Bitcoin Extreme Uncertainty

Source: YouTube

Introduction: competing forces and uncertainty

Speaker 1: 00:00 Hey everyone, and thanks for jumping back into the Cryptoverse. Today we're going to talk about Bitcoin and discuss the extreme uncertainty that sits with the market right now. If you like the content, make sure you subscribe to the channel, give the video a thumbs up, and check out the sale on Into the Cryptoverse Premium at intothecryptoverse.com.

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00:38 I've been tracking Bitcoin for a long time. Publicly, I've been talking about it with you since 2019, when I started the YouTube channel. There are certainly times where uncertainty gets to pretty high levels, and it feels like there are forces pulling Bitcoin in either direction. In those cases, both the bulls and the bears have a point. Today, I think we find ourselves in a similar situation.

But I would argue that uncertainty now is higher for Bitcoin than it has been in the past, just because of the forces simultaneously pulling on Bitcoin. In one camp, you have the bulls, and the bulls have a great argument for Bitcoin right now. The bears are in another camp, but they have some things they can point to as well.

01:47 When it comes to investing, we all have to recognize that no one actually knows what's going to happen. On crypto YouTube and crypto Twitter, there's this idea that people are going to know for sure what's going to happen. The people who speak the most loudly, the most confidently, are often given a large platform to voice their opinions. I've fallen into that as well. Sometimes I get very deterministic about what I think is going to happen. That has served me well in some cases, and in other cases, it has not.

What I want to do is go through exactly what's going on in the market, so if you're a bull, you can understand the bear case, and if you're a bear, you can understand the bull case.

02:39 I think we're about at a decision point. I don't think we're going to sit here much longer in the low 80s. We're either going to go up and print a new local high above $87K really soon, or it's going to be a fake breakout, and then all the technical indicators break down. Let's go through it so you can understand where we are and why there's so much disagreement.

The technical bull case

03:09 The bulls have a lot going for them, and they've had a lot going for them for a while. From a pure technical perspective, if you're just looking at technical analysis—the RSI, the MACD—there's a lot they can point to.

One of the simplest things they can point to is the fact that Bitcoin had a golden cross. It had a correction after the golden cross, and it continued higher. As it stands right now, it's still holding just above the 50-day moving average.

Everything Bitcoin has done since the breakout to $87K could be construed as a normal correction that's backtesting the prior high. This would be fairly normal. If you're a bear, you can't look at that and say it's necessarily bearish on its own. It is retesting a prior high.

04:07 What you'll notice is that when Bitcoin previously broke down from a wick low, that formed a bottom that then yielded a new high. As it stands right now, that's something the bulls can point to and say, “Look, so what if we swept the low? Why can't we just do the same thing we did last time? Sweep the low, potentially consolidate over the weekend, and then head back up by Sunday night.” This is certainly a compelling case.

04:46 I'm at the point now where, if Bitcoin were to break down, it might almost be one of those things where you have to be careful what you wish for. Going into Q4—and really, in Q3—I said I thought we were forming a low for Bitcoin at $57K. What I wasn't expecting was for the rally to take out the prior high. That messed me up a little bit, because it made sense for the low to occur around $57K.

In 2018, we had a low at $5,700. We talked a lot about how the structure of the market is very similar: a February low in both cases, a lower high in May, a lower low in the summer, then your summer rally in Q3, and then your typical Q4 dump. That was what I said was the most likely outcome. Obviously, with Bitcoin putting in a higher high, that has called things into question and made me a little less deterministic.

05:59 I really want to understand what the bull case is. One thing you can look toward is to say, “Look, this is a normal stair-stepping pattern after you form a low.”

When you look at the longer-term moving averages, you could say, “Bitcoin is now above the 50-week moving average.” When you look at prior bear markets that started at the end of a post-halving year, once Bitcoin is above the 50-week and staying above it, like it has been recently, normally it means the bear market's over. You can see that happened many times.

From an RSI perspective, if you look at the relative strength index, it looks like Bitcoin has technically done what it does every bear market: go down to these lows, then go up and catch some people off guard.

There are a lot of indicators the bulls can point to. I think that's one of the things pulling Bitcoin higher: a lot of people look at these indicators and simply believe history is going to repeat itself.

The 2019 comparison, liquidity, and on-chain indicators

07:18 I've struggled with this because it goes against what normally happens in Bitcoin's cycle around now. Normally around now, Bitcoin is dropping, or at least not spending a lot of time above a prior high. So the bulls have a case.

If you want to compare to 2019, which I think is a relevant comparison—in fact, I've been making that comparison for years—this entire move here is more like this move. For a long time, a lot of people went against that. They were like, “No, this is not like 2019.” But now, of course, it makes more sense for them to favor it because it more so aligns with their bias.

What I was saying was that the 2019 post-apathetic-top downturn would align with the 2026 bear market.

08:24 What's interesting is, if you overlay the 2019 bear market with where Bitcoin is now, the lows would have occurred around the same time. What's different is that in 2019, there was price-based capitulation where we reset a lot of the on-chain indicators.

If you're just looking at it like this, you could say, “Bitcoin had about a nine-month bear market, but it also had a nine-month bear market after the 2019 apathetic top. Why is that not enough?” If you extend that out to the next peak, who's to say it can't just follow a weaker version of what we saw back then?

09:11 If you're a bear, you're simply going to point out that the reason we had such a euphoric rally back then was the monetary policy response to the pandemic. You're going to say, “Hold on a second. The reason Bitcoin was breaking out so much was because the Fed was printing trillions of dollars.”

If you look at global net liquidity—or sorry, this is just total assets held by the Federal Reserve—you'll notice Bitcoin didn't really start moving to those levels until after the balance sheet started to expand after the crisis. Right now, we're not really seeing the balance sheet expand. It's sort of in this pre-expansion phase. Last time, it required a crisis to get the balance sheet to really start expanding, and we don't know what would have happened back then had that not occurred.

10:10 In one sense, the bulls can simply say, “We had a nine-month bear market like 2019. Why does it need to reset the on-chain indicators? If we don't go to the highs, why do we have to go to the lows?”

What I mean is, if you look at things like the MVRV Z-score—the market value to realized value Z-score—or some other on-chain indicators, historically this thing bottoms after it goes below zero. You could argue that the ETFs have messed with that in some ways, but normally it bottoms below zero. It also normally tops well above where it did top previously. In 2019, it also topped near where it did this cycle, and we still went below zero.

10:54 If you're a bull, you would probably look at supply in profit or loss and simply say, “After they cross, historically the bull market is in effect.” Although the bears could simply say, “They crossed in 2022, and then they crossed again later on. In 2018 they crossed, and then they crossed again in 2020 when we had a recession.”

That's kind of the elephant in the room as well. There's been discussion about a recession for probably four or five years now, and it hasn't materialized. In 2019, it was the recession that killed things.

If you look at the 50-week moving average, Bitcoin also went below the 50-week moving average in that bear market, then got above it, but then went back below it. It's not like there's no precedent for this either when you compare it to the 2019 move. The bulls have a case, and it's because of that case that Bitcoin has been doing so well.

The bear case and bear-market duration

12:00 You can't deny it. The bears also have a point, and I'll talk about how I'm thinking about it at the end. I'm not just here to point out everything possible. I'm trying to put the evidence in front of you so you can understand what the other side is thinking.

If you're a bull, you're probably wondering, “Why is Bitcoin not higher right now?” Normally, when Bitcoin breaks through the 50-week moving average after a midterm-year bear market, it explodes higher. It doesn't sit there, wait around, and go backtest the 50-week moving average. That's not something that normally happens. The only time it's really struggled once passing the 50-week, arguably, is in 2019, where it begrudgingly went higher until the recession arrived.

12:53 The bears could simply say, “That's great, but what if you still have to have price-based capitulation? What if things like the MVRV Z-score do have to reset before we get another bull run?” That's what's causing this tug of war. On one hand, the bulls point out that we didn't go to extreme levels to the upside, so why does it have to happen to the downside?

But the bears could say, “When the Fed raised rates in the past, look at what Bitcoin did after the first rate hike in March 2022, and look at what it did here in 2026. It popped up for a little bit and then fell off.” If you look at what it did in 2015, the low was already in, but Bitcoin did go down about 20% after the rate hike.

If you average those out and look at 2026, this is the bear case: after the rate hike, Bitcoin pops up for a few weeks, and then it has that drop into Q4 anyway. That would put you at about day 94, and we're currently on day 30. That would be 64 days from now, so you're looking at about mid-to-late December.

14:29 Mid-to-late December seems like a pretty long bear market, because that's not your typical year-long bear market. If you're looking at late December, that's closer to 60 weeks rather than 52 or 54. Looking at the last two bear markets, the last one was about 54 weeks, and the one before that was about 52 weeks.

As it stands right now, where the current low is, this bear market was about 38 weeks. That's more in line with what happened in 2019, where it was about 37 weeks. However, back then we had price-based capitulation.

If you go further back, there are longer bear markets. For instance, the bear market in 2013 actually lasted about 59 weeks. It's not like there are no prior Bitcoin bear markets that went on longer than a year. A 59-week bear market would put you in late November for a low if it were to take as long as it did in 2014. But the main difference between now and 2014 is that in 2014, Bitcoin wasn't above the 50-week moving average.

15:46 When you look at all of this, I think the most relevant view is this 2019 view, because that's the only time Bitcoin topped on apathy rather than euphoria. It's the only time quantitative tightening came to an end, Bitcoin topped just before QT ended, and then went into this digestion phase. Same thing.

It's the only time Bitcoin topped in that way in the same year the Fed cut rates three times. In 2019, there were three rate cuts. In 2025, there were three rate cuts.

Rate hikes versus bullish charts

16:31 What's happening now is different from what happened in 2019. In 2019, Bitcoin was struggling to break out, but the Fed was cutting rates. They just weren't cutting rates fast enough. Once they did cut rates fast enough, Bitcoin really broke out.

One way to visualize this is to look at Bitcoin and divide it by interest rates. I know that's kind of a weird thing to do, but if you look at what Bitcoin was doing in 2019 through that digestion phase, it was basically in a channel. If you overlay interest rates, it was after interest rates fell to the floor that Bitcoin broke out. You see that?

Now we're in a similar channel. When you look at it like this, Bitcoin is still around where the May high was when you divide by interest rates. The point is that this time they're not lowering rates; they're raising rates. They're doing the opposite of what they did in 2019, and the reason is inflation coming back.

There are issues today that we're having to deal with that we didn't have to deal with in 2019 and 2020. This was when they were lowering rates; this is raising rates. Back then, we went back and forth between these levels for a long time before there was a decision. I think that's what's making everyone so frustrated now. The bulls have every reason to be bullish based on the technical indicators alone. They do.

18:20 The bears have a point, but it's an uncomfortable point. It's, “Are we going to go all macro-bro on this rather than just listen to the chart?” I think there are competing forces.

When you look at Bitcoin's ROI after a rate hike in September of a midterm year, the last two times there was a rate hike in September of a midterm year, Bitcoin was flat for about 40 to 50 days afterward. Then the drop occurred after about day 50, and we're currently on day 30.

By the way, even if we followed what happened in 2022, that wouldn't even yield a new low for Bitcoin. It would actually be a higher low, even if we had a 20% drop.

There is a case on the bear side. It's simply that, after a rate hike, Bitcoin often rallies—at least out of the two examples we have—and following that, the market drops.

S&P 500 history after the first rate hike

19:30 Because we don't have a lot of history for Bitcoin, it might be worthwhile to look at the S&P, because there are a lot more examples. We're going to go after the first rate hike, not just after a rate hike in September of a midterm year, because that's kind of oddly specific.

If you look at what the S&P is doing in September 2026, then look at December 2020—2015—you can see it held for a bit and then dropped. If you look at March 2022, the S&P held for a bit and then had this bear market.

If you compare it to 1955, you had a little drop around now in the S&P, and then it went up. In 1958, there wasn't much of a drop, but there was initially, and then we went up. Again, not every case has to go down.

20:22 Continuing: July 1963 was mostly just up. In 1967, it was up for about 50 days, which aligns with what we saw with Bitcoin, and then there was a drop. We're currently on about day 30, so about 20 more days would be around when that would occur.

In 1968, it just dropped. In 1971, we dropped, held, then dropped further, and then had a rally. In 1973, mostly just down into the bear market. In 1977, it was a bear market for a little bit. In 1980, it just chopped around for a year. In 1984, it rallied for a bit, then dropped into days 80, 90, et cetera, and then had another rally.

In 1987, that's kind of a scary one, where it holds and then has a massive drop. In 1994, it holds and then drops. In 1997, it drops initially and then goes up. That's what I was thinking would happen. I thought the S&P would have a drop right after the rate hike and then go up, but instead it's held on.

In 1999, it went up, dropped, and then had one final rally before the dot-com boom—or the bust. Then you have June 2004, where it dropped almost immediately.

21:40 If you average all of them, on average the S&P drops following a rate hike. It often bottoms around day 45, then retests those lows around day 70. When you look at it like that, that was my rationale for saying the most likely outcome would be for the S&P to drop after the rate hike. That would allow that low in Q4 to occur for Bitcoin, and then we would continue on like we normally do. It was more so looking at what happens on average.

While there are other extremes—extremes where you have a two-to-three-year bear market, extremes where we just go up—I have to base my decisions, or at least what I communicate the most, on what normally happens on average.

22:29 I do that, and I'd say about 70% of the time it works out and people are happy. About 30% of the time it doesn't, and that's where people get upset. But you have to remember there's not a one-size-fits-all for these things. Sometimes the market goes up, sometimes it goes down.

Yes, I'm saying it could go up or down, but the point is: what does it do on average after certain outcomes? Those are the outcomes I tend to focus a little more on. The bears are going to say, “From this perspective, you could have argued why it would have happened.”

Cycle timing and the risk of a fast false-breakout unwind

23:09 The bulls don't have this yet, but they could have it relatively soon: the ROI-after-the-low chart in midterm years. Normally, Bitcoin bottoms—out of the last two times—on about day 1432 and 1436. We're currently on day 1425, so we're only about 10 days away from where the last two cycles ended up bottoming.

Right now, you could argue this is on the bear side. But in not too much longer, this would be something the bulls would point to as a bull case: if there was going to be a low, it should occur really soon. If it doesn't happen by the end of October, that would be another point for the bulls.

24:00 When you look at this chart through a different lens—through the 2019 lens, for example—the only way that chart could still favor the bears and then still become a point for the bulls is if you have a pandemic-like crash. That's the only way. Someone's got to be wrong if there's not a—or a 2015-like crash.

What I mean is, Bitcoin is at a really critical level right now. I would argue that if Bitcoin were to give up $83K on the weekly timeframe after a week or two close, a lot of people would completely question this entire breakout. If they do, this whole thing probably doesn't unwind over many months. It probably unwinds like that.

Everyone who was relying on the technical indicators—the RSI, MACD, golden cross, all that stuff—all of it becomes pointless. You have a fake breakout to convince everyone, and then it just goes down.

25:19 If Bitcoin were to give up this level, I think it unwinds almost immediately. Then the 2019 view comes into play, where you have a rally, it stalls for a couple of weeks, and then it collapses within two to three weeks.

Same thing in 2015. After it turned out this was a false breakout, it all collapsed within about two weeks. When you had your first close back below—well below—it was only two more weeks after that when the actual low occurred. It was a sweep of the low that had happened previously.

That's why I'm saying, if this is a fake breakout, it unwinds almost immediately. If that happened, this chart ends up forming a low just like it always does, but it doesn't necessarily need to be a much lower low.

26:27 This is where it's tricky, because I feel like we're coming up to a point where a decision is going to be made. Arguably, it could happen as early as this weekend. A lot of indicators say that as early as this weekend, we could start to see the finality of this discussion we've been going back and forth on.

As I've said before, if you close below these levels, that would start to put me more in the camp that it's a fakeout. I'm giving myself that as an invalidation for either view, because I don't want to be super deterministic about which way. I already wasn't expecting this move to begin with.

It's only natural, if you're not expecting a move, to go to the rooftop and scream that it's the market that's wrong and not you. But it's probably better for our egos to say, “Actually, I was wrong, not the market.” So if it does accept back below—

The 10-year yield and midterm seasonality

UNKNOWN: 27:46.14 Then.

Speaker 1: 27:46.66 Then the cycle just plays out like it always has, theoretically speaking.

There are a few more things I want to talk about. One of the bear cases is that the 10-year yield is starting to struggle a little bit. You might say, “Isn't that a good thing?” It would make sense that it would be. But the problem is, if you overlay Bitcoin onto the chart, the major lows that occurred for Bitcoin this year—in the February–March timeframe and the June–July timeframe—actually occurred while the 10-year was going down, not up. In fact, while the 10-year was going up, Bitcoin was generally doing okay.

28:39 The reason this poses a potential problem is that if the 10-year were to drop, who's to say it's not because of a growth scare, and therefore Bitcoin ends up completing the bear market just as it always has?

What I look at with that is seasonality. Again, it doesn't always work. Sometimes it works, sometimes it doesn't. But if you look at the 10-year yield in 2026 and compare it to 2018, we're potentially in a topping process for the 10-year yield.

What normally happens, at least if you look at 2018 and 2022, is that the 10-year forms a high in October or November. If the high is in October, it then forms a slightly lower high in November, or it could be a slightly higher high around the midterms. I don't know—think about it as around the midterms. But after the midterms, the 10-year typically drops.

29:44 What you'll notice for Bitcoin is that all prior lows actually happened after the midterms, when the 10-year yield was dropping in the last two midterm years. In the last cycle, the final drop was right around the midterms. In 2018, the final drop occurred right after the midterms. In 2014, the final drop occurred right after the midterms, which aligns with when the 10-year yield was going down in late 2018 and late 2022.

If the 10-year yield is destined to go down after the midterms, perhaps Bitcoin plays out just like it always has.

Equities, Fed expectations, and metals

30:34 I was trying to think: what would cause this to happen? The common saying is that the solution to high rates is high rates. If you have high rates long enough, it's going to affect a lot of companies.

I know the S&P is essentially pinned to prior all-time highs. The Nasdaq is starting to show a little weakness. The Dow Jones has shown some strength recently, arguably because rates have gone down a little bit. But there are times where the Dow drops first, rebounds, then drops more. In fact, that's what happened in 2024. It's also what happened in 2018, I believe. Actually, no, it dropped a little, rallied to all-time highs, and then—sorry, here it dropped, rallied back up, and then dropped more. It's not like it can't drop again.

If you look at the Russell, it's just been getting hammered. It's been down week after week, and I'm starting to wonder: is this the destination for the Russell?

31:33 Right now, we have a 10-year yield that's down after a hot CPI report and a hot PPI report. To me, that's a sign yields are in the topping process. When you have a bad print and yields come down, is that not a sign that perhaps the market is starting to worry a little more about growth than inflation?

What could cause the 10-year to go back up? Remember, a lot of times the 10-year drops like it does now, but then it bounces back up around the midterms.

32:20 If you look at rate-hike expectations, the odds of a rate hike now in October are 85%. Eighty-five percent.

If they don't raise rates in October because of some, “We're going into the midterms; let's not raise rates, let's wait until December”—by the way, in 2018 they raised rates in September and December and skipped the meeting around the midterms.

The market thinks the Fed should raise rates. There's a disagreement about whether this is what the market thinks the Fed should do or what the market thinks the Fed will do. But according to the market, there's an 85% chance of a rate hike.

Imagine if they don't raise rates. The 10-year yield likely bounces back up to the highs because the market starts to get concerned: will the Fed actually do what they need to do?

33:21 If the 10-year yield bounces back up, things like the Russell, which has been dropping, and the Dow Jones would start to come back down. The Russell's already been going down, but the Dow Jones would likely start to struggle again as well, because it more so benefits from rates coming down, whereas the S&P hasn't been nearly as affected by this.

There's a strong consideration that if the Fed doesn't raise rates, perhaps this bounces back up, spooks everyone, comes down after the midterms, gives us a recession scare, and then hopefully continues back up after that. Hopefully there's not actually an immediate recession.

The bear case would be that Bitcoin ends up dropping after that. What normally happens is that metals bottom around the time yields top.

34:26 If you look at gold, in 2018—or sorry, in 2022—it bottomed in the October-to-early-November timeframe, when yields were topping. In 2018, gold bottomed in the August-to-October timeframe, again when yields were topping. Gold bottomed when yields topped, but Bitcoin bottomed when yields were going down. That's the bear case.

Why a failed breakout could have lasting consequences

35:06 Here's the problem with all that, and this is why I say you almost have to be careful what you wish for. I've struggled with this too. If we do break down, this is a fakeout, and it completely fools all the bulls, I have to ask myself: is that really what I want at this point?

The problem is that all the indicators that have fired off at the end of other bear markets would be completely null and void. Part of it with Bitcoin is just believing that the same thing that has happened is going to keep happening. If that were to fail, I would actually be concerned that it could kill the market for years, not just a few months.

Imagine Bitcoin comes back down to $60K and then bounces back up. Everyone who bought up here, who believed in all those indicators, is probably going to be selling pressure now. Who's to say it couldn't come back up, then drop, and we go down in 2027? That's not my base case, but it is a consideration.

36:27 The only reason I bring it up—and I've shown you this chart a couple of times now—is the silver chart after the 2011 silver rally. You had a move up, came down, then had a big move up above that, which was a fakeout. You then came down.

Imagine it's like your February low for Bitcoin, your July low, and your Q4 low. Then you go back up, and it's like, “Surely now we can break through.” Then it ends up being a lower high, you break down, and all the on-chain indicators finally reset. But that kills the market for years.

I think the reason it kills the market for years is that if you have a fakeout where everyone gets all bulled up, calling for new highs, and it fails, all those guys are going to be selling pressure when it comes back up. All the indicators they put their faith in now no longer work.

37:28 That's why I'm saying it's a “be careful what you wish for” type thing. If that's how it plays out—if that's a fakeout, it comes back down, we print a higher low and go back up—who's to say this long-awaited recession won't finally kick in?

Think about it like this: do you remember how a lot of people were waiting for alt season last cycle and it never happened? The reason it never happened is that when it would normally occur, in Q4 of the post-halving year, the Bitcoin bear market started.

Had the bear market not started, we probably would have had an alt season, because Bitcoin would have had a euphoric rally, gone to $200K, and there would have been that rotation. Instead, the Bitcoin bear market started. That made it so the higher-risk assets, like altcoins, were unable to catch a bid because the bear market had started.

38:42 If you think about a risk curve, altcoins are way over here. You have alts up here; they're really high risk. Below that, you've got Bitcoin. Think about it like that. Alts didn't get their bull-market rally at the end because Bitcoin went into a bear market.

Recession signals and the risk dashboard

39:06 That's where you have to start thinking about the S&P 500. People have been calling for a recession for years. The reality is that no one really knows when it's going to happen.

If you look at initial claims, they're relatively low. You can't look at initial claims and say you're in a recession right now, because historically this isn't recessionary territory. I even have a recession-risk dashboard that shows it's kind of low right now.

Given that we have the Anthropic IPO and the OpenAI IPO, it would seem kind of strange if we go into a recession before that. It would make more sense to me that it would happen after that, and we haven't had either of those yet.

39:56 If you look at these, a lot of them aren't really going to show concern until after stocks start to drop, because stocks move first, then it shows up in the economy. The only one designed to show a little more concern first is interest-rate risk. If you look at the spread on the 10-year and the three-month, it's this metric that starts to show up first. It's been going up recently.

Not a lot—it's not all the way up at one—but it has been going up, and it makes sense when you think about what's happened with yields recently.

The reason this is the only one I allow to really go up before there's more of a correction is that I want a signal. The problem is, if you allow it to do that, there are going to be a lot of false positives.

40:47 For instance, in the 1990s this went all the way up, then dropped. There was a drop in the stock market, but then we went marginally higher before the bear market actually began. There are other times as well where this thing spikes. It also spiked in 1996, and there was no recession.

But all prior recessions saw this thing spiking, and it tends to spike before the other things. That's been going up recently, so it is a little concerning. Again, with initial claims where they are, it's not really recession territory.

The problem is that it's lower asset prices that lead to recession territory. It's not recession territory that leads to lower asset prices—at least that's not how the feedback loop begins. It might be what happens eventually, but it's not how it begins.

The S&P, the dot-com comparison, and AI-cycle risks

41:48 I was thinking: with the S&P, is it possible we're near a top—a macro top rather than a local top? I would like to believe that with these major IPOs coming up, there could still be another move for the S&P.

I was looking at the '90s, and I've done this before. You have to remember that fractals don't often play out. They tend not to, especially when you're talking about the down phase of it. But just to put it on your radar, what would stop a Bitcoin bull market would be an S&P bear market.

42:28 If you look at what the S&P did in the '90s with the dot-com boom and overlay it onto what it's done since the AI boom, a lot of these patterns line up. You have this little correction there, and the correction in late 2024–2025, which we called for back then. In late 2024, I said we were going to have about a 20% drop.

That was based on the S&P-divided-by-M2 chart. When we reached this level, I said, “All right, it's time for a 20% drop,” because in the same move in the 1990s, we had this 20% drop. In fact, it played out the same way: a 20% drop, then a rally to all-time highs.

After rallying up, we had another drop about right there, which aligns right there. It's the same thing. The question is: are we just repeating this?

43:30 What's interesting about this fractal is that the months are flipped. Back then, the lows leading into it were in October. If you look at the '90s, I believe it was October—yes, October 1997, October 1998, then October 1999, and the top was in March. It was October, October, October, March.

This time, the first low was October, but the next one was March, and the one after that was March. Right now, we're in October. October and March seem to be periods for the S&P where it's a turnaround point. Either March or October seem to mark these levels.

What's interesting is that the S&P could still stall out, drop into Q4, get everyone to believe that's the four-year-cycle low, and then we go back up into the Anthropic IPO and OpenAI IPO. Everyone's ready for the bull market, and then the bear market finally hits.

44:54 I'm honestly not a big believer in these fractals. I've done this long enough to know that anytime you overlay a fractal onto a chart like this, it's not going to play out. It's just not. I'm only showing this not to say it's what's going to happen, but to say these are things that could stop a Bitcoin bull market—if the AI bubble were to pop, if you will.

I don't think we're in the same type of bubble territory now that we were back then. If you look at the S&P divided by gold, the S&P's valuation against gold is nowhere near what it was in the dot-com era. Back then, the ratio was around five to six. Today, it's between one and two.

We're at a level where there's resistance, as there was in 1973 and also here in 2015–2016, but it's not as frothy as it was during the dot-com crash.

The least desirable path and elevated uncertainty

46:00 When I think, “What if the bears are right and we go down?” my concern would be that it might kill the market for years if we just go back to, say, $60K and then bounce back up. You're rinsing everyone out. You're wrecking the bears, wrecking the bulls, going back and forth. Eventually, people are going to give up and become apathetic about the whole thing. It's one of those things where you've got to be careful what you wish for.

Of course, on the bull side, if this holds, what likely happens is that it just goes up into the recession, until the recession actually arrives—whether it's 2027, 2028, 2029, who really knows?

I think that's what makes it particularly difficult. If you are buying, you know what the potential headwind is. How long is it going to take for all this uncertainty to really start to affect markets? Markets generally don't like uncertainty.

47:09 The World Uncertainty Index is pretty high right now. It's been high ever since the new administration, ever since Trump took office and implemented tariffs. All the different headlines are obviously going to introduce uncertainty. Markets are still at all-time highs, but oftentimes uncertainty isn't great for markets.

If you look at the Economic Policy Uncertainty Index, that's also been more elevated than it normally is.

Revisiting the forecast and respecting the closes

47:46 This is what makes it so difficult. The pure technical indicators for Bitcoin are bullish: the RSI, the MACD, the golden cross, being above the 50-week moving average. That's all bullish, and it's hard to ignore.

The bearish view is that a lot of the on-chain stuff never actually reset. In 2019, we went down, didn't reset, then went up and convinced everyone we were back in business. Then the recession arrived, and we still triggered all the on-chain indicators anyway. It all got triggered regardless because the recession finally arrived.

48:35 That's what makes it difficult. I thought the most likely outcome for Bitcoin going into this was that the rate hike would cause Bitcoin to drop, go below the realized price—which is around $53K or so—and then have a rally afterward. That's what I thought, because I assumed that when we had a rate hike, it would spook the market initially, like it does on average.

Again, the S&P 500, on average, after—sorry, I need to look at the right thing—after a rate hike, on average the S&P goes down.

49:28 I thought, “Oh, I'm very smart. We're going to get a rate hike, the S&P is going to drop, and it looks like it's going to bottom around the mid-to-end part of Q4. That's going to lead to the four-year-cycle low for Bitcoin. Everyone's going to freak out and call for a recession, but instead we're going to get a lot more rate hikes, and we're just going to go up for another year and a half.” That was what I was thinking.

The reason was that in the '90s, when the Fed started raising rates again, they had to raise rates—look, it was a complete mess back then. Imagine if we have to deal with this this time. In the '90s, they lowered rates and then raised rates 25 basis points.

I was thinking we were in this part, right there. We get a rate hike, the S&P gets a drop, people freak out and think it's a recession, but then we go up for another couple of years. Markets go like this, we eventually get a few rate cuts, and maybe that leads to the final phase of the bull market. Maybe that's when people finally get their long-awaited alt season. Then we raise rates again, and it kills the market. That's what I was somewhat basing it on.

50:51 But the market basically ripped me a new one when we got the rate hike. Instead of the S&P dropping, it went up. That's where I got a little off base, and that's why I don't want to be overly deterministic here.

We're coming up on a pretty important time for Bitcoin. If Bitcoin closes below these levels, I would more so defer toward the fakeout move in 2015 or 2020. That's what I would defer to.

I'm not saying it's a pandemic. What I'm saying is that when you have a move that convinces everyone the bull market is back on, like in 2020 and 2015, if you give that back, it unwinds immediately. It doesn't take six months to unwind. It unwinds overnight, practically, because everyone who was bullish now realizes the bear market isn't over.

52:04 That's why I'm saying: respect the closes. Respect the closes. As long as we're closing up here, the bulls can simply say things are fine. If you close below, that's where it becomes a problem, and that's where you would want to lean into the bear narrative a lot more.

Total market cap and how quickly a decision could arrive

52:25 We're going to look at another thing: the daily timeframe for Bitcoin. Bitcoin right now is doing something very similar to what it did after the May high. I'll show you what I mean. Actually, it might be a little better to look at total market cap, because I think that's a little more relevant here.

Look at what total market cap did after the May high. It came down, swept it there—same thing—rallied back up, came back down again, closed below it just like it did over here, and then rallied for about three to four days. We're currently in day two of that. You see how it did that? Then the next week, it unwound.

53:17 Let's say we're right here, and the bears are right. It would only take 12 days to basically print the low. Only 12 days.

If you look at that ROI chart we were talking about—the ROI after the cycle bottom, going out to the next bottom—we're currently on day 1425. Last cycle bottomed on 1436. That's 11 days from now.

That's why I'm saying that if total market cap repeats this, the low is unlikely to be six months from now. It would be immediate. It would happen so quickly that I'm almost not going to have time to come on here and talk about it very much, because it would happen practically overnight.

54:22 I've said this for a long time: bear markets make fools of both bulls and bears. For most of the bear market, Bitcoin actually goes up. That's why bears look like idiots in bear markets. Bitcoin generally likes to trend higher, then it breaks down very quickly. It slowly trends up for a long time before breaking down.

Look at this cycle. When it drops, it drops fairly quickly. Then it spends months trending up, drops quickly, months trending up, and then drops quickly. That's why it's so hard to be a bear in a bear market: you spend the entire bear market thinking you're wrong. There are only 10 or 12 days every few months where you feel like a genius and say, “See, I told you so.” By the time you say “I told you so,” that's the next low. Then you spend the next three months wishing you hadn't said that.

55:22 If you're looking at total market cap, this is why I think the uncertainty is about to unwind. We're going to make a decision here. We're either going to break back up or we're not, and I think it's going to happen really soon.

Total market cap has swept the low, just like it did over here previously. But look at what it did in May: it also swept the low. It swept the low, rallied around the 50-day, and then sold off. Just because it sold off back then doesn't mean it has to sell off today. What I'm saying is, if it does sell off, recognize it's going to be over before you can blink.

56:17 If it rallies, it'll probably be over before you can blink too, just like over here. You get about a week of rally, then spend another two months consolidating. That's what happened in 2019. Bitcoin just stair-stepped up for months.

If you don't know what I'm talking about, go back to 2019 on the Bitcoin chart and zoom in. That's what Bitcoin did. It stair-stepped upward: put in a high, held it as support, and slowly did that for a while. Eventually it swept below it, rallied, and then it was over quickly. Look how quickly it became over once that final rally ended. It was over in two to three weeks.

In 2015, when the final rally ended and we broke back down below the 50-day moving average, it was over in 10 days.

Accumulation strategy, macro concerns, and near-term conditions

57:32 It's hard because I see the bull case. Some people think I'm blind to it, that I can't understand there's an RSI that looks good, the golden cross, and that we're above the—I get all that.

That's why I said back in July that the accumulation phase had begun. I clearly said that, and I've said in practically every video since that my strategy for Bitcoin is simply to DCA throughout the second half of the midterm year. That's what I've normally done. That's what I did in 2018 and 2022. That's what I said I'm going to do in 2026, because I know how hard it is to navigate the latter part of the midterm year.

58:12 This is where we are. I hope you can at least leave this video understanding why there's so much uncertainty. If you're a bull, you're probably like, “What is Ben talking about? Why is he ignoring these indicators?” I'm not. I recognize them.

That's why, back in August, I said, “I think there's a 65% chance the low is ahead of us and 35% that it's behind us.” I still gave some probability to the low being in. It just wasn't my base case. Maybe it should have been my base case, but it wasn't back then. I didn't say it couldn't be in. I said it wasn't my base case.

59:00 Here we are. I completely understand the bull case. You don't have to convince me. I get it. I also understand the bear case from a more macro perspective.

By the way, in 2019, when we were breaking out, there weren't a lot of people talking about it being a false breakout and heading back down. You couldn't predict the pandemic, and I'm not suggesting we're about to have a pandemic. What I am saying is that there are other concerning things.

One is simply the price of oil. Oil keeps going up, and who knows when it's ever going to stop? I imagine that's weighing on people. I think inflation is too. If you look at the producer price index, it just had that big move up. I think that's weighing because it means rates are going to start going higher.

It doesn't mean you can't have a bull market. But for crypto, if rates are going back up and becoming more restrictive, you should expect Bitcoin dominance to go back up, like it is. As the market starts to realize we need rate hikes, not rate cuts, the dollar generally wants to go higher. That's at least my interpretation of all this.

1:00:21 I hope you recognize why it's hard to make videos that I know 100,000 people are going to see, because people want answers. There's a common saying: there's a time to go long, a time to go short, and a time to go fishing.

I don't fish. I've actually never been fishing in my entire life. I like to play chess. There's a time to go long, a time to go short, and, for me, a time to go play chess. I'm playing chess every day, waiting to see what happens, basically waiting to see who's right. Are the bulls right or the bears right?

I was way more convinced the bears were right a few weeks ago than I am now with these breakouts. Way more convinced back then.

1:01:05 Be willing to pivot very quickly on whether this holds or not. If it holds, we should be testing these highs probably before the end of the month. Bitcoin can't just hang out down here without people starting to lose faith.

If this holds, if the 50-day holds, we should be at new local highs before the end of the month. If it doesn't hold, we should be heading back down to the bottom of the range really soon. This is what you've got to watch: these levels right here.

Ethereum and the broader crypto market

1:01:51 Certain things are already below these levels. Ethereum has been struggling a lot more. TOTAL2—I think TOTAL3 has been a little stronger. It's actually below the 50-day, but there are times TOTAL3 gets below it and recovers without Bitcoin going below it, so don't put too much faith in that.

Same thing with TOTAL2. It's already below it. TOTAL is the one I think to track. Really, Bitcoin right now looks stronger at these levels than it did in May. It's actually above the 50-day right now, several percent above it, whereas in May it was just right on the line after that drop. I'm basically saying that this wick down here is similar to this one.

Decision time is coming very soon.

Bitcoin against silver and gold: the 1974 comparison

1:02:45 One more thing. I know this video is kind of short right now, so let me make it even longer: the Bitcoin–silver valuation and the Bitcoin–gold valuation.

This is tricky. I can't sit here on the Bitcoin–silver valuation and call for much lower than it already went, because I was already under the impression that just sweeping the low would be good enough. Against silver, I would say Bitcoin probably has bottomed for a long time.

The problem is against gold. Against gold, I don't know that it has. I really don't know. When you have ranges like this, normally you eventually test them. Even though you don't want to, you eventually test them.

1:03:38 It's no different from the ETH–Bitcoin chart, the ETH market cap divided by Bitcoin market cap chart. I spent years telling people this was heading back down to the floor, and it eventually did. It took a long time, but eventually it did.

Same thing with Solana. I spent years telling people this was heading back down to the floor. Guess what? It hasn't yet. And I will continue to spend years telling you it probably eventually will. I might be wrong. There are a few altcoins that go against what I think. But it's hard to look at these charts and not assume they eventually come back down to the range lows. People didn't think it would happen with ETH, and it did. I think it'll happen with Solana too.

1:04:26 When you look at the Bitcoin–gold valuation, that was my base case when I said it a few weeks ago. Then Bitcoin just kept going up.

You might say, “How is this possible? How could Bitcoin have bottomed against silver but not against gold?” That's a great question, but I have a great answer for it: in 1974—that's probably exactly what you thought I was going to say next—in 1974, silver had a similar move. It topped in the early part, around February 1974, dropped, and stayed at the lows for a couple of years before going back up.

Gold put in a high in 1974, then put in a higher high in late 1974, early 1975. That's exactly how it could happen.

1:05:24 What if gold bottoms soon because yields are topping, and gold starts heading back up? Remember, in 1974, when gold went back up, silver went up, but nowhere near the highs. It consolidated for a while.

If you zoom out and look at the bar pattern from 1974 to silver's next top, I'm saying: what if this is a similar type of move? Maybe silver rallies soon as well—I could see it going back up into the mid-70s—but what if it consolidates and doesn't get another big move until the next midterm year?

During that period in 1974, gold dropped, but then eventually went back up.

1:06:22 If you don't know what I'm talking about or are having a hard time visualizing it, look at the year-to-date ROI of gold in 2026 and 1974. It rallied, dropped, then rallied to new highs before the end of the year.

But in that same year, when you look at silver—we don't have it on here. Of course, we only go back to 1976. But you can imagine; we showed it on this chart. Silver put in a high, and it was just a lower high in December while gold was going to new all-time highs.

That's a way this could all make sense. The Bitcoin–gold valuation could go back down here, but the Bitcoin–silver valuation has already bottomed, because maybe silver doesn't participate in the next rally to new highs like gold does.

The Bitcoin–gold ratio of 10

1:07:31 That's the way I think this could all make sense: Bitcoin bottomed against silver, but not yet against gold. What's interesting is that this ratio of 10 is where it bottomed back over here.

Imagine gold ends up being that ratio. You can do the math. If gold is $5K, that puts Bitcoin at $50K. If gold is $6K, that puts Bitcoin at $60K. You can see what Bitcoin's price would be if the Bitcoin–gold valuation hits 10. It's just 10 times.

If the S&P—or sorry, if gold—is $7,000, that's Bitcoin at $70,000. If gold is $4,000, that's Bitcoin at $40,000.

1:08:27 That's the thing I'm watching. You have this move, and it's going up. If Bitcoin is a fakeout and gold bottoms while Bitcoin is topping, this could quickly come back down, and then you start back up, just like it did with silver. With silver, it already completely unwound. For gold, it hasn't completely unwound because it never swept the low, but it did for silver.

Final scenarios and closing remarks

1:08:53 That's a lot. I know when I do these videos, a lot of people say, “You're saying it could go up or down.” Yes, but I hope some of you can appreciate the intricacies of all this and why it's so complicated to say exactly what's going to happen, when so much of it depends on things completely outside my control.

If Trump comes out tomorrow and says the war on Iran is over, then yields probably plummet and risk assets go up. Who knows what's going to happen? That's why there's a lot of uncertainty. That's why you defer to the chart and say, “If this is a fakeout, the chart will tell me.”

1:09:38 If the chart doesn't tell me within the next week or two, more of the bear indicators are going to become bull indicators. People who are bearish because it's Q4 are going to turn bullish if this doesn't break down soon.

That's why where we are right now is so critical, and why I keep thinking, “Be careful what you wish for.” As much as it would have made sense to me for Bitcoin to go down in Q4, it still very much could. If it does, it might really affect the psyche of people who were in this breakout. They would probably become sellers in a few months if we rally back up.

1:10:16 If we drop down and put in a new low by the end of the year, just sign me up for the bull market in 2027. But if we just drop back down for a higher low and then come back up, we'll cross that bridge if it happens. Hopefully that's not what happens. Out of all three scenarios, that's what I would like the least.

If you had to tell me there are three scenarios: option one is we bounce here and go up. Option two is we break to a new low and then go up. Option three is we break down, print a higher low, and go up. The option I like the least is this one, because it's the most likely to lead to a longer downturn that would last a lot longer.

With the other two outcomes, I think you could just say this time's not different. It's more or less the same stuff. Either of these outcomes could theoretically end the same way.

1:11:16 Those are my views. Thank you for tuning in. Subscribe and give the video a thumbs up. I know these videos are relatively short, so my apologies for that. We'll try to make the next one longer. That's what I think.

If you want to come talk about this at the conference, we have the Investing Through the Cycles conference coming up. I'm going to be there. We'll also have a lot of other people there who are going to have their own opinions. Learn from them, because, as you know, I'm certainly not always right.

In fact, I had a pretty good run for a little while. Recently, I think I've taken a couple of hits. But that's normal in markets. You've just got to get back on your feet and try to recover from that.

Thank you for being here. Subscribe, give the video a thumbs up, and I'll see you next time. Bye.