Transcription
Hey everyone, and thanks for jumping back into the cryptoverse. Today, we're going to talk about Bitcoin. A beautiful chart.
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So, this has got to be one of the most aesthetically pleasing charts that exist in the cryptoverse. One of the most, if not the most aesthetically pleasing chart. There is a lot to be understood by looking at this chart. The top line here is the percentage of supply in profit. So, in a bull market, it will go up to 100%. Right? So, when Bitcoin is pushing in new all-time highs, then 100% of the supply is in profit. What you'll notice is that when Bitcoin is in a bull market and it hits 100%, it tends to stay in a bull market for a while, right? It doesn't just hit it once and then stop. It tends to stay there. And that's why momentum is an important indicator. It's an important technical to follow. I don't believe in a lot of forms of TA like heads and shoulders, knees and toes, right? That that stuff doesn't really mean a whole lot to me. But momentum means a lot. And a lot of times all-time highs lead to all-time highs. And so when Bitcoin does go to all-time highs, it then continues to likely put in all-time highs for a while. And you can see that very clearly.
But the reverse is also true. When Bitcoin kind of goes into these bear markets, it can, you know, it can go longer than a lot of people think. And if you, if we kind of hide the the pl the supply and profit chart and you look at this chart, you can see where it it historically goes to. So we are at a point now where they have crossed. And so because they have crossed, we should now be open-minded to a market cycle low forming. And what I said at the beginning of this year is basically ignore Bitcoin for the first half of the year because likely all rallies will be faded and they they likely will just simply be counter-trend rallies that lead to lower highs before another lower low comes. But we looked at this chart and we made a very clear assessment. We said that until these lines cross, there's no reason to call for market cycle bottoms. Doesn't matter how euphoric the rallies get to the upside, no reason to call for it. Because as you can see in every cycle, the market cycle bottom did not occur until after the supply of Bitcoin and profit or loss crossed. It did not occur until after they crossed.
You can see in 2011, they crossed in September 28th. The market cycle low occurred, um, on the daily time frame. It didn't occur till like the very end of that year. So a few months later. In 2014, they crossed in September and then the market cycle low was in January. So about three to four months later. In 2018, they crossed in November and then the market cycle low was about a month later in December. And in 2022, you can see they first crossed in June or sorry, yeah, they first crossed in June, which is kind of where we are right now. Uh, only briefly, and then they crossed again in September and then the the market cycle low was in November. So, we have now seen them cross. And you know, usually when they cross, the low's not immediately in. Like that's never happened before. I'm not saying it can't, but it's never happened before. Usually the month though, usually the low occurs within about one to three to like one to four months. Okay. So that could be anywhere between say like now and July, August, September, October, who knew, right? So I would say somewhere in that ballpark is going to be the market cycle bottom. It's usually not right when they cross. And if we do see it uncross for a while, it would likely be like what it did in 2022 where then they probably cross again as we get in sort of that September, like August, September time frame.
But again, is this cadence not remarkable? Think about how many narratives have existed justify certain price action both to the upside and the downside. And then you look at this chart and you're just like, you know what? None of it matters, right? None of the narratives matter. This chart tells you everything you need to know for the most part. I mean, could it break at some point? Yeah. But look at it, you know, look at it. It is It's remarkable, right? It really is. And some of the times like, you know, the argument is if all you ever did was DCA Bitcoin when these things flipped and just DCA for three to four months, then you could go enjoy the three years that came after that as we go back into the bull market. So I would be looking for that.
Now, I'm sure someone's going to ask about it. So, you know, could we argue that there's sort of like a trend line heading down here and maybe we're closer than we think? I think if you connect the dots, you can see we already broke through it. Also over here, it ended up going higher. So, I would I would just say like look at the range that it's gone up to. Um, and you know, last cycle it went all the way up to around supply and loss was around 55%. Currently, it's around 51. Okay. Cycle before that, it went to 60. Cycle before that, it went to 64. And you know, the one in 2011 went all the way up to around 54. So I wouldn't get too greedy here. You know, usually the right strategy is to start DCAing Bitcoin after the June low and and just being aware that, okay, the market might wreck you in Q4, but as long as you're okay getting wrecked uh by the market, which you should be if you're in crypto, uh, then it's not really that big of a deal. I mean, you know, I bought Bitcoin over here in the summer of 2022 and then I got wrecked and and then it didn't matter, right? And I bought Bitcoin in the summer of 2018 and I got wrecked and and then it just didn't matter. So that's kind of the argument is is you know, usually buying Bitcoin kind of after the June low and then just sort of establishing a a cadence to your DCA tends to work out the best rather than than stressing out too much about about what's going to happen.
But again, you know, just looking at this chart, it's hard not to look at it and just be kind of mesmerized by it because, you know, the cycles are so clear, like the four-year cycle is just so obvious and clear that it it's baffling to me just how many people fade it because it's just such an easy thing, you know? Like, and I'm not saying it'll go on forever. I'm not suggesting that. But it's one of those things where why fade it, you know? Why? Why fade it when it just continues to work out? Um, so my guess is we'll likely spend, you know, some time with these metrics crossed over each other like they are right now, but probably only a few months. And and then once we get out into say 2027, 2028, hopefully we'll see uh the cycle continue. And my guess is the biggest critics of the four-year cycle this year will become the biggest cheerleaders of it later this year.
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