers be exhausted? That's what we're looking at right now because obviously the markets are going down. So, we want to know, "When do we run out of sellers?" Well, there's three signals that we're looking for to find the exhaustion in the base. Okay.
So, number one, when we see that half of the market... so we can understand, so just if you're new to Bitcoin, because it's an open blockchain, it's an open ledger, we can see the data. So, we have what we call onchain data. So, we can see wallets, we can see what wallets are doing, moving, how long those wallets have been dormant, all types of things. And that gives us a lot more data than we typically get in normal investments. Okay.
So, when we can see that half the market is underwater, that typically tells us that sellers are starting to get exhausted. So, we have this chart. By the way, these charts right here are from Blockware. Shout out to my friends over at Blockware self-hosted mining. I do a lot of work with them. But what we see is that percent supply in profit. So, what we can see is that when the bottom part of the holders are below 50%. So, this white line is the Bitcoin price, and this green line is the percent of the Bitcoin holders that are in profit. And as you can see right here, anytime we get down to this zero line, we're below that level. And so, you can see back here in 2022, that was the last Bitcoin low, the last bottom cycle that we had. You can see where it got here. Same thing here back in 2018 at the bottom of the market. Same thing back here in like around 2015. So, you can see we're sitting on that line right here again today. So, we can see that sellers are starting to get exhausted as we can see it in this chart. Okay.
There's another way we can do this. We want to look at the Bitcoin miners. So, the Bitcoin miners, of course, they process transaction on the network. They earn Bitcoin rewards for doing that. And so, they stockpile, they hoard, they hold, HODL a lot of Bitcoin. But when they start capitulating, meaning they're just out, they're selling their Bitcoin, that's usually a sign that the sellers are being exhausted. Why? Well, one of the reasons is because they're one of the biggest holders of Bitcoin.
This is the hash ribbon. So, the hash is the hash power. So, the computers, it measures how much power, how much mining power is on the network. And what we can see again here, if we go back to 2022, we can see this capitulation right here in this market low right here. If we go back here in this market cycle, we can see it right here as well. And we go back in 2015, and we can see it all right here. And as you can see, just like this area here, we are below the line, we have a lot of miner capitulation. Again, some of the biggest sellers that we have are now capitulating. They're selling their Bitcoin into the market.
Then we have strong hands flip. What does that mean? We call strong hands the ones that don't hold. The weak hands are the ones that buy and sell very quickly. So, when we see the strong hands flipping, that also gives us an idea. So, we can take a look at it like this. This is the long ter long-term holder position change. And what we can see is obviously the long-term holders are selling, and then the long-term holders start buying again. They sell it, they buy back out. Maybe they know something we don't know. But we can see how this has played out in 2022 as the price came down right here. We can see they were selling, selling, selling, and they started buying, buying, buying. Here we can see that they were selling, selling, selling, and now we can see they're buying up again right here. So, they're flipping. They went from selling, and now they're stopping selling, and they're starting to buy. So, what does that tell us? No more sellers. So, the big long-term strong hands aren't selling. The miners are sold out. They're capitulating, and the market's underwater. So, that's three signals that typically show us when the market is being exhausted, when we're running out of sellers. Okay.
So, next we'll look at the line. Again, there's a lot of data points, but this one line has been very reliable over a long period of time. So, if there's one line I'm going to watch, it's going to be this one. Again, watch it in conjunction with others. Now, what am I talking about? I'm talking about the 200 week moving average. Okay.
So, this is basically averaging out the last 200 weeks. And we can see this line right here represents that average. And this is the Bitcoin price. And what we can see is back here in 2018, it touched the line. 2020, it came below the line. In 2022, it sat below the line quite a bit. And we can see we're just below the line and just on it right here. So, what does this represent? Well, it tells us, if we go back to the beginning of Bitcoin's time, we can see that anytime it's reached this line or gone below it, it's been historically cheap. Because we don't know a top or a bottom until we look backwards, what we're trying to find out is when things are cheap or when things are expensive, when things are overbought or when they're oversold. And that's what this is showing us. Anytime it comes down here, it's been a historic buying opportunity. You had the chance to buy here and ride that all the way back up. Buy here and ride that all the way back up. Buy here, ride that all the way back up. And here we are sitting again here, and we have this opportunity to ride it back up. Now, these are what we call historic buying opportunities. As a matter of fact, I'm going to show you here at the end what some of the opportunities could present if history holds true. Of course, past performance is no guarantee of future performance. But as you can see, if there's one line I'm going to watch, it's going to be this one because it shows me what's going on.
The 200 week moving average also sort of helps us understand where people were buying. And so, this is the cost basis of coins acquired in the last 2 years. And so, there was a heavy accumulation right here. As you can see, heavy accumulation anytime it gets below that line. What this is basically telling us is that the 2-year cost basis, again, people are buying in this area right here, is $88,000. So, they're underwater. Goes back to one of those charts I just showed you. So, right now, the price is in the $63,000-$65,000 range at the time of recording this. And the 2-year cost basis is $88,000. So, they're underwater. So, check this out. Follow this. If there's one chart, that's the one I don't want to be watching. Okay.
Now, we also want to understand the fundamentals that push Bitcoin's price. So, we're sort of looking at like a lagging indicator, sort of telling us what's happened or what's happened so far. We want to understand what's going to happen. We want to understand the leading indicators. What's actually driving this? What's under the fundamentals here? And so, from that, we can see that the tide is starting to turn. What am I talking about?
So, Bitcoin is like a liquidity sponge. When there's a lot of liquidity, when there's a lot of money supply, debt, etc., when the bond index is down, when things like that, then Bitcoin soaks up; it's more sensitive to that global liquidity, and it pushes assets up. So, when liquidity goes up, it's like the rising tide lifts all boats, and Bitcoin's the fastest boat. Okay, so a couple things that we want to look at. First of all, global liquidity.
Now, there's a bunch of ways we can measure it. Most of them are proprietary indexes. A couple good ones I like are the Bitcoin layer, Nick Bian group over there. Ralph Paul does a good one, Real Vision, Michael Howell, he's the goat of global liquidity. There's a bunch of ways we can do that. This is just a chart of the major central banks and what their money supply is showing. It's a little bit more of a simple version, but as you can see, this is showing the global liquidity is going up right here. And this is the NASDAQ. And look at how fast that's going up based off of that liquidity. And so again, this is the underlying driver that will lift Bitcoin back up. And we can see that it's turning up. That's one way to look at it.
Here's another chart. This is from Bitcoin Magazine Pro. If you want to get the onchain data, onchain indicators, check out Bitcoin Magazine Pro. And this is the Bitcoin price right here. And this is the global liquidity. And you can see right here in this section that global liquidity has turned up. And the Bitcoin price is still down. That's presented a gap right here that needs to be filled. And so, we expect Bitcoin to turn back up pretty heavy and then overcome that gap and then start rising again off of that liquidity. So, these are the underlying drivers.
Another one we want to look at is the bond index. All right, so this is represented by the MOVE index. And what we can see is that when the bond volatility drops, as we can see it down here, it's come down quite a bit. This represents a very favorable tailwind to start lifting Bitcoin price back up. So, we can see the sellers are being exhausted. We can see the price is at all-time historic buying opportunity lows. And we can see the liquidity is presenting a positive fundamental environment to start pushing the price back up. Okay.
Now, cheap in what, though? Cheap in what? Well, we have to understand that value is more important to understand. It's more realistic to understand than the bottoms. Nobody knows the bottom of the market. And maybe some people get lucky once in a while, but what we can understand is the range. So, people can sell in the bottom range. They can sell in the cheap range when it's a good value. Or they could buy in that range, right? So, we don't know the bottom, but we do know the value, the cheap, the pricing, things like that. What we can tell off of the data, and there's a bunch more indicators I look at, we can tell that right now, currently, we are in deep value territory.
Now, I do want to say that just because it's cheap doesn't mean, number one, doesn't mean it can't get cheaper. It also doesn't mean that it can't stay cheap for a long time. So, we don't know these things. We don't know the bottom, but what we do know is that it's cheap. We also know that past performance is no guarantee of the future. But let me show you a couple, a couple more charts here.
So, when we get these factors to line up all together, so for example, the supply in profit is 50%. The hash ribbon is falling, the price is below the 2-year cost basis, and the long-term holders are accumulating. Anytime it's done that, that's represented by these colored brown bars right here. You can see that anytime it's done this, it's represented these amazing buying opportunities. Right here we are. And you can see all those factors have combined again right here. Now again, past performance is no guarantee of the future, but if this holds, this looks like another historic buying opportunity lined up in front of us.
Now, what has happened if you have bought during those periods? Let's take a look at this. So, if we go back to 2011, what we can see is if you bought, you could have bought Bitcoin for only $4 back then. Imagine buying it for $4. You would have, in a year, you would have made 162%. Within two years, 2,551% return on your money. In 2015, it's about the time I started buying Bitcoin. It crashed. It hit about $1,000 in 2013. That's when I first started paying attention to it, and I've watched it run up to a thousand, then it crashed spectacularly. I'm like, "Woo, good thing I didn't buy that." I bought it around 2015. It bottomed, well, I guess it bottomed around $227. I bought it in the $300 range. But you can see within two years, it was up 469%. November 2018, that was the first big draw down I had to suffer in. It went from, well, I guess it went from $300 when I started it in 2015. At the end of 2017, it was over, it was about $20,000. Then it spectacularly crashed to $5,700. But it went on to return 185% in two years. We can see in December 2022, another time it was below that 200 weekly moving average for quite a while. It hit a bottom of $16,000 and had a 529% return. And here we are right here. We're at about $63,000 at the time of this recording. And of course, we don't know what the return will be.
But there's a couple things I want to draw your attention to. Number one, you'll see that it went from $4 to $227 to $5,700 to $16,000 to $63,000. You'll notice that each of the lows are higher. So, when you're looking at financial markets, what you want to see is higher highs and higher lows. And as you can see, this continues to make higher lows over and over and over. The other thing that you can see is that the median returns is 499%, 500% returns. The worstc case returns were 185%. Not too bad.
Now, the one thing I'll tell you about my own experience is that each one of these times, to see the price crash back down here, it's really difficult. I mean, like I said, I started buying around $300. I saw it go up to $20,000 and crash all the way down to about $5,000. And I had enough money for me at the time was like, "Man, this is like life-changing money. Why didn't I sell? I can't believe it. I missed my opportunity. I'll never get another chance." Now, I didn't sell, but what I also didn't do is I didn't buy. I didn't back the truck up and buy heavily here because I'm like, "Man, it may never come back. I don't know. I'm listening to all the FUD. I kind of already have some. Let me just see what happens." And then it came back up. Same thing happened here. It crashed back down to $16,000, and it's a whole another set of stories as to why it's dead this time. It's not coming back. And again, I didn't sell, but like I didn't back up the truck because it's like, "Man, I don't know. I don't know if I want to get any more. I kind of already had enough. Maybe I'll just wait." And I would say the same thing is sitting here now. It's a whole new set of reasons why Bitcoin's not going to come back. AI took all the liquidity, or Quantum's going to break it, or whatever you want to put it in. Micro Strategy owns too much of it. Whatever you want to put in there.
But now is the time, if history is our guide. Now is the time to start adding back to your positions when it's cheap, when things go on sale. The same reasons why people stand in line, stand in line all night at Walmart on Black Friday to get things on sale. It's much harder. It's much harder with financial assets than it is big screen TVs for some reason. But anyway, again, if history is our guide, now is the time to be buying. Doesn't mean it can't be cheap for longer. Doesn't mean it can't get more cheap than now. But what we do know is that every time we've had a chance to buy in this deep value range, it's been a historic buying opportunity.
Let me know what you think down below. Is it cheap now, or will it get cheaper, meaningfully cheaper enough to wait? Let me know in the comments down below. As I always say, to your success, I'm out.