WEBVTT - The Hidden Formula Controlling Bitcoin’s Price! 0:00:00.120 --> 0:00:03.480 If you've ever wondered what really drives bitcoin's price, there's 0:00:03.480 --> 0:00:06.000 a formula for it, and it's more accurate than most 0:00:06.080 --> 0:00:08.440 people realize. Now, this isn't a guess. 0:00:08.680 --> 0:00:13.119 It's a framework built on data, global equity leverage, and 0:00:13.200 --> 0:00:16.960 investor behavior, the same three forces that have quietly driven 0:00:17.120 --> 0:00:20.880 every bitcoin boom and bus cycle. Now, once you understand this, 0:00:21.120 --> 0:00:24.080 you're going to stop reacting to price and start positioning 0:00:24.280 --> 0:00:27.360 ahead of it, because right now the signals say. 0:00:27.280 --> 0:00:31.120 We're entering a new regime real quick. On Mark Mawson's twenty. 0:00:30.920 --> 0:00:35.199 Sixteen, I've helped millions navigate bitcoin cycles using data, not hype. 0:00:35.240 --> 0:00:38.080 I'm a partner at a leading bitcoin venture fund. I 0:00:38.159 --> 0:00:41.519 advise companies building the future of finance on bitcoin, and 0:00:41.640 --> 0:00:43.479 in this video, I'm going to walk you through the 0:00:43.560 --> 0:00:46.360 same systems and the same signals that we use to 0:00:46.400 --> 0:00:47.080 make decisions. 0:00:47.640 --> 0:00:51.639 How you can use them too. Let's go all right, 0:00:51.680 --> 0:00:54.040 so we're going to dig into the data here. Now. 0:00:54.080 --> 0:00:57.880 In my companies with my team, I tell them always, look, 0:00:57.960 --> 0:01:00.640 we're not in the guessing game, We're in the data game, 0:01:00.760 --> 0:01:03.520 all right. Now, same with bitcoin. People ask me all 0:01:03.520 --> 0:01:05.600 the time, should I buy now? Is there another dip coming. 0:01:05.840 --> 0:01:08.440 I don't know. I'm not in the guessing game. Let's 0:01:08.440 --> 0:01:10.040 look at the data and see what it says. Now, 0:01:10.319 --> 0:01:14.320 what most people get wrong is they think there's this 0:01:14.600 --> 0:01:17.960 illusion of chaos like either one. They look backwards to 0:01:18.000 --> 0:01:19.760 the chart and go, wow, bitcoin looks very predictable. I 0:01:19.800 --> 0:01:22.360 should just sell here and buy back here, so simple, right, 0:01:22.800 --> 0:01:25.160 Or they think there's no way to know what's going on. 0:01:25.240 --> 0:01:27.600 But what if it's something in the middle. Now, I 0:01:27.640 --> 0:01:30.200 have this chart up right here. By the way, I'm 0:01:30.240 --> 0:01:31.920 going to be using a lot of charts from Bitcoin 0:01:31.959 --> 0:01:34.440 magazine Pro, i''ll be using a lot from Jamie Coutz 0:01:34.600 --> 0:01:36.240 at Real Vision. I'm gonna be using a lot from 0:01:36.280 --> 0:01:38.199 a lot of different places to show you that there's 0:01:38.240 --> 0:01:40.200 a lot of places to get this data. I'll cover 0:01:40.240 --> 0:01:42.080 that with you, okay, But we can look at the 0:01:42.200 --> 0:01:44.720 history of bitcoin since twenty eleven and you can see 0:01:44.760 --> 0:01:46.479 we have a high right here, and then it goes 0:01:46.480 --> 0:01:48.000 all the way down low, and then it comes high 0:01:48.040 --> 0:01:50.040 and goes low again, goes high and comes down low. 0:01:50.360 --> 0:01:52.080 Now, of course it always trends up. 0:01:52.080 --> 0:01:54.480 So if you just bought here and waited ten years, 0:01:54.560 --> 0:01:55.840 but nobody can wait ten years. 0:01:55.920 --> 0:01:58.400 So they're trying to buy here, sell here, buy here, 0:01:58.440 --> 0:02:00.680 sell here, etc. Right, So it looks very chaotic. 0:02:01.120 --> 0:02:03.480 So what some people do is they think, well, what 0:02:03.520 --> 0:02:05.640 about if we use on chain data. 0:02:05.760 --> 0:02:07.160 So we're going to go through this. 0:02:07.240 --> 0:02:09.160 So there's some on chain indicators that we can look 0:02:09.160 --> 0:02:11.880 at to help us understand the way bitcoin moves. We 0:02:11.960 --> 0:02:14.760 look at technical analysis. A lot of people think technical 0:02:14.760 --> 0:02:17.800 analysis is the way to go, and so you know, well, 0:02:17.800 --> 0:02:20.040 we have to look at the five repeating patterns and 0:02:20.080 --> 0:02:22.120 have to repeats then it consolidates. Here it right, So 0:02:22.160 --> 0:02:24.440 there's like I call it reading the tea leaves. They 0:02:24.440 --> 0:02:27.560 think they can do that. However, for most people this 0:02:27.600 --> 0:02:31.359 is like technical analysis. More like this. Yeah, you can't 0:02:31.360 --> 0:02:34.320 make sense of that, right. So maybe it's on chain indicators, 0:02:34.360 --> 0:02:37.919 maybe it's technical analysis, maybe it's macro trends. Okay, all 0:02:38.000 --> 0:02:40.280 of those are important. We want to be looking at 0:02:40.320 --> 0:02:42.200 all of those. Of course I talk about macro topics 0:02:42.200 --> 0:02:46.840 all the time. But what if the boom, the bitcoin 0:02:46.880 --> 0:02:50.720 boom always begins with three different data points. And if 0:02:50.720 --> 0:02:52.799 we understand these three data points and how to look 0:02:52.840 --> 0:02:55.200 at them, then we can figure out how to navigate 0:02:55.400 --> 0:02:57.519 the bitcoin cycles. Okay, well do you want to know 0:02:57.560 --> 0:03:01.160 what those are? Let's break them down now. I call 0:03:01.240 --> 0:03:04.320 this the hidden engine. Now, the hidden engine is what 0:03:04.360 --> 0:03:07.880 I'm calling a formula, a formula of how to understand 0:03:07.880 --> 0:03:10.000 this all right, Now, I'm just gonna stay real quick. 0:03:10.040 --> 0:03:13.239 Disclaimer again, nobody knows the tops or the bottoms until 0:03:13.240 --> 0:03:14.640 you're looking backwards. 0:03:15.240 --> 0:03:16.919 What we can figure out. 0:03:16.720 --> 0:03:20.160 Is when things get over bought, over sold. We do 0:03:20.320 --> 0:03:23.120 know when they're expensive or when they're cheap, and that's 0:03:23.160 --> 0:03:24.040 what we're going to look at here. 0:03:24.120 --> 0:03:24.639 Okay, So the. 0:03:24.560 --> 0:03:27.760 First thing is that the old sort of driven model 0:03:27.800 --> 0:03:31.520 of sort of bitcoin's forecast its future was either network 0:03:31.560 --> 0:03:35.800 effects from Metcalf's law SOT. Metcalf's law says that as 0:03:35.960 --> 0:03:39.720 each node, as we continue to add nodes, we multiply 0:03:39.800 --> 0:03:41.920 the power of the network. So like one phone's not 0:03:42.000 --> 0:03:43.400 very valuable if no one else in the world has 0:03:43.400 --> 0:03:45.600 a phone, but if everyone has a phone, the phone's 0:03:45.640 --> 0:03:48.480 more viable. Read's law is very similar, except for now 0:03:48.480 --> 0:03:51.279 it's not just the nodes, but it's then the multiplication 0:03:51.400 --> 0:03:53.640 of those nodes down below, so it's more exponential. But 0:03:53.760 --> 0:03:56.600 that's sort of the old model. The new models we 0:03:56.640 --> 0:03:58.000 have are a little bit different. So we're going to 0:03:58.040 --> 0:03:58.960 break it down to three. 0:03:59.280 --> 0:03:59.680 Fuel. 0:04:00.080 --> 0:04:02.560 This is the global liquidity, and there's two ways we 0:04:02.640 --> 0:04:05.920 have to look at this, GLI and GRS. 0:04:06.120 --> 0:04:09.680 Okay, I'm gonna break those down. And this has about moves. 0:04:09.680 --> 0:04:12.720 About seventy five percent of bitcoins moves are driven by 0:04:12.720 --> 0:04:13.360 these two things. 0:04:13.800 --> 0:04:14.600 Now, that's the fuel. 0:04:14.640 --> 0:04:16.680 Then we have the pedals, the gas and the brake, 0:04:17.200 --> 0:04:21.200 and that's really the leverage that goes into the system. 0:04:21.560 --> 0:04:23.599 And then we have the valves, the blow off valves, 0:04:23.640 --> 0:04:27.200 the reliefs valves, and this is the profitability behavior. And 0:04:27.240 --> 0:04:29.159 we can look at this through on chain data. All right, 0:04:29.200 --> 0:04:31.800 we're gonna break all this down. Buckle up, turn off 0:04:31.800 --> 0:04:34.279 all your distractions, get a notepad, write this down. 0:04:34.440 --> 0:04:39.880 Let's go. All right, So the first thing is the fuel. 0:04:40.000 --> 0:04:42.320 This is what feeds the engine. All right, we're talking 0:04:42.360 --> 0:04:45.200 about GLI and GLS. Now, a lot of people get 0:04:45.240 --> 0:04:47.279 this wrong, so let me break it down for you. 0:04:47.400 --> 0:04:52.080 GLI stands for global liquidity, global equity. Now where a 0:04:52.120 --> 0:04:54.440 lot of people get this wrong is they look at 0:04:54.839 --> 0:04:55.600 USM two. 0:04:56.000 --> 0:04:57.200 But we're talking about global. 0:04:57.200 --> 0:04:59.599 Bitcoin is a commodity, it's a global asset, and we 0:04:59.640 --> 0:05:02.560 want to look at the global liquity. Now, I believe 0:05:02.600 --> 0:05:05.880 the absolute master in this game is Michael How. I 0:05:06.000 --> 0:05:08.719 reference his work all the time. He writes a newsletter 0:05:08.760 --> 0:05:11.359 called Capital Wars. It's a paid subscription. I'm gonna be 0:05:11.360 --> 0:05:13.360 referencing a lot of stuff from paid subscriptions that I 0:05:13.400 --> 0:05:15.320 have because I pay for data. You might want to 0:05:15.320 --> 0:05:17.919 pay for data as well Capital Wars Michael How or 0:05:17.960 --> 0:05:19.559 you can just continue to subscribe it to my channel 0:05:19.560 --> 0:05:21.360 and I'll break it down for you. But he talks 0:05:21.360 --> 0:05:24.360 about the impact of global liquidity. He says, the biggest 0:05:24.360 --> 0:05:28.760 and most direct impact comes from global liquity. It seems 0:05:28.760 --> 0:05:30.200 like we should be paying attention to it. Let me 0:05:30.480 --> 0:05:33.080 let me tell you why. All right, So we don't 0:05:33.120 --> 0:05:36.239 want money, We want goods and services. Goods and services 0:05:36.279 --> 0:05:39.159 a wealth. So when the government prints more money sends 0:05:39.160 --> 0:05:41.400 it out a stemmy, that doesn't make more wealth. 0:05:41.440 --> 0:05:43.600 They can't print wealth. So what we really have is 0:05:43.640 --> 0:05:44.400 all the money. 0:05:44.160 --> 0:05:46.160 Of the world divided by all the goods and services 0:05:46.160 --> 0:05:49.720 of the world. As they print more money, the value 0:05:49.800 --> 0:05:51.640 or the price of those goods and services go up. 0:05:51.839 --> 0:05:53.360 So if we look at liquidity. 0:05:53.080 --> 0:05:55.600 As they increase it, then we know that it has 0:05:55.680 --> 0:05:57.760 to go somewhere, and it's going to go into these assets. 0:05:57.839 --> 0:05:59.920 They're going to go up. That's why it's the driver. Okay, 0:06:00.120 --> 0:06:03.599 this is the leading indicator, not a lagging indicator. Okay. 0:06:03.600 --> 0:06:06.200 So he says it's the most important thing global equity. 0:06:06.400 --> 0:06:09.960 He says that bitcoin is not a substitute for global equity, 0:06:10.040 --> 0:06:11.680 not a substitute. 0:06:11.080 --> 0:06:12.719 But rather it's a barometer. 0:06:12.800 --> 0:06:14.240 So it's a way to read it, a way to 0:06:14.279 --> 0:06:16.480 gauge it right, way to tell us what's going on. 0:06:17.200 --> 0:06:19.440 What's more, is it is a truly global asset. 0:06:19.480 --> 0:06:21.440 Again, Bitcoin is a global asset, so we can see 0:06:21.480 --> 0:06:24.920 what's going on with India and China and Japan, not 0:06:25.000 --> 0:06:28.240 just the United States. Whether China prints money or the 0:06:28.320 --> 0:06:31.799 US FED inject's liquidity. Either way, the price of bitcoin 0:06:31.800 --> 0:06:35.279 should rise. It's the most sensitive asset to global liquidity, 0:06:35.600 --> 0:06:37.480 all right. It's like a sponge, just soaks it up. 0:06:38.200 --> 0:06:40.680 A little bit more from Michael Howe again the king 0:06:40.760 --> 0:06:43.920 of global equity in my mind. In this article is 0:06:43.920 --> 0:06:45.960 a two P series. He was writing Bitcoin and global liquidity. 0:06:46.240 --> 0:06:49.559 He says that debt denominates wh're talking about global equity. 0:06:49.600 --> 0:06:51.080 A lot of people want to know what is it 0:06:51.600 --> 0:06:53.599 and where you go wrong is just looking at M two. 0:06:53.800 --> 0:06:55.919 It's a very rough way to look at it. But 0:06:56.040 --> 0:06:59.400 because we're in a debt based monetary system, all money 0:06:59.440 --> 0:07:03.120 is created through debt issuance, debt creation, So we want 0:07:03.120 --> 0:07:04.960 to be looking at debt. Okay, So we want to 0:07:04.960 --> 0:07:06.880 look at the money, Yes, we want to look at 0:07:06.920 --> 0:07:11.360 the availability of credit, the availability the ability. 0:07:10.880 --> 0:07:13.440 For central banks to create more money. Okay. So it's 0:07:13.480 --> 0:07:14.960 that debt dominates. 0:07:15.040 --> 0:07:17.960 So what he's saying here is that currently in our system, 0:07:17.960 --> 0:07:20.559 in this debt based monetary system, debt never gets paid, 0:07:20.760 --> 0:07:25.400 it never gets extinguished, instead refinancing existing debts. So we 0:07:25.440 --> 0:07:27.600 always refinance, if we kick the can down the road, 0:07:27.920 --> 0:07:31.200 refinancing an existing debt. With about seventy five percent of 0:07:31.240 --> 0:07:37.800 transactions now involving debt rollovers, this creates a dependency on collateral. 0:07:38.080 --> 0:07:42.160 This is why we can have no deflation when debt 0:07:42.200 --> 0:07:45.080 is issued. So money is created through debt issues. The 0:07:45.160 --> 0:07:50.800 debt is the asset, The dollars are the liability, the debt. 0:07:50.640 --> 0:07:51.239 Is the asset. 0:07:51.480 --> 0:07:54.640 So the debt becomes the asset or collateral for more debt. 0:07:54.680 --> 0:07:56.720 That's what he's saying right here. So we have to 0:07:56.920 --> 0:07:58.920 roll the debt over. We can't pay the debt off 0:07:58.920 --> 0:08:01.280 because it's collateral for more debt, so it has to 0:08:01.280 --> 0:08:05.240 get rolled over. It creates a dependency on collateral. We 0:08:05.280 --> 0:08:08.600 can't have a deflation, it says I e. Global liquidity. 0:08:09.240 --> 0:08:13.200 The financial system is trapped in a debt refinancing loop. 0:08:13.440 --> 0:08:14.920 So we're trapped. We have to. 0:08:14.920 --> 0:08:16.920 Continue to roll it over. And in order to roll 0:08:16.920 --> 0:08:19.240 it over, we have to create more of it. Right, 0:08:19.320 --> 0:08:23.040 we're trapped in the system. There's two ways out. We 0:08:23.120 --> 0:08:26.720 continue forward inflating the system in a debt based monetary system, 0:08:26.880 --> 0:08:29.559 or we let the whole thing collapse and crash and 0:08:29.600 --> 0:08:32.360 we start over. Now, there's no politician in the world, 0:08:33.040 --> 0:08:36.720 or banker or elite or whoever that may have any controller, say, 0:08:36.840 --> 0:08:39.200 is going to allow this system to crash and see 0:08:39.200 --> 0:08:42.160 what happens next. It's always going to be continued. That's 0:08:42.160 --> 0:08:44.920 why we're trapped in the system. Policy makers need to 0:08:45.080 --> 0:08:47.839 continually expand liquidity. 0:08:48.840 --> 0:08:51.080 Right, so all those doomers. 0:08:50.679 --> 0:08:53.240 Out there that are calling for this market crash, they 0:08:53.320 --> 0:08:56.760 don't understand the basics of the system that we're in. Okay, 0:08:56.800 --> 0:08:58.520 let's go a little bit deeper and now Michael Hole 0:08:58.640 --> 0:08:59.360 uses these charts. 0:08:59.360 --> 0:09:02.280 I use them all the time, so you probably recognize these. 0:09:02.480 --> 0:09:05.600 This is the global equity going back to twenty twenty one. 0:09:06.040 --> 0:09:07.160 So it went up and then. 0:09:07.040 --> 0:09:09.160 We had this big crash here in twenty twenty two. 0:09:09.200 --> 0:09:10.840 October twenty two was when we were in like that 0:09:10.880 --> 0:09:13.079 bear market. Everybody's saying the world's going to end, the markets, 0:09:13.080 --> 0:09:15.760 we're all crashing down. I started making videos saying there's 0:09:15.760 --> 0:09:18.760 no market crash coming. Here's why, And it was because 0:09:18.880 --> 0:09:21.960 of this liquidity cycle starting now. You can see here 0:09:22.040 --> 0:09:24.440 is just since this year, and we've had a big 0:09:24.520 --> 0:09:26.960 run up in global equity this year as well. Again, 0:09:27.040 --> 0:09:29.240 these charts are from Michael Howe. Okay, now here's another 0:09:29.320 --> 0:09:31.200 chart on global equity. I mean, you can just go 0:09:31.200 --> 0:09:33.920 Google searches and find any number of charts. I like 0:09:34.000 --> 0:09:35.679 this one here because it kind of shows us a 0:09:35.720 --> 0:09:38.640 couple different levels here. So in the green right here 0:09:38.720 --> 0:09:42.560 is the global M two growth. The blue line is 0:09:42.600 --> 0:09:45.280 the global M two supply, the money supply, and then 0:09:45.320 --> 0:09:47.560 we're overlaying it with the orange of the red line, 0:09:47.559 --> 0:09:48.800 which is the bitcoin price. 0:09:49.160 --> 0:09:51.199 And so what the green is is the year over 0:09:51.280 --> 0:09:51.800 year change. 0:09:51.800 --> 0:09:54.480 So you can see We've had this massive print of 0:09:54.480 --> 0:09:55.679 global equity. 0:09:55.600 --> 0:09:58.240 During the pandemic right twenty twenty twenty twenty one, and. 0:09:58.240 --> 0:10:02.120 So this pushed the p of these assets sky high. 0:10:02.440 --> 0:10:04.960 Global equity went up, the bitcoin price went up because 0:10:04.960 --> 0:10:07.960 of this massive volume here. Then we had this big 0:10:08.040 --> 0:10:11.160 draw down both in global liquidity and in the bitcoin price, 0:10:11.640 --> 0:10:15.240 coming down as the year over year month over month. 0:10:15.240 --> 0:10:16.760 Changed and liquidy drained out. 0:10:16.960 --> 0:10:19.640 And you can see here it's starting to pick back up, 0:10:20.000 --> 0:10:22.200 and of course both of them are turning back up, 0:10:22.280 --> 0:10:24.240 so you can start to see the correlation of this. 0:10:24.440 --> 0:10:26.320 I've done a bunch of videos on this, and you 0:10:26.400 --> 0:10:28.760 have to understand it's also important to realize it has 0:10:28.800 --> 0:10:31.280 somewhere between like an eight to twelve week lag. Most 0:10:31.320 --> 0:10:34.360 people just consider it three months or ninety days. Okay, 0:10:34.440 --> 0:10:36.679 so that's the global liquidity. Here's the chart on Trading 0:10:36.760 --> 0:10:38.040 View again. I just want to show you can get 0:10:38.080 --> 0:10:40.760 these charts from anywhere. I like to pay for my information. 0:10:40.880 --> 0:10:42.719 It's a much faster, easier way to get it. 0:10:42.840 --> 0:10:43.959 But this is just Trading View. 0:10:43.960 --> 0:10:45.920 This is my charting software, and you can see the 0:10:45.960 --> 0:10:49.040 bitcoin price and global liquity, and you can. 0:10:48.920 --> 0:10:52.560 See how closely tied they are together. So these are 0:10:52.559 --> 0:10:55.480 the leading indicators. Okay, global equity. Now the next thing 0:10:55.520 --> 0:10:56.360 we have to understand. 0:10:56.920 --> 0:11:02.280 Remember the fuel is the Global Risk Score, call that GRS. Now, 0:11:02.320 --> 0:11:03.760 this is where we start to get into some of 0:11:03.800 --> 0:11:06.680 the predictive power of what these things tell us, because 0:11:06.720 --> 0:11:10.080 again we're looking for leading data, not lagging tell us 0:11:10.120 --> 0:11:12.360 what already happened. We want leading data tell us what's 0:11:12.440 --> 0:11:15.280 going to happen. Okay, Now these charts are from Jamie 0:11:15.320 --> 0:11:18.480 Counts over at Real Vision. He's an absolute master in these. 0:11:19.240 --> 0:11:22.920 And this is the Global Liquidity Index GLI. And when 0:11:22.920 --> 0:11:25.480 he's talking about the GRS or the Global Risk Score. 0:11:25.840 --> 0:11:29.080 So the Global Riskcore attracts how far biquin's price deviates 0:11:29.120 --> 0:11:31.840 from its liquidity. So if the liquid is driving it up, 0:11:32.200 --> 0:11:34.559 the risk is when it starts to deviate away from 0:11:34.600 --> 0:11:35.040 the liquidity. 0:11:35.080 --> 0:11:35.840 That's what this tracks. 0:11:36.160 --> 0:11:40.199 It's implied fair value based on a regression model regression 0:11:40.960 --> 0:11:44.000 from the liquidy. It says here it shifts GLI Global 0:11:44.000 --> 0:11:48.319 Liquidity from being just a macro backdrop to an actively 0:11:48.520 --> 0:11:50.720 usable risk management tool. 0:11:51.400 --> 0:11:52.120 So for risk. 0:11:51.960 --> 0:11:54.600 Management, the most amateur investors just think about how much 0:11:54.600 --> 0:11:56.679 money can I make? Tell me the hot crypto to 0:11:56.760 --> 0:11:58.600 buy right, and they just want to buy it yolo 0:11:58.720 --> 0:12:00.439 in hopefully you know, aross their fingers. 0:12:00.440 --> 0:12:01.480 They make money. 0:12:01.600 --> 0:12:03.960 But professional investors always want to think about the risk. 0:12:04.080 --> 0:12:08.000 That's the name hedge funds, like hedge hedging, the positions. 0:12:08.000 --> 0:12:10.160 It's always about risk, and so we want to use 0:12:10.200 --> 0:12:12.960 this as a risk management tool. Even when I'm going 0:12:13.040 --> 0:12:15.520 long to make money, I need to know how big 0:12:15.559 --> 0:12:18.360 I should bet, how long I should go based off 0:12:18.400 --> 0:12:20.800 of the risk of that cycle. And that's exactly what 0:12:20.840 --> 0:12:22.160 this is going to break down for. So let me 0:12:22.160 --> 0:12:23.839 show you what we're talking about. Okay, Now, the first 0:12:23.880 --> 0:12:27.360 thing we have to understand is that liquidity, like most 0:12:27.400 --> 0:12:30.160 things and moves in cycles. I talk about cycles all 0:12:30.160 --> 0:12:32.160 the time, Okay, So what we can see, and in 0:12:32.160 --> 0:12:35.200 this case we're calling them regimes, is we can see 0:12:35.200 --> 0:12:38.960 that this liquidity moves up and then it consolidates in 0:12:39.000 --> 0:12:42.960 a pattern. Why I've done a bunch of videos on this, 0:12:43.240 --> 0:12:45.520 but it's because the debt has to get rolled over. 0:12:45.880 --> 0:12:48.120 It's about an average of four year cycles of debt. 0:12:48.720 --> 0:12:51.720 On year three, we start running out of liquidity until. 0:12:51.480 --> 0:12:53.920 The next tron just put in. Then we're off to 0:12:53.920 --> 0:12:54.840 the races for the next four year. 0:12:54.880 --> 0:12:58.000 So we have this upcycle liquidity, we have a consolidation 0:12:58.120 --> 0:12:58.640 pattern and. 0:12:58.600 --> 0:12:59.600 Here is the breakout. 0:13:00.640 --> 0:13:03.680 This breakout puts us into the next super Bowl cycle. 0:13:04.080 --> 0:13:06.800 And now we take off, we go into a consolidation 0:13:06.920 --> 0:13:09.680 right here, and then we break out consolidation right here. 0:13:10.000 --> 0:13:11.280 And the reason why I'm showing. 0:13:11.040 --> 0:13:14.880 You this is because we're sitting right here, right now 0:13:15.200 --> 0:13:19.880 on the third breakout. Now, if you're an elementary kid 0:13:19.920 --> 0:13:24.319 looking at patterns, we have a consolidation breakout, consolidation breakout. Here, 0:13:24.320 --> 0:13:26.880 We've had a consolidation and we're breaking out. What do 0:13:26.880 --> 0:13:30.320 you think happens next? Well, if you see this arrow 0:13:30.320 --> 0:13:32.800 shooting up, you would be exactly right. But again we 0:13:32.840 --> 0:13:35.600 want to understand one. We're in this breakout of this 0:13:35.640 --> 0:13:37.800 regime shift, but we want to look at the risk. 0:13:38.040 --> 0:13:41.160 Okay, so how does this work? Again? This is from 0:13:41.240 --> 0:13:41.880 Jamie Coutch. 0:13:42.040 --> 0:13:45.600 This is a global equity risk score and basically we 0:13:45.679 --> 0:13:50.200 have five levels level one, level two, level three, level four. 0:13:50.200 --> 0:13:51.960 And level five. You can see that. 0:13:52.559 --> 0:13:55.880 And this is overlaid with the price of bitcoin going 0:13:55.920 --> 0:13:58.720 back here to twenty seventeen, and of course this is 0:13:58.760 --> 0:14:02.040 current right here. So what this shows us, right now 0:14:02.480 --> 0:14:05.480 is that we are currently at level three. 0:14:05.640 --> 0:14:06.840 Which is basically neutral. 0:14:07.280 --> 0:14:10.840 Basically neutral, right, we're not at the bitcoin lows right 0:14:10.880 --> 0:14:12.760 here where we're back here when we are. 0:14:12.720 --> 0:14:13.240 Only at one. 0:14:13.720 --> 0:14:16.640 We've come up a lot in the bitcoin price, but 0:14:16.679 --> 0:14:18.840 we're only at level three, a neutral score. 0:14:18.960 --> 0:14:20.760 We're not at five yet. 0:14:20.960 --> 0:14:22.800 What does that tell us, Well, it tells us we're 0:14:22.960 --> 0:14:25.360 sort of like a medium risk. We're not the lowest 0:14:25.440 --> 0:14:28.080 risk ever, but we're nowhere near the top either. So 0:14:28.120 --> 0:14:31.800 what this tells us is potentially bitcoin has a lot 0:14:31.880 --> 0:14:34.400 of room to go up from this one hundred thousand 0:14:34.440 --> 0:14:36.760 dollars price point that we're in before we start getting 0:14:36.800 --> 0:14:39.600 into level four level five risk. Now, even when we 0:14:39.600 --> 0:14:41.880 get into level five, we can keep going for a 0:14:41.880 --> 0:14:42.400 long time. 0:14:42.480 --> 0:14:45.080 These do not predict absolute tops. 0:14:45.240 --> 0:14:47.040 They only know let us know when things are cheap 0:14:47.880 --> 0:14:50.440 level one or expensive level five. 0:14:50.480 --> 0:14:50.760 That's it. 0:14:50.920 --> 0:14:52.840 So you can see here we hit level five, but 0:14:52.880 --> 0:14:55.440 look how long I continue on to that pattern? So 0:14:55.520 --> 0:14:58.280 this is one thing. But again in this risk score, 0:14:58.400 --> 0:15:01.360 we're only at level three. Okay, there's a lot more 0:15:01.360 --> 0:15:02.680 to go over, so let's keep going. 0:15:03.520 --> 0:15:06.400 All right. Now, we talked about the fuel for the engine. 0:15:06.800 --> 0:15:08.920 Now we want to talk about the accelerator and the 0:15:08.920 --> 0:15:11.880 brake pedals. So now the fuel's in the cars going, 0:15:11.920 --> 0:15:13.200 how do we control this, How do we speed it 0:15:13.240 --> 0:15:15.240 up or how do we slow it down? Okay, this 0:15:15.320 --> 0:15:17.560 is the leverage or the drs. 0:15:17.880 --> 0:15:19.200 Okay, this is the derivative market. 0:15:19.440 --> 0:15:22.520 This is all the bets, all the side bets that 0:15:22.560 --> 0:15:24.000 are happening on bitcoin. 0:15:24.160 --> 0:15:25.600 So in the old days, we just looked at bitcoin, 0:15:25.640 --> 0:15:27.240 look at the network effects, looked at the. 0:15:27.160 --> 0:15:29.560 On chain data, the number of addresses growing, the number 0:15:29.600 --> 0:15:31.720 of walls holding one or more bitcoin, things like that. 0:15:32.160 --> 0:15:35.320 But now we have derivatives. Now, derivatives are again where 0:15:35.320 --> 0:15:37.600 I can bet on the side of where the price 0:15:37.680 --> 0:15:41.560 is going. Leverage bets, leverage, longs, leverage, shorts. 0:15:41.280 --> 0:15:41.960 All those things. 0:15:42.600 --> 0:15:47.880 The derivatives make up three to five times the total 0:15:48.040 --> 0:15:51.560 volume of bitcoin. So just looking at on chain data 0:15:51.560 --> 0:15:55.080 alone today doesn't really give us the total picture. It's great, 0:15:55.120 --> 0:15:57.200 we should definitely be holding bitcoin on chaining in your 0:15:57.200 --> 0:15:59.720 cold storage, but if we really want to understand price action, 0:15:59.840 --> 0:16:03.200 we have to go back and look at the derivative market. Now, 0:16:03.280 --> 0:16:05.000 what we can see is that in March of twenty 0:16:05.080 --> 0:16:09.160 twenty four, the derivative market was about seventy five percent 0:16:09.880 --> 0:16:12.920 of the bitcoin price action. Now again this goes back 0:16:12.920 --> 0:16:15.480 to about twenty twenty and it comes to current And 0:16:15.520 --> 0:16:19.240 what this shows us is these derivatives bets going higher 0:16:19.320 --> 0:16:23.160 and then the red is going lower, going higher, going lower. 0:16:23.160 --> 0:16:26.520 And of course as the derivative action is going higher, 0:16:26.680 --> 0:16:30.280 what happens to the price action goes up When the 0:16:30.320 --> 0:16:33.240 derivative market is coming down, then of course we have 0:16:33.360 --> 0:16:36.400 down action. We had this long consolidation period when there 0:16:36.400 --> 0:16:38.600 wasn't a whole lot of derivative action going on. Here 0:16:38.640 --> 0:16:40.560 we have the increased derivative action. You can see we're 0:16:40.600 --> 0:16:42.560 heading back up. And is we want to be looking 0:16:42.600 --> 0:16:45.920 at this because again most of the price action is 0:16:45.920 --> 0:16:49.240 happening there. It's what's creating a lot of rallies and crashes. 0:16:49.320 --> 0:16:50.760 Why well, very. 0:16:50.600 --> 0:16:53.880 Simply, markets stop going up when there's normal buyers, they 0:16:53.920 --> 0:16:56.400 stop going down those normal sellers. And what happens with 0:16:56.440 --> 0:16:59.320 the derivative traders. They're adding all this leverage under the system. 0:16:59.680 --> 0:17:02.840 In a bull market, they're piling on, piling on, piling on, 0:17:02.880 --> 0:17:06.119 which pushes it up even faster than normally would. But 0:17:06.200 --> 0:17:08.680 also when it's going down, not only are people exiting, 0:17:09.200 --> 0:17:11.400 but they're also starting to pile on the shorts, which 0:17:11.440 --> 0:17:13.440 pushes it down even further, so it creates a lot 0:17:13.480 --> 0:17:18.760 more volatility. But basically, the DRS this score, it quantifies 0:17:19.160 --> 0:17:21.840 the excess that we have in the system. Again, this 0:17:21.920 --> 0:17:24.960 charts from Jamie Coowts over at Real Vision, and this 0:17:25.160 --> 0:17:27.440 is giving us the same type of a score again 0:17:27.760 --> 0:17:30.919 level one, level two, level three, level four, level five. 0:17:31.720 --> 0:17:34.600 So where are we in the derivvorous score. 0:17:34.880 --> 0:17:35.960 Well, let's take a look. 0:17:36.119 --> 0:17:38.640 What we can see is right now we're sitting at 0:17:38.640 --> 0:17:43.800 about a two, not a one, not the lowest, certainly 0:17:43.880 --> 0:17:45.000 nowhere near a five. 0:17:45.320 --> 0:17:47.119 We're only at a level two. 0:17:47.240 --> 0:17:49.280 So what this means is that the bitcoin price can 0:17:49.359 --> 0:17:52.840