Life-changing wealth in cryptocurrency, as I've stressed repeatedly, is not primarily realized in and by the moves one makes during a bull market, but in the boring, fearful times of bear market disinterest which I believe awaits us in the second quarter of 2022 until at least the beginning of 2024. In fact, the fewer actions one can take in a bull market, the better. Of course, it would be more beneficial for one's profit margin if Bitcoin's price was to go to stratospheric levels before the next bear market, but if we were to come down from here, one could potentially offset those missed profits by dollar-cost averaging one's excess discretionary income when the bear market is confirmed because, if $65,000 was indeed the top, bitcoin would most assuredly fall below $20,000 or more, enabling a greater number of middle- to upper-middle-class individuals a larger share of the pie than would otherwise be possible if the price exploded to $290k and "merely" came down to $45k. I don't think we're even close to the top, but if at any time a black swan event was to rock the world at large, one should not consider it a world-ending scenario from the perspective of your bitcoin holdings. Besides, one should be in this for the long game - the centuries-long game - so small perturbations in the weekly price shouldn't be a huge concern anyway. As an aside, I've personally come to relish the chaos of these markets. Every time Bitcoin goes against the general consensus to the upside or down, the true colors of crypto's "thought-leaders" are revealed in often humiliating fashion. Further, I think it's good to be continually surprised and even humbled by this market because it keeps one grounded and forces investors to continually flesh out why, in fact, they should follow this crap in the first place.
Of course, the biggest critique with my overall 2021 liquidation plan and 2022/2023 accumulation plan is that, traditionally, it has been foolish to think that one can effectively pick the top and bottom of any market, especially when one makes their proclamation quite far in advance of the date of the intended target. I am fully aware of this fallacy, as well as the fallacy that implies "this time is different", but with Bitcoin - as the world's first globally traded asset made available to retail buyers before institutions and accredited investors, the world's most liquid, fungible, functional, and reliable asset that has achieved 100% uptime since its genesis block, the asset that has the clearest, soundest, and most transparent monetary policy of any in the world, coupled with the fact that it is also the most unregulated investable market on the planet - I think we're working with an entirely different beast altogether, one that I have described in the past as an "entity", not an entity that has a will, per se, or a conscious mind that is self-aware and can self-narrate, but one that, similar to plants and animals, instinctually fights for its own survival, the same as other creations, ideologies, and philosophies have before it, the most evident example being Socialism which never seems to die but continues to live on in the hearts of those generations who did not experience its detriments.
Because Bitcoin is, at best, only loosely regulated by large nation-states, and because it has thus far achieved a more equitable wealth distribution compared to any asset of its kind, distribution which is only becoming more equitable over time, it represents the most unadulterated proxy of the fear and greed dynamic than any other asset the world has ever known. Perhaps the earliest stock exchanges in Amsterdam in the 17th century also manifested this degree of raw human emotion, or the first gold markets in the 6th century (b.c.) Greece, but in both those cases, the common "retail investor" was shut out from participating due to his low socio-economic standing. The market "purity" of Bitcoin is one of the main reasons I believe the asset will remain locked within its predictable mania-inducing halving cycles for at least another four to eight years, cycles which every newcomer is more or less blinded to until they experience it for themselves and thereafter develop the necessary thickness of skin to insulate their emotions from subsequent price volatility. Much is often made about Bitcoin "whale" manipulation, "whale" here meaning certain large market participants who can seemingly move the entire market by their trading activity alone, but to me, such accusations of manipulation by these anonymous forces are nothing more than dog whistles for the bitcoin-ignorant who want to pin every downturn on some group of "rich guys" colluding to control the market at the expense of the little guy. Bitcoin miners are the only groups with sizeable holdings who must systematically liquidate their bitcoin at certain price levels in order to pay for the overhead expenses of running a capital-intensive crypto mining business. They're all looking at the same futures charts - just like any commodity market - and will therefore act seemingly in unison if it makes sound market sense. But this is simple business dynamics and not, in my opinion, collusion or coordinated activity. No, "whales" are typically net buyers during market dips and thus provide a necessary floor to ensure that prices don't plummet any further during a rout. That such entities tend to sell during market tops does not signal manipulation but sound investing practices. No doubt they, just as you and I, feel "they don't have enough" and will seek to accumulate when there's blood in the streets and also realize profits when euphoria's in the air. Why on earth would they care about mid-cycle topping patterns on the daily chart? They've no doubt been around a lot longer than any of us and are therefore waiting, like all smart money investors, to make one or perhaps two big moves a year while "hodling" through the rest. You should chuckle at anyone in this space who tries to explain market movements by beginning with the words "because whales". This snapshot from Glassnode shows the age of the coins that were selling during Bitcoin's initial drop on Monday, September 20th when the price went down to $42,907. I can assure you it wasn't "new whales" who bought bitcoin for the first time in the morning of the 20th and sold before lunch.
Less than 0.295% of those selling had been holding their coins for 6 months or more (that's less than 1/3 of 1%). Most of the activity was conducted by market makers, extremely short-term traders (using leverage), and other newbie dumb-dumbs who got spooked. Simplistic data, perhaps, but no evidence of "whales" who in nearly every case have very long time horizons.
Bitcoin, as an "entity", unregulated and unmanipulated to the degree that it is, open, accessible, programmable, and liquid, representing not only a new asset class - akin to the stock market in 17th-century Holland - but the digitization of money, property, and value, can, as also the most accurate proxy for human greed and fear, particularly toward the uncertain future, be enframed with and by predictive models that are themselves informed by certain mathematical laws, of which traditional stocks, bonds, commodities, and other assets cannot because they are all inherently centralized (herein not a negative - merely a fact), existing as only they can within the over-regulated and manipulated world of central bank policies, nation-state regulation, and unequal access for all potential market participants. Of course, one would be a fool to assume traditional markets can be absolutely predicted unless, of course, you are a central bank insider such as a regional Fed chairman who was caught trading assets based on forthcoming FOMC announcements which they knew would push the market in a particular direction.
I'm belaboring the point: the Four-Year Cycle will, in my opinion, be decisive until at least 2028 when we can expect near-complete market saturation, or until widespread, coordinated regulation is passed unanimously among the most powerful nation-states. Or until fiat currencies are utterly destroyed. Instead of attempting to eliminate bitcoin, I actually see nations - small ones at first - soon viewing Bitcoin as a strategic interest, akin to gold, oil, natural gas, rare earth metals, microchips, etc. We will, therefore, begin to witness a race between nations to bring the most amount of hash power to their borders as it becomes undeniable that fiat currencies are no longer tenable. Perhaps counterintuitively, I don't see this action taken by governments as mutually exclusive to crypto regulation. Hash power accumulation can easily occur alongside the passage of draconian laws to limit cryptocurrency activity and criminalize crypto investors (see Gold Confiscation in the 1930s as a historical example). In America from the 1930s to 1971, gold was for the treasury and illegal for citizens. Nationalization of bitcoin can also occur alongside the release of a Central Bank Digital Currency. In fact, stockpiling bitcoin will almost be necessary for the US when the petro-dollar system fails because "Fed Coin" will need to be tethered to something other than hot air. Max Keiser, a long-time Bitcoin evangelist, has publicly posited the idea of a "Hash War", akin to the Space Race of the 1960s and '70s which, it must be noted, the U.S. was undeniably losing in the first decade of the contest. America was late in acknowledging there even was a Space Race between them in the Soviet Union, at least publicly. The Soviets had a clear lead on the US until the late '60s. Once the U.S. went "all-in", however, they went all-in, as only Americans can I suppose. Indeed, the propaganda victory made by "Capitalism" and "Freedom" that the moon landing achieved in 1969 was decisive in the West's eventual victory in the Cold War which would take another 20 years to fully play out, a war that was won - not because our "ideals" were that much "truer" and more effectual than theirs, but because we were able to outspend them.
The Hash War, however, won't only be waged by huge, multinational alliances or modern-day empires, but every nation fighting for its own survival in wake of a collapsing fiat world conglomerate. And as the US was late to the Space Race, it will - holding onto the exorbitant privilege it has enjoyed for the last 80 years by way of the dollar's reserve currency standing - be late to acknowledge even the existence of the Hash War, reticence that will doom America from ever regaining its superpower status within any of our lifetimes. Western Europe will likewise be slow to enter the Hash Race and will only do so because they fear a rising Russia or find themselves envious of the improving living standards of their eastern neighbors who will be more likely to accumulate Bitcoin before them. That's even if the nation-state model survives a fiat collapse, a big "IF" to be sure. If I'm wrong about this, all the better for each one of us, so I hope I am.
Until then, one can expect untold levels of volatility and a near-constant stream of FUD directed at this nascent asset class. Most will become nauseated by the whole thing and simply turn away, saying, "this isn't happening" or "this can't happen here". As such, primarily because the crypto market is still governed by unadulterated fear and greed, and considering we have not even begun to experience even a hint of the government-level attacks that I'm sure will transpire in the not-distant future, one would be hard-pressed to imagine that we will go up and up and up in this bull run and not come tumbling down.
Technically, the crypto markets are getting more "mature" and will only continue to get more mature with an SEC approval of a Bitcoin ETF, but - due to the fact that a trader can now speculate with up to 100x leverage on many exchanges - the market is also vulnerable to mass liquidations in the event of a minor downturn. We've seen this happen at least 4 times this bull run. In 2017 (and prior), leverage trading wasn't available so if you were going to speculate, you had to do it on a spot exchange, meaning, you could only buy, sell, or trade what you actually owned. Today, every exchange allows for leveraged trading, so when there's a downturn, the most overleveraged positions get liquidated quickly, leading to a violent drop in price precipitating more liquidations which eventually builds to a veritable cascade. When the market begins exploding to the upside in the next few weeks and months, untold numbers of newcomers will be going all-in with YOLO ("you only live once") trades which will inflate the market to such a level that it won't need much more than a tiny pinprick to unravel it entirely.
Newcomers, primarily those who jump in during mania peaks, and especially those who use leverage when they do, will always be punished for this type of activity, eventually. It's an immutable law written in the stars of human nature. What's more, the downturns we've experienced this bull run have demonstrated three important things that won't change in the next 5 months: (1) we can still experience a sustained market sell-off of at least 50% or more (occurred May to July), (2) we can drop nearly 20% in s single day (Sept 7th), and (3) crypto is still highly correlated with the S&P, as evidenced by this week's massive volatility on the heels of a possible default by the Chinese real estate developer, Evergrande. As such, when the stock market corrects (highly likely within the next 12 months), crypto will not be spared and will probably lead the charge downhill. So no, I do not agree with the "Supercycle Thesis", insofar as it theorizes that we'll go up but not violently come down until the next bull market cycle, perhaps correcting only 30% or so. What's more, this thesis is supposed to be realized while we're still at only 2-4% global adoption. Institutional money is often cited as justification for this thesis, but I in no way think they'll save us from a downturn. Institutions are, at the end of the day, comprised of human beings gripped by the same fear and greed as everyone else. Unless they've gone on their own 4-year journey with this asset and have become seasoned crypto investors, they will experience euphoria and will subsequently panic sell like all the rest. So will nation-states and their sovereign wealth funds when it is their turn to throw their weight into the fray. This maturation process, crucial to developing the necessary long-term thinking which must liberate itself from the high time preference mentality that fiat has for decades conditioned humanity into embracing, is necessary and unavoidable by all those who participate in this market (which will be the entire world in eight years or so). The Supercycle Thesis will only come to fruition when fiat is destroyed and there is no other viable option but Bitcoin. Until then, the fiat mentality will reign in the minds and emotions of man.
In closing, we are locked in boom-and-bust repetitive cycles that will pass through another bear market after this current run ends. Again, all newcomers must be purged of their short-term, fiat-induced mentality, a mentality that not only looks for a quick buck (denominated in dollars, of course) but deludes noobs into believing they "know it all" about crypto after having bought some shitcoin on Coinbase two weeks prior. Indeed, every newcomer "knows", of course, "what's wrong" with Bitcoin and how to fix it, or more precisely, which shitcoin purports to fix it. They gained such knowledge from a YouTube video after all. As I've stressed from the first newsletter: do not listen to anyone - be they Elon Musk or Warren Buffet, or Mark Cuban, or some wealthy hedge fund manager, or a Youtube influencer with 500k subs - unless they have endured a four-year cycle from start to finish. Preferably two. And not merely "endured" with a kind of passive reluctance but actually dived deep into the nuances of bitcoin, a dive that all investors must take in order to gain the proper market perspective. Among the most important reasons for this is that we tend to witness the same media hype surrounding the same VC-funded projects like Solana every cycle, and also the same China Bitcoin-banning FUD year after year. Indeed, China bans Bitcoin once a quarter it seems. It's utterly ridiculous at this point. But of course, most newcomers wouldn't be aware of that and will subsequently be induced to panic-sell when they see headlines or those like it.
Bitcoin's ultimate bottom typically drops 85% from its cycle high, usually 12 months after the peak (almost to the day). $290,000 (my prediction) x .15 is $43,500. Basically, where we are now. The market low is, of course, dependent on the cycle high, so these numbers can change as the cycle develops. Returning to my opening remarks, if $65,000 was the peak, bitcoin might go below $10,000. However, I find this as unlikely as Bitcoin going to zero, not impossible, but nearly. What's more, bitcoin will probably languish in the sub-$55k range for two to three weeks during the market low, with the ultimate bottom near $45k. Trying to time the exact floor is not only foolish but unnecessary. Will it really matter if you got in at $45k or $55k when bitcoin reaches a million dollars in 2025? Hardly.
As a postscript, I want to make one last point about the mythical "Million Dollar Bitcoin". When this occurs, 1 Satoshi (i.e. the smallest bitcoin domination) will be worth 1 US cent. More importantly, the world will cease to price things in dollars and simply price in Satoshis, or "sats". According to the Stock to Flow Model, we're anticipated to reach this milestone in 2024 at the earliest and to average that level from about 2026 onward. The dollar's demise, with "all thing's being equal", is not far away. Continued monetary debasement, unfunded liability obligations, ongoing Quantitative Easing, negative interest rates, inverted demographics, and the rest will all coalesce to dramatically hasten the day.
The crypto investor's maturation process cannot be short-circuited or circumvented. It takes 4 years. If you have no interest in investing in "Bitcoin the asset", it would nevertheless be prudent to learn how to navigate "Bitcoin the monetary network". This can be accomplished for less than $100. Download Cash App (free). Connect your bank (free). Purchase some bitcoin (whatever amount you choose). Buy a hardware wallet like Ledger ($60). After setting it up, transfer your bitcoin from Cash App to your device (fee varies). For the advanced, learn how to tip people on Twitter using Strike (only available on iOS devices at the moment). Trust me, you'll need to be familiar with these things in the not distant future, whether you "invest" in Bitcoin or not.
Good luck to you all.
NSV