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Market Chaos: Is the Bitcoin Bull Run Over? | Checkmate · What Bitcoin Did

• 0:00
  these big deleveragings, they're not uncommon.
• 0:05
  We're going to go into an increasingly volatile environment since April,
• 0:09
  since the April low.
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  Before that, I'd say it was a very spot-driven market.
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  Since April, it's just been leveraged up and to the right.
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  But I think Bitcoin's actually in a far better position.
• 0:19
  If you look across the other side of the pond,
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  true just carnage.
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  And it's FTX level.
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  And by the way, the reason Bitcoiners say,
• 0:28
  stay humble stack sats, Bitcoin only, is because many of us, most of us, we've gone through this.
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  We've liquidated our accounts. We've bought a shit coin that's gone down 95% and then gone down
• 0:38
  95% again. The reason we say these things is because we have already learned these very, very,
• 0:44
  very, very painful lessons. But once you've touched the stove and your fingers have healed up,
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  don't touch the stove again.
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  thanks for doing this last minute i was i was like uh do i cover it it's like a crypto thing
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  is it the right thing to do and i was like no we should but um wild fucking few days so i was in
• 1:06
  nashville um i was at the hrf event there and i was flying to vegas took off and everything seemed
• 1:12
  normal and then landed and the world was burning so we need to get into it there was i mean i think
• 1:19
  this was really more of a crypto thing than a Bitcoin thing. Bitcoin obviously went down a lot,
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  like it was nearly 20% in a few hours. But on the crypto side, people got totally wrecked. It was
• 1:31
  something like, was it $20 billion of liquidations? And I saw a report saying 1.6 million traders got
• 1:37
  wiped out. Yeah, it's pretty savage. So it's kind of tough to work out how some of these data
• 1:43
  providers calculate. When they say liquidations, do they mean, so there's kind of two ways that
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  futures. Let's go back to the base here. Futures markets were a massive part of what happened
• 1:54
  over the weekend. Now, there's a liquidation, which is where you have your account just goes
• 1:59
  to zero. Now, that happened a lot. There's a lot of that. There's also just people getting
• 2:03
  forced closed, right? So as the market falls, you hit your stop loss, but you may liquidate
• 2:08
  your 5% of your account, but your whole thing. So it's a little bit unclear to me whether all
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  of these data providers are like, do they say liquidations or open interest decline? But it
• 2:17
  doesn't really matter. The point is it was a massive unwind. I mean, for Bitcoin specifically
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  and the data that I look at, 2.5 billion or 2.4 billion, which is about on par with what we saw
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  in 2021 and that middle 2021 sequence. And really, I think this is the key thing as it relates to
• 2:34
  Bitcoin. These big deleveraging, they're not uncommon. They do happen. They're not frequent,
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  but they are a event that occurs. We've been building up a lot of futures open interest for
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  a long time. And I've been writing about saying like, guys, we're going to go into an increasingly
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  volatile environment since April, since the April low. Before that, I'd say it was a very spot-driven
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  market. Since April, it's just been leverage up and to the right. This includes IBIT options.
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  It includes futures. Now, in my work, I basically only look at Bitcoin. I very, very rarely
• 3:06
  touch altcoins. In fact, I just don't. I will cover them moving forward because you're right,
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  This is very much an altcoin story because some of these price tickers literally went to zero,
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  like actually went to zero. Now they bounced back, but what we really saw here was just a
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  massive cascade of leverage. You're right that the Bitcoin chart took a punch. There's no question.
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  Technically speaking, it's not the funnest of events. However, when I really take a step back
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  and just look at the overall environment, the Bitcoin price chart, it actually hasn't set a new
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  lower low, even on the daily chart. So yeah, it's got some damage and yeah, we may have some time to
• 3:44
  kind of work through this, but I think Bitcoin's actually in a far better position. If you look
• 3:49
  across the other side of the pond, true, just carnage and it's FTX level. Now, of course,
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  in terms of dollar value, you can edit by far the biggest liquidation event, but obviously the
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  market's much bigger. But what I just didn't understand and because I just don't look at it
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  is how much leverage built up in the altcoin space. And if I understand correctly, basically
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  what happened is as the market started falling, Trump's put out his tweet about tariffs,
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  all markets took a bit of a hit. Bitcoin, I think it was down 12%. I think we're down 12%
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  from the all-time high as it stands, which by the way, guys, 12% from the all-time high,
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  it's all right. It's all right. Hang in there. So 12% down is meaningful,
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  but some of these went 60, 80 to zero. And if you imagine, it doesn't matter what your leverage
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  profile was. If you were 2X'd, if you were 1.5X'd, if your token goes to zero, you get liquidated.
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  So what essentially happened here is that one guy's stop loss became another guy's liquidation
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  price, which became another guy's stop loss. And when the volatility spikes like that,
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  the market makers have to widen their spreads because they don't know if they're going to get,
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  if they get filled or they take one side of the book, they don't know that they're going to be
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  able to offload that and actually make money. So they widen their spreads. And eventually the
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  volatility got so big in such a short span of time that their algorithmic models just said,
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  walk away, get away, close all orders. And what we found with altcoins is that there is actually
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  no bid. There is no bid for any of this stuff. So when the market makers turned off their
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  market making software, suddenly there's just no one to buy. And these tickers fell 70%, 80%,
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  just like these massive wicks. Now these things kind of equalize, but when I take a really big
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  step back, we're seeing all of these ETFs coming for the crypto universe. You can't be a money
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  manager and allocate to something that literally goes to zero on a weekend because of a tweak.
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  You just can't. And on top of that, I think for a long time, people have underestimated the damage
• 5:48
  that FTX did because A, it just nuked a lot of people's value. It just destroyed retail capital.
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  We're in an environment where inflation is high and retail just doesn't have as much money anyway.
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  People keep asking, where is retail this cycle? I think a lot of them are just genuinely broke
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  and they've kind of had enough with crypto after FTX. The survivors, the ones who still had
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  conviction in your ripples and your suies and all this stuff, they just lost everything. It sucks
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  seeing all these and like i slowly see them filter through because my my twitter feed just has very
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  little altcoin stuff in it but you just see people retweeting i lost everything i lost 15 million i
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  lost 400 grand you know i'm back to zero and you're just like like honestly my feeling when ftx blew up
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  is okay that's a pain in the ass price is down but coins are in cold storage i'm like i actually
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  lost nothing sure price is down but it's going to come back and i just have the same feeling here
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  there's a lot of people out there who just actually nuked everything and like i just can't
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  honestly see where serious capital can't allocate to these stuff anymore the old coins and i think
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  all the retail guys who survived all the like post ftx thing they're gone as well so like there's
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  there's no money left for this stuff so i think it's a real veil off moment um and look it it
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  really sucks i'm sure there's a lot of people listening to this who did lose money and truly
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  it does suck. It's okay, right? It comes back. Markets come back. But these are lessons to learn.
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  And I think Bitcoin has for a very long time just been saying, and by the way, the reason Bitcoin is
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  say, stay humble, stack sats, Bitcoin only, is because many of us, most of us, we've gone through
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  this. We've liquidated our accounts. We've bought a shit coin that's gone down 95% and then gone
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  down 95% again. The reason we say these things is because we have already learned these very,
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  very very very painful lessons um in fact we had a really good moment the other day at the sydney
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  bitcoin meetup and uh sorry alec i'm going to call you out here but uh it was a great story
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  because he goes you know i blew you know i lost a bunch of money in ftx and i had to clarify that
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  wasn't from uh the blow up that was actually just trading perps you know i've done that i've i've
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  blown up my options account on deribit many times like you know i'm selling put options and whatever
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  and they're just getting imploded in March 2020, losing money on leverage. It's a lesson that we
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  all go through. But once you've touched the stove and your fingers have healed up, don't touch the
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  stove again. It's a real lesson and a veil off moment that there just is no actual bid for this
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  stuff. And I think it's going to be a bit of a wake up call. Many Bitcoiners were born on this
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  particular sell-off, I would say. Yeah, I think that's definitely true. I saw someone tweet,
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  yes they created a number of bit like the new wave of bitcoin maximalists and 2018 i did the
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  same thing like end of 2017 early 2018 i did the same thing i believed in shit coins they blew up
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  and i had to reassess and be like huh i'm either going to run away or i'm going to figure out what's
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  real and what the real signal is and that's when i like went bitcoin only um but it's it's like a
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  hard lesson like people are going to be feeling really shit right now um do you think this could
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  really be, I don't even want to overstate it and be like the end of altcoins. That's a very
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  definitive statement. But do you think this has markedly changed the altcoin world?
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  I think the change has been happening over many years. So I put out a tweet the other day,
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  basically likening the Bitcoin dominance chart, which had a massive, massive candle. I think it
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  must be the biggest Bitcoin dominance candle we ever seen I liken it to the gold silver ratio Now and I say this as someone who owns both gold and silver I very very confident that if you look at the gold
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  ratio, which is really gold dominance, it's kind of the same thing. When you look at that ratio,
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  it's been in a macro scale uptrend since 1971, right? Since they broke the gold standard,
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  silver actually lost its main selling point which is divisibility right why would you own the second
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  best fiat currency kind of solved as shitty as fiat is fiat currency solved the divisibility
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  problem and frankly the internet kind of solved it as well with etfs for gold so you don't really
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  need fractional silver coins to back up your gold coins anymore that's gone so silver is slowly being
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  demonetized to an industrial metal sure it's going to go through pumps and moves and it's having an
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  all-time high at the moment. But if you look at the gold-silver ratio, it used to be like it would
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  come down to 30 or I think the atomic ratio is like 12. I just don't think it's coming back down
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  to that level ever again. I think it has been demonetized. It is on that long, half-century
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  long journey towards being an industrial metal. And there's going to be some last gasps and it's
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  going to rally at some points in time. But overall, gold is just destroying silver in terms of value.
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  same concept in 2017 there was a lot of people who truly believe from 2017 through to 21
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  truly believe that altcoins had a chance at flipping bitcoin at actually creating some value
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  there's a lot of speculation around this and like you know they're building all these use cases and
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  define all this stuff and then 2022 happens and everyone just realizes i don't really need this
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  stuff ftx happens people go and also there's no kind of value here and then in 2023 and beyond
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  And people just like, you just watch the ETH-BTC ratio get nuked.
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  And then you watch Solana perform.
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  And then it starts to look a little bit like the ETH-BTC ratio, just, you know, a cycle
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  behind.
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  And suddenly people realize, oh, wait a second.
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  If I tokenize the entire world stock market on the Ethereum chain, first of all, it doesn't
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  work because it doesn't scale.
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  But second of all, there's no value transfer to the ETH token.
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  So suddenly everyone's just going, wait a second, we're actually struggling to justify
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  the current prices.
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  and then after all of that, ETFs are coming, regulations are favorable. Then you get a moment
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  like this where just people realize there's actually no buyers for this stuff and the veil,
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  how many more veils can we pull away? So look, I don't want to say it's the end of altcoins because
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  the reality is that people are going to speculate on this stuff. However, do I think that Bitcoin
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  dominance is ever going to go back to the 2017 peak? No. Do I ever think that Bitcoin dominance
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  is going to go back to the 2021 peak? Probably not. Just suddenly your confidence that these
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  things are going to actually accrue value. Let's face it, we're more than a decade into the altcoin
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  experiment and Bitcoin is still 61% of the market. And that includes stable coins. If you remove
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  stable coins, we're still at like 66%. Two thirds of the market with a boring old orange boomer coin.
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  Guys, where's the value creation? Where's the product? There's just so many, like really at
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  the end of the day, they just keep making new versions of a casino. And I just like, yeah,
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  there's a demand for a casino, but you're in Vegas. Go and argue what one of these casinos
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  is worth. Now it's a global casino. All right, multiply it by 10. It's not half a trillion.
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  You know what I mean? It's just not half a trillion for these things. So I just think
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  the value proposition is just increasingly scarred. And I don't know how people keep
• 12:51
  justifying it. It's quite remarkable. But I think today or yesterday really showed that it's kind of
• 12:56
  the market makers keeping the price at the level it is because there's not enough retail demand to
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• 15:10
  What happened to the market makers during this?
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  Because I, like, where did all the liquidity go?
• 15:14
  because I understand that these aren't anywhere near as liquid as Bitcoin,
• 15:18
  but there was some liquidity in them.
• 15:19
  How did we see flash crashes to zero?
• 15:22
  Yeah.
• 15:22
  So basically, if you're a market maker,
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  the idea is that people are buying and selling
• 15:26
  and you want to have captured the spread.
• 15:28
  They want to buy off you and then you sell back.
• 15:29
  And basically, you're playing that middle spread of the order book.
• 15:33
  Now, when volatility picks up and markets start really moving,
• 15:36
  if people are selling to you, you actually don't want to get left.
• 15:39
  Like market makers try to do a delta neutral position,
• 15:43
  which means they actually don't want to take inventory risk. For any long they have,
• 15:46
  they want an equivalent short. They actually don't want to hold too much of a token. So
• 15:50
  this is actually a good case study. Now, to the best of my understanding,
• 15:54
  one of the many things that FTX and Alameda blew up is they had this system where when they were
• 15:59
  liquidated, so trader A gets liquidated, as you'll notice in most charts, when you get a big
• 16:05
  deleveraging event, usually the market bounces. So when the market bounces, the FTX exchange
• 16:11
  wouldn't actually liquidate their account. It would hand the position to Alameda and then Alameda
• 16:15
  would ride the bounce and then exit. So they're kind of capturing that spread. The problem is
• 16:21
  when Luna imploded, Luna didn't stop going down. It exponentially went to zero. So they kept getting
• 16:28
  handed all these liquidation levels, but the price never bounced. It just went down, down, down, down,
• 16:32
  down at an exponential fashion. So suddenly their own exchange nuked them because they got handed a
• 16:38
  pag a steaming pile of dog shit that just kept going to zero. And if you think about like a
• 16:42
  market maker, they don't want to be that Alameda entity. So when the volatility gets super high,
• 16:48
  they open, they widen up the spreads. And then eventually if the vol's too high, they're like,
• 16:52
  oh man, I don't want to take any of this stuff. And they just turn off. They turn off the algorithm
• 16:55
  and say, I can't touch it. They would have risk thresholds where it says, when the volatility
• 16:59
  hits this level, just turn it off, walk away. I don't want to be involved, let the market clear.
• 17:04
  And the problem is then you've got an order book of the actual buyers, the actual people who have
• 17:08
  of a bid for Ripple. And if you've got all these sellers, suddenly you feel Mr. I want to buy Ripple
• 17:13
  for $50,000. Suddenly $50,000 of the book's gone and then it's just, there's nothing underneath it.
• 17:17
  It just goes down. So suddenly there's no buyers whatsoever. So it really was just a market maker
• 17:23
  step back. There's no actual liquidity in the books. It cleared all the people who wanted to buy
• 17:27
  of which there weren't very many. Price just keeps going and people just keep selling because
• 17:32
  a lot of these things are algorithmic so as it's cascade sells more people sell and shorts pile in
• 17:39
  and you know it really just flushed out every buy that that existed it's um this is probably the
• 17:45
  most i've ever talked about shit coins on the show um but the reason being like it first of all is
• 17:50
  quite interesting it's interesting to see what happened over the last few days but more than
• 17:53
  that i'm interested to know what you think this means for bitcoin because like while it was nowhere
• 17:58
  near as volatile as the other stuff. It went down a lot. And I'm curious what you think that means
• 18:04
  in terms of the structure of the market right now and where that leaves Bitcoin.
• 18:08
  Yeah. So it's a good one. So I prepared a couple of charts to go over and explore this dynamic
• 18:12
  because it is important. So to give people a bit of context, over the last, I would say,
• 18:17
  I mean, basically since that first 124K all-time high, as we came off that level,
• 18:23
  I started writing and saying, look guys, this kind of looks like an all-time high failure.
• 18:28
  And what we need now to do is just see how investors respond. And through the course of
• 18:34
  that process, as we're correcting down, we came back down to the short-term cost base,
• 18:38
  which I talk about in just a second As we pull down to that level what it really showed there was this giant pool of supply which we touch on at the end of this slide deck That pool of supply above 95K I called the hodler wall
• 18:53
  And the reason why is that it looks like, you know, I'm a ground engineer by training
• 18:58
  and the shape of where everyone bought their coins looks very much like a gravity retaining
• 19:03
  wall.
• 19:03
  So I called it the hodler's wall.
• 19:04
  and the idea was when you get too many bitcoiners underwater on their position like we can take a
• 19:10
  bit of a hit 12 we've taken this before but once people are down 30 and you get like more than half
• 19:17
  of all bitcoin underwater and suddenly people are just feeling a bit more sensitive you can just
• 19:21
  really bust sentiment so we're going to try and explore like this is my current thinking about
• 19:26
  the system so this is just the liquidation profile it shows you how mammoth and monstrous it is so
• 19:30
  So for folks listening, we're looking at the long liquidations that occurred, $2.4 billion
• 19:36
  on this sell-off.
• 19:37
  And you actually have to go back to the mid-2021 sell-off.
• 19:41
  So there's two sell-offs that I really want to just anchor to and use as a base case here.
• 19:47
  In the event that we have actually broken market sentiment, that's really the thing
• 19:50
  I want to look for, have we broken sentiment of the bulls?
• 19:53
  That mid-21 sell-off, I believe killed the bull.
• 19:57
  That was, I know we went to all-time high after, but sentiment was just destroyed.
• 20:01
  You can look at 50 metrics and they all tell you that we just broke something on that sell-off.
• 20:07
  And that second all-time high is the one that you call the scam all-time high anyway.
• 20:11
  Correct.
• 20:11
  Correct.
• 20:12
  So there was a lot of Fugazi going on there with Alameda and FTX and all that.
• 20:16
  Anyway, we'll come back to that.
• 20:17
  So that's the first major sell-off.
• 20:19
  And really, you have to go back to that level to find, I mean, that was the highest, 2.5
• 20:23
  billion in liquidations versus today, 2.4.
• 20:26
  Now, this is for Bitcoin, by the way.
• 20:28
  So when you hear those big numbers of like, you know, 19 billion, that's because the wider
• 20:31
  altcoin space was just far bigger in terms of the damage.
• 20:35
  Now, the chart we're looking at now is open interest priced in USD.
• 20:39
  And if you think Bitcoin's been in a bull market, open interest has been an even more
• 20:43
  ripping bull market.
• 20:45
  Absolutely mooning.
• 20:46
  Now, here's where I highlight those two sell-offs.
• 20:49
  Mid-2021, so this is kind of May period, open interest declined by 58%, went from 24 billion
• 20:54
  to 10 billion.
• 20:55
  The second one I want to flag is in December 2021.
• 20:59
  Now, open interest declined by 32%, went from $22 billion to $15 billion.
• 21:03
  Now, that event, I remember very clearly because I was working for Glassnode at the time,
• 21:07
  and we released a video as the market was selling off.
• 21:11
  And that was, for the whole time that I worked at Glassnode, that was the all-time high views
• 21:16
  that we ever got.
• 21:17
  And it was always the target to try and get back there, but obviously it was the start
• 21:20
  of the bear, and we just watched everything deteriorate from that point onwards.
• 21:23
  So those two are really my kind of anchor points for things that killed the last bull market.
• 21:29
  If it wasn't May 2021, if you don't want to argue that, then it was December.
• 21:33
  And both of those involved a massive futures deleveraging.
• 21:37
  So now if we come across to where we are at the moment,
• 21:40
  OI dropped by 25% for Bitcoin from $94 billion down to $70 billion.
• 21:44
  So a pretty meaningful shot, right?
• 21:47
  It's basically wiped out everything through till maybe the last four months.
• 21:53
  thereabouts in terms of OI growth. Now, by the way, this is actually not a bad thing
• 21:57
  because when you get a forest fire like this, that clears out all the leverage,
• 22:02
  you've cleared out a lot of the leverage. Now that doesn't mean it can't regrow. And that
• 22:06
  doesn't mean that there aren't people bidding underneath, but a lot of people are going to be
• 22:10
  going, oh shit, I got to, I got to peel back positions. I got to just like take risk off the
• 22:14
  books. People are going to just make more sensible decisions. So I would argue that Bitcoin's 12%
• 22:19
  below all-time high, it's not the worst thing actually to have cleared out a lot of this
• 22:25
  leverage.
• 22:25
  And this has been one of the things I've been writing about saying, guys, look, be aware
• 22:28
  that there's just a lot of people gambling.
• 22:31
  And a lot of this open interest, by the way, it's not coming from CME.
• 22:35
  Since 2023, the CME exchange has really grown.
• 22:39
  It overtook Binance in terms of open interest.
• 22:41
  It has been flat to stagnant in terms of OI growth since November.
• 22:46
  and honestly I think a lot of that's to do with the iBit options coming live Wall Street just
• 22:50
  prefers to play with options rather than futures but what we have seen is a massive growth in like
• 22:56
  the hyperliquids and the buy bits and a lot of these exchanges like exchanges that you've never
• 23:00
  heard of right a lot of them I just put in the bucket of other and other just keeps exploding
• 23:04
  higher so we've seen a lot of this degenerate leverage I would say on exchanges you never heard
• 23:08
  of a lot of that got washed out right this is not coming from CME some of it's on Binance and the
• 23:13
  like, but a lot of these are all these backwater exchanges you've never heard of.
• 23:17
  So just go back one second to that other chart, because in there, that was maybe, I don't know
• 23:22
  when that would be, February, March 25, there was a pretty big deleveraging event. Is that around
• 23:28
  when Trump announced the initial tariffs? That's the Trump tariff, yeah. Trump tariff V1.
• 23:33
  Okay. So we recovered pretty well from that. Do you think we may enter a similar thing now where
• 23:38
  this is kind of a V-shaped recovery and we end up being absolutely fine from here?
• 23:43
  So that's obviously, that's definitely a scenario. And many long-term Bitcoins will know the Dalai
• 23:48
  Lama candle. That's really what we're hoping for. We're hoping for the Dalai Lama candle,
• 23:51
  where we actually do get this V bottom and it recovers. We could also, I mean, generally speaking,
• 23:56
  when you get a big event like this, there's just a lot of people who are going to be more risk
• 23:59
  averse. A lot of people are licking their wounds. So we do have to be just cognizant that the damage
• 24:05
  isn't as bad for Bitcoin. There's no question about that. I think altcoins are in a world of
• 24:09
  hurt moving forward just because the fundamental case of why you would ever own them is like not
• 24:15
  that it was there in the first place but like the market structures now are not there either whereas
• 24:18
  for bitcoin it is a different animal now that doesn't mean that people can't have their sentiment
• 24:23
  broken so i try to look at all these problems from different angles uh the first one is like
• 24:28
  derivatives and what's going on like a market structure level um up until this week the etfs
• 24:33
  were just ripping in terms of inflow so let's see i suspect we'll get outflows on monday tuesday
• 24:39
  but if we get outflows sustained all of next week probably not a great sign and the market price
• 24:45
  will probably take a hit accordingly if the etfs don't actually have a major outflow and they start
• 24:52
  to recover and we've seen this many times you get an outflow for a couple of days or a week
• 24:55
  and the next thing you know you're back to three times the size of inflows and not that etfs are
• 25:00
  the only buyer but it's a very very just like classic example of the demand profile so let's
• 25:05
  see what the ETF investors do, because generally speaking, what you see going on in the ETFs
• 25:10
  is pretty coincident with what's going on in the on-chain world. And outflows correspond with
• 25:14
  futures deleveraging, correspond with people locking in losses on-chain. And when it flips
• 25:19
  around, when the bulls start stepping back in, the inflows pick back up, the futures open interest
• 25:23
  picks back up, so on and so forth. So these things all generally speak the same language.
• 25:28
  So one thing that I saw you tweet, and something I'd also been thinking about, is how basically the
• 25:33
  entire market global market not just sort of bitcoin crypto but like everyone is going to be
• 25:38
  watching bitcoin this weekend to see what's going to happen on monday and i think that's one of the
• 25:42
  really interesting things about bitcoin being a 24 7 market um because basically if bitcoin starts
• 25:48
  ripping people are going to start thinking that we're going to have a v-shaped recovery um and
• 25:52
  just to add to that one of the really interesting things is did you see that bitcoin was dropping
• 25:56
  before the trump announcement and i love this idea of bitcoin almost being like a prediction market
• 26:03
  of macro events?
• 26:04
  Oh, no, there's two ideas that I want to float here, which I think are quite interesting.
• 26:09
  The first one is gold.
• 26:11
  I think gold and Bitcoin are special assets.
• 26:14
  Obviously, we know that Bitcoin is a special asset, but I think that for that specific
• 26:18
  reason, they're actually more information.
• 26:20
  They're as much information as they are an asset.
• 26:22
  So why would you go an old, an inert yellow rock or a magic orange coin, right?
• 26:26
  These are the two things.
• 26:27
  Why would you do this?
• 26:28
  They don't yield any money, blah, blah, blah.
• 26:29
  there's obviously a signal that people put in to buying these like just hard scarce serious assets
• 26:35
  gold i think tells us where we're going bitcoin tells us the road to get there so let's just one
• 26:42
  interpretation of that gold has told us that they're gonna print the money they have to debase
• 26:48
  to cover the all whatever hole forms i don't know what the hole looks like but you know that nothing
• 26:52
  stops the train and they've got it coming gold smells that first bitcoin is very very sensitive
• 26:57
  to local conditions. So it may sell off telling you something is wrong. This is the thing,
• 27:03
  why all these traders are looking at Bitcoin, because they know that the equity market is
• 27:07
  stretched on any valuation metric you want to pick. Now, that's obviously because the denominator
• 27:11
  is wrecked in fiat, but that doesn't mean that people, not everybody believes the debasement
• 27:16
  trade at the same time. There's a lot of people who just look at their fiat number,
• 27:19
  and that's just their fiat number. So when the market starts to tank, Bitcoin might actually be
• 27:24
  saying, guys, there's something wrong here. And the trade after the trade, the down before the up
• 27:30
  is more or less what gold is telling you. So gold tells you where we're going. Bitcoin tells you the
• 27:33
  road to get there. The other one, and on that idea of like over the weekend, and it's kind of
• 27:39
  hilarious how Trump tweets this on a Friday afternoon when the markets are closed. I don't
• 27:43
  know why, but the bond market apparently is closed on Monday and the bond market's the only thing
• 27:47
  that's going to call Trump's bullshit. So like the whole thing is just very on brand for 2025.
• 27:51
  But the other one is if you're a trader and you like, yeah, Bitcoin sold off and you're going to get all these tradify analysts saying, oh, look, Bitcoin is a shit coin and not a store of value and blah, blah, blah.
• 28:02
  If you a trader and you want to do something on Monday morning it might make sense to hold a bit of Bitcoin because sure the price might be down 12 but you can still tap that liquidity to do something with it on Monday
• 28:14
  So it might make sense to get some.
• 28:16
  And if you're an investor, like you and I, generally speaking, Bitcoin actually recovers just fine after this.
• 28:22
  So suddenly you're like, well, if it goes down and then it goes up again, well, maybe I should actually get some.
• 28:26
  Maybe this is an opportunity.
• 28:27
  So for both the fast money and the slow money, the fact that Bitcoin trades 24-7 gives you a liquidity tap when you need it, but also tends to recover after enough time, both of those are good cases to actually have some in the portfolio.
• 28:41
  So the case for Bitcoin is actually very, very strong.
• 28:44
  So they're the two kind of general ideas I want to share.
• 28:46
  But every single trader and macro analyst in the world is going to be staring at the Bitcoin chart on their Bloomberg terminal all weekend because it's the only information that they have.
• 28:55
  And the more people that do that, when Bitcoin recovers, because it will recover, I don't know when, but it will recover, they're all going to go, oh, all right, fine.
• 29:04
  Now I actually have to get some because I'm just wrong.
• 29:06
  I'm just wrong.
• 29:07
  I don't know if I'm being naive, but because you see these things, I mean, this is obviously an exceptional event, but you see things like this happen all the time.
• 29:14
  And Bitcoin tends to, like, I'm, you know, leaning towards this idea that it's Saturday the 11th at the moment.
• 29:20
  Tomorrow, we're probably going to have a pretty good day for Bitcoin.
• 29:23
  and coming to Monday, the market might call Trump's bluff and maybe guess that he's not
• 29:28
  going to be quite as aggressive as he's sort of signaling. Is that where you're at?
• 29:33
  Yeah, look, it is. This is going to come out on Monday, by the way, so we might-
• 29:37
  No, no, no, that's fine. And look, I was on Marty's pod the other day and I said,
• 29:41
  if we get back to 110K, it's concerning. And truthfully, it is. So the short-term cost base
• 29:46
  is about 114K. The reason I like that level, and it's not a perfect price, it's a zone of interest,
• 29:52
  But the fact that we're below that price, it means that there's a lot of people who are now about 50% of all people who've bought recently are now underwater.
• 30:01
  So all of those folks, some of them are going to be serious Bitcoiners.
• 30:04
  Some of them are going to have bought and be like, oh shit, now I'm down on my position, not feeling so good.
• 30:08
  Maybe I might not buy the next dip.
• 30:10
  So $110K is kind of the top down where things can start to get a bit hairy.
• 30:14
  Down below $105K, things get increasingly hairy.
• 30:17
  And below $95K, things get really quite hairy.
• 30:20
  And I'll talk through those levels in just a second.
• 30:22
  because there is rationale and logic to it. But as always, we've just got to see how the market
• 30:26
  responds. There is absolutely a case that we get a V-shaped bottom or we get one more leg lower and
• 30:31
  then it goes. But really it all comes down to how much damage does the sell-off do? And that's
• 30:36
  really what I try to model out and say, well, where are those tipping points when people start
• 30:40
  to feel a bit sensitive? Of that hodler's wall, how deep does the crack have to get where all
• 30:45
  these people are suddenly underwater that it just breaks sentiment the way that it did in 21 and
• 30:50
  in May and December of 21. And I would guess you're not looking at this as like a Bitcoin
• 30:56
  specific potential like by a market. Like I think really what's going to happen now is Bitcoin is
• 31:03
  going to tell us whether the entire market is going to go into bear market territory with these
• 31:06
  tariffs. Potentially, potentially. I mean, if we're talking about like the wider market with equities,
• 31:12
  yes, you could argue that Bitcoin is sending a signal that something is not quite right,
• 31:17
  generally speaking uh i think that there'd be a lot again i'm not an equity analyst so i have no
• 31:22
  edge in this but i certainly listen to a lot of guys talking about it and it's kind of hard to
• 31:27
  find too many people saying that these are like the cheapest stocks that we've ever seen like
• 31:30
  generally people like it's kind of not the cheapest stocks we've ever seen in fact it's
• 31:34
  quite the opposite um but again we've got a debasement trade on so like it's all these very
• 31:39
  very tricky things of like what does the majority believe uh i i mean for me personally i don't i
• 31:45
  think the biggest risk to Bitcoin is actually just the wider market, right? I don't think there's
• 31:49
  anything internal with Bitcoin. In fact, I wrote a piece on Friday, actually, which was more of a
• 31:54
  macro view. I was revisiting a study I did in January, where back in January, I basically said,
• 32:00
  I don't think we actually have had enough capital flow in to justify a move to 150.
• 32:05
  So I revisited that study because obviously I've been chopping sideways and more or less gone
• 32:08
  nowhere since January. And now I'm actually of the view that we have had sufficient capital inflow
• 32:14
  to justify a move to 150.
• 32:16
  Now, that doesn't mean it happens tomorrow,
• 32:17
  but it means that from a fundamental standpoint,
• 32:20
  we have actually seen enough real measurable capital
• 32:24
  invest in Bitcoin to, in my opinion,
• 32:26
  justify the move to 150.
• 32:29
  So that doesn't mean we go to 150 tomorrow,
• 32:31
  but it does mean that for me, that's where we belong.
• 32:35
  And the difference between now and January
• 32:36
  is I think we should stay there.
• 32:39
  But that also means if we go down,
• 32:41
  you start entering value and deep value zones much sooner.
• 32:44
  because there has been that capital inflow.
• 32:47
  Now, of course, all things in markets,
• 32:50
  and I actually encourage everybody,
• 32:52
  this is a superpower in markets,
• 32:53
  always hold two competing ideas at the same time.
• 32:57
  At a fundamental level, I'm of the view
• 32:58
  that we actually deserve a run at 150.
• 33:00
  And therefore, the lower the price goes,
• 33:03
  the more undervalued the thing actually is.
• 33:07
  Now, that doesn't mean that if we break through certain levels
• 33:09
  and you get too many people on the wrong side of this trade,
• 33:12
  you can start to shatter sentiment.
• 33:14
  So it doesn't matter where your fair value fundamentals are, because things can get, which are oversold, can get way more oversold, and there's certain tipping points.
• 33:22
  It might be worth going through now if you want.
• 33:24
  Yeah, let's do it.
• 33:26
  Okay.
• 33:27
  Actually, I just want to quickly just snapshot this chart, because I think this is a great example of what just happened.
• 33:33
  You sent me this, just to try and describe it.
• 33:36
  In fact, I can't describe it.
• 33:37
  I've never seen a chart like this.
• 33:39
  I know.
• 33:39
  I know.
• 33:40
  It's amazing.
• 33:40
  So basically, you'll have seen charts where it's like a quadrant.
• 33:44
  So for folks who are listening, this is basically a quadrant chart.
• 33:47
  And on the X axis shows me how much open interest increased or decreased in percent.
• 33:52
  So if you're on the left-hand side of the chart, it means open interest got flushed out.
• 33:56
  If you're on the right-hand side, it means that people are adding more leverage.
• 33:59
  And the vertical axis, the Y axis is what did the Bitcoin price do?
• 34:03
  Did the price go up or did the price go down in percent terms?
• 34:07
  So if you think about these quadrants kind of clockwise, left, right, down, right?
• 34:12
  At the top, you've got the price rallied and people deleveraged, which means it's a spot-driven rally.
• 34:18
  On the right-hand side, which is where we currently are, so basically the market over the last two weeks went up into a spot-driven rally.
• 34:26
  Price went up, but leverage wasn't so much.
• 34:28
  And then we went to the top right quadrant where open interest grew massively.
• 34:33
  People levered up and the market went up.
• 34:36
  And then we went crashing all the way back down to the bottom left-hand quadrant.
• 34:40
  So price got nuked.
• 34:42
  We went down on the Y-axis and open interest got absolutely flawed.
• 34:46
  Now, the default view on this chart that I have set on my website, it's like plus or
• 34:51
  minus 10% on either direction.
• 34:53
  I have to actually expand the range of this chart because the deleveraging that we just
• 34:58
  saw was so mammoth over the last seven days that it just blew out the chart.
• 35:02
  So basically people levered up into the rally and then we just got right back down again.
• 35:07
  So that deleveraging, is the part of this that is just normal market dynamics that when
• 35:15
  things get over leveraged, people want to wash that leverage out of the system
• 35:19
  and the Trump news was kind of just an excuse to do that?
• 35:22
  Yes. Yeah. And I think that's another way to just hold, if we're going to talk about bear
• 35:27
  market potential here, as I think a lot of Bitcoiners know, Bitcoin hasn't quite gone up
• 35:32
  as much as you would have liked in 2025. It is very obvious to anybody looking that we've had a
• 35:37
  slow down in momentum. Now, what we saw over the last two months, since we hit that first 124k
• 35:42
  all-time high, we'll talk about this in just a second, a lot of people have bought above 95k.
• 35:48
  This zone is really where Bitcoin lives now. And so therefore, if you go below it,
• 35:53
  things can get hairy very, very quickly. But with the bull market, momentum has slowed down
• 36:00
  meaningfully. And sometimes markets just look for an excuse to just like the straw that breaks the
• 36:06
  back. And it could be that because everyone's looking at the Bitcoin price now and the altcoin
• 36:10
  price, they're now going to go, oh shit, maybe I should take some risk off my equities on Monday.
• 36:14
  And then that risk off on equities creates downside elsewhere. And then you get this cascade. So
• 36:18
  just be very, very cognizant that we could, we may, there is a possibility that we have actually
• 36:24
  just like broken spirit across the board. And then we go back to my original analogy and saying gold
• 36:29
  is showing us where we're going, Bitcoin showing us the road to get there, probably down to go up
• 36:33
  if that's the case. If on the other hand, we don't get those things play out, right? And Bitcoin does
• 36:40
  get back above, I would say 118K is an important level because that's where like in our local
• 36:44
  trading range, that's where the most volume is. It's what's called the point of control.
• 36:49
  If we get above 118K, then I think we're off to the races, right? And by the way, I said that
• 36:55
  before we went to 126K because that was kind of that threshold where if we get above it,
• 37:00
  it's good news. And then now that we got above it, it's like, well, we kind of have no place
• 37:04
  going below it. And yet here we are. So the fact that we're now below it, you've now got to just
• 37:09
  at least put a caution goggle on and just be cognizant that we may just have snapped sentiment.
• 37:15
  We may not have, but we just be aware that that is a possibility.
• 37:19
  All right. Let's go on to the next one. Okay. So this is really where I think the meat of
• 37:24
  my work has been over the last couple of months. So again, for folks listening, the
• 37:29
  This profile, basically we're looking at like a bar chart and it shows on the x-axis is the Bitcoin price.
• 37:35
  And the height of the bars, it's called the URPD, it basically shows where all the supply was.
• 37:40
  Now this is in BTC terms.
• 37:42
  So you can kind of see there's a whole stack of coins down at $0 because that's all the Satoshi and early miners.
• 37:47
  There's a whole bunch of coins down at like $55k to $70k.
• 37:51
  There's a gap between $70k and $85k or $80k.
• 37:54
  but if you look at the bulk of when the majority of btc are right in terms of recent history
• 38:00
  30 of all bitcoin have a cost basis above 95k 30 of all coins and above 110k where we are right now
• 38:09
  15 of the supply so if you kind of think about our current price range 95 is the bottom
• 38:15
  and then 110 is the midpoint so we've got half above half below of the recent buyers
• 38:22
  Now, you can see in the red there, basically all the coins that are in loss right now.
• 38:26
  And it's pretty meaningful.
• 38:27
  So just for those who are kind of watching the chart, envision that the price goes down
• 38:32
  to 95.
• 38:33
  Suddenly, all of those coins that are above that red line there are all in loss.
• 38:39
  They're all people who've bought recently.
• 38:41
  They could be ETF buyers.
• 38:42
  They could be treasury company buyers.
• 38:43
  They could be retail.
• 38:44
  They could be investors, traders, whatever it is.
• 38:46
  Suddenly, all of those coins are underwater in their position.
• 38:49
  And the ones that bought at 120 and 125, they're going to be down a whole lot more than the
• 38:54
  ones that bought at 95.
• 38:55
  But the guys who bought at 95 have been waiting all year to not be underwater.
• 39:00
  And suddenly they're underwater.
• 39:02
  You can imagine the hit that that puts onto our overall sentiment.
• 39:05
  So this chart kind of lock the overall profile into your mind.
• 39:10
  This is in Bitcoin terms.
• 39:11
  But as we know, the vast, vast, vast majority of people, except for the hardcore Bitcoiners
• 39:18
  out there, and even you probably still think about things in fiat terms. Sure, 30% of all the dollars
• 39:24
  invested are up here, but if you price every coin when it last moved, being like an estimate of their
• 39:28
  real invested capital, the dollars people have invested, Satoshi's coins are worth zero. So now
• 39:33
  they disappear off the chart. 62% of all dollars invested are above 95K. Now, yeah, exactly. And
• 39:42
  above $110K, 35%. So 35% of all the dollars ever invested are now underwater. And if we go down to
• 39:50
  95%, 62%. That's a majority. So then you start saying, well, what is going to break people's
• 39:57
  sentiment? It's not going to be their Bitcoin being underwater. It's going to be their investment
• 40:00
  portfolio and the green number going to a red number. That's the thing that can break sentiment.
• 40:05
  Now, as I've said before, we're down 12% from the all-time high. We've recovered from this.
• 40:09
  we've actually seen this kind of damage many times. What we are looking at right now is not
• 40:14
  atypical for a bull market. In fact, it's actually quite normal for a bull. But once we go down to 95,
• 40:19
  we start testing the level of like, we haven't really recovered from that many sell-offs in the
• 40:26
  past with that much damage. So it's one of those things to just be aware of that it gets worse in
• 40:32
  terms of sentiment in my view at an accelerating rate as we go from 110 to 105 to 100 to 95
• 40:39
  it's like a an exponential curve of how nasty it is and this is why i say like we have no place at
• 40:45
  110 here we are at 110 we go to 105 if we had no place at 110 then we have no place at 105 and we
• 40:52
  have no place at 105 you start going to 100 so you can see how this like bear market potential
• 40:57
  and that's why I talk about that December sell-off.
• 41:00
  It just kept going lower
• 41:01
  and it just kept breaking people's sentiment
• 41:04
  and that's what I generally call a top-heavy market.
• 41:08
  You have too many people that bought too many coins
• 41:10
  at too high of a price
• 41:11
  and that is really defined by
• 41:13
  as the price comes down through those levels,
• 41:15
  people just start to move into loss.
• 41:17
  So again, hold two thoughts in your mind at the same time.
• 41:20
  We have recovered from dips like this many times.
• 41:23
  Right now, not atypical.
• 41:24
  but the gap between not atypical and kind of nasty is between here and 95k which is not a very big
• 41:31
  price range and it won't take a lot to get down there so just be really really sensitive to that
• 41:36
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• 41:41
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• 41:45
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• 43:58
  you've been talking about that 95k level for a little bit now um and if we do get there and
• 44:04
  that i completely agree that sentiment will be shot at that point in a lot of ways um we enter
• 44:10
  like a real bear market potentially what percentage chance do you put on us actually revisiting that
• 44:15
  price? Yeah, that's a very good question. So if you had, honestly, if you had to ask me before
• 44:20
  this sell-off, I probably would have said like, I don't know, maybe 10%, something like that. Now
• 44:24
  I'd say, I mean, again, gut feel, probably 30. I would probably put it as a one in three. And
• 44:31
  honestly, in order to get that one in three, it very much depends on what we see the equity market
• 44:37
  do Monday, Tuesday, Wednesday. If we just see like just this thing metastasize and things really
• 44:42
  start to fall down, then the odds just, and as I said, the odds rapidly increase. And the lower we
• 44:47
  go, this is kind of the nature of markets, right? You have to always be so flexible as things come
• 44:53
  to light. My thesis was we have no place at 110K once we broke to all-time high. Here we are.
• 45:00
  If the bulls don't make a stand here, then they're even more on the back foot. So like
• 45:05
  I would call 95K, that's like the bulls last stand. And I say this all the time to my subscribers,
• 45:12
  It's like, if we get to 95K, it's the bull's last stand.
• 45:15
  It is the level where the bulls are going to put up the biggest fight.
• 45:18
  But the second idea you've got to hold, the competing idea is, why did they let it get
• 45:22
  there in the first place?
• 45:23
  So you've kind of got to hold that view.
• 45:25
  Like, we can hold the last stand, but you really shouldn't have got to the last stand
• 45:29
  in the first place.
• 45:31
  So getting below 114K was important.
• 45:33
  That's the short-term cost basis.
• 45:34
  That's that tipping point.
• 45:35
  50% of all recent buyers are underwater.
• 45:37
  you know we just in that really sensitive point where the bulls have to step in they got to step in in the in the near term because the gap between here and nasty is not much You know on a more sort of macro level Trump just says stuff And with this he just like shot from the hip said he was going to tariff China an additional 100
• 45:57
  I don't know if that's feasible, if he's doing art of the deal stuff and what that will actually wash out and be.
• 46:04
  But he will obviously have seen this, you know, what's happened in the market since he made that announcement.
• 46:09
  Do you think he'll allow that to continue or do you think he'll have to backtrack on his words and the tariffs won't actually end up being as aggressive as how he's telegraphed it so far?
• 46:18
  That's a very, very good question.
• 46:20
  And I certainly am not going to say that I'm an expert on Trumpisms.
• 46:25
  My gut feel is, yes, it probably is a bit of art of the deal because if you put 100% tariffs on China, I think the US is a major problem.
• 46:34
  I just don't see how that's tenable.
• 46:36
  kind of makes sense why you would do this on the weekend but i also worry that like because
• 46:41
  valuations have been so stretched for such a long time and again if i if like and i do i believe
• 46:46
  bitcoin is an information index as much as it is an asset bitcoin not really ripping while equities
• 46:51
  and gold have been going it's just had this caution flag i'm again like why is it actually
• 46:57
  telling us that something ain't right and this could just be the straw that breaks the back and
• 47:00
  trump may think that he can then just like oh no don't worry i'm having the meeting with she again
• 47:04
  and the market just says, I don't care, man.
• 47:06
  I'm done.
• 47:07
  I'm out.
• 47:07
  I'm finished.
• 47:08
  The damage is too bad.
• 47:09
  I've got to get out.
• 47:10
  He might set away a train that he just hasn't kind of thought through stopping.
• 47:15
  It kind of depends what the bond market does as well,
• 47:18
  which we're not going to know until Tuesday US time.
• 47:20
  So there's just a whole lot of things that he may, maybe,
• 47:24
  I don't think he can put 100% tariffs on.
• 47:26
  I would say that there's a back down, a taco trade.
• 47:28
  But again, what am I going to do?
• 47:30
  Base my thesis on what Trump says.
• 47:32
  and like it's a tricky, tricky state of affairs.
• 47:36
  I mean, trying to guess what Trump's going to say is almost impossible.
• 47:39
  But the interesting thing as well, in terms of like Bitcoin has obviously been a signal
• 47:44
  that the market is going to be paying very close attention to.
• 47:47
  But I think gold is also.
• 47:49
  And while everything was selling off massively, gold was fine.
• 47:53
  I think gold was up on the day.
• 47:54
  It was still above 4K.
• 47:55
  What's that saying?
• 47:57
  I think that's the trade after the trade.
• 47:59
  I think whatever comes between here and now, if you close, like if I had to make a call
• 48:03
  what I think happens from here, I think we probably have some downside across all markets.
• 48:07
  That would be my gut feel.
• 48:09
  I think we have some downside.
• 48:10
  And then I just think that the liquidity cannon has to come in right now.
• 48:14
  The challenge is how much does the fall have to happen?
• 48:17
  Because we know that that's the response and it tends to be a response rather than be a
• 48:22
  prophylactic where they come in and just do it anyway.
• 48:24
  So I think we actually have the down to go up.
• 48:26
  And I think gold is telling us where we're going.
• 48:27
  and I think Bitcoin is telling us the road to get there.
• 48:29
  That's my kind of general base case thesis.
• 48:32
  I don't like the word 110K, honestly,
• 48:34
  because I don't think we belong here.
• 48:37
  I think we belong higher.
• 48:38
  And that tells me maybe there's something wrong,
• 48:40
  just like external to the world.
• 48:41
  And Bitcoin is actually just telling us information.
• 48:43
  And as a Bitcoin analyst, I like to listen to it.
• 48:46
  It's one of the most interesting times in Bitcoin in a long time.
• 48:50
  Absolutely.
• 48:50
  And just to get the popcorn out, I'm quite enjoying it.
• 48:53
  But let's get on to the next one.
• 48:54
  What have we got here?
• 48:55
  Yeah. So I want to just close out this section because as we talk about this whole thing,
• 49:00
  I've mentioned some thresholds here. And again, they're kind of these nice 5K increments,
• 49:05
  which again, aren't that far apart. 114 is the short-term cost basis. We're below that. Half
• 49:10
  of all recent buyers are underwater. 110K. Right now, if you look at the Bitcoin market cap,
• 49:16
  2% of it is currently unrealized losses. Now we can also then model. Now, by the way,
• 49:21
  that's very, very normal. The next chart, which is the last one, will help just explore how bad
• 49:26
  does it get during these major bear market starting sell-offs. And by the way, just again,
• 49:31
  for people in the audience who are listening, we're looking at that same bar chart, except
• 49:35
  instead of looking at things in terms of Bitcoin terms or USD invested terms, we're looking at in
• 49:40
  terms of the profit and loss, the paper gains they're holding. So now Satoshi's got billions
• 49:44
  of dollars of unrealized profit. The guy who bought at 125K, he's down that 12% on his purchase
• 49:51
  price, it's showing us the dollar value of unrealized profit and loss using on-chain,
• 49:56
  where basically the UTXO set. So right now, 2% of the market cap is underwater.
• 50:01
  So let's now imagine that the market sells off further. We go down to 95K, suddenly 5% of the
• 50:07
  market cap's underwater. We go down to 85K, 10% of the market cap's underwater. We go down to 15K,
• 50:12
  75K. 75K is where 15% is underwater. So the reason I've highlighted these price levels,
• 50:18
  So again, 95K at 5%, really an important one to just flag.
• 50:22
  If we look at the next chart, which is the final one, of that Bitcoin market cap, this
• 50:28
  is what the unrealized losses look like in bull and bear markets and very, very different
• 50:34
  in bulls to bears.
• 50:36
  So in a bull market, we've seen regular, like 5%, 10% of the market cap go underwater in
• 50:42
  both 24 and 25.
• 50:43
  both of those correction chop solidation phases we had about 10 of the losses um they're somewhat
• 50:49
  high relatively speaking so the the bull market has actually sustained some pretty nasty punches
• 50:54
  where we are right now you actually have to squint to see it so if we go down 100 to 95k
• 51:00
  suddenly you're at that bull's last stand and the the losses start to get meaningful enough
• 51:05
  but once you get above 10 once you get to like 15 or 20 this is what we saw in
• 51:13
  mid-2021. This is what we saw in December 2021. It's what we saw at the start of the 2018 bear
• 51:18
  market. There's just a certain level of damage to people's portfolio. And I have this feeling where
• 51:25
  we have a more sensitive audience now. Tradify guys don't want to see a 30% pullback. This is a
• 51:31
  bit much for them. They're calling the Fed for a bailout at 10% down. So if we go down to these
• 51:36
  kind of levels, I think it's like the sensitivity is actually arguably more. So really, if we get
• 51:41
  down to 95. That's why I think it's that bull's last stand. 5% of the market cap is going to be
• 51:45
  underwater. There'll be a bunch of people taking panic profits as well, which brings more and more
• 51:49
  coins up to that level. There'll be people locking in losses, but generally speaking,
• 51:54
  I think that that's kind of my, for now, that's my working thesis of like, we got to hold that
• 51:59
  level. And if we don't want to get there, then really we've got to hold higher up because things
• 52:03
  just get acceleratingly nasty as we go down. Let's get into the last one. And then I've got
• 52:09
  a few questions for you. Yeah. So that kind of picks like where the state of the market is,
• 52:14
  at least from my view. And again, all we can do here is theorize over when investor behavior
• 52:19
  changes. And that's how I like to run my analysis. It's not about predicting the future. It's about
• 52:23
  saying if we get to this threshold, upside or downside, where do I think the tipping point
• 52:28
  of investor behavior is? Now, again, a lot of people are looking at, oh, it's price suppression.
• 52:33
  Oh, there's, you know, why isn't the market going up? And it's all bullshit. The sell side
• 52:38
  pressure from long-term holders is massive 2.5 billion a day a day in coins coming back to
• 52:43
  market so whenever you see sailors bought like you know 400 million dollars worth like okay good
• 52:47
  long-term holders sold like six times as much as that on a single day and some people will argue
• 52:53
  and say that oh you know coins that are six months old they're not long-term holds like it doesn't
• 52:56
  really matter because one sold bitcoin is one sold bitcoin the whole idea is that after six months
• 53:02
  the odds of that coin having come back to life is insignificant compared to coins younger than six
• 53:07
  month. So they all behave in a very, very similar way. And that is that they don't do much until they
• 53:12
  sell usually in bull market trends. So just like a broad picture, there's a lot of sell-side
• 53:18
  pressure. We've clearly had this deleveraging event. There's a chance that we have kind of just
• 53:23
  tweaked people's sentiment. All this being said, I still actually believe that we end the year
• 53:31
  higher. However, my tipping points are very, very well defined because the lower we go down towards
• 53:38
  95, just the less bullish I can be at an objective level because we have seen this story many times
• 53:45
  before. We're only 12% off the all-time high, right? We're a long way from this getting broken,
• 53:50
  but that long way is a small price move. So really it's all about what the bulls do from
• 53:55
  this point onwards and whether we see a relaxing of some of this sell side, because right now it's
• 53:59
  pretty it pretty sizable it so it sounds like you um still bullish but cautious at this point um the question i would have for you there is like when we spoken in the past I always complain about this not being an exciting enough bull market
• 54:12
  and you always tell me to manage my expectations.
• 54:14
  But we've not had the same exponential run-up that we've had in previous bull markets.
• 54:19
  And the thing that you quite often say is that sort of the bull market
• 54:22
  will author the bear market that follows.
• 54:25
  So if we are now entering a bear market, let's say that 30% chance or whatever it is,
• 54:30
  Like, what do you think a bear market looks like?
• 54:32
  Great question.
• 54:33
  So my base case as it stands today, there's a model that, sorry, a lot of people will
• 54:39
  be aware of the realized price.
• 54:41
  Now, the realized price is the average cost basis per unit of Bitcoin in the whole supply.
• 54:46
  So it includes Satoshi, it includes all these folks.
• 54:49
  We have hit that in every previous bear market.
• 54:52
  Now, right now, from memory, it's like 55K or something.
• 54:56
  I think that's too brutal.
• 54:57
  And there was a study that Dave Poole and I did in 23, I think, or 22, I forget, called
• 55:04
  Coin Time Economics.
• 55:05
  And in that study, it's a big monster of a piece, like 122 pages of on-chain wizardry
• 55:11
  and strange nuance.
• 55:14
  What we basically found is that the realized price, it doesn't quite make sense moving
• 55:19
  forward.
• 55:19
  We expect it to lose signal over time.
• 55:22
  And the reason, to be at the break-even level, which means price goes down to 55K, we're
• 55:27
  at the realized price, for price to be at breakeven, you need guys who bought the top,
• 55:33
  people who are active and actual real people, to have losses equivalent to the massive profits
• 55:39
  held by Satoshi and lost coins that don't respond to the market. So you've kind of got these,
• 55:43
  let's call them dead entities, and they've got massive profit. And in order to be at breakeven,
• 55:48
  you've got to offset them with massive losses. Now, sure, that's what bear markets are,
• 55:51
  periods of massive losses. But I think that Bitcoin is just a different animal now. It's
• 55:55
  just matured to a different level now. People actually want to buy it at a serious level.
• 56:00
  We talk about $2.5 billion a day and we're 12% off the all-time high and this has been going on for
• 56:05
  months. Guys, there's a lot of demand here. One sole Bitcoin is one bought Bitcoin at the same
• 56:10
  time. So in that coin time economics piece, we came up with another model called True Market
• 56:16
  Mean. And we actually developed this purely from first principles. We get rid of what's called the
• 56:22
  thermo cap and production costs and all that stuff. And we only look at active investors,
• 56:27
  people who are active in the cycle. Now that model, after we developed the first principles,
• 56:32
  when we run the statistics of how the price actually oscillates around it,
• 56:35
  it's quite remarkable, dead center. The long-term mean and median of how the price oscillates
• 56:41
  around it is one. And we've spent 50% of our time above it, 50% below it. Very, very strange,
• 56:46
  but dead center. So it was right in the middle of that 2021 cycle, about 30K. Right now, it's about
• 56:53
  80K. What else is at 80K? Well, the average cost basis for the ETFs is at 80K. Sailor is like 75,
• 57:01
  I think. The class of 2024, if you just do an on-chain volume weighted price, is about 80K.
• 57:09
  So there's a lot of cluster down there at 80K. And that, to me, that's where I've been looking at
• 57:14
  at being the most likely place.
• 57:16
  If we do just bear out,
• 57:18
  we probably go down somewhere to like 80K zone.
• 57:21
  And then from like a more fundamental standpoint,
• 57:24
  I think Bitcoin proved
• 57:25
  that we're a trillion dollar asset in 2024.
• 57:27
  I really do.
• 57:27
  Like, and that's 50K.
• 57:29
  So, you know, let's add a premium to that
• 57:31
  because honestly, we belong above a trillion.
• 57:32
  Let's not kid ourselves here.
• 57:34
  You know, that 2024 chop consolidation range,
• 57:37
  the top of it was 75K.
• 57:38
  We bounced off it in the tariff tantrum in April.
• 57:42
  And again, I think things have to get really nasty
• 57:44
  to get down there.
• 57:45
  Like I truly,
• 57:46
  and I say this honestly,
• 57:47
  I do believe Bitcoin belongs
• 57:48
  up at $150
• 57:49
  and it belongs to stay there.
• 57:50
  We've seen the capital inflows
• 57:52
  to justify this now.
• 57:53
  So anything below that to me
• 57:55
  is just the lower you go,
• 57:57
  the more the deep value.
• 57:58
  But being aware that markets
• 57:59
  take time to process this stuff.
• 58:02
  So that's my general view.
• 58:04
  What's the price that Bitcoin's
• 58:05
  at $2 trillion right now?
• 58:08
  It's roughly like 50K is a trillion,
• 58:10
  100K is $2 trillion, ballpark.
• 58:12
  so i i mean 100k will be a you know a big buy zone for a couple of reasons one for being just
• 58:18
  a nice round number but also that two trillion market cap um 55k seems extreme although one of
• 58:24
  the things that i truly believe in is that the funniest outcome is always the most likely and i
• 58:29
  think honestly the fact that this all happened on the day that core v30 released is proof that
• 58:34
  that's the case oh it's great yeah come core tank the market and and they ended everything from from
• 58:40
  equities to Bitcoin the whole lot. And so maybe that makes me think we just, 58K is the bottom,
• 58:47
  is 58K forever. The other argument, look, the other argument is that Core managed to nuke alt
• 58:52
  coins to zero. So, you know, we've got to give them props for that. Like, that's a win.
• 58:55
  There you go. Okay. And then if we take the bullish scenario here, that this ends up being,
• 59:03
  you know, just a short-term event, V-shaped type recovery, and everything's kind of good.
• 59:07
  And how much do you think this slows down the price narrative?
• 59:12
  And do you think we then just hover around this kind of level for a long time before
• 59:15
  we go up to 150 or whatever we go to?
• 59:18
  No.
• 59:18
  Look, my general view here is that we either have, like, I think the market wants to go
• 59:23
  somewhere.
• 59:23
  I think it's time to move.
• 59:25
  We've spent enough time up here.
• 59:26
  The market's ready to move.
• 59:27
  I think we either go into a bear market or welcome to euphoria.
• 59:30
  It's going to be one of the two.
• 59:32
  So that's why I think it's actually quite an exciting time, especially for me as an analyst,
• 59:35
  trying to just see how the investor response evolves over the coming week.
• 59:40
  This to me is, we're going in one direction or the other.
• 59:44
  I don't think we just go sideways for six months.
• 59:45
  I think the market's ready to move.
• 59:47
  Interesting.
• 59:48
  So this is the time to pay attention.
• 59:50
  Totally, totally.
• 59:51
  And for me, this is just like a big puzzle.
• 59:53
  I just love trying to work out like what, what?
• 59:55
  I'm not trying to predict the future.
• 59:56
  I'm just trying to get a read on how Bitcoiners are behaving,
• 1:00:00
  how that Bitcoin behavior pattern changes now that we have an institutional audience.
• 1:00:04
  again bitcoin is taking two and a half billion of spot sell side a day at the same time that we have
• 1:00:12
  this deleveraging going on and 25 of open interest clears if you put that two and a half billion of
• 1:00:16
  sell side the altcoins go to zero let alone the deleveraging so the the divergence all right i
• 1:00:23
  think that's really if you can take one thing away from this whole event the divergence between
• 1:00:28
  crypto and Bitcoin, it just opened a whole different chasm because everybody, everybody
• 1:00:34
  has just seen that there is no second best in terms of liquidity profile. You just can't own
• 1:00:39
  the stuff that goes to literal zero on a weekend because of a Trump tweet. You just can't. Bitcoin
• 1:00:43
  down 12%. How many times have we seen this? Right. Not kind of another day in the office,
• 1:00:47
  noting all the, you know, can deteriorate from here, of course.
• 1:00:51
  I think I still lean bullish just with, I don't think Trump,
• 1:00:55
  Trump definitely doesn't want to see the markets crash.
• 1:00:58
  I think he's going to be very aware of what's happened.
• 1:01:00
  I think he maybe will course correct a bit.
• 1:01:02
  Art of the deal.
• 1:01:03
  Things will end up panning out a little differently to that initial tweet.
• 1:01:06
  I think we're likely going to have another couple of rate cuts at least through the end of the year.
• 1:01:11
  I don't know.
• 1:01:11
  Gold saying everything wants to go higher.
• 1:01:13
  JP Morgan talking about a debasement trade.
• 1:01:15
  It seems like there's too much lining up for this to turn into a bear market right now.
• 1:01:19
  Gold tells us where we're going.
• 1:01:20
  Bitcoin tells us the road to get there.
• 1:01:22
  if we do go into a bear market now, is that the four-year cycle thesis playing out? And we were
• 1:01:28
  all wrong talking about this being over. My base case for a long time, I think since like 2023,
• 1:01:36
  has been, I don't think that the four-year cycle breaks on the upside. I think it breaks on the
• 1:01:41
  downside. So look, we may have some kind of a, if we top out here, yeah, four-year cycle.
• 1:01:48
  but I think what actually breaks people's head let's just imagine right we go down the 30 percent
• 1:01:53
  40 percent from the all-time high are people going to reset their cycle chart being down 40 percent
• 1:01:59
  or they're going to wait for the 60 percent or the 70 percent right we went 90 then we went minus 85
• 1:02:04
  then we went minus 75 people can be waiting for the 65 and they get a 35 or 40 are they going to
• 1:02:09
  reset all their cyclical analysis maybe maybe not right I think that the bearishness is going to
• 1:02:13
  kick in and people aren't going to know where to reset the chart was that part of a super cycle is
• 1:02:17
  Are the bulls still going Right We had two 32 drawdowns in the past If this is a 32 drawdown was it a bear market And if so was 2024 a bear as well What about 2025 Maybe that was a bear
• 1:02:28
  market. I just think people lose sight of what's really going on and that's part of the fun.
• 1:02:34
  Oh, so that's interesting. So you think the fact that the bear market won't be as brutal
• 1:02:38
  as previous ones is what actually breaks the four-year cycle?
• 1:02:41
  I think so. And shop consolidation has a lot, like the 2024 and the 2025,
• 1:02:45
  I said this at the Sydney Bitcoin meetup as well.
• 1:02:49
  The thing that's interesting about chop solidation, in my view, is that it builds floors, not ceilings.
• 1:02:55
  Go back to some of those charts we just looked at.
• 1:02:58
  62% of all the dollars invested in Bitcoin have a cost basis above $95K.
• 1:03:02
  That's a big number.
• 1:03:04
  That's a big number.
• 1:03:05
  Like, hold two competing thoughts.
• 1:03:07
  Bitcoin belongs above $95K.
• 1:03:09
  The market has said it belongs above there.
• 1:03:12
  If we go below there, watch out.
• 1:03:13
  you know they're the two they're the two competing ideas you got to hold cautiously bullish all right
• 1:03:19
  checkmate thank you man um we only did a show a couple of weeks ago but when this all happened i
• 1:03:23
  was like i've got to do a show and it's got to be with you so i'm glad we could do this sort of last
• 1:03:27
  minute um i'm going to try and get this one out as quick as possible because otherwise we're going
• 1:03:31
  to like fools when the market tells us everything we said was wrong but i appreciate you man thank
• 1:03:35
  you for doing this good on you folks and uh again if you've if you've taken a gut punch over the
• 1:03:40
  course this thing, it gets better, right? It's all right. But always learn your lesson. I think
• 1:03:46
  everybody listening to this has blown up an account here or there. It sucks losing money. We've all
• 1:03:50
  done it, but it is part of the journey. And the quicker that you can learn the lesson and then
• 1:03:55
  right the ship. And leverage, leverage is a painful beast. And I think it's very, very clear that
• 1:04:01
  a lot of people would have had like 2X leverage on. If the price goes to zero, it doesn't matter
• 1:04:06
  what your leverage ratio is, it goes to zero. Very clear that Bitcoin is just in a different
• 1:04:11
  league to everything else because down 12% is very different to being down 100.
• 1:04:17
  Totally. And just for your sanity, I've deposited lots of money to BitMEX that's never come out.
• 1:04:23
  I've done the shitcoin casino. I don't think I've ever withdrawn from BitMEX.
• 1:04:27
  No, absolutely not. And when these things happen, just the peace that you have knowing that
• 1:04:33
  everything's just in cold storage and it's you're not going to sell anyway so it's just
• 1:04:37
  entertainment at that point um it's it's a different frame of mind it's the right place to be
• 1:04:41
  i have a very very similar feeling to what i had when ftx blew up just thinking okay well i didn't
• 1:04:45
  actually lose anything which is again very comforting yeah i'm thinking number go down
• 1:04:49
  but viewers go up when this sort of chaos happens so it's all hopefully it's not the all-time high
• 1:04:53
  like it was in my video back in december hopefully not checkmate you're a legend thank you for doing
• 1:04:59
  this such short notice mate um you should tell everyone about the newsletter i saw it come in on
• 1:05:03
  Friday. That was the signal that things weren't necessarily as bad as people thought, but give
• 1:05:08
  them a shill. Yeah. So you'll find us over at checkonchain.com. We've got a newsletter and a
• 1:05:13
  charting site. So all the charts we looked at today, they're all available for free. So you
• 1:05:16
  can check them out and poke around with those. Basically we do two posts a week, just trying to
• 1:05:21
  help people understand this stuff. Like again, I can't predict the future. No one can. I just like
• 1:05:26
  to try and help people think about these scenarios ahead of time and try and give it evidence-based
• 1:05:30
  database view, at least from my perspective. We do two posts a week, written and video.
• 1:05:36
  And yeah, as the market was selling off, I got up early on Saturday morning and ripped a quick
• 1:05:40
  video just to help people visualize what is going on. And that's what I think is so cool about
• 1:05:45
  Bitcoin in general, but just the amount of data that we have to watch the futures markets,
• 1:05:51
  to watch the options markets, to watch the on-chain space. You can visualize where people,
• 1:05:56
  where their sentiment is.
• 1:05:58
  You can see where their cost basis is.
• 1:06:00
  You can see where their leverage profiles are.
• 1:06:02
  And then you just kind of map out and say,
• 1:06:04
  well, if we go below this
• 1:06:05
  and you're going to hit this guy's liquidation,
• 1:06:06
  which is going to put all these guys underwater,
• 1:06:08
  probably a sensitive line in the sand.
• 1:06:10
  I can make my decisions accordingly based on that.
• 1:06:12
  So that's really how I just try to frame things
• 1:06:14
  and just help people navigate the volatility
• 1:06:16
  because we're all hodlers.
• 1:06:18
  And when Bitcoin does this stuff,
• 1:06:20
  and I get this feedback all the time,
• 1:06:22
  most hodlers do not care the price goes up or down.
• 1:06:25
  They just want to know why.
• 1:06:26
  because they're fascinated by it.
• 1:06:27
  And I'm much the same.
• 1:06:28
  That's why I do it.
• 1:06:30
  Yeah, go and subscribe.
• 1:06:31
  It's one of the best newsletters out there,
• 1:06:32
  if not the best.
• 1:06:33
  You're kind of like one of the only analysts
• 1:06:35
  that's still made it.
• 1:06:37
  There's not many of you around anymore.
• 1:06:39
  No, and the truth is I don't post as much
• 1:06:41
  on Twitter anymore because I just prefer
• 1:06:43
  doing the long form and actually writing
• 1:06:45
  and putting the thought into it.
• 1:06:46
  And I just find Twitter is just too noisy.
• 1:06:49
  Like you, I don't particularly want to talk
• 1:06:50
  about treasury companies,
• 1:06:51
  but that's just kind of the narrative at the moment.
• 1:06:54
  knots and core and and treasury companies i'm like i'm just going to write about the stuff that
• 1:06:59
  i find interesting actually saying i don't want to talk about treasury companies before we close
• 1:07:04
  out can i ask you a really quick question on that because sure we've talked a lot about whether that
• 1:07:08
  business model is kind of dead at this point do you think something like this could really crush it
• 1:07:14
  oh totally i mean i think it was dead i mean look shit coins just went down 80 most treasury
• 1:07:20
  companies have been down 80% for weeks, months. So again, I've been saying this for a long time.
• 1:07:27
  I don't understand how a treasury company that is too small to tap debt markets, too small to tap
• 1:07:34
  preferreds, hasn't reached the scale necessary. I don't know how they re-expand their MNAV.
• 1:07:40
  I would love to see it happen because then I can learn from it. But my thesis is,
• 1:07:44
  if your primary means of accumulating Bitcoin is selling your stock to buy Bitcoin at a premium,
• 1:07:51
  then your stock no longer has a premium. Why would someone invest in it? And then you kind
• 1:07:55
  of look at it from another perspective. If the argument is that they get acquired by a bigger
• 1:08:00
  treasury company, well, guys, no one acquires a company that's not distressed. So you're going to
• 1:08:06
  get bored out. And actually, it reminds me of, I worked on a mine site in the UK and the mine,
• 1:08:13
  a lot of people like you go on like the forum of retail traders they were paying 40 pence per share
• 1:08:18
  and the mine by the way went ahead but the company that they were buying shares in went bankrupt a
• 1:08:25
  big american miner came in and bought them at 50p on the dollar all those investors got bought out
• 1:08:30
  at a shitty price and then the mine goes ahead anyway so like the thesis was correct but you get
• 1:08:34
  wrecked by market structure so i think that's going to happen so if you're going for this like
• 1:08:38
  m&a proposition well you're not going to get bought out at a good price oh you're going to
• 1:08:42
  get bought out at the worst price. A lot of these treasury companies, I made fun of them,
• 1:08:46
  calling them penny stocks with a cold card. A lot of them are now literally penny stocks,
• 1:08:49
  right? They're trading below a dollar. They're going to have to do reverse stock splits just to
• 1:08:53
  stay listed. This is a really tough proposition. So I get it. I think the business model by the
• 1:09:00
  meta planets and the strategies, there's a case to be made for some of these things.
• 1:09:05
  I don't know if there's a case to be made for thousands of them, hundreds of them,
• 1:09:08
  even 10 of them. I think there's a handful of these things. And for strategy, for example,
• 1:09:14
  if Bitcoin goes on a proper run, you got 640,000 Bitcoin worth of beach ball that's going to
• 1:09:20
  inflate. At a minimum, the stock's going to chase the Bitcoin price. At a minimum, it's just too
• 1:09:25
  big. If you've got a thousand Bitcoin and Bitcoin goes to a million dollars, well done, you're a
• 1:09:30
  billion dollar company. What are you going to do with a billion dollars in today's world? It's
• 1:09:34
  just irrelevant. So size matters a lot and growth matters a lot. And there's only a handful that are
• 1:09:41
  of a size and growth potential that they can do anything about it. So I just think that the
• 1:09:46
  Pareto distribution, like shit coins, like shit coins, will not die. But a lot of them just did.
• 1:09:52
  And I would say treasury companies, not all treasury companies will die. But I think a lot
• 1:09:57
  of them are zombies walking. It is probably the most interesting time in the markets in
• 1:10:04
  you know since ftx really right now i think it's going to be a really crazy few weeks we'll see how
• 1:10:10
  this plays out but um thank you checkmate it's been awesome welcome to 2025 all right it's all
• 1:10:15
  very it's all very on brand perfect i will speak to you very soon mate i always appreciate it
• 1:10:21
  thanks mate
• 1:10:34
  Thank you.