Speaker 1: Bitcoin's price is crashing right now, and everybody wants to
Speaker 1: know the same two answers, why it happened and what
Speaker 1: happens next. But the reasons that most people they're throwing
Speaker 1: around they're just wrong. And if you don't understand what
Speaker 1: actually happened and why, then you're not going to be
Speaker 1: able to see what's about to change. More importantly, what
Speaker 1: comes next, because once you see the real cause behind
Speaker 1: this move, the entire crash suddenly makes a lot more sense.
Speaker 1: So today we're going to break down why is the
Speaker 1: price falling, who is selling, what broke, when will it end,
Speaker 1: and what you should be doing about it now, whether
Speaker 1: you're a long term investor a short term investor, we're
Speaker 1: going to answer that now. Look, I've been building I've
Speaker 1: been selling tech companies for decades. I invest in bitcoin startups.
Speaker 1: I hope run a public trade a bitcoin treasury company.
Speaker 1: This is the same data that we're using internally, all right,
Speaker 1: So let's just start with the obvious. Bitcoin's price is
Speaker 1: crashing now at the time of this recording, probably going
Speaker 1: to change by the time you watch this, but we're
Speaker 1: at about eighty five thousand. It's about thirty two two
Speaker 1: percent off of its previous all time high that was
Speaker 1: set back in October thirteenth, and everybody's looking around. They're
Speaker 1: all trying to figure out, like, what the heck just happened,
Speaker 1: and of course, more importantly, what comes next. But the
Speaker 1: problem is that most of the explanations out there that
Speaker 1: you're seeing maybe online on Twitter whatever, they're guesses, right,
Speaker 1: they're headlines, it's whatever narrative. People grab whatever they can
Speaker 1: find the quickest, and none of it actually matches the data.
Speaker 1: But before we go anywhere, before we talk about the seller,
Speaker 1: before we talk about the micro structure, we talk before
Speaker 1: we talk about the timing of the moves, we have
Speaker 1: to set the right frame right. This is when I
Speaker 1: always go back and I listen to good old uncle
Speaker 1: Warren Buffett, the Oracle of Omaha, because he has all
Speaker 1: these little lines, these little sayings, ones that I think
Speaker 1: about a lot, especially when markets start acting very emotional
Speaker 1: like right now, And he has a really famous one.
Speaker 1: He said, quote, if you're not willing to own something
Speaker 1: for ten years, don't even think about owning it for
Speaker 1: ten minutes in quote. And of course the other one
Speaker 1: everybody quotes all the time is price is what you
Speaker 1: pay value is what you get. But the one I
Speaker 1: think fits this moment right now, the best, the most
Speaker 1: perfect one for this moment is in the short run,
Speaker 1: markets are a voting machine. In the long run, they're
Speaker 1: a weighing machine. Now, if you've been around these cycles
Speaker 1: long enough, you know exactly what he's talking about, right
Speaker 1: because right now, the voting machine, it's in full panic mode.
Speaker 1: Bitcoin again, it's down thirty five percent. It's a big move,
Speaker 1: but really, when you look at the bigger picture, it's
Speaker 1: not unusual for bitcoin. In fact, it's the third drop
Speaker 1: of this size in just this current cycle, and we've
Speaker 1: seen dozens of these previous cycles. But what is unusual
Speaker 1: is the sentiment this time that, like this drop right now,
Speaker 1: this must mean something is fundamentally wrong. So let's walk
Speaker 1: through this very carefully and take a look, like, let's
Speaker 1: lay out the framework. Let's lay out the evidence so
Speaker 1: we can understand what's going on, because once you line
Speaker 1: up all the facts becomes really clear that the long
Speaker 1: term picture, it hasn't changed at all, and really the
Speaker 1: fundamentals have actually never looked better. Now, before we get
Speaker 1: to the fundamentals, let's stay on Buffett just for one
Speaker 1: more second, because understanding how he thinks how he became
Speaker 1: one of the wealthiest men in the world is something
Speaker 1: that we should all learn from. And I know he's
Speaker 1: not a big bitcoin fan, but we can still learn
Speaker 1: from him. Now, Buffett never buys something and then sits
Speaker 1: there staring at the price. Every day. He said over
Speaker 1: and over he doesn't care what the price does today
Speaker 1: or tomorrow because he's not buying the ticker, right, He's
Speaker 1: not buying the price. He's buying the business. And if
Speaker 1: the business is getting stronger and the price is falling,
Speaker 1: then he doesn't panic. He just buys more. Okay, So
Speaker 1: before we get emotional about you know, the red candles,
Speaker 1: before we get emotion about the headlines, what we want
Speaker 1: to do is we want to do exactly what Warren
Speaker 1: Buffett would do. If we want to zoom out, just
Speaker 1: ignore the noise for a second and let's get to
Speaker 1: the facts because the facts they paint a very different,
Speaker 1: a completely different picture than the emotions do. Okay, So
Speaker 1: now that we've got the right frame of mind, let's
Speaker 1: go straight into the first big question. Why is the
Speaker 1: price falling? Like what happened? Now, before we get into
Speaker 1: the market, makers and the force selling and all that.
Speaker 1: We have to start with something way bigger than bitcoin,
Speaker 1: something that affects every asset on Earth, and it's liquidity.
Speaker 1: Because when liquidity disappears, it doesn't matter how strong the
Speaker 1: fundamentals are, it doesn't matter how much demand there is.
Speaker 1: Everything gets hit. And that's exactly what's been happening over
Speaker 1: the last six eight weeks. Now. The first thing most
Speaker 1: people missed is that the US government went through the
Speaker 1: longest shut down in American history forty three days. And
Speaker 1: when the government shuts down, spending freezes. The Treasury General
Speaker 1: Account the TGA, it's the government's checking account, swells up,
Speaker 1: and all that money that swells into it comes out
Speaker 1: of the system. And of course, every time the TGA jumps,
Speaker 1: you see risk assets start to pull back because the
Speaker 1: liquidity is getting rained from the exact places the markets
Speaker 1: rely on for the day to day funding. Now, on
Speaker 1: top of that, but a reserve, they're still running QT,
Speaker 1: or quantitative tightening. So while the shutdown froze fiscal spending,
Speaker 1: QT was pulling reserves out of the banking system, And
Speaker 1: if you watch the bank reserve levels, you can see
Speaker 1: the floor getting hit pretty quickly. Now this isn't a guess, right,
Speaker 1: it's all in the data. Reserves fell back to the
Speaker 1: same danger zone we reached in twenty nineteen, right before
Speaker 1: the repo market blew out. And while that's happening, the
Speaker 1: reverse repo facility it's basically empty, which is another major
Speaker 1: signal that the system is getting tight. Now. The reverse
Speaker 1: repo dropping to near zero means money market funds have
Speaker 1: nowhere to park excess cash. Because no excess cash, overnight
Speaker 1: borrowing costs between banks have been creeping higher and higher
Speaker 1: and higher for weeks. Dealers are pulling back. Risk leverage
Speaker 1: is coming down across the board. So when all this happens,
Speaker 1: you get a temporary I say, where a liquidity vacuum.
Speaker 1: Right now, this hits everything. It's just that Bitcoin reacts
Speaker 1: to this the fastest. Okay, So before we even get
Speaker 1: to the trigger, we already see the liquidity environment. That
Speaker 1: explains why every risk asset's been under pressure lately. Now,
Speaker 1: if you don't understand that, you're gonna end up blaming
Speaker 1: the headlines instead of looking at the money flows that
Speaker 1: actually move market. Okay, but now that we understand liquidity,
Speaker 1: and that alone explain explains a lot, right, we have
Speaker 1: to get into the part that almost nobody understands. This
Speaker 1: is where things get a little bit weird, because the
Speaker 1: price action that we've been seeing the last few weeks
Speaker 1: doesn't look like fear right, it doesn't actually look like
Speaker 1: normal selling pressure. It looks like something broke. And the
Speaker 1: date everything changed was October tenth, ten ten. Remember that day.
Speaker 1: That's the day President Trump sent out the tweet he
Speaker 1: said that he was going to put one hundred percent
Speaker 1: tariffs on China, and then it triggered one of the
Speaker 1: largest liquidation events in crypto's history. Almost twenty billion dollars
Speaker 1: in leverage positions were wiped out in less than twenty
Speaker 1: four hours. Now that's not normal, right. Bitcoin didn't drop
Speaker 1: fifty percent. The ETFs didn't like give back all, you know,
Speaker 1: give all the redemptions back. There wasn't some major macro shock,
Speaker 1: but the size of the forced liquidations was bigger than
Speaker 1: what we saw in some of the twenty twenty two candles.
Speaker 1: Now here's the key. When liquidations get that big, it's
Speaker 1: not just traders losing money. Market makers took this too, right.
Speaker 1: These are the firms that provide the liquidity that lift
Speaker 1: the books that stabilize the volatility, and when they get
Speaker 1: blindsided when their hedges get liquidated, and when exchanges use
Speaker 1: ADL to force closer positions at horrible prices, they don't
Speaker 1: just get hurt. They pull back right, they reduce risk.
Speaker 1: They have to shrink their inventory, they quote smaller sizes,
Speaker 1: and that starts to leave holes in the market structure.
Speaker 1: And that's exactly what we saw on ten ten. Now
Speaker 1: we can take a look at Finance for example, they
Speaker 1: had one of its largest forced liquidation clusters ever Wintermute
Speaker 1: Ceo public Is Finances ADL system malfunctioned and hit them
Speaker 1: with fills that quote make no sense. Now. Then right
Speaker 1: after that we saw the collapse of Stream Finance. It
Speaker 1: was a two hundred million dollar Delta neutral fund. They
Speaker 1: lost around ninety three million and went bankrupt. Now that's
Speaker 1: a fund that wasn't supposed to lose money, but their
Speaker 1: hedges they got caught in the same ADL chain reaction. Now,
Speaker 1: when you put all that together, a major liquidation event
Speaker 1: ADL kicking in a large fund blowing up, you end
Speaker 1: up with exactly what we've been seeing ever since. And
Speaker 1: it gets even more strange. Than that for almost two
Speaker 1: weeks straight. Now, someone's been selling bitcoin every single morning
Speaker 1: at nine thirty am Eastern time, the exact moment the
Speaker 1: US stock market opens, the same pattern, the same time
Speaker 1: and the same pressure. This isn't retail panic, right. Retail
Speaker 1: doesn't wake up and then dump bitcoin at the opening
Speaker 1: bill on Wall Street with that kind of precision. Right,
Speaker 1: this looks like has to be a mandated seller. And
Speaker 1: this is a fund that's unwinding. It's a market maker
Speaker 1: that's de risking their portfolio. Somebody's closing a position because
Speaker 1: they have to, not because they want to. And the
Speaker 1: technicals back all this up. Right, We just hit the
Speaker 1: lowest daily mac D reading in bitcoin's history, lower than
Speaker 1: the COVID crash, lower than the FTX collapse, and yet
Speaker 1: the price is only down thirty three percent, Right, I'd
Speaker 1: be impossible in a healthy market. RSI hit twenty one
Speaker 1: on the daily. That only happens during true capitulation events.
Speaker 1: But there's no capitulation this time. The price action is
Speaker 1: all pressure. It's no panic, right, that's the tail that
Speaker 1: we're looking at. This is one or maybe more forced
Speaker 1: actors unwinding through a broken microstructure. The ten ten event,
Speaker 1: it damaged liquidy. Now the seller that we're seeing is
Speaker 1: basically dragging their inventory through the weekend market. All right,
Speaker 1: So now you understand the liquidity was low and then
Speaker 1: the ten ten event was the trigger that sent the
Speaker 1: cascading down. Right, But then we need to zoom back
Speaker 1: out for a second. We have to look at the
Speaker 1: fundamentals because this is the part that really matters, at
Speaker 1: least to me. Right, price, it moves around, sometimes it
Speaker 1: moves around pretty violently, But if you care about the
Speaker 1: long term outcome, and of course that's what Buffett always
Speaker 1: tells us to look at. If I look at then
Speaker 1: what actually matters is whether the asset you're holding is
Speaker 1: fundamentally getting weaker or stronger. So while everybody's panicking about
Speaker 1: the price, you know, dropping thirty thirty five percent, fundamentals,
Speaker 1: they've been doing the exact opposite. As a matter of fact,
Speaker 1: they've been getting stronger in ways we've literally never seen before.
Speaker 1: Let's start with a couple of them, like institutional adoption,
Speaker 1: because that's changed more in the last two years than
Speaker 1: in the previous ten spot Bitcoin ETFs finally launched in January.
Speaker 1: What most people don't realize is that these ETFs created
Speaker 1: permanent pipelines from traditional financial institutions into bitcoin. I mean,
Speaker 1: we're talking pensions, downmends, insurance companies, We're talking about boring money,
Speaker 1: loan money. Right. This is the exact opposite of the
Speaker 1: leverage traders that blew up on ten ten. Then we
Speaker 1: have the credit side, which is something I've been talking
Speaker 1: about for a really long time. I mean, we have
Speaker 1: JP Morgan, one of the largest banks in the country,
Speaker 1: in the world, is now accepting bitcoin as collateral for
Speaker 1: institutional loans. I mean that's a massive milestone because it
Speaker 1: means bitcoin has crossed the line from being just an
Speaker 1: asset that you can speculate with to actually be in
Speaker 1: an asset you can borrow again. Now, once Wall Street
Speaker 1: starts accepting something as collateral, then it enters the credit system.
Speaker 1: Once it enters the credit system, demand becomes structural, not cyclical.
Speaker 1: And it's not just JP Morgan. The FHFA, which regulates
Speaker 1: Fannie Mae Freddy Mack. They announced this year that mortgage
Speaker 1: underwriters are allowed to consider bitcoin holdings when evaluating a
Speaker 1: borrowers financial strength. Think about that for a second. For decades,
Speaker 1: bitcoin was treated like some fringe internal asset. Now it's
Speaker 1: something that helps you qualify for mortgage. I mean that's
Speaker 1: a massive shift. It's a regulatory shift, which is even
Speaker 1: more important. And custody has gone fully institutional as well.
Speaker 1: Fidelity City, US Bank Corps, Standard Charter, they're all running
Speaker 1: regulated bitcoin custody operations now. And the important point is
Speaker 1: that when institutions buy bitcoin and custody with firms like that,
Speaker 1: those coins they disappear from the liquid float for years.
Speaker 1: Maybe right, they're not trading on binance, they're not part
Speaker 1: of this noise. They're effectively locked away in deep dark,
Speaker 1: cold storage. Bitcoin mining investment it hasn't slowed down at all.
Speaker 1: Hash rate hit and new all time high this year.
Speaker 1: It means the network is more secure than it's ever been.
Speaker 1: And when you see miners investing one hundreds of millions
Speaker 1: of dollars into hardware energy contracts, tells you one thing.
Speaker 1: They're not worried about short term price moves. And then
Speaker 1: got sovereign adoption starting to accelerate. The US now holds
Speaker 1: over two hundred thousand bitcoin between seized assets and strategic
Speaker 1: reserve discussions. Now multiple states are exploring bitcoin treasury allocations.
Speaker 1: Other countries are openly studying strategic bitcoin reserves. Now this
Speaker 1: part is still pretty early, but the direction, it's undeniable.
Speaker 1: So when you stack all this up, institutions are accumulating bitcoin,
Speaker 1: entering the credit system, mortgage underwriting guidelines, changing regulated custody,
Speaker 1: exploding minor security at all time high sovereign interest building.
Speaker 1: Then you compare to the price dropping thirty five percent,
Speaker 1: becomes really obvious what's happening here? Right? This is exactly
Speaker 1: the kind of setup that long term investors wait for
Speaker 1: when the weighing machine hasn't caught up to the voting
Speaker 1: machine yet, or what I like to call the mismatch multiplier,
Speaker 1: how far off of reality is to perception the mismatch.
Speaker 1: The greater the multiplier, the better the opportunity. Okay, so
Speaker 1: now we understand why the price is falling, we understand
Speaker 1: who's doing the selling. So then the next question for
Speaker 1: us is when does this all in? Because if all
Speaker 1: you see is the chart going down, it's easy to
Speaker 1: assume it means something's fundamentally broken. But when you strip
Speaker 1: out the emotion and you just look at the structure,
Speaker 1: the timeline for how these events resolve is actually pretty clear.
Speaker 1: You see, for sellers always have one defining characteristic. They
Speaker 1: run out. They don't get to choose the price, they
Speaker 1: don't get to choose the timing. They don't get to
Speaker 1: wait for better entry, right. They unwind until their mandates complete.
Speaker 1: That's it. And when you have a seller like this,
Speaker 1: someone selling at the exact same time every single day
Speaker 1: through thin liquidity into damage markets without reacting to price,
Speaker 1: the end is determined by the inventory they hold. The
Speaker 1: think is is that once they run out of bitcoin,
Speaker 1: the pressure disappears instantly. Now we've seen this before March
Speaker 1: twenty twenty, May twenty twenty one, the FTX aftermath, even
Speaker 1: all the way back to Mount Cox in twenty fourteen.
Speaker 1: When it stops, you get these violent snapbacks. They seem
Speaker 1: to make no sense to almost anybody who wasn't paying
Speaker 1: attention to the un line structure. And there's a second
Speaker 1: piece to all of this. Liquidity turns fast. The same
Speaker 1: way liquidity was drained over the last six eight weeks,
Speaker 1: it comes back just as quickly. The government shut down,
Speaker 1: it's over, the TGA's full, it's finally ready to start
Speaker 1: spending again. The Fed ends QT on December first, bank
Speaker 1: reserve stabilized as soon as that flow stops. So the
Speaker 1: question is then when does it It ends when two
Speaker 1: things converge, seller exhaustion and liquidity returning, and we're getting
Speaker 1: close to both. Okay, So now that we've walked through
Speaker 1: the actual cause this move, right, next question is what
Speaker 1: should you be doing about now? The answer it depends.
Speaker 1: It depends on your time frame, because how I think
Speaker 1: about bitcoin personally very different of how I manage positions
Speaker 1: inside my fund. Now. For me as an individual, bitcoin's
Speaker 1: a long term asset, right, so I don't care what
Speaker 1: it does in a week. I don't care what it
Speaker 1: does in a quarter. I don't even care what it
Speaker 1: does over a year. I buy it because I understand
Speaker 1: the network. I understand the adoption curve, I understand the
Speaker 1: monetary structure, I understand the long arc of where this
Speaker 1: is going on that timeline. A move like this doesn't
Speaker 1: change anything, right, These are liquidity pockets. None of it
Speaker 1: touches the actual fundamentals. If anything, this is the kind
Speaker 1: of opportunity that long term investors like me wait for.
Speaker 1: But on the other hand, I also manage capital for
Speaker 1: investors who don't have that luxury right. They care about quarters,
Speaker 1: They look at things on an annual basis. They want
Speaker 1: to see annual returns, they care about draw downs. So
Speaker 1: inside the Bitcoin Opportunity Fund, we hedge, we use options,
Speaker 1: We take tactical positions to manage volatility, because that's part
Speaker 1: of the mandate. We're not trying to trade in and
Speaker 1: out of it. We stay long, but we manage liquidity
Speaker 1: on the downside. So you're managing short term liquidity. If
Speaker 1: you have bills, if you have obligations, you have redemption windows,
Speaker 1: then you have to think differently. You can't ride out
Speaker 1: every structural shock, and for some people that means diversifying
Speaker 1: into assets outside of bitcoin that produce shield things with
Speaker 1: more stable cash flows, fixed income opportunities. Now there's nothing
Speaker 1: wrong with that. It just depends on what you're optimizing for.
Speaker 1: So if you're thinking long term, nothing's changed. If you
Speaker 1: need short term liquidity, had you diversify, and if you
Speaker 1: fall somewhere in the middle, well you probably already know
Speaker 1: which side you lean toward. The key is matching your strategy,
Speaker 1: your time frame, not to the headlines. Okay, so to
Speaker 1: wrap all this up, bring it back to where we started.
Speaker 1: Let's go back to Buffett, right, He always said that again,
Speaker 1: the market is a voting machine in the short term
Speaker 1: and a wane machine in the long term. So when
Speaker 1: you strip out all the noise, pick out the liquidations,
Speaker 1: the broken market structure, the liquidity vacuum, what we're left
Speaker 1: with is still the same asset, same adoption curve, same fundamentals,
Speaker 1: the same long term story. And if you look at
Speaker 1: it through that lens, this move isn't the market wane bitcoin.
Speaker 1: It's the market voting under pressure, reflexive mechanical by flows,
Speaker 1: not fundamentals. The weighing machine hasn't even stepped on the
Speaker 1: scale yet. So if you're long term like me, stay
Speaker 1: long term, nor the voting machine, ignore the noise, use
Speaker 1: these opportunities to buy bitcoin at a discount. And if
Speaker 1: you're more short term like we are inside the fund,
Speaker 1: then manage your risk the way short term investors have to.
Speaker 1: But don't confuse a broken seller in a broken market
Speaker 1: with a broken asset, because that's not what the data
Speaker 1: shows us. Buffett would look at it like this and
Speaker 1: say the same thing he always says. If the long
Speaker 1: term economics are getting stronger while the price is falling,
Speaker 1: then you're looking at opportunity wearing a disguise. That's exactly
Speaker 1: where bitcoin is right now. Now, if you want to
Speaker 1: see the actual data behind all of this, I put
Speaker 1: together a free report with the top nine charts I'm
Speaker 1: watching right now. These are the same charts I use
Speaker 1: inside my research, the same ones I rely on to
Speaker 1: separate noise from signal. Then, if you want it, I'm
Speaker 1: going to leave a link down below, so grab it.
Speaker 1: Study it compared to what we walk through today. It's
Speaker 1: completely free. It's my gift to you. It's gonna give
Speaker 1: you more clarity than scrolling through Twitter. That's what I
Speaker 1: got to your success.