00:00Hey everyone, and thanks for jumping back into the Cryptoverse
00:04Today, we're going to talk about Bitcoin, and I'm going to reflect on what has happened and perhaps how that affects things moving forward
00:12One of the things to always do when you get something wrong is to go look to see what other people are talking about, because after all, it is a market, and it is the different opinions that make up that market
00:31As I've said before, we all represent the market, and we're all going to get things wrong at times
00:37As I have again mentioned before, I was wrong about Bitcoin not being able to get past the May high, which it has now
00:48It has gone above it, and one of the cool things about..
00:53You know, we're I'm doing this conference in November, although, you know, right now, obviously, I know that's not probably the thing on everyone's mind
01:02But we do have a couple of new speakers, in line with the idea of making sure we hear all sorts of different opinions from people, especially those who have been more so on the right side of where things are
01:18We have Michael Saylor coming to the conference, so that's pretty big
01:24And we also have Grant Cardone coming to the conference, which is also really big news
01:28So thanks to both of them for agreeing to speak at the conference
01:32Let's go ahead and jump in
01:36So Bitcoin is currently trading at $86,000
01:40So what's interesting about this is I was trying to like put the pieces of the puzzle together
01:48Right? And the pieces of the puzzle were as such
01:52I thought that, going into the end of the year, starting a couple of months ago, we would likely see energy prices go up
02:02So, I thought energy would increase from there
02:07I thought that because energy prices were rising, yields would go up as well, because the Fed would initially be unwilling to hike rates
02:22From there, I thought yields would likely go up
02:25Now, because of that, since rising energy prices would lead to higher yields, I thought the Federal Reserve would then raise rates to combat higher yields
02:33So, I expected the Fed to start raising rates in September
02:41And then I thought that, because the Fed would raise rates, the dollar would..
02:49Then go up
02:58What's fascinating to me is I got all these things right, but none of those things really matter for a lot of people who watch this
03:06I mean, obviously I've been bullish on energy, and I know some people own the energy market as well
03:13But a lot of this stuff I was using to understand what Bitcoin would do
03:20And I said, "All right, well, if energy goes up and if yields—which would cause yields to go up, which would make the Fed raise rates, which would cause the dollar to go up—therefore Bitcoin would go down," right? That didn’t happen
03:35Now, if you look at energy prices, right, if we go look at XLE, for example, that’s what I mainly track here
03:45Energy has actually had a really good move over the last few..
03:50Months
03:56And yields went up, right? If you look at, say, like the 10-year yield, we talked a lot about the 10-year yield reaching about 5%, which it now has
04:01The 30-year yield is going and setting new highs, which it has
04:05That forced the Fed to raise rates
04:08If you look at interest rates, then, I think I need to figure out how to add that on here
04:13But if you look at interest rates, then we saw that interest rates went up, and when the Fed raised rates, the dollar of course started to show strength once again
04:26Now, what's interesting about the dollar chart is I was thinking, all right, we're going to have, we have a low, we've got a higher low, we're going to have another higher low, and upon that higher low, Bitcoin should..
04:42Start to show weakness
04:46So, if you overlay Bitcoin, this is where I got it wrong, right? Like, this is where I got it wrong
04:50I was looking at this thinking, all right, the last time the dollar sort of put in that double bottom pattern, it corresponded to Bitcoin's local top
05:03This time we got that double bottom pattern again, but instead of Bitcoin dropping like I thought it was going to do, instead Bitcoin went up with the dollar
05:15Right? So, you see there's like a divergence there
05:17The dollar went up in May, and then Bitcoin went down after the double bottom
05:24This time, the dollar went up like it did back then, but then Bitcoin followed
05:35So, something changed, right? Like something clearly changed
05:40Now
05:45If you ignore all that stuff, which is reasonable, right? I mean, I don't really think you have to have a narrative to justify anything
05:50If you ignore all that stuff and just look at the Bitcoin chart, Bitcoin formed a low in February when it normally does, right? Like when it normally does, February of the midterm year
06:06You can see that it's kind of done that time and time again
06:09It also did it all the way over here in 2014 as well
06:16So February—let me change this to a weekly chart—so you have your February lows, and then following the February low, you have your summer low, right? Your summer of 2018, summer of 2022, and then summer of 2026
06:25So all of that lines up
06:35And it was because of that I said, well, look, normally what..
06:44Happens in the second half of midterm years is Bitcoin rallies, uh, and then it comes back down, and then once we get into the fourth quarter, we get a drop that no one ever anticipates, and then we'll be on our way, right? And normally, you would expect about a 40% rally, right? If you look at 2018, it was a 40% rally off the lows, like 45%
06:54In 2022, it was about 40%
07:05And so I said, all right, you know, maybe we could go up 40% from the lows
07:15I said this back in July, thinking that we could have that, but then it didn't happen in July, right? So I was thinking, all right, if we're going to follow 2018, you'll have that countertrend move in July, and then you'll come back down
07:32What happened is we got barely anything, and then it didn't break up
07:38Until August, so that's kind of where I started to get off-kilter a little bit because that's where things really started to diverge some, because Bitcoin from the low has now rallied all the way up 50%
07:53It’s a bigger move up after a summer low than we saw in the last two midterm years
08:00So something clearly changed
08:03Furthermore, not only is it different in that sense, but also Bitcoin set a higher high, right? So from the summer rally of 2018, it was a lower high, and from the summer rally of 2022, it was a lower high as well
08:19So for me now, I’m looking at this and thinking, like, all right, well, something clearly changed in the markets because the dollar went up, and Bitcoin went up with it
08:37Now, in some ways, Perhaps Bitcoin is a little more correlated to traditional markets now because of the ETFs and traditional market influences, and midterm years often can stay bullish even into late September
08:53In fact, we actually saw that happen in the last two midterm years, right? The last two midterm years
09:02You look at September of 2018—sorry, not the last one—the previous one, the drop started in August
09:11If you look at September of 2018, the stock market reached a high on September 21st and then had a 20% drop
09:17And then, in 2014, the stock market reached a high on September 19th before a 10% drop
09:34So, you have examples in the past where the stock market started that drop, but that doesn't mean it has to
09:42There are midterm years where..
09:44The stock market does not top out in late September
09:46I believe 2010, uh, is an example where the stock market found, or sorry, where was it? In 2010, the stock market found a low in early July and then went up into the end of the year rather than experiencing that correction
10:10So it's not like there has to be a correction because it has happened in three of the last midterm years
10:16If you go back to four midterm years ago, in 2010, there wasn't a correction
10:21Now, that was also coming off the back of the financial crisis, where the market had already dropped over 50%
10:26But it does go to show you that you don't always get one
10:32So, because of this move, right, I have to be a little bit more open-minded now, to where Bitcoin..
10:39Goes from here
10:46The last time, arguably, the last time I was this wrong about something, right? I get things wrong all the time
10:53Who are we kidding, right? But the last time I was this wrong about something was in 2023
11:03So, in 2023, I said that I thought Bitcoin would not exceed $35,000 for the rest of the year
11:11I thought that 35K would basically be as high as it would go, and we clearly broke through that
11:20That was like the last time I really, you know, felt the wrath, right? Felt the internet's wrath was probably like late 2023, around October
11:33So, about three years ago, almost exactly three years ago, is where that happened
11:39And perhaps the same thing is happening now, right? Where, you know, and By the way, in October of 2023, when Bitcoin broke through, I did the same thing that I did today
11:52Like, I made a video, I said I was wrong, and I just moved on with my life
11:57I tried to regroup and reassess
11:59As it stands right now, you know, Bitcoin has broken through, and unless that changes, then I have to respect the new structure of the market
12:14I cannot, you know, unwind this in my mind
12:16The only thing that would change something is if this were completely retraced, which at the current time, I don't really feel like I have any authority to suggest that something like that would happen because I didn't predict the breakout in the first place
12:34Right? A lot of times it, it's convenient for people who were Wrong about something, then try to figure out why, uh, you know, why does it have to, like, why does it have to then come back or do something that they initially thought
12:51And so, I don't really feel like I have the authority at this point, right, like the credibility to suggest that, and so I think it would be more prudent to listen to other people's views about what's happening right now, rather than mine, because I didn't predict this move in the first place
13:10So, if I didn't predict it in the first place, then I'm scrambling to figure out what's happening, whereas there are other people who are not scrambling to figure out what's happening
13:23Perhaps they were able to foresee this better than I did
13:28In case it's better to figure out what they're thinking and what they're saying than to, you know, listen to someone who was wrong
13:39And that doesn't mean that, like, my opinion is never valid in the future
13:43I'm not suggesting that
13:45I do think, you know, at times I can have good runs, but what it means is that when you find yourself on the wrong side of the market, there's usually something you're missing, right? And I’m still trying to figure out what that is, right? So, that's what I would argue, and I’ve gone through and looked at what Bitcoin has done during past rate hikes because my thinking was this, and I think this is where I really, really went wrong
14:04Okay
14:22I thought that when the Fed was forced to raise rates, Bitcoin would reprice lower because I thought that Bitcoin would not like the rate hike, right? I thought it would react negatively to that rate hike and the dollar going up, but that is actually not rooted in the data
14:41And that is where I went wrong, because if you look at what Bitcoin did after the other rate hikes that we had, the so-called rate hike cycles
14:59If we go look at interest rates, the Fed Funds Rate, you'll notice that since Bitcoin's been around, there have been a couple of rate hiking cycles
15:09One started in December of 2015, and another one started in March of 2022
15:18When we had the first rate hike of a rate hiking cycle..
15:23Cycle, Bitcoin did not go down immediately
15:30And in one case, the bottom was already in
15:32If you look at Bitcoin's ROI after the first rate hike of a rate hiking cycle, this is December 2015
15:46This is March of 2022
15:49So those were when we had the first rate hike of a rate hiking cycle
15:51And I was thinking, all right, well, a rate hike in the short term is probably bearish, but over a longer period of time, it would be bullish because a rate hike just means the economy is fine
16:03So that's what I thought would happen
16:04I thought Bitcoin would reprieve, but it would actually be okay and it would just spook people in the short term
16:12So from there, I was looking at, all right, well, what did Bitcoin do after the first rate hike in a rate hiking cycle? Cycle, and you have the December 2015 line
16:24Bitcoin went a little bit lower, but the bottom was already in, right? Like, Bitcoin continued higher after that, and you can even extend it out
16:31Then, if you look at the other rate hiking cycle in March 2022, Bitcoin actually went up initially
16:41So, if I had been a little bit more rigorous in my thought process around this rate hike, perhaps I would not have come to the conclusion that Bitcoin would have to then repric
16:52Okay
17:03So, from there, if you look at the current one, the current first rate hike of this rate hiking cycle—arguably, is it even the first rate hike, or is it just kind of a continuation from the past one? Bitcoin has also gone up, but that doesn't mean it has to follow either
17:10Of these two other paths
17:17What I'm showing you is that in one of these paths, the low was already in, and in the other one, it obviously wasn't
17:24But, you know, it took about three more months for Bitcoin to, or not
17:31No, I mean it didn't take three more months, but you can see that Bitcoin sort of fell off, but that was going into the summer low, right? Which Bitcoin already had, right? Bitcoin already experienced that big drop into the summer low
17:42So, looking at this, you can take the average of the last two
17:51You can see that Bitcoin is clearly outperforming the average of the last two
17:55And had I looked at March of 2022, without the drop into the summer, I could have looked at that and known
18:03That there was a good chance that Bitcoin could, in fact, break out, especially if you couple that with the golden cross that Bitcoin had, right? I mean, it was kind of like the perfect storm for it to happen
18:14You had the golden cross
18:16We said after the golden cross, Bitcoin normally dumps and then it rallies again, and then we wait to see if it's a higher high or a lower high
18:23And in this case, it was a higher high
18:28So you're coupling that with a rate hike, and it's doing almost the same thing it did after one of the other rate hikes that we had
18:35And again, in one of these cycles, while we did go lower, the bottom was already in, right? Because in the 2015 cycle, Bitcoin did go back down into about day 90, but it was only about 30% down from..
18:50Where the rate hike occurred, which would still not, I mean, you know, if you're just kind of averaging that out, like that's still not necessarily a new low in the market
19:02And then I thought, well, I don't really like comparing it to the first rate hike in the cycle because, you know, is this really the first rate hike? Maybe it is
19:10I mean, by the technical definition, it is because we shouldn't assume that rates have to always go back down to zero before we start counting it to be the first rate hike in a cycle, right? I mean, there's plenty of times throughout history where they raise rates, it comes back down, but then they just raise rates again, and they don't go all the way back down to zero, if that makes sense
19:30So, I was like, well, have there been any rate hikes in September of a midterm year? And what happened then? So, then I went and looked at that, and I was like, okay, we've got an example here
19:44September 2018, the Fed raised rates
19:47Bitcoin didn't drop
19:50I mean, it did later, but by then, it was making lower highs
19:53This is a higher high
19:57It didn't immediately drop after a rate hike in September of 2018
20:00And in September of 2022, it also did not immediately drop
20:05In fact, in September of 2022, after that, not the first rate hike, but after the rate hike in September 2022, Bitcoin went up, just like it has in September of 2016
20:18September 2016, it's gone up more, even if Bitcoin experienced downside
20:22In, say, like month two or something, because if you look at history after rate hikes, in the midterm year or after the first rate hiking cycle, Bitcoin tends to do pretty well for the first month or so after that
20:36You can see that what happened in 2022 is we had the FTX collapse, and Bitcoin then went down about 15% from where the rate hike occurred
20:47Well, 15% from where the rate hike occurred—I don't even know exactly; it was somewhere over here, right? It would not even be a new low, right? Like, that wouldn't even be a new low
21:01So, because of all that, I have to reassess, right? I have to look to see where we are now
21:10And at this point, in the short term, I don't think you should defer to me
21:19I think you should defer to… Those that were calling for this and go see what they have to say
21:28If Bitcoin were to show weakness in, like, a month or two, then you come back and you look at some of these charts to try to get an idea of, okay, like, if we do go back down, how much further could we go? Could it be a higher low? And certainly with a higher high, I have to be open-minded to the next drop whenever it occurs being a higher low
21:54The other thing that I, I sort of was looking at with the dollar and kind of like trying to figure out what happened, is that I saw this pattern, and this pattern sort of reminds me of USDT dominance
22:08I'm sure everyone else, I mean, is familiar with USDT dominance, but the dollar had a big drop, consolidated
22:17And then had another drop down
22:23And what's interesting is that the dollar is sort of like testing these prior highs, and it's actually gone below these prior highs, like, you know, where it sort of built out this base
22:33It built out this massive base, and then it sort of broke through those prior highs and formed a double bottom, and now the dollar is actually heading back up
22:46But what's interesting is, if you look at that pattern, right? Like, if you look at this pattern right here, it's actually not that different from USDT dominance
23:00So if you look at USDT dominance, it's kind of like the same pattern in a way, where you have, sorry, you have your initial drop in USDT dominance, and then you get another drop to connect
23:17These dots, and then let's suppose there is a brief correction in October, maybe USD dominance goes back up
23:29But that doesn't mean it has to immediately continue up; perhaps it comes right back down
23:36So, the things to sort of look out for later this year, and again in the short term, in terms of how high could Bitcoin go, I would encourage you to defer to other people who are on the right side of the move rather than to me because I don't know
23:46I don't know
23:56You know, the only time I bought Bitcoin—uh, I thought it was a good idea this year was back in July and below 0.3 risk, and that's what I did, but it only lasted for 5 days
24:06So, you know, I got some, but not a ton because I thought we would spend more time below the 0.3 risk level
24:15From here, in the short term, I would defer to others who have a better handle on, you know, the current move that we're in
24:25If we do see weakness later in the year, I would not automatically assume that it has to be a lower low
24:32It could resolve to a higher low, like a macro higher low
24:43Um, and we'll see
24:54And you know, I think one of the things with Bitcoin, too, is that the final weakness, historically, in midterm years has occurred after the midterms, in fact, right? So, looking at, um, you know, the midterms in 2022, 2018, and 2014, right? The final weakness occurred after the midterms rather than before
25:05So, if you're looking for a macro higher low to print, then perhaps after the midterms is when it potentially could be
25:22...in line with what it's done previously
25:25So we'll see what happens
25:27Obviously, there are still questions about things like, you know, the realized price
25:30Will Bitcoin go below the realized price? Uh, and that sort of stuff
25:35I have to be a student of the market and just say, you know, unless you get a retracement here quickly, then I have to defer to the market, which is showing me a higher high, right? So, you have the lower lows, higher highs
25:56I can't be as deterministic as I was
25:59Um, so we'll see how this plays out
26:06And again, I think that my mistake was kind of putting the pieces of the puzzle together and assuming, "Okay, well, all of this will lead to a rate hike, which will then be..
26:19Bearish for Bitcoin
26:22But none of the data suggest that a rate hike has ever been immediately bearish for Bitcoin
26:28In September of the last two midterm years, Bitcoin did fine for a month or two after the rate hike
26:34In the first rate hike of a cycle, Bitcoin was okay at first in at least one of those cases
26:43In the other case, where it wasn't okay at first, the low was already in
26:47So, I think my mistake was assuming that a rate hike would cause Bitcoin to immediately repric, which I shouldn't have assumed, right? I shouldn't have assumed that
26:58And historically, if there is weakness after rate hikes, it’s not for a couple of months, right? A month or two before that were to happen
27:07So, I think in the short term, defer to..
27:10Those that got this move right, we'll see how high it goes
27:12If there is weakness that kind of comes up later in Q4, then I would be a little bit more open-minded as to where that low, you know, has to be, right? Not assuming that it has to be a lower low, and I mean if it is, it is, but not making that assumption right now
27:32But being more open-minded to, you know, a different potential outcome
27:34By the way, there was, you know, I've talked a little bit about some of the other markets that have shown some of these patterns before, and one was gold, right? Where, and this was where I also went sort of sideways because I was looking at this gold pattern as well and saying, "All right, well, when gold had this..." Top and you had sort of a low and then a slightly lower low
27:56I was kind of assuming that Bitcoin would follow suit and that we would come back down into the 4-year cycle low, and that this would be a lower high
28:08And what's interesting back then, though, is that silver did put in a new high
28:14Silver did put in a new high, but when it came back down later, it did not put in a new low, right? So, I mean, eventually it did, but that was because of other things that were affecting the metals markets
28:26The stock market was trending back up by then, like risk assets were doing fine
28:30But if you look at silver, you can see that it set a higher high, but it didn't go take out the prior low
28:39So that's why I think people should be open-minded
28:42That if you do get, if you do get any weakness, you know, later on in Q4, I would be a little bit more open-minded about where that would sort of land
28:52Um, again, at the end of the day, I mean, historically, the right thing to do with Bitcoin is to just dollar-cost average it throughout the second half of the midterm year and then just hope for the best, right? And you know, I did the same thing in 2018 and 2022, and I dollar-cost averaged, felt like a genius, and then I got wrecked in 2018
29:02Same thing in 2022
29:11Got wrecked again
29:21And, by the way, in 2022, my mistake was just assuming it was going to go a little bit lower
29:24Um, and then in 2026, I started to dollar-cost average below $30,000, but it lasted all of five days because after it started to move up, I was like, I'm not going to
29:38Chase it
29:39It's probably just going to come back down, and then it just never did
29:43Um, so we'll see what happens
29:48I mean, as it stands right now, the burden of proof has shifted to the bears rather than the bulls
29:52The bulls have kind of proven a higher high, and now it's the bears who have to prove anything if you know, there is going to be weakness at all, uh, in the fourth quarter
30:07So, we'll see, you know, and, and by the way, if weakness were to show up, I think it would have to correspond to a correction in stocks, because if you don't get a correction at all in the stock market, I think it's unlikely that Bitcoin would go that much lower, because it was always a correction in the stock market that caused Bitcoin to get that
30:18Final selloff
30:29And now, if Bitcoin or if the S&P 500 were to just have a 10% drop, I don't think that would be sufficient to take Bitcoin to a new low
30:40I think you'd have to have a much larger drop for the S&P 500 to take Bitcoin further down
30:46So, we'll see what, you know, we'll see what the S&P 500 does, because I mean, as it stands right now, you know, the NASDAQ, if you look at the NASDAQ, it is back up to a new high, which is kind of in line with prior midterm years
31:01I mean, there's a lot of times in September or so of the midterm year when the NASDAQ is trading at new highs right in September
31:07So that's not like that unheard of, right, for you know, for that to happen
31:12But those are my thoughts
31:16I'm just trying to sort of regroup here and..
31:18I acknowledge where I went wrong and where I went wrong
31:24My thesis was that rising energy prices would cause the long end of the yield curve to go up, which would initially lead the Fed not to raise rates because they would think, "Oh, it's okay." Then they would raise rates in September
31:34Then the dollar would go up, and Bitcoin would reprice down because of the rate hike
31:40But the rate hike causing Bitcoin to immediately go down arguably was not rooted in the data, and I think that was my mistake
31:48I hope that in the future I can learn from that mistake so as not to make the same mistake again
31:55Now I will just more so defer to the market structure of Bitcoin rather than get so deterministic about it, because as it stands now, this is a..
32:02Higher high, and I have to, I have to respect that
32:06So that's the content for today
32:10If you guys like the content, subscribe, give the video a thumbs up, and if you want to come listen to other opinions as well
32:17We are having the first ITC Conference in Miami
32:19The main conference day is November 21st, and we have a lot of great speakers
32:24We've got Michael Sailor coming, Grant Cardone, Sim, we have Mark Yusco, Allesio, James, Mike McLo, Guy, Rob, Gareth, David, Jason, Leah, Tom, FA, Randy, Evan, Dana, Matt Crosby, and Mauricio
32:41So, we've already got a pretty good lineup of speakers, and I hope to see you guys there
32:45Hopefully, by having other people in the room as well, you can listen to different perspectives
32:51Opinions, and then help form your own opinion as to where the markets are going to go
32:54But that'll wrap it up
32:55Thank you, guys, for tuning in
32:56I will see you next time
32:57Bye.