It takes 700 days to get over your PTSD and get over the damage that that bear market brought upon
you. So it takes about that long. And once we get to that 700 800 day period, suddenly the markets up,
the critics are back in force and you start feeling really good. You're like, I was right. I was right
to have bought those coins all that time ago. And then it keeps going. And then you're like,
I'm so right, I'm going to go all in again. And suddenly you end up buying the top. So you kind
of get this like acceleration phase. But a lot of it is human confidence. That's just how long it
takes people to get over the previous market cycle. And I agree with Odell that like Bitcoin is
designed to go up forever. It's designed to pump forever. But it goes through these things in waves
and processes. Now, I think it's also important to remember that there's macro factors, right? The
halving is also the election years, right? In the US, there's liquidity cycles, there's all these
different things. And I think Bitcoin is increasingly becoming like a macro asset. In fact, I think it
is a macro asset. My favorite thing is like you see some global event, a trade war or something
breaks out on a Sunday. And people who trade fly dudes who hate Bitcoin, what do they post? The
Bitcoin price chart. Why? Because it's the only thing that actually sends a signal as to what your
stocks are going to do on Monday morning. So everyone is now paying attention to it because it is
the index for where the world is going.
Greetings and salutations, my fellow plebs. My name is Walker, and this is the Bitcoin podcast.
The Bitcoin time chain is 882480 and the value of one Bitcoin is still one Bitcoin.
Today, my guest is James Czech, aka Checkmate. Checkmate is an on chain analyst and creator
of check on chain.com. We dug really deep into market sentiment where we're at in the current
cycle, chop solidation and where Bitcoin moves next on chain analysis and what it shows us
hodling strategies versus trading tips for new investors, market cycles and human psychology,
global liquidity and bitcoins role, micro strategy, altcoins and how they're complete garbage,
the impact of Bitcoin having the bit life crisis and a whole lot more. Before we dive
into me a favor and subscribe to the Bitcoin podcast wherever you're listening and make sure
to subscribe on YouTube or rumble as well. Just search at Walker America. And if you find this
show valuable, consider giving value back by giving it a zap on Noster or a boost on Fountain.
You can find me on Noster at primal.net slash Walker and find this podcast at primal.net
slash Bitcoin. Without further ado, let's get into this Bitcoin talk with Checkmate.
Okay, Checkmate. I didn't realize that your name was actually James Czech until like it took me
way too long to realize that. And I was like, oh, damn, that makes the handle even cooler.
But how you doing, man? Good, right? Thanks for having me on. It's a funny one, actually,
because way back in 2018, so that the reason that Checkmate came about is back in 2018 when I got
into the market on chain analysis, like that the idea is that once you get reasonably good at
understanding Bitcoin, as matter what it is, but my field was obviously in analyzing it,
people can assume that you've like been around for a long time. And back in 2018,
a long time means like 2013, right? Or 2012, you've got like a stack of Bitcoin. And at the time,
I was living in London and I was like, I just don't want to be this full public figure. If I
know about this thing, like, I don't want to get my kneecaps broken in some country, I'm
when I'm traveling. So I was like, I want to pick up some kind of a pseudonym. And the other
angle for it is I like people challenging your ideas, not your face. So the idea was, you know,
come and challenge the ideas that I'm putting out there rather than who I am. So that was kind
of the framework. And then when I joined Glassnode, all these institutional clients I'm talking to
were like, bro, what's with the pseudonym? I was like, well, I mean, it's easier because no one knows
who James Check is, right? Because it's checkmate, the name from there there. And I was like, okay,
let's just make the name James Check. And then everyone understands like, oh, cool, that makes
sense. So I just solved all those problems. And it's, it's, I can imagine the institutional
clients were not quite as like, they don't want to that same kind of NIMM maybe like they want to
know that. Yeah, there's a there's a human behind it. Maybe that'll change. Maybe we'll have
institutions like, you know, preferring NIMM'd people in the future. I don't know. That's,
that may be a bridge too far, who can say optimistic. Yeah, it may be. But you know, well,
we've got some, some, I would say, large institutional news coming today, like as we're
recording this, and I'll try to keep an eye on it. But I know the MicroStrategy earnings call
is happening at, as we speak right now. So it should be quite interesting to see what happens
there. I know, I mean, like their earnings per share, I saw they released beforehand there,
like, you know, they were expecting like six cents per share. And it's like negative 326 or
something. But like, I don't think anybody really cares about the earnings per share with MicroStrategy.
It's more like, how much Bitcoin are you going to stack? I don't know how closely, I mean,
how close did you follow Sailor and the MicroStrategy moves, like as part of your larger
research? Yeah, this was a topic that I got. Many of my subscribers were asking, hey, can you cover
MicroStrategy? For a long time, I just hadn't quite put it on the radar. So I wrote a piece called
the Infinite Money Glitch. And just to give you a bit of an idea of like the scale of this thing,
usually with my reports, I do written and video, but I do a TLDR. So people who are short on time,
they can read the TLDR and come back if they want later. And a lot of people really like that.
The TLDR for this piece was there is no TLDR folks, this thing's a whole meal, because it just was
like, it was really my just worked example of thinking it through. My like base case for MicroStrategy,
if I kind of summarize my core points, it's obviously going to be very good in the bull
because you can issue more convertible debt, you can stack more Bitcoin. Their product is
volatility. So as long as they can generate excess vol on top of Bitcoin, that's a that's
essentially what they do, they securitize volatility. The trade off to this is that in the bear market,
they're not going to be able to raise as much money, their debt's not going to trade at as much of a
premium, there's not going to be as much demand. So I think that there's two cases here. One is the
very long term. And then there's the bear market, I think they both have the same characteristics
they're going to reach their bit life crisis eventually, right? Everyone does, everyone has
a logarithmic supply curve because you can't stack more than 21 million no matter who you are.
So because everyone has this logarithmic curve, their growth metrics of Bitcoin per share and yield
by definition must go to zero, they have to go to zero by definition. I also like I like Luke
Grumman's approach was like, let's use the extremes to inform the main. Let's imagine MicroStrategy
stopped doing anything, they just sit. What's their value going to be probably their ETF value of
a nav of one. So they're constantly fighting the gravity, gravity of that share is to go back to
the Bitcoin Treasury value. That's where it wants to go if you don't do anything. Their job and
Sayla's job is to generate excess volatility to prevent that from happening. So that's that's
how I view the stock. I think it's going to have booms, I think it's going to have some really nasty
busts. But my base case is that gravity is always back to that ETF value.
It is really interesting, you know, talking about that that bit life crisis, like,
well, can you explain that for people who are not familiar with that term and like what that
actually signifies? I think this is an American hot all special. I think so. Yeah. Yeah. So the
idea of the bit life crisis and a lot of people go through this right, you stick around for two,
three cycles. And eventually, you know, here in Australia, Bitcoin is $160,000. So $1,000 just
doesn't go that far anymore. And like the longer you're in your journey, the more that $1,000 makes
a meaningless increase to your personal stack. So eventually you hit this point where you're like,
do I keep buying this? And you're like, try not do I keep buying this thing? Because like,
it's not increasing my Bitcoin balance. I'm still putting dollars in it. Yes, it's still going to
perform and the percentage is good. But you've kind of gone through this journey where you flip to a
Bitcoin centric world, everything is denominated in Bitcoin. And then you start looking at your
paycheck denominated in Bitcoin, you're like, why do I work? Because this thing like it doesn't buy
me anything anymore. But then you have to reclimatize yourself to the new heights. And you almost have
to go back to kind of think about things in fear because you have to remember, yes, you're still
stacking Bitcoin, but the percent of how much that's going to preserve and grow your value is still
the best performing asset. So you kind of have to go from Bitcoin centric world back to being like,
oh, but I still earn dollars. And then like it's a process. Yeah, it is. I'm definitely not at my
bit life crisis yet. I haven't been around quite long enough to have achieved that. But it is a
funny thing. I mean, even as you just watch like Sats per dollar going below a thousand, like that
just mentally, like for those of us that look at the Sats per dollar price or US dollar, I should say,
not a dollar. Moscow dollar. Yeah, yeah, Moscow time. It's kind of like a whoa, like this really
just doesn't this dollar does not get me very many Sats anymore. It is not quite so satisfying
when that DCA is hitting. And I'm realizing, okay, wow, that's a shrinking amount of corn that I'm
getting for that same amount of dollars. And I guess it's, it really does also put the put you
in the perspective of like, okay, is, you know, like Bitcoin's repricing the world, right? Like
this is the big, big, yeah, Bitcoin's just a denominator that doesn't change, or at least,
you know, right now changes on a very even schedule. But ultimately, the total denominator
doesn't change. And we're just as Eric Kasin would say, like our monkey brains cannot totally
wrap themselves around that it just it just doesn't it doesn't make sense. Like the numbers
are hard somehow, I don't know. No, and this is actually important, like even from like a market
structure perspective, I'm a big advocate for and I think everybody should observe your own
emotional response to price, because it is essentially if you can take what you're feeling
and extrapolate it, that's more or less what the rest of the world is doing at the same time.
So if you look at like, when we rallied up to the, I call it the chop, solidation range back for
most of last year, that chop, solidation range, it took me, I don't know, probably about a month
or two, April, May, I think, before I had to climatize myself to go, okay, when it goes to 50K
and 60K, I'm happy, I'm actually happy to buy below 60K. I am not going to get 20K again, I just
believe it's gone. So now I'm like, okay, I accept that value is now probably anything below 60.
And then you start behaving that way. Well, now you got to go through that process again,
and actually observe how you personally go through this journey. Because at 100K, I'm starting,
I'm not quite there yet, but I'm starting to get to, oh, look, it's 90 something, that's good.
That's really good again. So like you have to reclimatize yourself. And if we just,
you know, go up again and again and again, eventually people can't acclimatize themselves.
They actually can't look at 200K and go, oh, Cal DCA this, and that's what puts tops in, right?
Some kind of top and I'm a big advocate for people like, which, where's the top? It's like,
which top bro? Which one? Because if you're a day trader, it's the one that just liquidated your
account. If you're a long-term odd lot, there is no top. So like, work out what top you're
actually talking about, because there are many of them. But you know, this is why markets eventually
exhaust themselves on both directions. But because people can't acclimatize themselves to that new
level. And as a result, you know, you have to then correct and find where that acclimatization zone is.
So on the chop salutation point, because you had a great definition for your definition that you
had posted, which is a period where the market chops wood and trade sideways after powerful
bull market advance, chop salitations tend to last just long enough for people to get bored
and walk away and miss the rest of the uptrend, which I think is just kind of like great. It's
like that point where, you know, like, it's like that meme of like, you know, you always manage to,
you know, sell the bottom and buy the top. It's essentially that. Yeah. Like you're just totally,
again, our monkey brains are really bad at trying to just game out, okay, what's actually happening
here? Is that fair to say? Absolutely. And you can kind of extend it, right? Chop salutation and
a correction is more or less the same, except you add in an extra line and deep enough, right? The
correction goes just deep enough. That's the difference between chop salutation and correction.
You get these nasty wicks and people go, Oh, that's it. It's over. It's dead. Right. Bitcoin
crashes to 105 K amount finish. And then of course, that's, that's the bottom. Are we in a, I mean,
this is a pretty intense chop salutation phase right now. I'm curious how does this compare
to other phases of chop salutation? Are we, you know, are we getting to that point where
people are getting bored and walking away? I mean, even though it's sitting at whatever,
just below 100 K right now, which you would think that would not be boring, but people are funny.
And somehow people are like, Oh, you know, it's, it's crashed. It's down below 100 K, like feeling
bearish. Where do you think we're at with the just overall sentiment versus reality?
Yeah, this is a great question. So I think I actually went back during the previous chop
salutation period, I went back to the start of Bitcoin's history on trading view, and I put like
full screen, probably about a year and a half worth of price. And I literally scrolled left to right
and just explored Bitcoin's history from start to finish looking for previous examples of chop
salutation. And the only one that even remotely resembled it was 2019, right? Most of that year
was what I would call a chop salutation. It was, however, there was more downside. There was a lot
more nasty sell offs. And that kind of helped me understand the one that we had in 2024, which
was a lot more controlled, very, very structured. I would say this whole uptrend has been very,
very structured. So I actually think 2020 forwards quite unique. And my base case, just from like a
sentiment perspective, there were a lot of people calling for a bear market at that point last the
shitter cycle of all time. But when I looked at how the market was trading, I struggled to believe
that people would be willing to accept a 73k all time high. So there's like this, this underlying,
it ain't over. And I think that when you actually look through the data, we actually see this,
this like by the mentality, market sells off, you get a little bit of ETF outflows followed by a lot
of inflows. So there was this just like, no, we are going higher behavior. This current process,
it has some of those similarities. But we are also at a higher altitude. So it's taking people a lot
more work and a lot more to understand that, Hey, we are now a $2 trillion asset to go up to $3
trillion is going to be another trillion dollars for market cap. Now, as most people know, you
don't need a trillion dollars to come in to move the market cap. There's like a money multiplier
effect. My estimate is somewhere between like three and five, it fluctuates and varies. But
you can't go to 150k and add a trillion dollars without about 200 billion or so of real capital
coming in, you can wick there, right? This is not just like some volatile random spike where it
goes and comes back. This is the kind of thing it needs to get there. And I think what a lot of people
miss is they go, Oh, no, it can't possibly be that because we don't get $200 billion when we're
from 73 to 200. It's like, no, but we had eight months of chop solidation. That process before
and after is what allows the market to go from 73 to 100 markets are a process, not a result.
So you need that accumulation period before and after to justify the rally. If you don't have it
before, you usually don't get the rally, you get a sell off. And if you don't get it after, you go
back from whence you came, right? These are, this is just how markets work. So I think people just
need to understand these kind of dynamics that markets are a process, not a result. It takes
time to get places as Bitcoin gets bigger. This is just only going to get more real. So, you know,
just kind of keeping that grounding anchor, I think is important. Yeah. I mean, staying,
staying grounded, I think is often difficult, even for the most hardcore Bitcoiners, like we like to
talk about low time preference and everything, but then exhibits some, yeah, exhibits a very
high time preference behaviors. And so, you know, I guess maybe a good place for us to kind of get
into a little bit is just because, okay, we're at this period right now that maybe has some
historical parallels or, you know, the chop salutation phase of 2024 had some historical
parallels. And then we just, you know, pumped up to basically over a hundred cam, not sure exactly
how high we got like what 106, 107, or was it one? There you go. Which is quite a move. And I think,
you know, perhaps the sentiment now, especially, I mean, I want to talk about the broader like
crypto quote, market sentiment a little bit too, because that's like even a whole different world
from where Bitcoiners are at. But influence is everything. Yes, I agree. Right. Right. And so,
I mean, are we at a place now where obviously there's a lot of different narratives that are
going on. There's a lot, people are talking about the strategic reserve, you know, micro strategies
are going to continue to buy more companies coming on that are, you know, trying to buy up
Bitcoins and pump the price of their stock because they saw, wow, this worked really well for Michael
Saylor. We can get into that as well, because I think there are different levels of, let's say,
conviction among some of those players. But narratives aside, like what does the on-chain
data actually look like? And how, I mean, how much stock can people put in on-chain data? Because,
you know, they say like, okay, you know, like TA, like looking at just price charts is like astrology
for men, right? Is on-chain data a slightly more accurate version of that astrology? Or what do you
think? So it's based on the same stuff, right? Because at the end of the day, what is the only
constant in markets? It's our 100,000 year old monkey brains. That's the only thing that's constant.
Interest rates change, the asset changes, right? What the political climate is, that's all evolving.
But the way that human beings respond to fear and greed will never change. So that's our base
constant. We will always respond that way. You will always have smart money who buy low, have
higher conviction, patience, and they wait, and they sell to people who buy into FOMO. This is why
you can't get your friends to give a rat about Bitcoin until it reaches some ridiculous level,
right? And it's also why when they sell the bottom and they capitulate everything,
that's it. That's the flaw because everyone does this at the same time. So at the end of the day,
what is on-chain data? And, you know, I don't just look at on-chain data as another thing. It's like,
I consider myself a Bitcoin analyst. Yes, my expertise is in the on-chain side. But at the end
of the day, what we're actually doing is surveying the Bitcoin population. Some of them transact
on-chain and 80% of coins moving on-chain, typically speaking, are going in or out of exchanges. So
every single one of those coins is being deposited and withdrawn has a signature. How long did they
hold it? What was the cost basis? How much profit did they lock in? Are they taking a loss? All those
dynamics. So we survey that the whole UTXO set. We then look at futures markets. What are they
doing over there? What's all the metrics we can look at here? What about options? What about ETFs?
What about spot? So suddenly you've got like five different populations and you don't need to
door-knock every single person to find out what their sentiment is. You just take a statistically
significant subset and you say, hey, what's their story? And if on-chain people, right, if you just
look at the on-chain data, if they're locking in really big profits and they're like really in the
money and they've got fat green portfolios, I can guarantee you, you go to the futures markets and
some guy is paying a 50% interest rate per year to go levered long at the absolute top. So you see
this like parallel across all these markets. So you're like, okay, I have a consistent story
from five different semi-connected but also disconnected Bitcoin populations.
Now I can make a conclusion based on this. And at the end of the day, what I kind of view it as
is you're looking under the hood of what's going on with Bitcoin, what drives people to make decisions,
profit or loss. So if you're seeing a lot of smart money with old coins taking large profits,
like we saw at 105K, at the 73K peak in 2024, we had $55 billion a month in old supply that was
dormant had not moved. And then it ramped up selling into that peak. Then we had eight months to digest
it. We had $85 billion at the 105 peak and we are currently digesting it. So some people like,
oh, what about guys who are doing their UTXO consolidations? Like, yes, $86 billion a month
worth of people decided that 105K was the time to upgrade to a cold card. Like, it's just no,
as people are taking profit. Like just this is just what's going on. And that's if you have that kind
of insight, again, my whole audience and I've actually asked them this question, are you a trader?
Are you a hodler? Are you a professional? Like, how do you view yourself? The latest stat we did was
like 96% hodler. A lot of these people, they just want to know why the market does what it does.
They don't care about trading. I don't care about trading. What I care about is helping people
understand why the market does what it does. Just because we have sell slide doesn't mean it's
bearish. It can be. But if you bearish, that's just an opportunity to not buy the top and wait for
something to maybe, you know, just maybe not buy before a red 10% candle. And we've all done it.
And you know what it feels like. But if you can just reverse that and go, well, I can see that a red
candle is probably likely. I'm just going to wait. Oh, there it is. Now I'm going to buy.
I am definitely not a trader. I'm trying to hold my Bitcoin for the long term. And if you're like
me, you need to make sure you keep that Bitcoin safe by going to bitbox.swiss.com.
Slash Walker and using the promo code Walker for 5% off the fully open source Bitcoin only
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Bitcoin is chop solidating right around 100k. But we have companies, nation states, and a whole
lot of plebs like you and me who are stacking harder than ever. So it's going to keep ripping higher.
But now is the best time for you to get your security locked down tight with Bitbox. Plus,
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me, you can go and verify that for yourself on their GitHub. When you go to bitbox.swiss
slash Walker and use the promo code Walker, not only do you get 5% off, but you also help support
this podcast. So thank you. It seriously blows my mind that there are Bitcoiners who are not yet
on NoSTER seriously, what are you guys doing? Just like you shouldn't need to ask permission to use
your money, you shouldn't need to ask permission to speak freely. But that's exactly what you're
doing. If you're still stuck on centralized social media platforms on NoSTER, you can't be censored,
you can't be banned, and you can't be de boosted for saying words Elon doesn't like. And honestly,
the vibes are just better. And there's nowhere else you can end up having a casual conversation
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check out this podcast on NoSTER at primal.net slash TIT coin. Primal has a built in Bitcoin wallet,
so you can literally get zapped by people for your posts, then use those same sats to buy a coffee or
whatever the heck you want, all from the same app, search for primal in the app store, go to primal.net,
or check out any of the hundreds of other NoSTER apps out there, because you can freely switch
between them anytime you want. So if you're done being a LARP, come join the largest Bitcoin circular
community in the world and start zapping sats on NoSTER. Yeah, it's tough because like for me,
I'm definitely not a trader. I'm not sophisticated enough to be a trader. I don't have the time to
be a trader. I mean, I look at the Bitcoin price probably more than I should, but certainly not
a trader by any means. And I'm curious too, just as far as strategy goes, I mean, do you think in
general for the average odeler is just kind of like a DCA and go away the best option for them?
Because I know there's a lot of back and forth about like, okay, yeah, DCA works very well,
but also like if you are able to lump in a little bit more at opportune times,
that works obviously even better. But like, where do you sit on that in terms of like, okay,
is there a best option? And then is there like a best option for most people when they're trying
to figure out, especially newer people who are just getting in, like who are finally seeing
Bitcoin because it's in the news. And we're saying, okay, do I just set up this $5 DCA?
I think that doesn't seem to be adding up to much or like, but it seems safer. Or do I just
ape in with everything I have right now and grit my teeth? Yeah. So again, all of these things are
totally personal, right? And for a lot of people, if you just want to be hands off and just go and
live your life and you actually don't spend that much time looking at Bitcoin, just DCA and walk
away. However, I would say that a very large majority of people, especially because it's
streamed on Nostra watching this, you probably look at Bitcoin more than once per day. So let's
just rethink about that. What parts of Bitcoin are you looking at? A lot of it's going to be the
narratives and the price chart and, you know, they'll be at the occasional trader who flicks
past and I'm not a trader as well. In fact, I don't target traders at all with my content because
I don't particularly care. I don't care about stop losses and take profit levels. I break my persona
into two because I think it helps people because my audience is broad. We've got hodlars who are in
accumulation mode. You've got people who've been around for many years and it's now like their
life savings and then want to understand what's going on. There's professionals who like have
trading firms and they all want to kind of all have the same problem. I want to know why the
market did what it did. I don't care that it's up. I don't care that it's down. I just want to know
why it did that because that helps me understand some of these dynamics. So the way I view data
just by and large, it's information about what the rest of the market is doing and it's kind of
like having X-ray vision at the poker table where you can see like 30% of the cards. You don't need
to see all of them, but if you can see 30% of them, you're like, I can now start making more sound
decisions. So when I think about like what my biggest pain points are as a hodler, it's buying
when it feels great because that's what we all do. You're FOMO buyer because it feels awesome
and it feels awesome for about three minutes and then you feel terrible because it corrects
for the next two months. You're like, I could have bought so much more. And even though it doesn't
matter on your relative long-term time horizon, just imagine if you had just looked at two metrics
and gone, hey, look, the smart money is taking a lot of profit right now and the dumb money is going
leavened long on futures exchanges. What is that a recipe for? A red candle, right? And that just
wait. So the idea is like, just don't buy, right? So my two personas is check the analyst. His job
is to be very objective. This is my best read on what I think is going on and people can kind of
interpret that how they need. That's like my objective assessment. But then I often break
into check the hodler and I say, all right, Mr. Analyst, get out. I don't care about all your
fine tuning fancy models. What do I as a guy who just wants to see Bitcoin go up? Well, how do I
do this? Right? Yes, I know the price is higher, but I still want to accumulate. I still want to
stack sats. I still believe Bitcoin is going up forever. But now that I've got an objective
assessment, what do I do? I either be more patient. I maybe just go, you know what, I think we're just
going higher. So now anytime is a good time. And you just kind of refactor it to being like,
rather than just looking at Bitcoin headlines, just add that extra layer of I'm going to think
about what the market's doing. I'm going to visualize. I'm going to see it. And you really
don't need that many tools to do this. It's just understanding how in profit are people,
are they taking profits? Are people going to generate eight mode? If so,
make a decision according to those. So where are we at with that right now? Like,
are we, I mean, we're chop solidating a little bit fair to say, but like, where do you see this
going from here? Are there any kind of like either positive or negative warning signs that
you're looking at where you're like, Hmm, okay, this is going to get interesting in one direction
or another. Yes, I think it is. And where we are at the moment, relative to the 2024 chop
solidation, that was very structured. And I was of the view that we just needed to cool off from
that rally. We basically went from FTX to 73 without even a, it was like without a 15% correction,
it was unreal. So then, I mean, we still only had like a 25, 26, right? We had one WIC that was 32.
So it's really the most controlled bull market we've ever seen. In our current environment,
how did we get here? There's obviously a lot of news with Trump. There's a lot of news with
SBIRs. There's a lot of things that I would put are not contingent on, but anchored to
politicians. Now, if anyone is going to tell me now, I know that the politicians, they seem to be
doing what they said that we're going to do. How long that lasts, how realistic this is like,
you know, like, let's be real here, they're still politicians. So I'm of the view that
like, all you're going to need is a string of, oh, it may not happen, nor, you know, this isn't,
and then suddenly steam can come out. So at the moment, I'm actually quite constructive. I think
2025 is going to be a good year. I still have a positive general view, but I do think it's going
to be very choppy. And, you know, we're going to have swings left and right because the world's
changing, right? We've seen like a 25 minute tariff war show up and the whole market kind of gets
really jittery. So there's just a lot of things that the world has to adjust to change. Change is
always creating uncertainty. And one thing to view about markets, they can go up on bad news and down
on good news, right? Markets don't necessarily respond to news in the way people think they do.
Markets don't like uncertainty. And I think we can all agree that there's a lot of things changing,
and that uncertainty is what's going to create jitters in markets. So at this point in time,
whilst I'm constructive on 2025, I actually have two scenarios and I've painted these out. The first
one is if we get to 120, 150K, that zone, as you go from 120 to 150, more and more models just get
really overheated. And when I talk about these models, it's the level where the average Bitcoiner
has such a big green number in their portfolio that literally every single previous cycle,
they've sold into it. And I like to say, if you're listening to this and that's not going to be you,
it's actually not going to be me. 150K is not my price either. But it's this guy's price and it's
that guy's price. And that guy just happens to be from 2013, he's got a lot more money than me,
and he wants to buy a house. He wants to live his life. And this is just going to happen. So
at 120 to 150, a lot of models get very overheated. That doesn't mean we can't go above that. It doesn't
mean it's over. It doesn't mean it's the top. It could be atop. I don't know. We'll have to see.
But it's probably not going to be an easy move to just go to 200. It's probably going to take some
work. The other scenario I've got is on the downside, which is, well, what happens if we undo all
this political stuff? What happens if we go back to 75? I don't know. I'm not saying this is going
to happen. I got no idea. And that's the first thing I do. I have no clue where the market's
going to go. I don't predict anything. I can't predict anything. No one can. I can prepare
for both of these scenarios. What am I going to do at 150? And what am I going to do at 75?
At 150, if it's overheated, I'm just not going to buy as much. I'm going to wait and allow the
market to cool off. If we go to 75, I'm not going to have any money in my bank account anymore.
That's basically those two scenarios. So I kind of think about those two in advance
so that if they happen, then I know exactly what to do. If they don't happen, great. I spent
half an hour thinking about what I was going to do. Problem solved.
So have a plan, basically. It sounds easier than it is.
When emotions are involved and those emotions are centered around the money that you are
for, I think most Bitcoiners, almost all in, you understand why people are emotional. It is
one of those things where it's so much easier said than done to, even if you have the best laid plans,
emotions can take over once you actually get to that point. And you think, oh, for example,
it hits 150K. And the guy that had the plan that says, I'm selling, and I'm trimming off at 150,
and that's that, but he sees 150 hit and it goes up to 155. He's like, never mind. I'm riding this
forever. Next stop's a million. Let's go. So in terms of cycles, because obviously,
we have the having cycles. It's a beautiful thing about Bitcoin. It is predictable in terms of its
issuance. You know exactly what that new issuance is going to be every four or so years. We can
predict that. Do you think that the havings are there? There's always debate about are the havings
priced in because we always know about them, or can they never be priced in because again,
our monkey brains don't understand absolute scarcity. What's your take? Yeah, so my view
is that the halving has been priced in forever. And basically, it doesn't matter. It hasn't mattered
for a long time. And I was going to actually run the numbers on this. But if you look at how much
miners earn over the next year, right? Long term holders are sold approximately 15 times that in
the last like three months. So like, do the miners really matter if you've taken their entire yearly
issuance and the long term holders have sold it? And that's just long term holders. Other people who've
held their coins for a very short period of time, they're also selling. It doesn't really matter.
You know what I mean? Like, and people like, oh, but miners are a one directional thing. They're
always selling. It's like, that's true. Long term holders buy in the bear market, they wait for three,
four years and then they sell. They're also one directional, right? At the extremes. So in many
ways, I don't think the halving has mattered for some time. The market's just much, much bigger
than them now. It's actually the existing holders. I mean, you know, think about it from their
irrational perspective. There's a lot of Bitcoiners who are like, never sell your Bitcoin. It's like,
okay, I'm going to turn up the speed dial. We're at 500k. Now we're at a million. Now we're at
2 million. I'll see that big green number through that house. You want, what about fight? How high
do I need to turn this dial before you take one sat off the table and go and improve your life?
Every single person has a price where it's going to improve your life. And again, it may not be you,
but I can guarantee you that whilst you may be saying, no, I want 10 million, some other guy took
it at 200. You know what I mean? Like people have their levels and it's just important to recognize
that that is reality. And we can use ideology and say, I'm going to hold most of my Bitcoin forever
as well. But at the same time, I know some other guy is going to sell. So as a result, I need to
behave knowing that that's going to be the case. So you just kind of think about whatever
else is doing, even if it's not your decision, what is everyone else's decision that helps us
frame things up? Do you think that the presence of more like Bitcoin lending and being able to,
you know, take out debt against your Bitcoin, do you think that changes that dynamic at all,
especially for the long term holders? Yeah, no, this is actually really interesting.
And in many ways, that is the perfect definition of a long term holder,
because those coins don't hit the market. If you lock your coins up and take debt out against it,
which I actually think is going to be a massive product and will happen, especially with SARB
121 getting rescinded. So I think this is absolutely going to happen. You now have the most strict
definition of a long term holder. You're going to have to balance that by saying, well, how much
debt did these guys take on? And where's their scary liquidation price? Because that will also
come into play. But that is the definition of a long term holder. They've taken dollars out and
they've done something with them in the world. Those coins are not hitting the market. This is
almost like a sailor risk strategy. It's a black hole for coins. So I think that's a real thing,
but we do have to balance it with, well, how much leverage is now building up in the system,
if and when that does become a problem at some point.
So because you mentioned earlier, saying that in your opinion, the havings are kind of don't matter
as much as maybe people say they do. Is it fair to say then that your opinion would be also that,
are the cycles just natural market dynamics of things getting overheated, blowing off,
cooling off, and they just seem to kind of align? Because you do see a lot of alignment with the
havings, right, in terms of when the price runs up. So is that just like it just happens that way?
Or why do we see those same kind of correlations in the market as they relate to the havings?
It's a great question. And you'll often see, I'm sure most people can visualize it,
but there's that chart where people like index to the harving, and then you can see how each cycle
performed from the point on. I don't like that particular version. I prefer the one that goes
from the cycle bottom. And if you use the one that goes from the cycle bottom, the last two
cycles, the 2015, 16, 17, and the 2018 all the way through to 2021, those two cycles are almost
exactly where we are right now. We have following those paths from the cycle bottom, we are like,
put a pin right in the 2016 market, we are exactly there, which is strange and uncanny.
I don't hold two views on like this four year cycle thing is going to continue until it doesn't.
And I simultaneously hold the view that it's already broken. If there's ever a time for it
to break, it's probably now. So when I look at that dynamic, how on earth do we get to the
exact same position in those last two cycles? I discard the early ones because Bitcoin was
just too young, right? It's just a very different world back then. The reason is because when you
have these capitulations, these like market washouts, which 2015 was, 2018 was, and then FTX,
it takes time for the market to recover. Like everyone who's been through a bear market,
there's like this period of about, well, it's actually about 700 days almost to the, to the
dot. It takes 700 days to get over your PTSD, right? And get over the damage that that bear market
brought upon you. So it takes about that long. And once we get to that 700, 800 day period,
suddenly the markets up, the critics are back in force and you start feeling really good. You're
like, I was right. I was right to have bought those coins all that time ago. And then it keeps
going. And then you're like, I'm so right. I'm going to go all in again. And suddenly you end up
buying the top. So you kind of get this like acceleration phase, but a lot of it is human
confidence. That's just how long it takes people to get over the previous market cycle.
And I agree with Odell that like Bitcoin is designed to go up forever. It's designed to pump
forever, but it goes through these things in waves and processes. Now, I think it's also important
to remember that there's macro factors, right? The halving is also the election years, right? In the
US, there's liquidity cycles. There's all these different things. And I think Bitcoin is increasingly
becoming like a macro asset. In fact, I think it is a macro asset. My favorite thing is like,
you see some global event, a trade war or something breaks out on a Sunday and people who
trade fly dudes who hate Bitcoin, what do they post the Bitcoin price chart? Why? Because it's
the only thing that actually sends a signal as to what your stocks are going to do on Monday morning.
So everyone is now paying attention to it because it is the index for where the world is going.
It is the liquidity index by and large. So I think there's a lot of factors at play.
As we move towards this like sovereign debt crisis, which again, these things move at
glacial pace and then they just happen. There's going to be phases where these cycles are going
to break and we're going to get periods where they just have to put liquidity into the system.
Right now, it looks like they're starting to try and take some of that liquidity out. So
we're going to go through these swings and roundabouts. And I think it's just important to
remember like just because the halving has happened before, doesn't mean it's going to happen again
in terms of the cyclical behavior. If there's ever a time for it to break, it's now.
But at the same time, we are still following that four year cycle. So the reason I hold two views
at once is I don't anchor to either of them by holding the view that the four year cycle will
continue and it's already broken. I stopped worrying about whether it will or won't happen. I just say,
what's interesting that it's still happening, but I don't look at the right hand side of the chart
and the goes, that means we're going to go up 100X. I don't hold that view because it changes your bias.
Lynn Alden and Sam Callahan in one of their recent pieces, they basically called Bitcoin a
barometer for global liquidity. And I think that that's such a great way of describing it because
again, it's the only real denominator that you have. So it's going to measure that the best.
And to your other point just now about the fact that, I mean, we've been in actually a tighter
phase of global liquidity recently than, I mean, obviously then during COVID. But I mean,
we went and there was so much money pumped into this system during the COVID era and right after.
And then they start, you know, like USM2 went down. Like they pulled liquidity out of the system.
And the interesting thing was that around like that whole pulling liquidity out time, you know,
now it's starting to go back in. But Bitcoin was coming out of the bear at that time. Like Bitcoin
was actually was doing quite well. So I find that to be really interesting because it makes me wonder,
okay, if Bitcoin has done pretty damn well under situations that are, I mean, it was for the US,
it was the fastest rate hikes, you know, like ever basically, their money was being pulled out of
the system, which you hadn't seen in a while. If it did that well during that period, and we know
that, for example, Donald Trump likes green candles, you know, he likes to see the stock market
doing well, he likes to see asset prices doing well, he views that as, you know, his own barometer
for how happy people are, how well he's doing, something he can point to and say, look, you
know, I delivered a great market for you. You know that that money printer has got to be turned on,
kind of full blast at some point, especially you look at the interest expense on the debt in the
US and, you know, all around the world. But again, the US is the biggest kid in the playground, right?
And one way that I frame things up is the gravity. Yeah, how do you think about it?
Yeah, there's the gravity of the situation. For each asset, everything's got a gravity.
You know, I've been tweeting about this recently, but there's like five prices that I look at,
the oil price, because the more expensive oil is the tighter everyone's liquidity. It's because
it's the input cost of everything, right? So oil, the dollar, because that's what everyone's debt
is denominated in, who's not America. Well, I mean, their debt is as well, but they can print it. So
every other country, their debts in US dollars, so the more expensive the dollar is, the harder
their debt is, the more they got to tighten the belt. Treasuries, because that's the benchmark
interest rate. And then Bitcoin and gold, because those two are telling you, they're the fire alarms
that tell you where the overall liquidity picture is going. And for all of these assets, there's
a gravity. Where does it want to go left to its own devices? And then there's the managed outcome.
And I think it's important to note that aside from Bitcoin and gold, because they're the fire
alarm, the gravity for them is a result of the other three by and large. So for the dollar,
I think that Brent Johnson's milkshake theory is perfectly correct, where if you leave the world to
its own devices, the dollar just goes up forever because there's this like structural bid for it.
The debt must be repaid or serviced at the very least. And therefore the structural bid is for
the dollar. What happens if the dollar goes too high? It breaks stuff because suddenly they can't
pay their debt and then they've got to sell assets and that breaks things. So the managed result is
that they have to weaken it. Same for treasuries. The natural gravity is why on earth would I lend
the government money? They're bankrupt. Why would I lend them anything, especially for 30 years?
So therefore, where's the gravity for yields up? What happens if yields go too high? Shit breaks.
And if shit breaks, they have to weaken it, which means they've got to bring yields down. They've
got to find buyers for bonds. If they can't find buyers for bond, then the Fed becomes the buyer
for bonds. So there's like, where's the gravity and where's the managed result? And generally
speaking, the managed result comes as a reaction to. So when they see things starting to break,
then they start to do these things. And we saw this back in 2023. Yields on the 10 year side to
get towards 5%. That was a point of stress. Stuff started to break. Janet Yellen started issuing
shorter term debt and pulling all that $2.3 trillion out of the reverse repo facility,
putting that money from COVID, that black hole of money started getting pumped back into the system.
Suddenly, Bitcoin starts going up. So that's the way I like to frame these things. What's the
gravity of the situation? And then what is the managed outcome? And generally speaking,
the gravity is obviously always there. It wants to be pulling in that direction,
but they've got to fight it. If you go to the biggest picture, the Jeff Booth level, the gravity
is deflation. Technology continues to make us more efficient. The gravity is deflation. The
managed outcome is inflation. So you've got to understand where the market wants to go and
how they're going to push it or pull it away from that result. Do you foresee, just for this year,
it seems like things are going to get pretty wild? First of all, you never know what Trump is going
to do and the whole world pays attention to what the US president does. The one nice thing about
Biden was that it was just like he was asleep. So there was not a whole lot to pay attention to.
He's predictable.
But yeah, extremely predictable. He's going to sniff heads. He's going to mumble a lot.
Exactly what you're getting with him. Trump's a bit of a wild card. He will just do things.
Are you seeing just a lot of, for Bitcoin specifically, but also just kind of global
markets, are you seeing a lot of volatility on the horizon this year? Are you seeing just a lot of
again, uncertainty leading to some of that volatility?
I think so. And if you think about my base case, is that Trump is going to do what's best for
Americans. What I think Washington has been doing and will continue, that's the status quo,
that's the gravity. What do they want to do? They want to benefit Washington. So you've kind
of got the government trying to benefit the government by exporting dollars, exporting jobs,
benefiting from all those things. I think Trump is going to go through the pro any clearly,
is going through the process of trying to benefit Americans, which in the short term is actually
quite chaotic because you are reshaping the way that the system works. And a lot of the rules
that would have happened previously suddenly are going to flip and start moving in reverse.
So in the long term, that's going to benefit America. If you benefit the people, then you're
going to benefit the country overall. But there is going to be short term pain.
Markets are going to have to adjust. I think a lot of markets thought that these tariffs were a
bit of a bluff. And in a way, they are, as we saw with Columbia, as we saw with, you know,
maybe with Canada, where it's basically like, I'm going to just put it on the table and say,
this is how it's going to work now. And you're going to kick and scream and then eventually
you're going to bend the knee. So some of them is a bluff. Some of them isn't, right? He's obviously
quite serious about putting this stuff into play. You're going to have a lot of the system,
the B that's going to push back against it. He's going to get a lot more done than they think they,
the system that B expects and markets expect, but he's also not going to get as much done as the
Trump bulls think, because he's eventually going to hit these roadblocks and political capital
is a finite resource. So I think a lot of these dynamics are just going to play out.
Markets still have to adjust to these things. You know, again, I'm not an equity, I'm not
an equity evaluation specialist. I don't spend any time looking at stocks. But if you just look
at it on a broad picture, it's like, these things are very, very expensive. Like there's a lot
baked into these stock prices. Can they be maintained up there? We saw jitters just with
deep seek, right? And again, I have no edge in AI whatsoever, but just the release of a model by
another country, suddenly everything tanks by like 10%. Nvidia got absolutely crushed.
And Nvidia is like, you know, what is it? The mag seven, like 30% of the S&P 500. So
there's just a lot of sensitivity out there and there's a lot of concentrated risk.
I've said to my subscribers, just keep an eye on the gold price because gold doesn't go up when
everything's all hunky-dory. Gold goes up when stuff ain't quite right. And gold's going up.
Gold's hitting new all-time highs day after day. This is a sovereign, you know, other countries
are basically buying it as the marginal buyer of treasuries. And then someone else has got to come
in to buy those treasuries, otherwise yields go up. So there's just a lot of things changing.
And I think, you know, for my view, when I really look at this problem, gold and Bitcoin are the
only assets that make sense to me, right? I just struggle to find anything else to be like, yeah,
that makes sense. But at the same time, I'm very, very aware. People have probably seen that
Mermic and Capital chart where it's like gold priced in the YMI Republic. It goes up with a
lot of swings to get there. And I think that's the correct framework to think about this stuff.
Yeah. I mean, Peter Schiff is certainly very happy right now with the price of gold doing
what it's doing. I'm curious, just in terms of the like at the nation state level, and we were
mentioning cycles earlier, does the enactment of a strategic Bitcoin reserve in the U.S. or in
another G7, does that fundamentally start to change cycle dynamics? Like, does that start to kind of
blow the doors off and make it just much harder to figure out what's coming next from your perspective?
I think so. And I think Nick Carter did a really good piece. If you get exactly what
it was called, but why doesn't support a Bitcoin strategic reserve? And I generally align with
that piece. Is it a tacit admission by the U.S. government that something is wrong? And like,
when I frame this thing up, it's like, for me as an individual, why do I buy Bitcoin? Because it
makes a hell of a lot of sense for check on chain as a company. Why do we buy Bitcoin? Because it
also makes a hell of a lot of sense. Doesn't that extrapolate up to a sovereign level? Of course it
does. But at the same time, there's different types of sovereigns. There's sovereigns who, for
example, if we look at what Russia has been doing, they've been buying gold for many years, same as
China, because they're like, these treasuries can and did get frozen. So therefore, it's kind of not
your money. So it makes perfect sense in the world for them to be buying gold and accumulating Bitcoin.
It makes perfect sense. Does it make sense for the global reserve issuer to do it? I'm not sure I
can quite get behind the idea that the Bitcoin backs the dollar because, you know, as much as we
all love Bitcoin, it's a very, very small fish in a very, very big pond now. So look, there is some
game theoretic aspects there. You could argue that every country will eventually go down this road.
But at the same time, does the global reserve asset issuer have to do this? I'm not, I'm not
that sure. So for me, I think the way I think about the Bitcoin strategic reserve is that there's
basically it's a binary outcome. It either happens, in which case, number go up, everyone happy,
you stacked as much as you could. Congratulations. So therefore, it's kind of a, it's an easy answer
as to what happens there. Good. If it doesn't happen for any reason, or we get more of this
announcement of announcement, we're going to think about maybe talking about potentially
having a committee that we might think about. That's kind of what politicians do when they
don't want to do anything. They have committees about committees. That seems to be the status
that we're in. If they choose not to do this, and if you think about the invisible hands that
exist behind there, there's departments of defense, there's treasuries, there's all these different
groups who are going to say, Hey, we probably shouldn't do this because we want people to buy
our treasuries, not Bitcoin. If it doesn't happen, that's what's more interesting, because that's what
takes all the steam out of the market. Anything that was pricing in this strategic reserve,
there's a long road between now and there. I also don't think I agree with Nick again that the
executive order approach here is probably not the right way to do it, because anything that gets
signed in with an executive order gets signed out with an executive order. It's much better to go
through US Congress and get voted on. But when I'm really honest, and I just like, as an Australian
commenting on Americans, you can correct me if I'm wrong here, but I would be shocked if you
walk outside and pick 10 people from the street and say, Hey, should the US government spend $500
billion on buying Bitcoin? I would be amazed unless they're wearing an orange shirt. I think
they would probably say, What? I don't have a job mate. I don't give a shit about Bitcoin. Can you
please fix the economy? That's what I think the result is going to be. It's just a very low priority
guys. So that's my base case. I think it's a fair statement that if you did a man on the street,
the majority of people would probably just regurgitate the same Bitcoin talking points that
they've been fed by the mainstream media for years, because we are still very, very early in this.
And it's going to be interesting to see what happens. From my perspective,
it's like, if the US government does it, great. If they don't do it, great. It doesn't change
fundamentally why I use Bitcoin. I have seen a lot of people talk about how it's like,
Oh, well, this no longer is the separation of money in state. Bitcoin was supposed to be
the separation of money in state. What is this? To your point earlier, it's like,
earlier, it's like, if Bitcoin is what we think it is, then of course, sovereigns were eventually
going to adopt it as well, because it's in their best interest to do it. It's Bitcoin doesn't care
if you're you or me or a company or a sovereign. It doesn't matter to Bitcoin. Bitcoin does not care.
So that was always going to happen. But the important thing to remember is the separation of
money, the creation of money from state still exists. The government can't print more Bitcoin.
And that's, I think, like the little bit of the nuance that gets missed there. It's like,
just because the government starts using Bitcoin doesn't mean that the government controls Bitcoin.
We know that's not how it works. And they can't print more nor does the game theory incentivize
them to find a way to print more. So at least we have that. So switching gears a little bit,
because I think every now and then again, people on YouTube turns out they're altcoiners too.
And so I think it's good to maybe to speak a little bit about just the absolute carnage
in the altcoin markets as it relates to Bitcoin dominance. Like even with Bitcoin,
like on the tariff announcements, Bitcoin dips a bit, right? Altcoins just got absolutely
slaughtered. Bitcoin dominance is going up as price is going down.
So what do you think about this? What do you think about it? What does it tell us about larger
sentiment and kind of are you seeing like two different worlds here where it's like the Bitcoiners
who, if you're seeing Bitcoin dip, if you're like me, you're like, oh, great, my DCA goes a little
bit further than it did yesterday. But for altcoiners who believe that their altcoins just
chase Bitcoin wherever it goes. And if Bitcoin moves, I mean, they've not had a good time this
run, it seems. No, no, this has been a lot of people like, why do you spend any time thinking
about shit goes like I don't, but I'm an observer, I'm a market observer. And when I pay attention
to this stuff, because it's interesting to just see where the rest of the market is, because
the reality is, and actually you can look at this, go and look at how many UTXOs on Bitcoin,
more than like, you know, $100. It's like there's less than 25 million UTXOs. And I'd say most
people listening to this, you probably have more than one UTXO. So as a result, yet that's how
many Bitcoiners are on chain, right? It's in the single digit millions. It's not a lot. So that's
your base case. Where's everybody else? Where's this other supposedly 300 million people, they
don't hold Bitcoin, they hold all the other shit, right? Or they're on exchanges and the like. So
why do we pay attention to this stuff? Because it tells us information, it tells us where the
market is. And I've been trying to work out why sentiment has been so shot at crashing to 102K,
and everyone's just completely destroyed. And I'm like, eventually it comes pretty clear
that this divergence between Bitcoin and crypto, both in narrative, size, scale, attention,
is very, very real. So the first thing is that this whole bull cycle, we have seen capital inflows
into Bitcoin at a tremendous rate. Just so people can understand the scale of this thing.
We use a metric called the Realized Cap. It's the on chain market cap. Rather than valuing
every coin at the spot price, it values every coin at the time and it last transacted on chain.
So the better way to think about this, it's the value saved in Bitcoin. You bought one BTC back
at $10,000, you invest $10,000 and you keep holding that UTXO, it's saved at $10,000. That's
how much you saved in that asset. Now, 45% of all dollars that have ever been invested have been
invested above 90K. 45. That is the scale of where we're at right now. And that tells me two things.
One, that's a shitload of demand. And second thing, that's also a lot of sensitive buyers.
So if we go below 90K, don't be surprised if it gets a little bit hairy because all those 45%
of dollars invested are going to be a little bit scared. Now, if you look at the altcoin space,
we have not seen that capital inflow. And I looked at a series of metrics like how many of the top
thousand tokens or above their 200 day moving average are profitable, just literally more than
50% of people are in profit, more than 50% of coins are in profit. And there was another metric,
we're seeing capital inflows over 30 days. In previous market cycles, there was like a structural
bull trend where more people go into profit, the 200 day starts getting flipped, there's more people
who are having a good time, more capital inflow into shitcoins. This cycle, it's been like spike
dead, spike dead. There just hasn't been, and that's that spike is only just getting to like half of
the top, top thousand being not bearish, right? We're not talking about a good time here. We're
just saying not complete dog shit. So the average altcoin investors had a horrible time. And what's
really interesting about this, the money has come into Bitcoin first via spot markets, then via the
ETFs, but it is simply not rotating. It is not rotating in the way that most people expected.
Back in 2023, a lot of people and particularly hedge funds and traders, I heard this from many
sources and firsthand, they bought ETH at the bottom, not Bitcoin, because they expected the
Bitcoin, ETH, L1s, DeFi, NFTs, shitcoins, like that. They expected that like long tail behavior.
And it went Bitcoin, Solana, shitcoins, right? But they didn't get the classic like waterfall
behavior. They basically just money came into Bitcoin and it just stayed there. And I think
that's a really important insight. The money that's coming into Bitcoin is not rotating. It
doesn't want to rotate. Now, as a result, people then look at the lofty valuations of like, I use
ETH as a punching bag because it's number two and it's the most obvious one for this. But
if you look at how much Bitcoin's market cap swings on an intraday basis, this is like the high
and the low of the day, it moves an entire Solana every day. Solana is like 150, 60 billion. Bitcoin
does that in a day, every single day, just between the swings and the highs and the lows, just like
if you plot them over each other, you can't even see the Solana market cap because it's so big.
We used to move on that same metric. We used to move 5% of an Ethereum back in 2021. We now move
20% of an Ethereum. So we're moving like when something is moving a fifth of your entire market
cap just on like intraday wicks, you are officially irrelevant by comparison. You just don't, you
don't count. No one cares. And now what I think is going on is a lot of these assets, particularly,
I think Ethereum is interesting because it's tried all the different narratives. It's tried the money
thing. It's tried the smart contract thing. It's trying the data availability thing now. These are
all like the big streams and it tried, it's still trying to do the money thing. And the reality is
it's just not working. So now investors look at it and go, well, how do I value this thing?
How do I actually value it? If I can't value it as like a monetary asset, I know I'll do a discounted
cash flow. Oh, shit. That's a hundred dollar ETH price. That's the number I got out of this model.
Let me run it again with more bullish numbers. Oh, $250 ETH price. Shit. This thing's 10 times
overvalued. These are like the conservative numbers you come up with. And I think this is just
echoing through the whole space. And you see it with meme coins. What are meme coins? Right? This
is kind of Marad's thesis. It's basically just tokenized community doing away with all the tech.
You don't need devs. It's just complete shit coins. But the thing with that is like, how much
energy does that really have? Trump then launches these meme coins, which has all sorts of questionable
realities. I mean, that itself is a bad sign in my opinion. But like, how do you beat that as a meme?
It's hard to. It's literally the sitting US president. If that's the height, what comes next?
So you kind of just realize that like, the crypto world has had hundreds of billions of dollars,
and they've built stable coins and casinos. And the casinos, yeah, they're going to always remain.
But do they deserve a $400 billion market cap? Do they deserve $150, that's half to $150 billion?
I don't know. I don't know. And I think a lot of investors are just struggling. And the narratives
are struggling to justify the premium that is already baked in. And, you know, if I kind of
think about why sentiment is so bad, I think too many people owned not enough Bitcoin, that's step
one. They owned too many shit coins, but more importantly, too many of the shit coins that
didn't go up, which is also painful. And then you go to the third rung, which is like, they're
actually now questioning the valuation frameworks that they got there in the first place and going,
oh my God, it's like my favorite tweet at the moment is like, this is where bottoms will form
if there is one. And it's like, if there is one is doing a little lifting here, because
where is it? Where's the bottom goes? Like it just keeps coming.
Well, I think they're all starting to kind of realize, because you pointed out like,
ETH is going through all these different changing narratives. You know, the ultrasound
money was the hilarious one. And now you just, you know, tweeted out either today or yesterday,
ETH net issuance now since the merge is now positive territory again. So even though it was
supposed to, you don't be deflationary forever, it's like, oh, it turns out when you've got a
foundation in charge of your money, that you can't believe anything that they say or plan in the
future. And so like, none of these alt coins are actually alts at all. I mean, they are just
shit coins, because if they were alts, they would actually be alternatives to Bitcoin,
but they are not. They are just, they're shit coins. And the funny thing is that I think that
people are starting to realize this now, they're realizing, oh, Bitcoin is in a league of its own.
Its competition is nothing. There is no second best. There is nothing competing with Bitcoin.
Now all of you meme coins or all of you L ones, and then all the meme coins built on top of you
are all competing with each other. So now it's just infighting, you know, it's no longer,
you know, you're kind of like poking the big king of Bitcoin. It's like, no, no, no.
The king moved on from you. There's no interest there. You are now fighting amongst yourselves
and realizing that there is not enough new suckers floating in here for you to be able to rug.
And I think that's a really important point. The money that's come into this industry has been
institutional and sophisticated. This is why Bitcoin hasn't pulled back more than 25% on a
serious closing basis. The money is very, very serious. And it looks at these things and goes,
these aren't serious. So you're absolutely correct. It's kind of like ancestral money,
where it's just all the crypto money fighting amongst themselves for which coin's going to pump.
And I can't help but feel because I had this meme a way, way back ago, you know, the meme where it's
like the old man's leaning over, then he goes, but not for me. And he pulls out the gun. It was
the concept like the flippening, the flipping, but it's not for me. It's actually Bitcoin is going
to be just fine. It's actually the top signal for the crypto market in my view, if it hasn't
already happened, is going to be when they all start fighting over which coin flips for number two.
And you can imagine the fervor that's going to come out and that will be the final extinguishing
light where they all realize we're just going to flip each other to zero because eventually
that we realize that there's just nothing here. It's a shame. And then maybe they'll finally
realize the toxic Bitcoin maximalists were right and we're just trying to look out for them, but
maybe not. Okay. So I appreciate the perspective on the shit coins. We'll leave them be for now.
There's always room if you're shitcoining for you to come over to Bitcoin. It's not going to bite,
and the people are not as toxic as you think. I wanted to give you a couple of questions
because there were a couple of great questions asked on Nostra and on X. And the first one of them was
just about never getting a clear answer about Bitcoin balance on exchanges. Seeing multiple
results for this, what can you tell us about this? Is this something people should look at or is this
kind of a nothing burger? Yes. So exchange balances is one of the engagement farmers' preferred tools.
They have no signal whatsoever. So my colleagues back at Glass know they actually released a report
recently where they look at this as like this waterfall decline of exchange balances. Now,
the reason why when you go to data provider A, B, C, D, they all have different numbers is because
tracking exchange balances is extremely difficult, extremely specialized, always changing, forever
dynamic, never fixed. You have a whole team of data scientists who are constantly tracking all
these UTXOs and often they're missing like one and a half million coins, two million coins.
So what my colleagues showed is that basically over time, the coins that what looks like an exchange
decline, they're actually just coins moving into the ETFs, which are just custody by Coinbase.
So this is the thing. When you look at an exchange balance chart, what you need to realize is that
data providers find new wallets all the time. And it's not as if like they find this wallet,
let's say they find a new Binance hot wallet. That wallet didn't just appear the day they found it.
It's probably been around since like 2019. So they're like, oh, let's go and retrofit the data.
So that exchange balance is always historically changing. It's never a fixed number. It's always
changing and moving. And it depends on how good your labels are. So this waterfall decline,
this supply squeeze that we're seeing are just coins going from Coinbase to the exchange into
iBit Coinbase custody. It's literally just moving to the other side of Coinbase's ledger.
It's not a supply squeeze. So this is a really important thing. So my general advice,
when you see people talking about exchange balances, they are engagement farming. They
don't know what they're talking about. Very, very few people can actually tell you what it means
and whether there's signal in it. And as someone who spent a lot of time with this data for the
average plet, pure 100% unadulterated noise, get rid of it, remove it from your feed. It is
completely useless. I can't stress this enough. The only people were exchanged metrics in general
are useful is for high frequency traders, people who are building algorithmic bots,
and they want to see flows coming in and out of exchanges. Show me when people are
depositing large amounts of coins, and I'm going to trade around on the micro time frames. If you're
not doing that, you do not need to look at exchange metrics at all. They do not provide signal. So
that's my base case for the average pleb out there. Don't look at it. Not useful. Are they at all
useful in terms of, is there anyone to figure out if exchanges actually are selling paper,
Bitcoin through these metrics? Or is that something that, no, that's not even helpful
in that regard? If you look at the 2022 bear market, what created the savageness of that last
six months? It was all the off chain, all the hidden leverage that Celsius and Three Arrows and
all these mobs actually had. There is no metric for this because it's the whole point of it.
It's clandestine leverage. So if they're doing all this paper, Bitcoin, right, and I actually wrote
a piece that I called paper, Bitcoin is actually one of my favorite pieces I wrote last year.
And there's this narrative that derivatives are suppressing the Bitcoin price. And my take on it
was, well, if you're a big asset manager and you want to get allocated billion dollars to Bitcoin,
if you can't hedge a billion dollars worth of risk in a liquid options market or a liquid futures
market, you can't buy the billion in the first place. So my case on paper, Bitcoin is actually
without derivatives and without big options markets, you can't have the big capital inflows
to take us higher. You actually need the derivatives markets to get to five, six, seven trillion
dollar market caps. That's just how it is. So that was my take on paper, Bitcoin, whether
exchanges are like short selling and all this kind of stuff. People moan about this all the time.
Guys, we're crashing to $97,000. Where's the suppression, right? It's basically at all time
high. The thing is, one, I should actually add this to my chop solidation definition. It is also
a period where the biggest narratives about short selling and manipulation, every man and his dog
is banging on about this. No one talks about manipulation and short selling and all this
stuff when the market's going down, or when it's going up, only when it's going sideways and nowhere,
which by the way, if you look at a daily price action, Bitcoin goes nowhere. And by nowhere,
I mean less than 1% up or down 40% of the time. 40% of the time, Bitcoin literally goes nowhere
on a daily basis. The other 30% of it goes up and the other 30% of it goes down. So if you're one of
these short sellers, right, there's a 70% chance you're going to be wrong because 40% of the time
it goes nowhere, you're wrong. And 30% of the time it goes up, you're wrong. So all this is why day
traders get blown up all the time, but it's not manipulation folks. We're a $2 trillion asset.
It's going to take a lot of money to move to the next altitude. If we can't find that money,
we go down to a lower altitude until we do. So this is just how markets work. Don't worry about
boogie men. You'll never catch them. And if you do catch them, what are you going to do about it?
It doesn't change your world at all. Let it go, move on.
Just speaking of large numbers, because you touched on this briefly, but I know you wanted to
talk about a little bit, this kind of law of large numbers piece. You want to get into that in
a little bit more detail, maybe? Yeah, for sure. So I called the law of large numbers, which is
the whole idea of that concept is that things are basically mean reverting. When you run enough
simulations, it goes back to some level. For that level, what is the gravity of Bitcoin? It's the
realized cap. In my view, it is the money saved in Bitcoin on chain. If you go to an exchange and
you just buy and they just leave your coins there, you're one button away from a sell. It's not really
a capital inflow. When you buy and you take it in a cold storage and you hold that thing for six
months a year, five years, you have saved money in Bitcoin. So the realized cap, in my opinion,
that is the metric. When people ask me, is Bitcoin being adopted? I show them the straight up chart
of realized cap and say, look at all this money being saved in Bitcoin. It's up $480 billion
in the last two years. That's how much money is going. Yes, it is being adopted. So my concept is,
in order to go, we're at a $800 billion realized cap right now and we're at $2 trillion. In order
to get to a $2 trillion market cap, we needed $800 billion to go into the realized cap. The real
number is $800 billion and the multiplier is then whatever that is up to $2 trillion. In order for
us to get to $3 trillion, you probably need the realized cap to go to like $1 trillion or $1.2
trillion and add that extra capital flow to move higher. Where does those capital flows happen?
During chop solidation periods, during corrections, during times when the market goes nowhere and trades
around and people buyers and sellers are trying to work out what this thing is worth. People take
profit that revalues their $10,000 Bitcoin to $100,000. Some other guy had to come in with $90,000
more than the original purchase price to acquire that same coin, capital inflow. So that's the way
I like to think about these things, right? It just takes time. We are in the world of big numbers.
Bitcoin is, as we're talking about shitcoins, it is the biggest fish by not even contended with,
the biggest fish in its pond. But it just swam out into the biggest pond in the world, which is the
macro market. So whilst Bitcoin is $2 trillion, and it's going to take time and big money to go to
the next level, gold added $6 trillion to its market cap last year alone. That's a 25% move,
right? And I'd say most Bitcoiners would be very disappointed with a 25% bull market.
That's what I mean. It's so, but $6 trillion, that puts, just take big gold's ad, just the amount
that it went up last year, Bitcoin's $350,000 a coin at that market cap, just about gold added.
So we're in a world where Bitcoin is the smallest fish in the biggest pond, which is the opportunity
set. But the opportunity set takes a long time to get there. And a lot of people, I don't want to
bring it up actually, but the power law, a lot of people talk about the power law, which I don't
give any time or effort to. One thing that a lot of people ignore about the power law is its log
time as well. To go up orders of magnitude, you need orders of magnitude more time as well.
And that part I actually do agree with.
Now, it's, yeah, I have not given too much attention to the power law. You just saved me
some potential time there. That's fantastic. So just building off that, another question we have
was just about chop salutation. And the question specifically was, is this the highest weekly
chop salutation, choppiness index that we've ever seen? Like, are we at a period of extreme
choppiness right now? Or is this just kind of par for the course?
Yeah, no. So the reason that chop salutation has its name, it actually comes from the only technical
indicator I use, which is called the choppiness index. This Australian commodity trader invented
it many years ago. And basically what it looks at is I use a 10 window period for weeklies.
And the idea is take the last 10 candles, and you can see the price is chopping around within
that range. If all the candles are within a defined range, this thing will go very high.
And the idea is it's basically saying it's like a fuel tank. We are ready to trend again. We've
chopped around long enough that we're ready to go. And this thing works on daily and weekly and
monthly timeframes. It doesn't tell you a direction. It just tells you has the market chopped wood for
long enough on that particular timeframe. So yes, we've basically hit an all time high. Now,
again, I use a 10 week period for mine. The standard is 14. So all these things are variable. I use
10 because by my analysis, we roughly 10 trend for about 10 weeks at a time. And then we chop
around. So that was just kind of my base case there. But the market looks like it wants to go.
It does want to move. Which direction it goes? Well, I've got my upside 150k scenario and I've
got my downside 75k scenario. I got to look at both of them because it could be both. It could
be one. We don't know. It could be one and then the other. So we'll have to wait and see. Do you
think, you know, I won't hold you to a price prediction or anything, but is that 150k scenario?
Is that where you see like, as in that's as high as we're going this cycle? Like barring, like,
does that include the potential of nation states just deciding to ape in? Or is this,
that's that's base case. Yeah, there may be some other like all else being equal. That's kind of
where you think we're going. Yeah. So I think the way to think about this is in terms of,
if we just came out from like a probabilistic standpoint, the metrics that I've used to define
that 150 zone, if we get to 150, only 5% of all those metrics trading history is at a higher level
than that. So we've gone there. 5% is not zero, but it's also there's a 95% chance that they're
kind of overheated. So it's one of those things where check the analyst, check the analyst looks
at this thing and goes for the foreseeable future. I can't tell where we're going to be in 10 years
time for the foreseeable future. I think 150k is everything will be overheated and check the
analyst just by, you know, I cannot have an opinion that is otherwise that is saying like,
Oh, suddenly all my models are broken. That's, that's FOMO, right? That's me going, Oh,
I'm just going to ditch the models because my gut feel. So based on everything I look at,
Hodlers have put tops in at the amount of profit we get to 150. Now, the other thing that's important
to remember, these are moving targets. 150 was 149 and 148 a couple of weeks ago, because as demand
comes in, as that realize cap climbs, the average cost basis lifts. I mentioned that there's 45%
of all dollars invested above 90k. What happens if investors have just realized that this is now
the floor and we get this period of re-accumulation that actually cools things off and raises this
level, right? So the idea is that we're trying to look for when are we stretched away from the mean,
right? Because you want to always go back towards that mean. That's what mean reversion is all about.
I think the realize cap is an important mean reversion model. Unless we get that demand coming
in, those models will just keep going higher and higher. But if we were to teleport tomorrow,
and I wake up and we're at 150, check the analyst simply has to put out a piece saying,
guys, we're overheated beyond belief. There's a 5% chance or a 4% chance we're going to keep
going. That's not zero. But if we keep going higher, the odds go from 4% to 2% to half a percent to
nothing. And then you're like, we're in rare air. And maybe it's a new cycle. Maybe this time is
different. Maybe a million dollars is just a magnet. But the other framework I've got, which I think
is important, if we wake up tomorrow and we go to a million dollars, I think most people listening
to this can probably envision an 80% correction back to 200k. I can't envision an 80% correction
from 100k back to 20k. Good luck. So the bull market authors the bear that follows. The more
we just grind up and sideways, up and sideways, the higher those models keep going. So slow and
steady is actually going to get us to a much, much better place, far more robust bear markets will
be much more shallow from 150. I don't think we go down 80%. I think we go down 40%, 50%.
That's the kind of environment where it's just not going to be bad enough to justify going back
down 80%. So that's how I think about things. And we'll just have to read it as it comes.
I suppose, especially if that environment coincides with a very high liquidity environment from the
fiat system that just seemed, yeah, it's going to be an interesting recipe. One of the other
questions that we had a slightly different take was just about what you think about recent kind of
very, very low fee environment. It's a great time to consolidate those UTXOs. But like,
why do you think the on-chain activity is so particularly slow at this moment? Not a lot of
competition for block space. Yeah, I think there's two takes here. So the first one is that strictly
speaking, when fees go down like this and on-chain volumes go down like this in every single previous
cycle, it has been the start of a bear market. Let's just check the analyst opinion is that
you would rather people using Bitcoin than not. So first things first, strictly speaking, it's not
great. We also have to temper this by saying we've probably had a low fee environment for some time.
It's been all the shit coin ordinals and all that kind of guff that's been going around,
which has basically just died with all the other shit coins. Because that's now disappeared,
suddenly we're just looking at monetary transactions. I wrote a piece the other day where I think
Runes was basically the number one, since the halving has been like the number one block space
user, basically went to zero almost overnight. That is why blocks have essentially emptied out. So
now everyone's kind of left looking at this and going, well, where's all the
demand? Where's all the, and it's still there, by the way, right? We still have a 15 billion
dollars a day of old money taking profit. Someone else is buying them. We're crashing to $97,000.
So I'm not, I'm not a bear actually, but I am also prepared for guys, this is not what you see during
a rip roaring bull market. So just be tempered, right? If we were to go back down to 75, if we were
to go back down to 80, if we go back down to 90, these are the levels where I am certainly paying
attention to. Because again, check the analyst is saying, Hey, it's not strictly good. Check the
Hodler lights up and goes, Oh, that sounds like I'm going to have to empty my bank account soon. So
therefore I get to start thinking about that in advance so that when it happens, I don't go,
shit, I just spent all my money at a high price. I'm like, there it is. Thank you very much.
Yeah. I mean, do you think also that there's the possibility of just inflows into the ETFs changing
some of that volume in terms of on chain? Like a lot of people who would have been lighting up your
on, you know, on chain metrics for this, those are now more consolidated because they're with an ETF
issuer and then with Coinbase. Yes and no, because in order for the ETFs to be filled, you still need
an OTC transaction and some guy to sell. And you know, if you think about it, $1 going into the ETF
is not $1 worth of UTXOs moving around. There's multiple transactions for it to go into the exchange,
get sold, move to the OTC, go to the authorized participant, then go into the custody. So there's
like, there's like a sequence of money moving around. So what we're actually seeing is that
there's just less activity, we've got less trade volume as well. That's also cooling off. So you
just look at all and that's why I say you look at what's going on ETFs, what's going on derivatives,
what's going on in spot, on chain, and you look at all of these things and they tell you the same
story. We are substantially quieter today than we were at 100,000 when we first hit it. So
there has been a cooling off that doesn't mean the top is in, it might, but it doesn't mean the top
is in, just means that right now it's a softer patch than where it was. Therefore, I'm probably not
expecting that we just teleport to a million dollars tomorrow. So therefore, I kind of put that scenario
as a low probability event and I start thinking about things that are more rational. Well,
until things start to pick up, I assume that can be a bit more patient.
Does that trade volume get measured in BTC terms or dollar terms?
You can usually it's in dollars, it's usually in the quote. So if you're trading
shitcoin versus BTC, BTC is the quote currency, it will be in BTC. If you're doing Bitcoin versus
dollar, it will usually be dollars. Okay, okay, that makes sense. So I want to be conscious of your
time here, but I wanted to give a chance just, you have a very rational way of looking at these
things. And I think it's very useful because again, emotions can run high when price is going up and
when price is going down and seemingly even more so when price is chop-solidating. So just kind of,
do you have any just general advice for folks on navigating this, especially maybe,
for newer folks who, I mean, I'm pretty new myself, this is just like my first cycle that
I've actually seen come through. So like, I'm new, there are people who are now just getting in in
the year 2025, we're minting new Bitcoiners. What advice do you have for people who are new to this,
who are saying like, I don't even know how to deal with all this, how should they handle it?
How should they think about this going forward? Yeah, so I think the first thing is that most
people come in and they think they're a trader. We all go through this experience, you end up at
some point blowing up an account somewhere and you realize, I hate this trading thing.
I hate this trading thing too. I don't like doing it. I don't think it's fun. I don't write about it.
I don't care about it. Entry, stop losses. It's just a different, don't worry about it. So have
that long-term perspective. I actually think that having a separation of you, the analyst, and you,
the the hodler, it may not be the analyst, but like you, the objective thinker, it's very,
it's natural human behavior to take out expectations for what should happen.
Trump's in power. They're talking about strategic reserves, but I'm spying.
Why aren't we at a million dollars yet? That's your expectation. Your expectation is not what is
happening, right? And it's very easy for people to apply their expectation to the price chart.
The way this manifests is you take big information like Trump's going to get in and we're going to
win all this, you know, it's all going to be fantastic. And then applying it to the next daily
candle, right? And when it doesn't happen, you feel like something is wrong and you keep trying to
justify why the price is doing it and then you go, oh, it's manipulation. That's why my expectations
aren't happening. No, your expectations were incorrect, right? So don't allow your expectations
to get in the way of what the market is actually doing. Markets are just information. That's all
they are. They're just information. The only thing you can control is your decisions. So make your
decisions before they happen so that when, even if that scenario doesn't play out, you have made
your decision in case it does. And if you just think about it from that perspective, it just improves
the whole process. You are here for the long term. You don't have to be a trader. In fact, I recommend
most people don't trade because it's a huge waste of your brain power. You probably won't win. The
statistics show you probably won't win. Most people should not trade. But that doesn't mean
that understanding what Bitcoin is doing isn't useful. So that's why I think on chain data,
a lot of people are like, oh, I don't want to trade. I'm not a trader. I don't trade either.
But I study this thing because it helps me understand what my life savings are doing every
single day. And if you're on Bitcoin Twitter or you're on Bitcoin Nostra or you're listening to
podcasts every day, if you're checking the price chart twice a day, add in some extra information
because it tells you the health of your asset. And a lot of this stuff isn't actually that complicated.
There's like five metrics that really matter. There's obviously a skill in learning how to
properly interpret them. But when people are in profit, they take them. It's not that hard.
That's just kind of the framework. When people who buy high, they always sell low. To me,
that's the whole point of this game. And speaking of getting that extra information,
she'll the service you provide, man. You were nice to have to come on here, share your time.
What do people get out of check on chain? Yeah. So basically,
so check on chain is a company that me and my best mates by now, so it's a two man job. We've
basically got two products. There's the newsletter, which is me, basically the way I view it. And I
think most Bitcoiners understand this. I've got my own expertise and proof of work coming to what
I've kind of worked out over the years. So basically what I do is I try to help people
think about markets. I don't talk to traders. I talk to hollers. I want people to understand
why the market's doing what it's doing. Just help ground yourself in reality. So
we do two posts a week written and video. So some people like to watch, some people like to listen,
other people do both. And then we also have a charting website at charts.checkonchain.com.
Everything's free. Basically, every Bitcoin metric you possibly want, it's all there. It
updates once a day and it's, you know, I'm a big advocate for lots of people will say,
Hey, can we have higher resolution? I say no, because you know what? You don't need hourly
data. It's not useful. It's just noise. Again, unless you're a high frequency trader,
daily is perfectly fine. All you want to do is look at these macro trends and understand how
is the Bitcoin market evolving. So they're basically the two services. And yeah, check it out. If
you've got any questions, you can always reach me. I appreciate it, man. This was a good grounding
experience for me. My bullishness and bearishness is now perfectly tempered somewhere, chop
solidating in the middle. Anything else you want to leave folks with before we go? Do we cover
everything? I know we went over a lot. No, I think we got a lot. And you know, Bitcoin, stay humble,
stack sats. That's that's like the at the end of the day, that's the end goal. One Bitcoin is one
Bitcoin, we're going to be just fine. I can't think of anything aside from Bitcoin and gold that
makes sense. So you just, you know, all you got to do is survive the volatility, volatility creates
uncertainty, solve that with education and knowledge, and you'll be just fine. Amen to that.
What a perfect note to end on. Checkmate. Thank you for joining me. This was a pleasure. Thanks
for putting up with my, my post El Salvador voice as well. It is slightly huskier than usual, but
it was great chatting with you, man. Look forward to doing it again. Get on you, man. Thanks a lot.
And that's a wrap on this Bitcoin Talk episode of the Bitcoin Podcast.
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Until next time, stay free.