Speaker 1: If you've ever wondered what really drives bitcoin's price, there's
Speaker 1: a formula for it, and it's more accurate than most
Speaker 1: people realize. Now, this isn't a guess.
Speaker 2: It's a framework built on data, global equity leverage, and
Speaker 2: investor behavior, the same three forces that have quietly driven
Speaker 2: every bitcoin boom and bus cycle. Now, once you understand this,
Speaker 2: you're going to stop reacting to price and start positioning
Speaker 2: ahead of it, because right now the signals say.
Speaker 1: We're entering a new regime real quick. On Mark Mawson's twenty.
Speaker 2: Sixteen, I've helped millions navigate bitcoin cycles using data, not hype.
Speaker 2: I'm a partner at a leading bitcoin venture fund. I
Speaker 2: advise companies building the future of finance on bitcoin, and
Speaker 2: in this video, I'm going to walk you through the
Speaker 2: same systems and the same signals that we use to
Speaker 2: make decisions.
Speaker 1: How you can use them too. Let's go all right,
Speaker 1: so we're going to dig into the data here. Now.
Speaker 2: In my companies with my team, I tell them always, look,
Speaker 2: we're not in the guessing game, We're in the data game,
Speaker 2: all right. Now, same with bitcoin. People ask me all
Speaker 2: the time, should I buy now? Is there another dip coming.
Speaker 2: I don't know. I'm not in the guessing game. Let's
Speaker 2: look at the data and see what it says. Now,
Speaker 2: what most people get wrong is they think there's this
Speaker 2: illusion of chaos like either one. They look backwards to
Speaker 2: the chart and go, wow, bitcoin looks very predictable. I
Speaker 2: should just sell here and buy back here, so simple, right,
Speaker 2: Or they think there's no way to know what's going on.
Speaker 2: But what if it's something in the middle. Now, I
Speaker 2: have this chart up right here. By the way, I'm
Speaker 2: going to be using a lot of charts from Bitcoin
Speaker 2: magazine Pro, i''ll be using a lot from Jamie Coutz
Speaker 2: at Real Vision. I'm gonna be using a lot from
Speaker 2: a lot of different places to show you that there's
Speaker 2: a lot of places to get this data. I'll cover
Speaker 2: that with you, okay, But we can look at the
Speaker 2: history of bitcoin since twenty eleven and you can see
Speaker 2: we have a high right here, and then it goes
Speaker 2: all the way down low, and then it comes high
Speaker 2: and goes low again, goes high and comes down low.
Speaker 1: Now, of course it always trends up.
Speaker 2: So if you just bought here and waited ten years,
Speaker 2: but nobody can wait ten years.
Speaker 1: So they're trying to buy here, sell here, buy here,
Speaker 1: sell here, etc. Right, So it looks very chaotic.
Speaker 2: So what some people do is they think, well, what
Speaker 2: about if we use on chain data.
Speaker 1: So we're going to go through this.
Speaker 2: So there's some on chain indicators that we can look
Speaker 2: at to help us understand the way bitcoin moves. We
Speaker 2: look at technical analysis. A lot of people think technical
Speaker 2: analysis is the way to go, and so you know, well,
Speaker 2: we have to look at the five repeating patterns and
Speaker 2: have to repeats then it consolidates. Here it right, So
Speaker 2: there's like I call it reading the tea leaves. They
Speaker 2: think they can do that. However, for most people this
Speaker 2: is like technical analysis. More like this. Yeah, you can't
Speaker 2: make sense of that, right. So maybe it's on chain indicators,
Speaker 2: maybe it's technical analysis, maybe it's macro trends. Okay, all
Speaker 2: of those are important. We want to be looking at
Speaker 2: all of those. Of course I talk about macro topics
Speaker 2: all the time. But what if the boom, the bitcoin
Speaker 2: boom always begins with three different data points. And if
Speaker 2: we understand these three data points and how to look
Speaker 2: at them, then we can figure out how to navigate
Speaker 2: the bitcoin cycles. Okay, well do you want to know
Speaker 2: what those are? Let's break them down now. I call
Speaker 2: this the hidden engine. Now, the hidden engine is what
Speaker 2: I'm calling a formula, a formula of how to understand
Speaker 2: this all right, Now, I'm just gonna stay real quick.
Speaker 2: Disclaimer again, nobody knows the tops or the bottoms until
Speaker 2: you're looking backwards.
Speaker 1: What we can figure out.
Speaker 2: Is when things get over bought, over sold. We do
Speaker 2: know when they're expensive or when they're cheap, and that's
Speaker 2: what we're going to look at here.
Speaker 1: Okay, So the.
Speaker 2: First thing is that the old sort of driven model
Speaker 2: of sort of bitcoin's forecast its future was either network
Speaker 2: effects from Metcalf's law SOT. Metcalf's law says that as
Speaker 2: each node, as we continue to add nodes, we multiply
Speaker 2: the power of the network. So like one phone's not
Speaker 2: very valuable if no one else in the world has
Speaker 2: a phone, but if everyone has a phone, the phone's
Speaker 2: more viable. Read's law is very similar, except for now
Speaker 2: it's not just the nodes, but it's then the multiplication
Speaker 2: of those nodes down below, so it's more exponential. But
Speaker 2: that's sort of the old model. The new models we
Speaker 2: have are a little bit different. So we're going to
Speaker 2: break it down to three.
Speaker 1: Fuel.
Speaker 2: This is the global liquidity, and there's two ways we
Speaker 2: have to look at this, GLI and GRS.
Speaker 1: Okay, I'm gonna break those down. And this has about moves.
Speaker 2: About seventy five percent of bitcoins moves are driven by
Speaker 2: these two things.
Speaker 1: Now, that's the fuel.
Speaker 2: Then we have the pedals, the gas and the brake,
Speaker 2: and that's really the leverage that goes into the system.
Speaker 2: And then we have the valves, the blow off valves,
Speaker 2: the reliefs valves, and this is the profitability behavior. And
Speaker 2: we can look at this through on chain data. All right,
Speaker 2: we're gonna break all this down. Buckle up, turn off
Speaker 2: all your distractions, get a notepad, write this down.
Speaker 1: Let's go. All right, So the first thing is the fuel.
Speaker 1: This is what feeds the engine. All right, we're talking
Speaker 1: about GLI and GLS. Now, a lot of people get
Speaker 1: this wrong, so let me break it down for you.
Speaker 2: GLI stands for global liquidity, global equity. Now where a
Speaker 2: lot of people get this wrong is they look at
Speaker 2: USM two.
Speaker 1: But we're talking about global.
Speaker 2: Bitcoin is a commodity, it's a global asset, and we
Speaker 2: want to look at the global liquity. Now, I believe
Speaker 2: the absolute master in this game is Michael How. I
Speaker 2: reference his work all the time. He writes a newsletter
Speaker 2: called Capital Wars. It's a paid subscription. I'm gonna be
Speaker 2: referencing a lot of stuff from paid subscriptions that I
Speaker 2: have because I pay for data. You might want to
Speaker 2: pay for data as well Capital Wars Michael How or
Speaker 2: you can just continue to subscribe it to my channel
Speaker 2: and I'll break it down for you. But he talks
Speaker 2: about the impact of global liquidity. He says, the biggest
Speaker 2: and most direct impact comes from global liquity. It seems
Speaker 2: like we should be paying attention to it. Let me
Speaker 2: let me tell you why. All right, So we don't
Speaker 2: want money, We want goods and services. Goods and services
Speaker 2: a wealth. So when the government prints more money sends
Speaker 2: it out a stemmy, that doesn't make more wealth.
Speaker 1: They can't print wealth. So what we really have is
Speaker 1: all the money.
Speaker 2: Of the world divided by all the goods and services
Speaker 2: of the world. As they print more money, the value
Speaker 2: or the price of those goods and services go up.
Speaker 1: So if we look at liquidity.
Speaker 2: As they increase it, then we know that it has
Speaker 2: to go somewhere, and it's going to go into these assets.
Speaker 1: They're going to go up. That's why it's the driver. Okay,
Speaker 1: this is the leading indicator, not a lagging indicator. Okay.
Speaker 1: So he says it's the most important thing global equity.
Speaker 2: He says that bitcoin is not a substitute for global equity,
Speaker 2: not a substitute.
Speaker 1: But rather it's a barometer.
Speaker 2: So it's a way to read it, a way to
Speaker 2: gauge it right, way to tell us what's going on.
Speaker 1: What's more, is it is a truly global asset.
Speaker 2: Again, Bitcoin is a global asset, so we can see
Speaker 2: what's going on with India and China and Japan, not
Speaker 2: just the United States. Whether China prints money or the
Speaker 2: US FED inject's liquidity. Either way, the price of bitcoin
Speaker 2: should rise. It's the most sensitive asset to global liquidity,
Speaker 2: all right. It's like a sponge, just soaks it up.
Speaker 2: A little bit more from Michael Howe again the king
Speaker 2: of global equity in my mind. In this article is
Speaker 2: a two P series. He was writing Bitcoin and global liquidity.
Speaker 2: He says that debt denominates wh're talking about global equity.
Speaker 2: A lot of people want to know what is it
Speaker 2: and where you go wrong is just looking at M two.
Speaker 2: It's a very rough way to look at it. But
Speaker 2: because we're in a debt based monetary system, all money
Speaker 2: is created through debt issuance, debt creation, So we want
Speaker 2: to be looking at debt. Okay, So we want to
Speaker 2: look at the money, Yes, we want to look at
Speaker 2: the availability of credit, the availability the ability.
Speaker 1: For central banks to create more money. Okay. So it's
Speaker 1: that debt dominates.
Speaker 2: So what he's saying here is that currently in our system,
Speaker 2: in this debt based monetary system, debt never gets paid,
Speaker 2: it never gets extinguished, instead refinancing existing debts. So we
Speaker 2: always refinance, if we kick the can down the road,
Speaker 2: refinancing an existing debt. With about seventy five percent of
Speaker 2: transactions now involving debt rollovers, this creates a dependency on collateral.
Speaker 2: This is why we can have no deflation when debt
Speaker 2: is issued. So money is created through debt issues. The
Speaker 2: debt is the asset, The dollars are the liability, the debt.
Speaker 1: Is the asset.
Speaker 2: So the debt becomes the asset or collateral for more debt.
Speaker 2: That's what he's saying right here. So we have to
Speaker 2: roll the debt over. We can't pay the debt off
Speaker 2: because it's collateral for more debt, so it has to
Speaker 2: get rolled over. It creates a dependency on collateral. We
Speaker 2: can't have a deflation, it says I e. Global liquidity.
Speaker 2: The financial system is trapped in a debt refinancing loop.
Speaker 1: So we're trapped. We have to.
Speaker 2: Continue to roll it over. And in order to roll
Speaker 2: it over, we have to create more of it. Right,
Speaker 2: we're trapped in the system. There's two ways out. We
Speaker 2: continue forward inflating the system in a debt based monetary system,
Speaker 2: or we let the whole thing collapse and crash and
Speaker 2: we start over. Now, there's no politician in the world,
Speaker 2: or banker or elite or whoever that may have any controller, say,
Speaker 2: is going to allow this system to crash and see
Speaker 2: what happens next. It's always going to be continued. That's
Speaker 2: why we're trapped in the system. Policy makers need to
Speaker 2: continually expand liquidity.
Speaker 1: Right, so all those doomers.
Speaker 2: Out there that are calling for this market crash, they
Speaker 2: don't understand the basics of the system that we're in. Okay,
Speaker 2: let's go a little bit deeper and now Michael Hole
Speaker 2: uses these charts.
Speaker 1: I use them all the time, so you probably recognize these.
Speaker 2: This is the global equity going back to twenty twenty one.
Speaker 1: So it went up and then.
Speaker 2: We had this big crash here in twenty twenty two.
Speaker 2: October twenty two was when we were in like that
Speaker 2: bear market. Everybody's saying the world's going to end, the markets,
Speaker 2: we're all crashing down. I started making videos saying there's
Speaker 2: no market crash coming. Here's why, And it was because
Speaker 2: of this liquidity cycle starting now. You can see here
Speaker 2: is just since this year, and we've had a big
Speaker 2: run up in global equity this year as well. Again,
Speaker 2: these charts are from Michael Howe. Okay, now here's another
Speaker 2: chart on global equity. I mean, you can just go
Speaker 2: Google searches and find any number of charts. I like
Speaker 2: this one here because it kind of shows us a
Speaker 2: couple different levels here. So in the green right here
Speaker 2: is the global M two growth. The blue line is
Speaker 2: the global M two supply, the money supply, and then
Speaker 2: we're overlaying it with the orange of the red line,
Speaker 2: which is the bitcoin price.
Speaker 1: And so what the green is is the year over
Speaker 1: year change.
Speaker 2: So you can see We've had this massive print of
Speaker 2: global equity.
Speaker 1: During the pandemic right twenty twenty twenty twenty one, and.
Speaker 2: So this pushed the p of these assets sky high.
Speaker 2: Global equity went up, the bitcoin price went up because
Speaker 2: of this massive volume here. Then we had this big
Speaker 2: draw down both in global liquidity and in the bitcoin price,
Speaker 2: coming down as the year over year month over month.
Speaker 1: Changed and liquidy drained out.
Speaker 2: And you can see here it's starting to pick back up,
Speaker 2: and of course both of them are turning back up,
Speaker 2: so you can start to see the correlation of this.
Speaker 2: I've done a bunch of videos on this, and you
Speaker 2: have to understand it's also important to realize it has
Speaker 2: somewhere between like an eight to twelve week lag. Most
Speaker 2: people just consider it three months or ninety days. Okay,
Speaker 2: so that's the global liquidity. Here's the chart on Trading
Speaker 2: View again. I just want to show you can get
Speaker 2: these charts from anywhere. I like to pay for my information.
Speaker 2: It's a much faster, easier way to get it.
Speaker 1: But this is just Trading View.
Speaker 2: This is my charting software, and you can see the
Speaker 2: bitcoin price and global liquity, and you can.
Speaker 1: See how closely tied they are together. So these are
Speaker 1: the leading indicators. Okay, global equity. Now the next thing
Speaker 1: we have to understand.
Speaker 2: Remember the fuel is the Global Risk Score, call that GRS. Now,
Speaker 2: this is where we start to get into some of
Speaker 2: the predictive power of what these things tell us, because
Speaker 2: again we're looking for leading data, not lagging tell us
Speaker 2: what already happened. We want leading data tell us what's
Speaker 2: going to happen. Okay, Now these charts are from Jamie
Speaker 2: Counts over at Real Vision. He's an absolute master in these.
Speaker 2: And this is the Global Liquidity Index GLI. And when
Speaker 2: he's talking about the GRS or the Global Risk Score.
Speaker 2: So the Global Riskcore attracts how far biquin's price deviates
Speaker 2: from its liquidity. So if the liquid is driving it up,
Speaker 2: the risk is when it starts to deviate away from
Speaker 2: the liquidity.
Speaker 1: That's what this tracks.
Speaker 2: It's implied fair value based on a regression model regression
Speaker 2: from the liquidy. It says here it shifts GLI Global
Speaker 2: Liquidity from being just a macro backdrop to an actively
Speaker 2: usable risk management tool.
Speaker 1: So for risk.
Speaker 2: Management, the most amateur investors just think about how much
Speaker 2: money can I make? Tell me the hot crypto to
Speaker 2: buy right, and they just want to buy it yolo
Speaker 2: in hopefully you know, aross their fingers.
Speaker 1: They make money.
Speaker 2: But professional investors always want to think about the risk.
Speaker 2: That's the name hedge funds, like hedge hedging, the positions.
Speaker 2: It's always about risk, and so we want to use
Speaker 2: this as a risk management tool. Even when I'm going
Speaker 2: long to make money, I need to know how big
Speaker 2: I should bet, how long I should go based off
Speaker 2: of the risk of that cycle. And that's exactly what
Speaker 2: this is going to break down for. So let me
Speaker 2: show you what we're talking about. Okay, Now, the first
Speaker 2: thing we have to understand is that liquidity, like most
Speaker 2: things and moves in cycles. I talk about cycles all
Speaker 2: the time, Okay, So what we can see, and in
Speaker 2: this case we're calling them regimes, is we can see
Speaker 2: that this liquidity moves up and then it consolidates in
Speaker 2: a pattern. Why I've done a bunch of videos on this,
Speaker 2: but it's because the debt has to get rolled over.
Speaker 2: It's about an average of four year cycles of debt.
Speaker 2: On year three, we start running out of liquidity until.
Speaker 1: The next tron just put in. Then we're off to
Speaker 1: the races for the next four year.
Speaker 2: So we have this upcycle liquidity, we have a consolidation
Speaker 2: pattern and.
Speaker 1: Here is the breakout.
Speaker 2: This breakout puts us into the next super Bowl cycle.
Speaker 2: And now we take off, we go into a consolidation
Speaker 2: right here, and then we break out consolidation right here.
Speaker 1: And the reason why I'm showing.
Speaker 2: You this is because we're sitting right here, right now
Speaker 2: on the third breakout. Now, if you're an elementary kid
Speaker 2: looking at patterns, we have a consolidation breakout, consolidation breakout. Here,
Speaker 2: We've had a consolidation and we're breaking out. What do
Speaker 2: you think happens next? Well, if you see this arrow
Speaker 2: shooting up, you would be exactly right. But again we
Speaker 2: want to understand one. We're in this breakout of this
Speaker 2: regime shift, but we want to look at the risk.
Speaker 1: Okay, so how does this work? Again? This is from
Speaker 1: Jamie Coutch.
Speaker 2: This is a global equity risk score and basically we
Speaker 2: have five levels level one, level two, level three, level four.
Speaker 1: And level five. You can see that.
Speaker 2: And this is overlaid with the price of bitcoin going
Speaker 2: back here to twenty seventeen, and of course this is
Speaker 2: current right here. So what this shows us, right now
Speaker 2: is that we are currently at level three.
Speaker 1: Which is basically neutral.
Speaker 2: Basically neutral, right, we're not at the bitcoin lows right
Speaker 2: here where we're back here when we are.
Speaker 1: Only at one.
Speaker 2: We've come up a lot in the bitcoin price, but
Speaker 2: we're only at level three, a neutral score.
Speaker 1: We're not at five yet.
Speaker 2: What does that tell us, Well, it tells us we're
Speaker 2: sort of like a medium risk. We're not the lowest
Speaker 2: risk ever, but we're nowhere near the top either. So
Speaker 2: what this tells us is potentially bitcoin has a lot
Speaker 2: of room to go up from this one hundred thousand
Speaker 2: dollars price point that we're in before we start getting
Speaker 2: into level four level five risk. Now, even when we
Speaker 2: get into level five, we can keep going for a
Speaker 2: long time.
Speaker 1: These do not predict absolute tops.
Speaker 2: They only know let us know when things are cheap
Speaker 2: level one or expensive level five.
Speaker 1: That's it.
Speaker 2: So you can see here we hit level five, but
Speaker 2: look how long I continue on to that pattern? So
Speaker 2: this is one thing. But again in this risk score,
Speaker 2: we're only at level three. Okay, there's a lot more
Speaker 2: to go over, so let's keep going.
Speaker 1: All right. Now, we talked about the fuel for the engine.
Speaker 2: Now we want to talk about the accelerator and the
Speaker 2: brake pedals. So now the fuel's in the cars going,
Speaker 2: how do we control this, How do we speed it
Speaker 2: up or how do we slow it down? Okay, this
Speaker 2: is the leverage or the drs.
Speaker 1: Okay, this is the derivative market.
Speaker 2: This is all the bets, all the side bets that
Speaker 2: are happening on bitcoin.
Speaker 1: So in the old days, we just looked at bitcoin,
Speaker 1: look at the network effects, looked at the.
Speaker 2: On chain data, the number of addresses growing, the number
Speaker 2: of walls holding one or more bitcoin, things like that.
Speaker 2: But now we have derivatives. Now, derivatives are again where
Speaker 2: I can bet on the side of where the price
Speaker 2: is going. Leverage bets, leverage, longs, leverage, shorts.
Speaker 1: All those things.
Speaker 2: The derivatives make up three to five times the total
Speaker 2: volume of bitcoin. So just looking at on chain data
Speaker 2: alone today doesn't really give us the total picture. It's great,
Speaker 2: we should definitely be holding bitcoin on chaining in your
Speaker 2: cold storage, but if we really want to understand price action,
Speaker 2: we have to go back and look at the derivative market. Now,
Speaker 2: what we can see is that in March of twenty
Speaker 2: twenty four, the derivative market was about seventy five percent
Speaker 2: of the bitcoin price action. Now again this goes back
Speaker 2: to about twenty twenty and it comes to current And
Speaker 2: what this shows us is these derivatives bets going higher
Speaker 2: and then the red is going lower, going higher, going lower.
Speaker 2: And of course as the derivative action is going higher,
Speaker 2: what happens to the price action goes up When the
Speaker 2: derivative market is coming down, then of course we have
Speaker 2: down action. We had this long consolidation period when there
Speaker 2: wasn't a whole lot of derivative action going on. Here
Speaker 2: we have the increased derivative action. You can see we're
Speaker 2: heading back up. And is we want to be looking
Speaker 2: at this because again most of the price action is
Speaker 2: happening there. It's what's creating a lot of rallies and crashes.
Speaker 1: Why well, very.
Speaker 2: Simply, markets stop going up when there's normal buyers, they
Speaker 2: stop going down those normal sellers. And what happens with
Speaker 2: the derivative traders. They're adding all this leverage under the system.
Speaker 2: In a bull market, they're piling on, piling on, piling on,
Speaker 2: which pushes it up even faster than normally would. But
Speaker 2: also when it's going down, not only are people exiting,
Speaker 2: but they're also starting to pile on the shorts, which
Speaker 2: pushes it down even further, so it creates a lot
Speaker 2: more volatility. But basically, the DRS this score, it quantifies
Speaker 2: the excess that we have in the system. Again, this
Speaker 2: charts from Jamie Coowts over at Real Vision, and this
Speaker 2: is giving us the same type of a score again
Speaker 2: level one, level two, level three, level four, level five.
Speaker 2: So where are we in the derivvorous score.
Speaker 1: Well, let's take a look.
Speaker 2: What we can see is right now we're sitting at
Speaker 2: about a two, not a one, not the lowest, certainly
Speaker 2: nowhere near a five.
Speaker 1: We're only at a level two.
Speaker 2: So what this means is that the bitcoin price can
Speaker 2: run way further up before we start getting too a
Speaker 2: risky situation, not predicting the top, but getting close to that.
Speaker 2: And as you can see, at a level two, we
Speaker 2: have a long way for the bitcoin price to run
Speaker 2: up from this risk adjusted model.
Speaker 1: All right, that's two. We can keep going. Now we
Speaker 1: have the valves. What are the blowoffs?
Speaker 2: How does the market move when we have these other things? Well,
Speaker 2: this is the network profitability, So this is gauging how
Speaker 2: many people on the bitcoin network are in profit or
Speaker 2: at a loss, because depending on where they're at with profitability,
Speaker 2: we can start to guess and gauge what they might
Speaker 2: do next. It drives their decision making. If I'm sitting
Speaker 2: in a massive profit, I might want to scoop a
Speaker 2: little cream.
Speaker 1: Off the top right, I might want to sell a
Speaker 1: little bit. If I'm sitting in a major loss, I
Speaker 1: might try to hold until I get back into profitability.
Speaker 2: And so what this does is we can look at
Speaker 2: this and here's a couple on chain indicators here. So
Speaker 2: these are ones from Bitcoin magazine. I recently did a
Speaker 2: video where I talked about the five on chain indicators
Speaker 2: that I like to watch the most. We'll link to
Speaker 2: that and then the show description down below if you
Speaker 2: want to go watch that video. But this is the
Speaker 2: MVRV score. You've probably heard about this. It's the market
Speaker 2: value versus the realized value. And so what you can
Speaker 2: see here is the black line is the price of
Speaker 2: bitcoin and this gold line here is the Z score.
Speaker 2: So what you can see is when it shoots really high,
Speaker 2: that was a bitcoin top shot really high. That was
Speaker 2: a bitcoin top shot really high. That was a bitcoin
Speaker 2: top But as you.
Speaker 1: Can see we're nowhere near shooting all time high. We're
Speaker 1: way down here.
Speaker 2: So we need to see this go way up to here,
Speaker 2: and this would go way up to here before that happens.
Speaker 2: So again the indicators are telling us we're nowhere near
Speaker 2: that level. Here's another on chain indicator that we can
Speaker 2: look at. This is the net unrealized profit and loss.
Speaker 2: So again this is showing how much profit people are
Speaker 2: sitting on unrealized right. And again when this gets high
Speaker 2: or low, it starts to show. So this got high
Speaker 2: here at this top. This got really high at this top.
Speaker 2: But here we are way down here. So this price
Speaker 2: needs to come up, and this needs to come back
Speaker 2: up somewhere right around there. Hey, don't worry, I'm going
Speaker 2: to show you some predictions of price if you stick
Speaker 2: around with me.
Speaker 1: Okay, Another one we want to take a look at
Speaker 1: is the spo R.
Speaker 2: Now, the spo R is basically the spent output profit ratio.
Speaker 2: And again when we see a high volume, this sort
Speaker 2: of marks the top of cycles.
Speaker 1: But again, look how low that volume is right now.
Speaker 2: Again, these don't predict where we're going, but they help
Speaker 2: us to understand when things are expensive or cheap.
Speaker 1: Now, the NPRS is.
Speaker 2: Basically taking all of these signals and put them together
Speaker 2: in a single source to make it much easier. And
Speaker 2: again this is from my friend Jamie Couch over at
Speaker 2: Real Vision.
Speaker 1: They do amazing work.
Speaker 2: And so what we can see is the network Profitability
Speaker 2: risk Score, and again sort of same framework. We have
Speaker 2: level one, level two, level three, level four, and level
Speaker 2: five five being the most risky, one being least. Where
Speaker 2: are we today on this risk score? Well, right now
Speaker 2: we're sitting right around about a two and a half
Speaker 2: two point seven percent risk, so just below neutral, a
Speaker 2: little bit less risky the neutral, which again means this
Speaker 2: needs to run way higher in order for this to
Speaker 2: run way higher. And so again we're well below We're
Speaker 2: not at the lowest price levels ever. Obviously we've come
Speaker 2: off this bottom all the way up. We're obviously not
Speaker 2: here anymore, but we're nowhere near the top. Based off
Speaker 2: of these things, it looks like this market has a
Speaker 2: long way to go. You're gonna think of this as
Speaker 2: like an emotional heartbeat, because again, like if I'm sitting
Speaker 2: on a lot of profit, I'm probably going to take
Speaker 2: some profits. Maybe I'll pay off my house or buy
Speaker 2: something new, right, or if I'm if I'm at a loss,
Speaker 2: I want to hold this. It plays with my emotions
Speaker 2: and so it sort of gives us that leading indicator
Speaker 2: of what the market may do. Okay, So the question
Speaker 2: is if we combine all these where are we now?
Speaker 1: And I've kind of already given that away.
Speaker 2: If we add the grs, the drs, and the nprs together.
Speaker 1: Where are we?
Speaker 2: But what I haven't given away is based off historical returns,
Speaker 2: where do we go from here? If we look at
Speaker 2: past market cycles that we've seen this, what could potentially
Speaker 2: happen from here on out? Let's take a look, all right,
Speaker 2: So if we go back and we put all these
Speaker 2: together again and combine them, what we can see is
Speaker 2: we're right here in about two point six two point seven,
Speaker 2: So that means we need to go a lot higher
Speaker 2: here for this to come up a lot higher. Here,
Speaker 2: we're already up quite a bit off the bottom. Doesn't
Speaker 2: mean we're at the top. You have to understand market cycles, right,
Speaker 2: So we're above right, we're at new all time highs,
Speaker 2: but at the midpoint of.
Speaker 1: The cycle, not at the top of the cycle like
Speaker 1: we were last time.
Speaker 2: We were there, So based off of the combined score,
Speaker 2: we can see we're in about a neutral market.
Speaker 1: Again, we're not anywhere near caution.
Speaker 2: We're not at four, we're not a five, and that
Speaker 2: sort of tells us that we have a long way
Speaker 2: to go now based off of past performance, which again
Speaker 2: is no guarantee of future performance, but based off of
Speaker 2: past performance when we've seen these levels before, what is
Speaker 2: bigcoin done?
Speaker 1: Now?
Speaker 2: If we look at each of these indicators on it own,
Speaker 2: they all have different data, but if we combine the
Speaker 2: three we get something different.
Speaker 1: Okay.
Speaker 2: So Network Profitability Risk Score NPRS performance and basically right
Speaker 2: now we're sort.
Speaker 1: Of in this neutral range. We're a little bit lower
Speaker 1: than neutral, but let's just call it neutral for this
Speaker 1: this exercise.
Speaker 2: Okay, So what this says about almost sixty percent of
Speaker 2: the time this has worked in thirty days, we'll see
Speaker 2: eleven percent ninety days of forty five percent, one hundred
Speaker 2: and eighty days a ninety six percent return double. Okay,
Speaker 2: it's not guaranteed sixty percent, so that means it's a
Speaker 2: base case. So what we want to do is we're
Speaker 2: always looking at the odds.
Speaker 1: Again. Poor mentality thinks about how much money can I
Speaker 1: make and they go low end.
Speaker 2: But smart money always makes structured strategic bets. How much
Speaker 2: should I allocate, Well, depends on what my odds are.
Speaker 2: If I have a ninety percent chance of winning the bet,
Speaker 2: I'm going to bet more.
Speaker 1: If I have a ten percent chance ten percent odds of.
Speaker 2: Winning the bet, I'm gonna bet a very bit obviously, right,
Speaker 2: if we want to understand the odds and what the
Speaker 2: probabilities are, and based off of where we're at right now,
Speaker 2: we have a long way to go, right, We have
Speaker 2: a long way to go now.
Speaker 1: Understanding this gives us new tools. But how do we
Speaker 1: use all this? How do we use all this? Again?
Speaker 2: So the first thing is this is not a crystal ball.
Speaker 2: This doesn't predict the future. This doesn't tell us exactly
Speaker 2: what bitcoin's price is going to be on what date
Speaker 2: and one's.
Speaker 1: Going to turn around. It doesn't tell us if there's
Speaker 1: another big dip coming that you should wait to buy
Speaker 1: the dip.
Speaker 2: What it does tell us is if it's expensive or
Speaker 2: if it's cheap. It does tell us if we're starting
Speaker 2: to get overbought or over sold. It does tell us
Speaker 2: maybe when we should be pressing in harder. Because the
Speaker 2: odds are with us, or we might want to pull
Speaker 2: back a little bit because the odds are against us. Now,
Speaker 2: I would strongly advise against trying to time this and
Speaker 2: sell out and buy back in because what happens. Let's
Speaker 2: take twenty seventeen for example. In twenty seventeen, bitcoin ran
Speaker 2: from one thousand to twenty thousand in one.
Speaker 1: Year, okay, from twenty times. It's pretty amazing.
Speaker 2: But if you were looking at these indicators around I
Speaker 2: don't know, it was around four to five thousand, it
Speaker 2: started flashing that it was at the top of the market,
Speaker 2: it was overbought, it had gone up four or five times.
Speaker 2: It's amazing. If you're a traditional investor, this is the
Speaker 2: best returns you've ever seen in your life. And so
Speaker 2: the indicators were showing it was very expensive, and so
Speaker 2: if you're following that and trying to time the market,
Speaker 2: you would have sold out, you would have cashed it,
Speaker 2: and you would have missed the run from four or
Speaker 2: five grand up to twenty grand. Now what happened is,
Speaker 2: of course it crashed all the way back down, and
Speaker 2: you were going to try to time the bottom. But
Speaker 2: of course nobody wants to catch a falling knife, So
Speaker 2: you're waiting for something to turn, some sentiment to turn.
Speaker 1: The charts are turned to tell you when to start buying.
Speaker 2: But bitcoin moved so violently that really quickly it moved higher,
Speaker 2: and now you're buying back in at six or seven K.
Speaker 2: So if you tried to sell out at four or five,
Speaker 2: you missed this, and then you bought it at six
Speaker 2: or seven.
Speaker 1: You actually got behind.
Speaker 2: Now, if you're like you know, whatever your circumstances, maybe
Speaker 2: you're older, you're on a fixed income, you don't have
Speaker 2: a long timeframe.
Speaker 1: Maybe maybe the four or five times.
Speaker 2: On your money was amazing. It was the best praturny
Speaker 2: you've ever had in congratulations. And if you're just trying
Speaker 2: to get more US dollars, you can trade it from
Speaker 2: one to four, you can trade it from six to
Speaker 2: twenty again, and you can.
Speaker 1: Make that spread, and that's cool.
Speaker 2: But if you're a long term bitcoin hoddler like I am,
Speaker 2: and you expected to hit one million dollars by twenty thirty,
Speaker 2: like I do.
Speaker 1: Then I'm not trying to time this.
Speaker 2: What I'm going to do is I'm gonna start adding
Speaker 2: aggressively here so when it gets here, I'm not as
Speaker 2: adding as aggressively. So I'm buying super heavy. Right here
Speaker 2: around here, I start slowing down. Maybe I'm not going
Speaker 2: to put any in. Maybe I'll just kind of wait.
Speaker 2: I'm not selling, but I wait. Then when it starts
Speaker 2: coming down right around here, I start deploying again.
Speaker 1: I'm gonna buy all the.
Speaker 2: Way through this dip. When it gets here, I start
Speaker 2: waiting again. That's how I use this Now. We also
Speaker 2: that's positioning versus chasing.
Speaker 1: I'm not trying to predict. I'm not trying to time.
Speaker 2: I'm positioning myself correctly to take full advantage of this cycle.
Speaker 1: Again, we want to use tiered entries.
Speaker 2: So again I'm not going to exit, but I'm not
Speaker 2: going to do massive entries at the top of the market.
Speaker 2: I'm going to I'll pause these entries here we're nowhere
Speaker 2: near that yet, and then I'll start tearing in my
Speaker 2: entries over here. We do this based off of conviction
Speaker 2: weighted allocations. Remember the percentages, so based off.
Speaker 1: Of where we're at.
Speaker 2: As we're starting to get more expensive here, as the
Speaker 2: odds the percentages are coming down, it's less so it's
Speaker 2: conviction weighted allocations. Another thing about to take talking about
Speaker 2: in this video is the treasury stacking. So now there's
Speaker 2: this new breed of treasury companies, Bitcoin Treasury companies. Micro
Speaker 2: Strategy launched it, Metaplanet, all matatoral these other ones that
Speaker 2: are blowing up, and you might want to consider stacking
Speaker 2: into some of these as well. If you're going to
Speaker 2: break down a whole video on that, let me know
Speaker 2: down in the comments. Okay, so I do want to
Speaker 2: just press on something here. This is not static, Okay,
Speaker 2: these charts the change. This is dynamic.
Speaker 1: It's moving.
Speaker 2: So if you're looking at any type of indicator a
Speaker 2: two hundred moving to average, for example, it's moving with
Speaker 2: the price.
Speaker 1: So you can't go off of what we just said.
Speaker 2: That's why we can't predict the top or we can't
Speaker 2: predict a time because these are moving. So what we're
Speaker 2: doing is we're seeing the signs as it developed. Now
Speaker 2: the cycles are not random. They happen in proper sequence,
Speaker 2: but not to the exact time or date. But it's
Speaker 2: always going to be the same thing. It's always going
Speaker 2: to be liquidity that's the leading indicator. It's always going
Speaker 2: to be leverage built up in this system. That's the
Speaker 2: derivatives and it's always going to be the human emotion
Speaker 2: because we drive humans. We're driven by pleasure, greed, and
Speaker 2: fear pain.
Speaker 1: That's it.
Speaker 2: So we want to look at those three things and
Speaker 2: again not trying to predict the top or the bottom,
Speaker 2: but instead measuring the risk and the location of our
Speaker 2: investments to the cycle. If you follow this, we're going
Speaker 2: to have massive success. And if you want to know
Speaker 2: the top five on chain indicators that I'm watching to
Speaker 2: help me understand this, watch this video right here and
Speaker 2: I'll see you over there.