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James Check explains how Bitcoin derivatives, particularly from institutions like BlackRock, could disrupt Bitcoin’s traditional four-year cycles.
In this episode of TFTC, James Check discusses the growing impact of Bitcoin derivatives on price stability and market cycles, particularly noting how the increased trading of options may disrupt Bitcoin’s historical four-year cycle by reducing volatility. He highlights that institutional investors, focused on long-term gains, are less reactive to daily price shifts, instead assessing broader trends—a shift he sees as vital to Bitcoin’s maturity as an asset. Check explains his concept of "chop solidation," where periods of low price movement clear out over-leveraged retail investors, enabling institutions to accumulate Bitcoin at favorable prices. The approval of Bitcoin options for ETFs provides these institutions with essential tools to hedge risk, making it easier to allocate larger capital to Bitcoin while managing volatility. Check believes this setup could drive Bitcoin to new highs as institutional interest deepens.
James Check presents a vision of Bitcoin's evolution as institutional finance reshapes its market dynamics, with derivatives like options and futures playing a crucial role. While Bitcoin's traditional cycles may become less predictable, its appeal as a hedge against inflation and global uncertainty remains. The shift from a retail-driven to an institutionally dominated market, enabled by Bitcoin derivatives for ETFs, allows big investors to hedge risk, potentially stabilizing Bitcoin at higher price levels. Check sees this "chop solidation" phase as a sign of maturity, positioning Bitcoin to redefine traditional financial models as a stable, long-term asset class.
0:00 - Intro
0:46 - Explaining chopsolidation and institutional reaction
12:17 - Options and other derivatives
18:22 - Bitkey
19:17 - A new breed of hodler
26:46 - Volatility
34:29 - Comparing to previous cycles
40:20 - How would a major crisis affect price?
46:11 - Dispassionate decision-making
49:27 - Will they successfully demonize bitcoin?
56:03 - Institutional alliance and gold
1:07:02 - How high
1:13:02 - James's newsletter
(00:00) [Music] you actually need derivatives for us to get big ey James Check specializes in studying the Bitcoin economy and has made significant contributions to the field of onchain analysis he accurately predicted this long stretch of consolidation and has formulated new theories on how the introduction of more Bitcoin derivatives will affect the market many of which he will share today what are the options going to do as it pertains to to price and more importantly volatility moving forward there is no question the volatility
(00:27) profile will evolve and change with options I think Cycles the idea of Cycles is probably breaking down the four year may not be as clearcut as it used to be so I'm certainly running on that assumption which side of the market do you think blows up first the Longs and the shorts was that a bull trap that we just saw last night are we bull trapped right now James I mean everyone if you if you look at the sentiment on Twitter right the first daily red candle after you know it's it's the biggest monthly bull
(00:56) flag I've ever seen everyone's looking at the hourly shop being like holy [ __ ] it's over I I thought we were going to 75k last night yeah it's funny isn't it like I mean certainly a lesson that I've learned from markets in my time is they love to coax you into like it's an emotional thing and people don't realize you're trading against yourself right and even if you're not trading our emotions live on the daily chart CU that's what we see that's what we feel
(01:21) but at the end of the day like you have to look at the big picture and I know it's a bored old Trope but zooming out is actually a legitimate thing because if you're one of these big institutional guys they don't care about the hourly chart their traders who do execution worry about the hourly chart for most people right these big institutions they're looking at the monthly and the weekly and saying is this thing an uptrend and I mean it's it's hard to argue it's a downtrend no it's funny
(01:42) here in the states at least it's typically like a Sunday night pump fake where it's 8:00 p.m. on the East Coast Sunday night football's on gets like halftime the price is running then by the time you go to bed it's like ah looks like this is dead but let's zoom out I mean and I I I was telling you before we hit record I've been reading your newsletter pretty consistently since the last time that we spoke and I'll let you say but what what is the latest with chop solidation is it over you mentioned the monthly bull flag
(02:17) what is a bull flag yeah for those listeners who aren't well versed in ta yeah AB absolutely so so I mean the chop solidation been my thesis more or less for the whole time I started writing news that mid April right so we've hit the all-time high we've pulled back a bit and that's when we actually started writing and I think it would have been about early may we started writing about chop solidation and the the thesis was close your eyes for 6 months and will probably be at the exact same price I'm
(02:42) pretty sure when I wrote that piece was like 63k close your eyes for 6 months bulls and bears will get liquidated everyone will be excited and get blown up and 6 months lat you'll be the same price and they'll be just the bodies of Traders all the way to get there and I can't even begin to tell you how many Twitter posts I've seen of traders who blew up their accounts it's like lost millions in this chop and the reason that I had this thesis is markets just can't go in a straight line right if you
(03:07) spend enough time in this space you realize you get Trends and then you get Corrections and consolidations and we basically trended up for 18 months right there was a pause kind of halfway through last year but for the most part since FTX it's just been uninterrupted up only with very very small draw Downs right less than 20% Which Bitcoin normally does like a 30 on a regular basis so and even on a closing B we only got like 26% uh through this whole chop solidation process so it was really just about like recharging the
(03:36) gas tank but it wasn't recharging the gas tank on like a small daily time frame on the monthly scale we were tired right you go up for 18 months 6 months of sideways is about right we end up getting seven months but you know what this has really done is just built this like Foundation this reaccumulation pattern I mean you I've seen many people talk about it Bitcoin has this like bare Market floor and then it goes through a bit of recovery phase and then there's a reaccumulation period and 2019 was by
(04:05) far the closest analog to this period but the difference with 2019 was much more aggressive to the downside we got really really nasty Wicks really bad sell-offs um you know it was down like 50 60% if you include Co but this was like down 26 we had one wick on the Yen carer trade to 32 but like for the most part it's just been chopping sideways and if you look on a monthly chart it's just like red green red green bars just stack next to each other it's beautiful and what do you think the institutions I
(04:37) mean you mentioned them earlier they're they're looking at this zoomed out chart and obviously we had pretty massive inflows into the Bitcoin ETFs last couple of weeks how how do you think they've been viewing this summer of chop yeah so I think um we spoke about this I think the last time I was on this this carry trade right this and and I do believe that's still a big component of it and there's still a lot of U misunderstanding about derivatives just in enal but this whole carry trade the
(05:02) idea of the carry trade is that there's already a premium in the CME Futures which means there is a longside bid uh so in order to get that premium in the first place people are just generally you know accumulating and buying when they do the carry trade they have to buy the ETF and because Bitcoin is fixed Supply it's still taking coins off the market right they they're not available for sale if they're locked in an ETF and also even if they got a short position on the derivatives so generally speaking
(05:29) I think for for the institution they're seeing an asset that is volatile although a little bit less volatile right so that's going to allow some more institutions to come in it's bigger in size right yes we've been chopping around for seven months we've been chopping around for seven months between like 55 and 70k right this is not 6K in 7K we're talking about a whole order of magnitude bigger and it's just chopping sideways right and if you think about the market cap we have proven that we
(05:53) belong up here at a trillion dollars right for the second time the first time we attempted that in 2021 we got rejected which tried it again we got nastily rejected in uh the 2022 bear and here we are for 7 months barely 20% draw down just chopping around at a trillion and a bit um a trillion in change now these institutions if they look at those big scale charts they're just seeing an asset that has holders who aren't willing to sell right and that's by and large what we've seen I mean there's
(06:22) definitely been sells side there's been kind of two different buckets of sell side that I've seen there has been long-term holders and OG selling this is just a real thing and you can see it there's like coins this is the beautiful thing about onchain data I can see that coins are taking profit meaning they were acquired at a very cheap price and now they're moving and they were old and you can't fabricate that right the blockchain just is what it is the the utxos are either old or they're not and
(06:46) they're in profit or they're not so we can see lots of those coins coming back into the market and in the last like month uh really towards the as we come into August and the tail end of September that OG like long-term hold of selling really tap it off like markedly almost just went to zero and since then we've started creeping higher there's also been a whole lot of these big buckets right German government US Government Mount GX is distributed like these are huge pools of Supply that were
(07:14) moved redistributed and uh these big institutions right I mean we saw with the German government the market sold off in anticipation right the actual selling of when the market traded lower before the German government sold most of their supply as they sold like 48 8,000 Bitcoin the market actually rallied through it who is there absorbing 48,000 Bitcoin in like a matter of one it was like I think it was one week it it has to be just big money right there's there's simply not enough hodlers up here at a trillion dollars to
(07:44) do that so there there's there's money that's been patiently allowing the market to sell to it it's not hitting the market bid it's just saying here's my price you come to me sell to me thank you very much and when you consider the macroeconomic landscape too you have to imagine some of these larger institutional types are doing exactly what you just described because you you look at the FED lowered rates by 50 bips and you had the 10 year and the 30-year running running higher the yield uh
(08:15) which is counterintuitive to what you would expect with the the FED lowering rates you have Stan drucken Miller coming out and putting 20% of his family office portfolio short bonds US Treasury bonds specifically which is a big bet that is very contrarian right now uh obviously we have the US election I think a lot of people are waiting for the results of that election in a couple of weeks before making any um larger allocation decisions but then you the tried and true alarm bells and precious medals with gold and silver running
(08:51) towards all-time highs as well and so um despite the fact that bitcoin's been in this chop solidation you do have these external macroeconomic factors at play that are signaling that there may be a shift in the liquidity profile of um of the World As We lower rates and that has INF inflation expectations and outside of Bitcoin it looks like people are certainly um shuffling the chairs and and allocating their money with the expectation of something not going as it has been going the last few years yeah I
(09:24) think that's about right and and the other thing about the election right is it doesn't really matter so much what the result is to take out the politics of it doesn't really matter what the result is markets can rally on bad news and sell off on good news right if you've been around markets long enough you'll see this all the time what they don't like is uncertainty and the fact that they the market you know it's slowly getting an idea of how this is going to play out but once it knows the
(09:45) result and it knows that you know okay now we can actually allocate money there will be people and institutions who take bets early right having a view on where it's going like for me probably for you I don't particular care who gets in because I think bitcoin's going to go up anyway because that's not really the problem the the monetary system so you know my bets already in play but there's going to be a lot of Institutions are just waiting for the rules to be laid out and then they'll make their
(10:08) allocations because you know they they've got different mandates you know they can't weather Big Draw downs and the other thing and I wrote a piece on this the other day the concept of derivatives you actually need derivatives for us to get bigger and in my like core view this thesis I'm currently working to if you look at the hodlers like shrimp and and crabs right we're talk about people under 10 Bitcoin their balance has been more or less flat for the last 12 months right they haven't really grown their stack and I I
(10:38) kind of I spent a lot of time thinking about this and I think there's kind of two big reasons for this the first one is that $1.2 trillion you know it's it's painful 0.1 Bitcoin used to be like two stacks away now it's like a multi-month venture you like when you get there it's an achievement right so at this scale people's incomes just simply don't buy as much coin as it used to but the other one there's a lot of hodlers who've been around since 2013 16 even 17 18 they're
(11:06) now getting to the point where they've been stacking for seven years the additional stack is not making a marginal difference to their balance so we're kind of in this like Edy current or this like estery between um the the original kind of hodlers who got us here but it's very hard to push the market up into the two trillion $3 trillion Mark right it's hard for retail to do that you actually need the institutional Capital to move higher but at the same time these institutions they need derivatives whether it be Futures most
(11:36) mostly options which is why this options thing is actually very very important because if you want to allocate $50 billion you need to be able to hedge that risk and if the only way for you to hedge that risk is to short a Futures Contract or to sell spot you just can't allocate the 50 billion in the first place so we're in this like interesting handing over of the Baton from retail who got this to the size we currently are to the institutions and they do need the derivatives they've got the ETFs now
(12:03) they've got the Futures very soon they'll have the options then they actually have you know options the optionality to hedge their risk which means they can now allocate serious Capital so we're in this like transition period between retail dominant to institutional dominant well yeah let's dive into the options because obviously the SEC approved options on the Bitcoin ETFs I believe they started trading at the end of last week I believe one of I think Charles Schwab uh clients got access to the options via their um
(12:32) broker dealer portal uh could be wrong there but regardless it seems like they're coming to Market um I believe it was Jeff from bitwise wrote a long thread last week uh what impact are the options going to have play I've seen many takes on both sides it's going to be a incredible squeeze upwards and other saying uh options are here it's similar price manipulation that we've seen with gold um in your thoughts what what are the options going to do as it pertains to to price and more importantly volatility
(13:06) moving forward yeah there's there's a lot of interesting Dynamics here so um one thing I'll just note because it's important before I forget it I listen to this really interesting like obscure podcast with David dredge and he's one of these like all-time great volatility managers and he had this really interesting point the guy who was interviewing him is is is into Bitcoin and allocates to it and David was saying you know until this point I you know I'm a volatility guy people ask me about
(13:29) Bitcoin all the time and he goes really I haven't been that interested for a while not because I don't see it as like a tail Risk insurance to where the world's going because like I understand all that that makes sense but he goes the problem is if you've just got retail like you and I we earn our salary we allocate to bitcoin we put our own money on the line we have a different I guess risk profile how we behave I'll huddle through the bare Market because it's my capital he goes what I'm interested in
(13:57) is I want to see when the Goldman sack of the world and these big guys come in because they bet other people's money with a bailout behind them and he goes that's where you get the real tail risks right I want to see these guys blowing up on the wrong side of the trade with options not like retail they're a different animal I can't extract serious money out of them I can extract serious money out of people who are betting other people's Capital with a bailout in the background right so that's that's
(14:22) kind of an I thought that was a really interesting Dynamic that that's kind of alluding to it can get more volatile as these big ins come on and these derivatives creep in now there is no question the volatility profile will evolve and change with options there's a couple of ways this happens one is there's things like volatility capture so uh this is kind of what the cash and carry trade is is alluding to it's like extracting a yield but if you imagine the market rallies and we go into another chop solidation period you can
(14:50) essentially have calls above and puts below and capture the uh like an income stream right you sell a call and a put the market trades in between it and you're essentially collecting an income right at some point one of those options will get exercised but then you can essentially roll them and the idea is you can generate income by selling volatility and pulling that volatility out of the market uh the other side of the equation you think about who is going to be the one who's you know who benefits from options and ultimately
(15:17) what are derivatives they're a tool to transfer risk options best way to think about there is an insurance contract if you're a minor you know you have Bitcoin income in the next month two months three months I want to sell that income today right collect a a premium by selling a covered call or something like that I know I'm going to have the Bitcoin so I don't particularly care if I get exercised because I'm going to have the spot anyway but I can collect a premium until that option gets done so
(15:43) you're transferring risk from the minor balance sheet to the Speculator right the Speculator job is to take that risk and be right or wrong that's basically how these derivatives markets work and it's why options and Futures contracts were invented in the first place is to actually transfer that risk now there is the element of Leverage that creeps into these things so not only can you have people you know speculators betting on One Direction and transferring that risk from The Producers or you know if you're
(16:11) a portfolio manager I want to ensure my $50,000 uh Bitcoin portfolio put a an actual buy a put option you're transferring that risk to a Speculator but what happens is that people can eventually over lever these things so yes you can squeeze volatility out at certain points in time but like anything right there's always going to be the flip side of the equation which is you can get this explosive volatility where a whole bunch of people are wrong and markets are full of periods and like they're all about people being wrong and
(16:41) then you get these explosive Moves In One Direction so you know there's a whole series of dynamics that come into it right if you've sold a whole lot of insurance you now have an incentive to defend that level so you don't get exercised and that's where they start playing the spot Market but if you kind of Envision what all of this is doing it's bringing buyers it's bringing Sellers and that creates depth that creates liquidity that allows bigger money to come in it gets bigger money to
(17:05) be more comfortable with it so all of these things are creating deeper more liquid derivatives and spot markets which allows bigger institutions to come in with bigger capital and this is this is how you move Beyond a 1.2 trillion to start moving up into the two four five 6 10 trillion markets who do you think blows up which side of the market do you think blows up first the Longs or the shorts well that's a big difference with Bitcoin is it actually has typically speaking when you look at options downside so put
(17:33) insurance is more expensive people are willing to ensure their portfolio Bitcoin actually has if you look it's called the volatility smile you're basically looking at how expensive is volatility on your left tail sell-offs and your right tail which is um ripping to the upside and this is I think Jeff uh Jeff Parks was talking about this Bitcoin actually has a positive on both sides meaning there is more volatility on both taals the equity Market basically it just grinds higher and then has these nasty sell-offs Bitcoin has
(18:04) face ripping rallies and wild sell-offs so it actually has a vol a true volatility smile and I mean that's just V right it can it can literally explode in both directions my view if you look at the way the world's going and look at the gold chart it's telling you what is going on the right tail is going to get get pretty wild I think so freaks this rip of tftc was brought to you by our good friends at bit key bit key makes Bitcoin easy to use and hard to lose it is a hardware wallet that natively
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(19:01) the easiest zero to one step your first step to self- custody if you have friends and family on the exchanges who haven't moved it off tell them to pick up a big key go to bit keyworld use the key tftc 20 at checkout for 20% off your order that's bit keyworld code tc20 and I mean how Wild do you think he can get cuz going back like I think this is a good setup to the next chapter and what do a hodler look like you explained like long-term OG's hodling they have their archetype but now as we get into a
(19:36) deeper deeper Market with more liquidity getting multi- trillion dollars Deca trillions eventually like what do these new hodlers look like to you and what what type of price Dynamics uh outside the options the volatility introduced by options is that introduced cuz there's one thing I'm seeing at 1031 is I think this could be the cycle of Bitcoin being paired with structured credit with longer durations which creates like a new type of long-term hodler um and when you think about the the amount of liquidity particularly
(20:13) focused on on credit markets that could be immense but then you have this intra trading as well um not sure if I explained that well but just trying to get into something we were discussing earlier which is the piece you wrote a couple weeks ago was zooming out and looking at the the hodler archetypes that that exist and potentially will come into existence as we transition to the next chapter yeah I mean there's a whole lot of Dynamics here right like if you think about and you've probably seen this in your YouTube stats and and all
(20:40) that who is the average bitcoiner right the bulk of them Millennials they are millennials right that's that's the dominant majority of people who are watching Bitcoin content like from every single metric I've ever seen in terms of like the social demographic Millennials giant bulge there's some people who are younger some people who are older most Millennials where about to they in their Journey right if you've been in Bitcoin for a number of years You' probably been you know you got decent enough stack and
(21:05) this cycle I mean I I do have a a kind of General concept and again I think Cycles the idea of Cycles is probably breaking down the four year may not be as clearcut as it used to be so I'm certainly running on that assumption but let's just if we talk about the cycle the next 10 years right 5 years 6 years whatever that kind of General period is I think this is probably going to be the cycle where a lot of those Millennials right they're doing two things one they're probably going to have a nest EG
(21:34) they go holy [ __ ] well they actually look at the number and they go it's actually pretty pretty big right I kind of kind of did it right good job but then they're also moving into a period of their life where they're starting families buying homes you know my favorite saying for for Bitcoin is like what is bitcoin for me it's my savings what do you use your savings for whatever the [ __ ] you want and you know for me it's a house right at some point I'm saving for a house uh if I look at
(21:56) the I mean the Australian housing market is is wild right it's gone up 40 50% since 2020 but it's down I think the last I checked in December actually so it's actually be better than this it was down 75% in Bitcoin terms so I can buy four times more house than I could in 2020 whereas the average person is down 50% on their on their salary so what where are those Millennials going to be they probably going to be either using their Bitcoin just you know sell a bit of it to actually pay for these things I
(22:26) mean you'll never pry all the Bitcoin out of bitcoin's hand right you might get 5 10% but for the most part they're going to just sit tight so I think there's going to be this like transferring of the Baton where the market will have to finance bitcoiners you know progressing in their life and they'll just huddle the rest but I also think you're right in terms of that like structured product that feels like the next real Evolution whether it's Bitcoin getting added to like a global index
(22:49) because it is really a bit of a global index it is one of those Diversified assets where you can put it into like you know 5% 3% I think we saw Fidelity recommending like up to % for their clients there's all these like just just put a little bit in here right go from zero to something and that Dynamic just tucking it into that ETF putting into that Global fund putting into that pension fund just little bits here and there it it it's very hard to get your head around the size of the numbers in the traditional Finance world I think
(23:19) one of the most instructive things for me that's happened in the last 12 months was Wisconsin that the pension fund added .1% this is $180 million and that's like they they don't care because it's such a small component but they expect to get to 2% and you just start thinking about like how many Pension funds and you know Global asset allocators have 0.
(23:42) 1% that is hundreds of millions of dollars it's just enormous Capital right so these are some of those Dynamics I think is probably going to play out I think the the structured product is interesting it's like you've got a a debt instrument and then you're attaching like a Bitcoin kicker to it we'll we'll probably start to see things like that we'll also see ETFs that just like you know covered call strategy so people can actually earn an income off bitcoin's volatility which again yes they're extracting volatility over here
(24:07) but what they're also doing is adding depth to both the options market and to the spot Market in order to achieve that so all of these things just allow bigger Capital put more money it's how this Market starts to evolve yeah and we were we were talking about it before we had recorded too is the the idea of micro strategy copycats when you think about these different pools of capital there's different type of hodlers that's why I'm partial towards like structured credit like dual collateralizing commercial
(24:35) real estate project with the real estate asset and Bitcoin over the life of a 10 15 year loan that bitcoin's locked up in that loan for 10 15 years but obviously Michael sailor and micro strategy have proven to be very successful in their spective attack of of Fiat Capital markets to accumulate as much Bitcoin and uh have their stock price benefit as a result of that and it seems like there are many others that are looking at what they're doing and saying we should be doing this too but this is a new type of
(25:10) buyer where the Bitcoin isn't locked up in the way it would be in a structured credit product you can have much uh much weaker hands at this level oh yes no I I really enjoyed your chat with with Dylan the other week because you know he he's got a lot more insight into the mechanics of this I think the for me when I look at micro strategy it's breath taking what he's doing just just incredible the way that he's playing the capital markets it really is a sight to behold we haven't seen all that many
(25:36) companies kind of click on to doing this and personally I think that's actually good I I I don't particularly want to see too many companies doing this for one reason they just won't have the stones that Michael sailor has in that bare Market which will come and the closest analog that I can think of is actually miners so miners have forever been procyclical and that means that they huddle too much in the bull which squeezes Supply and gives us juice to the upside but then they huddle way too long and they end up selling usually
(26:06) near the ass end of the bear so you've got this like you know they they buy it and hold it at the at the best times and they sell all of it at the worst times and I can only imagine if we start getting these like the day that GameStop buys Bitcoin to like save itself that's like the redest of flag for me just shooting up in the air going okay we're getting pretty close to Euphoria at this point so you know there will be all these Dynamics but I kind of don't want to see too many companies do it a little
(26:32) like putting some on the balance sheet yes but at the same time I think there's just that that one component you can kind of see it right all these zombie companies saying oh Bitcoin is might get out of jail free card and it's like n you're going straight to jail yeah yeah we've been talking about this a lot at 10:31 too like what is the evolution of this strategy look like and I certainly think there will be the Zombie company we need to um get our our El out of the situation where we're going nowhere no
(27:00) prospects for growth and use the attack on the capital markets to develop a Bitcoin strategy to get ourselves out of this hole but I think for it to be successful in the long run it's going to have to be done via companies that have strong cash flowing businesses under them where um they can leverage this micro strategy strategy to an extent but at the end of the day they have enough cash flow and they're actually producing productivity uh and growth throughout the economy that allows them to to service that debt if they ever get in a
(27:33) pickle like if it's just zombie companies with no cash flow I think that is not in the best interest of the Bitcoin price in the long run agree but I think the one thing that and certainly what I've learned the most by watching Michael saor and you know it's funny because it seems really obvious in hindsight but the role of volatility right volatility is always the thing people say oh bitcoin's too volatile but then if you think about it's like well if an asset's not volatile you're not
(27:58) going to go from from 0 to 1.2 trillion you're not going to go from 1.2 trillion to 10 trillion right with volatility you need volatility to move uh so Michael sailor really injected volatility you can see it in the stock price he went sideways for like 30 years and now it's just the most it's ripping to the upside you got 3x Lev ETFs on it like it's it's chaos but at the same time he's added I mean I actually don't know what the multiple is but he's you know 10 I think like a THX whatever it is in terms of
(28:27) how he's grown that stock price it's it's unbelievable so injecting that volatility back into markets this is the thing I've always found so fascinating about like Commodities versus equities equities just don't have volatility right certainly in the last decade and a half they just grind sideways they get the occasional Vol Spike to the downside someone steps in bails it out up it goes again so it's just like really artificial look at the world around us it's volatile as anything right the [ __ ]
(28:55) happening all over the place bitcoin's volatility reflect the world in my view it's like a more normal or I understand it right things happen on a Sunday night you get some kind of headline about conflict or whatever it is Bitcoin trades up down left right it I find it so funny that all these tradire guys who just they hate Bitcoin but then the moment that something happens on a Sunday they post the Bitcoin chart because it's like a lens into what's going to happen on Monday morning so it is becoming that
(29:21) Global uh that Global index but at the same time there's like this this volatility coming back right making volatility a part of Market Cycles again and volatility allows people to capture yield it allows people to trade things allows growth to you know um assets can't go up in a serious Manner and repic to the upside and the downside but to the upside without volatility and I think volatility is good people should actually get more used to volatility and I got this long-term thesis that Bitcoin is have dealt with volatility we see our
(29:53) net worth go up and down you know 300% to the upside down 80% four five times and like a decade you're hardened up you've got this like hardened up nature to you that once you get into a decision-making capacity and the world's volatile around you you can keep a cool calm head and actually make these decisions right it's that low time preference thinking so I think there's there's so many benefits to the world being a little bit more volatile and in a way Bitcoin and micro strategy is kind
(30:20) of injecting that back in as a as a good thing right it's taking away the negative connotation of V it's forcing people not to be complacent 100% you can't just can't just ride the liquidity spigot anymore which is a good thing and I mean but getting back to this like volatility reentering the Bitcoin Market particularly after this six plus months of chop solidation I mean you mentioned it at the beginning we've got a monthly bull flag what does what does that mean like mov before like how volatile how quickly if at all do we
(30:52) get from here on out cu obviously it's October oober are we getting October this year yeah I I love that right the most that October was the headlines uh we we sold off I can't remember what the price was but we sold off you know 10 12% almost immediately so when we talk about a bull flag this is a technical I don't do a great deal of technical analysis but I understand the general concepts um a good way to think about markets they they are they do adhere to the laws of physics you cannot just go
(31:17) up in a straight line you must have Corrections and consolidations along the way and what that does is people who people always buy too high and then they sell low and who are they selling to people with a higher conviction who are waiting for a better price now when you get just markets ripping to the upside the pullbacks are smaller and smaller it doesn't actually allow people to get in people start to fomo and you get a real explosive top and really the the March ETF high was one of those explosive tops
(31:46) people are going holy [ __ ] we're going to 100K I got to buy this thing right now and of course that was the maximum period of euphoria you then get this process of redistribution top buyers they buy high they sell low longterm holders they take a bit of profit and take some chips off the table CU they're seeing the asset at a bigger size they now have the ETFs to actually sell to right there's a big bid on the on the spot side um but overall you've got this kind of downward trending Channel and
(32:12) the way I would described the last 6 months is extremely structured really just trading within a really really well-defined Channel like a top bound and a lower bound just bouncing between them as it as it range down but there's a general concept that markets that are trading lower right assuming the asset isn't complete dog [ __ ] right so let's just talk about Bitcoin here when an asset is trading lower eventually it will break back to the upside right downtrends break to the upside eventually and exactly the same uptrends
(32:41) will break to the downside eventually because nothing can keep going up in a straight line nothing will keep going down in a straight line in the world of Bitcoin right shitcoins are go to zero if we're talking so from that perspective it's amazing to me to see all of these people saying oh but it's a it's like we were on bare Market territory people were saying oh this thing you know it's a downtrend for 7 months that's so bearish yes the maximum draw down was 26% if you go back to any previous bull
(33:07) cycle that's like the smallest draw down so you've got seven months of yes trending lower but downtrends break to the upside eventually so when we talk about a bull flag if you look at the monthly price chart it looks like a flag pole where the Market's ripped into into March and then it's just chopped downwards and sideways for six months and what that's doing it's allowing the market to redistribute coins from people who don't know what they own to people who do know what they own now of course
(33:36) sometimes those things can break down you actually get some kind of a top formation but usually speaking if you go back to 2021 those rounded tops they were ascending patterns right the price was going higher but with less momentum that's actually a bearish sign because you've got less buyers the market can't keep going higher we actually had declining sell side during those tops so you've got less sellers price is kind of going higher but it was really telling you we were running out of steam whereas
(34:04) here you've got this nicely descending pattern descending patterns break to the upside eventually and that's what I mean by a bull flag it literally looks like a flag pole and then a flag on a monthly basis if you zoom into the hourly chart it looks like chaos it looks like the nastiest bare Market you've ever seen But zooming out that's all within the context of allowing the monthly chart to just take a breather have a rest right rechar charge and then away you go again and it's funny how
(34:31) psychology leaks into this a s months of chop um trending lower and a lot of people have checked out and particularly if you're not already in Bitcoin it and I tweeted about this the other week but I'm it's very reminiscent right now it'll always be reminiscent because the way Bitcoin having Cycles work and Cycles work just more generally it's like some reason it's there's always an election year during a having um things typically pop off in the fall but um compared comparing all the cycles that
(35:02) I've lived through it be 2013 2014 um through to 2017 uh and obviously forward to today it feels a lot like the fall of 2016 now and I don't like it Bitcoin started floating up um and float up somewhat slowly from like 600 to 1100 between October to March believe and then things really got popping in like June July obviously into the the blowoff top in the end of that year but just remembering and I actually have like Journal notes from this time I can go back and read and read some of them the other day and you can I remember being
(35:43) like B Quinn's going up nobody's paying attention sort of feels like that right now where if you look at Google Trend search data like Bitcoin search volumes at all time lows and yet um people that have been paying attention for as long as we have are going like oh I I I remember this feeling I remember what this environment was like and what happened after y 100% so I wasn't around in 2016 I bought the 2017 top so that was me up there but from a just a um from my studies and just kind of understanding how this Market Works 2016
(36:12) is very close analog C and I think a lot a lot of 2016 is actually because it's a spot driven market right 2016 there was no derivatives so very very spot driven and yes derivatives and Futures and all that are at all-time high in terms of open interest however we still have a very spot dominated Market in fact I would say that the current market is much more spot dominated than it was in 20121 2021 it was all about the Perpetual Perpetual swap everything was about futures um and the only spot element there was that gbtc bid pulling
(36:45) in like 660,000 Bitcoin in four months right that was the spot bid but for the most part it was just leverage this cycle most of the Leverage is also paired with a spot buy right and I I did aart the other day but I was looking at the ETF inflows we've seen like 2 billion in the last couple of days that 2 billion is paired with about 1.
(37:06) 8 billion coming into the CME Futures so that to me looks like a lot of buy Spot sell future right but remember the reason the future has a premium is because people long so generally speaking there's a long bias to these things the other period that's very similar is 2019 although much more bearish right and we also had a you know there's a lot of sell side going on there was the plus token Ponzi absorbed like 2% of the supply and then the CCP sold those coins and we didn't find out until we were down like 8K and you know
(37:34) it was just it was chaos back then and then we had March 2020 but really 2016 2019 by far the closest periods there's a couple similarities to that like mid 2021 although that mid 2021 selloff right remember the Chinese mining ban that was a really really important I need to actually write a piece on this the Chinese mining band in my view wasn't what started that PA Market market usually markets they need a catalyst when there's already something baked in the cake it just needs a catalyst to trigger it the gbtc going
(38:07) from a premium to a discount was what really happened suddenly you've got a 660,000 bid that just disappeared the market started curling over leverage was really high everyone was betting on 100,000 and then the Chinese mining band was just the match that got flicked in and then away we went and that selloff was like 50% down that broke the bull sentiment and uh in a piece I did yesterday how do you how do you determine when a bear has really kicked in because a lot of people are talking about this chop solidation saying it's a
(38:37) bare market and I TR my whole thesis really for the last you know six months has been trying to distinguish is this a bear or is it a correction how do we how do we actually distinguish those two and that mid 2021 point is actually a really good reference point both in mid 21 and in this chop solidation we had 30% of all Bitcoin was underwater right so on a just is the coin above or below its cost basis 30% of all coins at the worst Point were below their cost bases so then the the other one is how bad is it because if you bought a coin
(39:11) and you're down 5% that's another day in Bitcoin if you buy a coin you're down 50% that destroys your sentiment you feel bloody awful after it and you start making decisions Going H I'll take the next exit liquidity pump so then I start looking at unrealized losses and in 2021 it was massive it was like 20% of the Bitcoin market cap was just unrealized loss really nasty stuff bare Market starting in this chop solidation the peak the high water mark on the Yen carry trade was about 7% so you're
(39:41) comparing 20% underwater versus 7% very typically in a bull market correction so all through 2017 5% 7% 6% very typical so we never got the the scale of the damage right it just wasn't bad enough yes 30% of coins were underwater but they're under rewarded by 5% or 4% or 3% and hoders can handle that so in many ways this chop solidation looks a lot more like a bull market correction that it does to some kind of really nasty bare bare Market starting bull sentiment shattering event we just didn't get that
(40:14) and that's been a real grounding anchor for me is just because a coin is underwater the next question is by how much that's really good info to have and that's like again going back to that's why I love talking to you because you come equipped with data that um allows people to uh detach themselves from the the emotions that come from these cycles and I mean just speaking for myself like having been through many of these Cycles the emotion still get to you you're still like oh you're up on a Sunday
(40:41) night like oh we're going to 75 and it's like up take a step back zoom out um but with all that in mind like is there anything in your mind that could like prevent the bull from from materializing just thinking of again going back to the macroeconomic landscape it does look like there's some systemic weakness despite what many uh economists would would lead you to believe again looking at the treasury markets and I've been doing a lot of sling on people covering covering Banks particularly Bank of
(41:16) America you just had uh Warren Buffett sell off a huge chunk of Bank of America which he's held as one of his largest positions for decades and it seems like some of the savier in institutional s uh types are shuffling the the chairs on on the tit or not shuffling the chairs but they're positioning themselves expecting um some economic turmoil moving forward like do you think some major economic crisis could throw a wrench in any potential bull market that may lie ahead for Bitcoin or do you think this is
(41:49) potentially a cycle or it becomes a true Safe Haven and people seek safety in Bitcoin yeah it's a great question so I think first things first we're going back to the topic we had before it's going to be volatile right things are going to happen because if there was probably about 6 months ago maybe 8 months ago I remember I took a screenshot of my my podcast feed right all the the new episodes that have come in and it was just top to bottom Market's going to zero deflation is coming watch out for the bust boom boom
(42:18) just every single thing was like I'm the most Giga bearish I've ever been and of course the market went up despite all of that right so you've got all these experts saying no it's the the end of the world blah blah blah and now we're seeing this kind of reflation starting to kick in right people are starting to believe that hang on a second markets are at alltime high fed's cutting cycle inflation actually might come back like you've got all these like interesting Dynamics um you know arguably the FED
(42:43) should be raising rates not cutting rates at this point in time so then you've got to look into all those kind of you know why is it political is it you know what is it because the the government's just paying too much in interest I think the the thing to really recognize is the world is in a very very volatile place and very few I would argue probably no Traders have ever experienced this kind of Market before right you hear that the drun and Mills of the world and these guys they'll say no one no one in the world has done this
(43:12) before right no one has dealt with this so in that regard there could be things that happen on a Sunday night and Bitcoin is the only way for them to express their view I would also say that many of these institutions they simply haven't done the compute cycles that you and I have I know why I hold Bitcoin it's because after whatever this volatile RI is I want to own it at the end of that Journey because and I I did a study uh a couple of weeks back where I was basically looking at in this chop solidation range how many days out of
(43:41) bitcoin's life does it go up 1% down 1% or nowhere and over a third of all days Bitcoin goes absolutely nowhere right less than 1% move in either direction so if you think about if you're a longside Trader right you put on a long position there's a 33% chance you're going to go nowhere which means you'll be wrong if if it goes down there's the other 33% you've only got a one in three chance of being correct on any single day this is why day Traders get blown up all the time because the odds are actually you
(44:11) know one to three but if you look at that on a a big picture view on like a quarterly basis it's massively skewed to the upside right these Traders you actually do you get these like single quarters where it's plus 100% And then it goes sideways so Bitcoin does nothing most of the time and then explodes to the upside and the downside sometimes so many of these firms are not ready to trade this kind of stuff they don't they've never seen an asset that trades this way and then you've got the world
(44:40) going through all inflation deflation um sovereign debt crisis conflict elections that are just complete circuses like pick pick your poison there's so many things that can create the swings in the upside and the downside but over the macro Trend Bitcoin is one of these assets you will perform better is just a Buy and Hold because if you're there for those explosive quarters where it just all happens and Bitcoin reprices that's what you need to be there for and you know how many people you when you're trying to convince
(45:10) people about Bitcoin right they're like oh don't worry I'll just buy it when it's the time it's like no you have to position yourself long in advance and then just wait right the hardest thing Bitcoin is just doing absolutely nothing and just waiting and just but eventually you get these tail events so I think we will get volatile swings in every direction it's why these options are going to be in my view the the killer product for Wall Street finally they have an asset that is truly volatile
(45:38) they can trade options on um there's going to be V Strat capture strategies the whole lot but those swings on both directions is really where those kind this is what David dredge talks about I don't care about the expected return I don't care about the you know the bell curve in the middle you make your money on the left and the right Tails that's where the money is actually made and from his perspective it's like and it's even better when the people who are blowing up on that left and right side
(46:04) have bet other people's money with a bailout behind them because that's the big money that's where you pull the the huge returns out of yeah so you're saying it's going to get interesting absolutely and and it's going to be really easy to get shaken out and you know sticking I did a piece recently I was talking about we live on the daily chart our emot like we live day-to-day we check the Bitcoin price our emot tions live on the daily chart but your decisions should live on the weekly and the monthly chart right so
(46:33) just extract the emotions from the decisions put your decisions on the bigger time frame let your you know the emotions will always get to you it's a constant battle you have to constantly fight yourself from fomo and fear right you're always going to be fearful when it's trading lower even the like even the mount GX guys I love this kind of analog these Mount go guys bought their coins in the hundreds of dollar range right for peanut they got their coins back at about 68k when the market sold off to 53 where
(47:04) do you think their emotional state was they're not looking at their $200 price point oh I'm only down you know I'm only up 4,000% now it's like no they feel like they got their coins at 68 and now they're down that's how they emotionally feel and that's a real like in terms of how you think about these markets understanding where your emotions live versus what your decision should be is just such an important skill for a hodler to learn because otherwise you will get caught up on the Twitter
(47:31) narrative you'll go looking for all the reasons why it's selling off it's almost never the reason the narrative on Twitter is almost always just an excuse People wrap around something that was already forming months in advance right so people like oh look ETF flows that's why we're going higher it's like no we're going higher because hodlers refused to sell and a bunch of people bought the lows for seven months that's why we're going higher it's got nothing to do with the ETF the ETF is just that
(47:54) like final kindling that gets the ball moving yeah yeah not now you got me thinking like the volatility I I can't imagine I'm just thinking is the the extent and the the gravity of the mount [ __ ] Mount gax blow up just like an appetizer for what one of these large option Trader funds blowing up is going to look like in the future absolutely and look I mean and not that it's a not that it's a risk that I really factor in but I see a lot of people saying oh coinbase doesn't have the coins for these ETFs guys
(48:31) that's not the risk you should be worried about the risk is that they have way too many coinbase has so many coins it's unbelievable the biggest risk is that something actually goes on there like to me the the most catastrophic risk that I think can happen to bitcoin right now is if something goes wrong with coinbase custody that is the the the gorilla in the room that no one wants to talk about so don't worry about them not having the coins worry about how many they actually already have that's the real risk and if you're
(48:57) listening and you have your coins on coinbase do your part to uh distribute that that concentration and risk away from them um the uh oh God what was I just going to say the um give me a second here talking institutions volatility mount gox something else is going to bring up slip my mind though the um it'll come to me lost it completely lost it first time I think I cut in there and that's the uh lose your thought no it's um just think about like broader trends of of where we're going and particularly
(49:35) if oh that's what I was going to bring up like the volatility like the um the ymr gold chart is what comes up a lot is the volatility um that happened during that period particularly with the gold price and that that seems like we could be heading into that territory with Bitcoin with the options and the macroeconomic sovereign debt crisis backdrop yeah no I think that's actually like spot on absolutely spot on I think that is the framework that most people should go into this thinking is on the macro scale
(50:04) it's going to look like a parabola that's Unstoppable on the monthly scale right when you start looking at what's going on week to week month to month there'll be draw Downs there'll be swings high they be draw it'll be chaos right on that like rate of change basis it's all over the place but on the macro scale right they're not paying off this debt anytime soon it's not going to happen so you know they have to print the money this is the the do not you can't stop the train it's going to
(50:30) happen yeah and we have so much circum Central evidence that the central banks even believe this with the papers that were recently written by the European Central Bank and the Minneapolis fed branch which basically I mean ECB tried to basically say that Bitcoin has failed as a payment system it's a zero some game the hodlers are going to get extremely wealthy and if you don't get in uh and you're not if you don't have Bitcoin it's going to be its detriment to you and then the Min Minneapolis fed
(51:01) essentially coming out being like uh we recognized that we're going to have to keep printing insane amounts of of debt moving forward we should probably make Bitcoin illegal for individuals to hold and just try to accumulate as much as possible and issue debt into odd infinum um so that we can keep doing this like they're they're even beginning to admit it um though they're trying to paint Bitcoin as the big Boogeyman that is that was a astonishing over the last week was to say oh you have the ECB and
(51:31) now the FED basically feeling compelled to to respond to bitcoin success and painted as a boogeyman it's funny isn't it like it's it is almost the the best thing they could do because they're basically saying like don't look at this it's perfect stri an effect don't look at this thing right if if Bitcoin was irrelevant there wouldn't be any papers written on it but the fact that it is relevant and it is growing and it is seeing this uptick right it's no surprise that they're writing this as
(51:57) the Market's starting to push higher again if the market was trading lower they wouldn't be writing this stuff um I did find it very interesting when you see like the ECB and again I don't know how they end up you know who has to review these things and what the process is for writing a piece like that but did nobody just say you just explained how assets work like yes when they go up the people who bought them earlier get wealthier that's the whole point and what they're missing in I mean they
(52:24) obviously understand it what they're not talking about is the fact that well really it's just you destroying the denominator right what you're doing is saying that everybody has to hold this paper while we print it and it's again they need people to hold the paper this is the other thing right the system needs bag holders this is why they regulate funds into having to own x amount of treasuries they need someone to hold the paper as they do the debasement right and the more people that opt out into gold silver Bitcoin
(52:52) whatever it is assets stocks the more people who opt out the fewer bag holders exist for the paper um so you know this this is the game that they have to play but I I was very impressed I'm like surely surely someone there some seniority in the ECB read this paper and goes God we look like idiots we can't publish this like it's got to go it's got to go out it's like you know directions from above well and that I mean do you think they'll have any success in I mean the ECB both the ECB
(53:20) and the FED papers almost explicitly called for laws against holding Bitcoin and that's actually had a conversation earlier on another show I was on it's just like Curious battle testing this off of Bitcoin it's like do you think socially they'll be able to successfully demonize Bitcoin hodlers and the asset itself and it's an interesting question convince cuz like if I think about like at a retail level right if I think about people that in in you know in my world that aren't into Bitcoin they wouldn't
(53:50) know what the letters ECB stands for they wouldn't understand what that even is so the vast majority of I don't think this is targeted reta this is targeted at the the institutional guys who are starting to think about this um it's more or less you know if you think about what's the number one thing when you hear institutions wh back the clock two years what's the biggest thing that most institutional guys and trafi guys would say there's the volatility which is fine but the other one is they're going to
(54:16) make it illegal that was always the big risk Vector they're like ah if it was ever going to get successful they'll make it illegal to me what are they doing this for it's to remind those guys you watch out we're going to make it illegal and they're like oh I can't touch it yet they're trying to keep those guys off because who's reading an ECB paper it's bitcoiners and tradire guys like this right bitcoiners gold bugs and tradire guys who want to be told don't buy this
(54:41) thing and when I left my engineering job I sent out an email and uh it was basically like you know I'm I'm I'm leaving engineering to go and work on this Bitcoin thing I know many probably won't understand this decision it doesn't you know you probably haven't even heard of Bitcoin here's a couple I think they like did like 10 points where here's what the narrative is here's what's really going on energy you know human rights blah all these things and my last point was think about the
(55:07) incentives of the media and put the ECB in this right think about the incentives of the media would you rather considering you don't own any Bitcoin and it's gone on this tremendous run right it would have been I can't remember was trading at that point in time 2021 probably like probably close to now 50k or something like that would you click an article that's telling you you kind of missed a really important thing you know you kind of [ __ ] up there would you read that or would you rather read something that goes no you
(55:33) are right to have missed it it's a scam it's used for all these nasty things don't touch it they're going to ban it don't worry we are going to ban it of course they're going to click the thing that confirmation bias tells me I made the right decision for ignoring it this whole time that's the incentive of this system they want people who already have this predisposition that the government's going to ban it to be reminded by the government we're going to ban it don't you buy it right that's
(55:56) that to that's what they're doing it for that's a great take and I wonder if it again going back to like it can it be successful obviously we've mentioned bailouts the target audience of these papers are institutions who historically have been bailed out particularly this Century are they having like is the um the marginal benefit of each subsequent bailout enough to convince them or that that yeah you're going to ban it and we stay away from this or if do you think putting your Institutional Investor cap
(56:32) on they're looking at the problem approaching $36 trillion in debt here in the United States macroeconomic geopolitical risk going parabolic um are they do they have the intestinal fortitude to basically look the fed the ECB any Central Bank in the eyes and say no I'm calling [ __ ] like it's obvious that you're going to continue down this path that makes my job way harder and my purchasing power way less over time and we're going to go all cuz reason I'm getting at this is I do think
(57:04) we're at a pivotal point in bitcoin's history where we probably need despite um what any like Cipher Punk may think we need like institutional social support of this asset to really ensure that um we can reap the benefits of the Bitcoin that we've accumulated up until this point yeah I mean I I do and as much as goes against that Cipher Punk ethos and and you know in many ways how many other $1.
(57:33) 2 trillion assets exist out there that are just retail holders there's none it's like there's none they eventually and this is what I try to write in my derivatives piece right it's kind of just a sobering thing it's like look you can't swim against the tide you will drown that's just how these things work right so you can't change the direction of these things an asset that gets of an appreciable size will eventually develop a derivatives market and without a der Market an asset is C in how much it can actually grow this is
(57:59) just truth why because you in order to get to a$1 trillion market cap you need the guy with a $50 billion position to be able to hedge 40 billion of it in a liquid options Market if he can't do that he can't allocate the 50 billion in the first place so that the only way he can hedge that is by selling it right which is why you don't get to that higher level so you that that derivatives component is really important from that perspective right you actually do need people to be able to hedge their risk now on the the
(58:30) treasury side of the equation and just like trfy in general I mentioned before that everyone's talking about deflation and you know we're going into a nasty bare Mark and stocks are going to go to zero and you know some of these predictions were insane but there was you know what two months ago everyone was talking about recession recession recession right that was the dooma narrative was all about recession and what do people do they pile into bonds because historically speaking when you get a deflation or a recessionary period
(58:56) bonds are the correct trade doesn't the systems at Power if they need people to hold this shitty paper don't they need to convince them that there's a bare Market coming and that you should probably buy these bonds right it they're salesmen they need these institutions who are conditioned for years and years and years that down means bonds Anything Goes Down buy bonds volatility goes up means the market selling off I should buy bonds this is how the most investors have been conditioned and it will take a long time
(59:26) for the that conditioning to be worked off and you know again I haven't been in markets long enough to really say this convincingly but generally speaking I think the rules changed after Co I think that's probably becoming a more consensus view that the rules probably change we don't really have the same system because a lot of these things just flipped over whether you call it fiscal dominance or the return of inflation or whatever it is there was just like a switch that flipped the old rules are no longer as relevant but
(59:56) everyone's is going to keep operating under the rules they've trained on for their whole life right some of these guys have been in market for 40 years in fact maybe some of the more senior veteran guys who've been there for that 40 year 50e period they know the rules of flips because they can see the difference right they're that experienced they can see the difference most people have only ever seen in a deflation buy bonds so the systems at Power they want people to believe that it's going to go lower they want people
(1:00:23) to believe that you know we're going to hike rates until the market Falls over it's like they need people to buy the bonds and if you think about what happened in the last 2 years they essentially took away you talk about the unrealized losses on the banks they basically forced them to hold those bonds because they destroyed their purchasing power they now have to hold them for the 10 years to maturity thank you very much Mr bag holder you're going to hang on to those bonds because you can't sell them right this is like it's
(1:00:50) it's so clever how they've done it but at the end of the day someone has to hold the paper they have to convince people to buy the paper and it's going to take such a long time for the market to start working out that maybe those rules don't work and really the gold chart in my view is really the story of of right now because it is telling you that the rules have changed gold doesn't run and actually here's a good exercise I pulled out the gold chart the other day I was just flipping through my
(1:01:15) trading View and I've got the gold chart like the full scale monthly chart or monthly or weekly for the full history and initially I was like God that's a weird looking Bitcoin CH holy [ __ ] it's not Bitcoin it's actually the gold chart and if you look it through the whole 80s yes it took 20 years to do it but it looks exactly the same as the 20189 bare Market identical right you've got this big long descending triangle breaks down gold is just a slower version of Bitcoin right it's it bitcoin's just fast speed
(1:01:47) running the whole uh the whole gold experience yeah and what's gold at right now like 27 2800 27 yeah yeah how high do you think I mean you think I can get to like 10,000 this run up like that's I mean because that's the the big um the big elephant in the room of sovereign debt I mean and I completely agree Co completely change the game it's like you cannot control or excuse me you cannot trust the central planners anymore not that I was trusting them before but I think it's become well apparent and as you're describing that
(1:02:23) that it's going to take time and Co was a marked change in in sentiment actually reminded me of when I worked at a managed Futures fund we uh index commodity trading advisers and this was right around the time of like right after qe1 operation twist and QE2 is when I was working at this fund and you saying that reminded me of conversations I would have with cios at these ctas where they hadn't lived in the world with bouts to the extent of 2008 and so this was like 200 11 2012 and they were still reorienting themselves and their
(1:03:00) strategies to World of which which you had Zer and infinite QE and they underperformed massively because they um still believe that that they were living in an environment that existed pre2 2008 and I think it took them a while to actually adjust absolutely yeah the rules the rules change and it just takes these guys time because you've been conditioned for years to trade in a particular environment um on your question with gold I I actually really liked the Luke groman had a take recently and I had really thought about
(1:03:29) it from this perspective I kind of clicked a little bit but this idea that gold doesn't have any other purpose as much as Peter shiff will disagree if you price gold based on its Dental usage you don't want to hold gold right it's not a very high price if you're just pricing based on on on uh gold fillings so really gold is like primarily monetary premium that's really its use case right it's monetary premium Bitcoin its only use case is monetary premium right because that's all it is it literally
(1:03:56) you can't use it for anything aside from storing and moving value that's its only job and this idea that like if you go back to the 70s you had these problems where the oil price would rise and when the oil price and you kind of put oil and the dollar in the same bucket here when oil and the dollar rise it creates stress globally right because energy is your primary input if your energy becomes more expensive it's harder your debt is US dollar denominated if your if the thing you need to buy the dollar to
(1:04:24) pay off your debt gets more expensive both of those things create stress so the system really can't have the release valve be oil because it has a utility purpose we actually need it for the economy to work so how do you reflate and actually get Capital as the ECB would say how do you impoverish everybody else in order to make the system healthy again you need an asset that if it goes up it's not going to blow up the system so it can't be the dollar it can't really be um it can't really be oil it can't be bonds because
(1:04:58) we're kind of very close to the zero bound right 5% is kind of the long-term average of bonds you're probably not going to go below zero so you can't really inflate Bonds in terms of their price so what asset do you have left to inflate and kind of the most harmlessly recapitalize the system there's only two candidates there's Bitcoin and gold they're the only two assets that if you were to inflate it and give wealth effects to a bunch of investors right let's just imagine for a second that gold went to $10,000 or
(1:05:28) $20,000 an ounce think about all the gold holders out there right yes a lot of them are central banks a lot of them are people with just gold in there safe people with ETFs what are they going to like Gold's eventually going to go into a bare Market they can take that capital and buy other stuff right they can buy Bank stocks they can buy equities they can do whatever they need to do to push that money back in and recapitalize the system uh Luke groman talks about the the fed's got this operating manual
(1:05:54) where if they just revalue the price of gold they can suddenly deposit trillions of I think it's $4,000 every $4,000 an ounce it goes up they can deposit a trillion dollars into the TGA scotf free imagine if gold goes to 20K suddenly they can just take that trillions of dollars either pay for infrastructure pay off a bunch of the debt get debt to GDP down you need an asset to recapitalize the system that its inflation doesn't blow up anything else so it can't be oil it can't really be Commodities Bitcoin and gold are the
(1:06:25) primary C Cates that you can inflate even silver because it's used in electronics and all this kind of stuff like probably don't want silver to go to High either because you want these industrial medals to be cheap because that's going to help the world not blow up you kind of need gold and Bitcoin to go up so ironically enough the ECB is not wrong they do need Bitcoin to impoverish people it just happens to be that's how you how you recapitalize the system that's the game that's what
(1:06:49) they're trying to do yeah I don't hate it as a Bitcoin holder and uh small a gold on my finger but um yeah it's going to get wild I know I asked you last time uh how high everyone wants to know so I have two answers to this question first one is the Practical one the second one I'll just have some fun so in terms of the Practical one um we were talking about unrealized losses before as like bare Market creating flip that around what creates a you know an uptrend will break to the downside eventually what
(1:07:24) creates that downtrend too many people see a fat green number in their portfolio and go yeah I me I I have to take some right so unrealized profit getting really really high is that level where we start to see people sell now you got to remember that just because people are selling doesn't mean there's not enough demand to just punch through it so I use things like you'll hear mvrv ratio right there's various forms of this it's basically modeling how much unrealized profit is in the system so as
(1:07:52) it stands right now if we get up into like the 12 130,000 realm that's where we get to a point where hodlers can be expected to start seriously ramping up their cell side right so in that 100 110 120,000 that's where that real sell side is going to kick in now that doesn't mean demand can't punch through it certainly can but that's where we we'll see a lot of metrics saying hodlers are taking some chips off the table here and eventually that will overwhelm things so that's a moving Target right that can
(1:08:22) continue to climb as demand Creeps in but that's where it stands as of right now in terms of where I think we're going to go right having some fun with this thing um when I play around with these ideas right and I my old man's got Bitcoin I I have to pair back where I think it's going to go because otherwise he just thinks I'm insane you know I wouldn't be surprised if we got to 250 in the next you know I don't know 3 years something in that kind of period I am certainly in the camp where I think bare markets are not
(1:08:50) going to be the 80 down I think a lot of people are going to be expecting that 80 down and they might get a 50 or a 45 or a 65 and then away it goes again I I don't think we're going to get again it depends on all sorts of factors but I think generally speaking unless we get GameStop buying at the highs right if we get GameStop buying at the highs maybe a 70 but if we don't I I think that the the Bears will be more muted so I think people will lose track of where the top is right where is the cycle
(1:09:18) where did it start is that a bear I don't know did we just go through a bear maybe right so there's all these interesting Dynamics so look I think 250 is reason able right it's not completely ridiculous we'll get up into the hundreds I think that's I see so many people just talking about this is where it's going to end like tradire guys it it makes sense at 100K it makes sense at 250k um I think the the concept of relative value bitcoin's about 10% of gold I think it's about less than that
(1:09:45) now now that Gold's run but if Bitcoin can get to 25% of gold right I think you and I would agree that Bitcoin is a superior asset to gold and you know point if you've ever bought physical gold it is a real pain in the ass you got to go to a physical place you got to pick it up you got to store it in a safe like it's a physical thing now that's great because it's self- custody but it's a I could also buy Bitcoin and send to my C card and it will take me a fraction of the time doesn't even
(1:10:10) require a bus ticket you've got all these different Dynamics where Bitcoin is just vastly vastly Superior so can it get to 25% of gold of course it can right that's that's kind of obvious so can it get to 100% of gold not anytime soon but what would 100% par be well it' be about 10.
(1:10:30) 8 kg of gold per Bitcoin right now it's just under one one kilo right 30 ounces or something like that so you know that's that long-term view you know my price Target's actually in Gold terms right 10.8 kilos that's my that's my actual number um which is I think that's like 600,000 700,000 I mean something ridiculous yeah and it's funny like the gold the Bitcoin overtaking or reaching parody Gold's market cap has been a meme in Bitcoin for so long but now gold running like that that Benchmark is going up way higher and like if it goes
(1:11:03) to 10,000 you got a 5x the The Benchmark price which I think right now around $2,000 gold it was what like $600,000 Bitcoin and like if cold runs to to $110,000 and stays there for a while like that's $3 million Bitcoin and the other thing I think is actually quite interesting I've been just observing how markets work and there's this this I recently actually bought some platinum and the only reason I bought Platinum is because historically speaking it trades at a premium to gold right now it's at a
(1:11:33) 65% discount and I I do know that a lot of investors have not ridden this gold wave right it's been mostly central banks and people in the East buying buying gold so they're only just saying oh [ __ ] I missed the run on gold so that's why silver starts to move because it's like the poor man's gold right you're going to buy the the cheaper asset and I just have this very simple thesis like well you know if platinum's currently trading at 1,000 bucks could it get to 2700 probably you know that's that's not
(1:12:01) a bad little return so like and I expect people to go on this like catch-up trade and in many ways Bitcoin is that catch-up trade as well right because it's a sound money asset that is still monetizing and really it tends to follow gold like six months you know in the in a re so I do think this like catch-up trade thing is a very very real concept we see it all the time in the crypto space right you get [ __ ] some shitcoin runs they go oh I missed that one don't worry I'll buy the next one down you get this waterfall effect we
(1:12:29) see it in equities as well right the big caps run then you get this rotation down and I can't help but feel that these catchup trades are probably going to going to kick in so I I bought some plattin because I just want to test the theory I want to put some money on the line actually test and see whether this happens right get some skin of the game so I'm I'm kind of invested in the outcome but I I do think Bitcoin is going to sit in that catch up trade as well because why is gold running okay if
(1:12:53) I once I form a thesis on that can I apply to any other assets that haven't already run oh look there's probably like three or four of them I'll buy one of those yeah all right you heard here first James is a n Platinum analyst and Plum Maxi Platinum Maxi James thank you for your time and your research your newsletter I've been loving your newsletter if you're um interested in shedding the psychological volatility that you will inevitably go through uh if you hold Bitcoin I highly recommend
(1:13:24) reading james' news newslet you get that at check onchain dos substack Doom checkon chain.com you'll find it there's a newslet sign up yeah it's uh incredible stuff and you're you're putting out uh quite a lot of content too getting and we do we do a video and a written post for every single one um because some people like to listen some people like to read and the way it works for me um when I write the piece and I develop the charts so I write the piece that's where I do my thinking and that's
(1:13:50) where I like really consolidate ideas and then the video is me kind of wrapping the whole thing up so they they're the same thing some people read and watch um in fact we have a really we did a survey a little while back we got a really like organic distribution 25% of people read 25 watch and 50% do both so it kind of services all those different different uh different angles but the the take we went with is with your Bitcoin personal trainer and the idea is that like you know the market is it's it's like being in a live combat
(1:14:18) sport right you're continually fighting all these different pieces of information and ideas should I sell should I buy am I scared am I not and the idea is just to ground people out and say well let's let's focus on what really matters do we care about how people are in profit are they taking profits like and just sequentially stepping through doing the routine you know you go to the gym you do your reps and you you get much better at surviving these things and it's going to be increasingly important as volatility
(1:14:44) increases so better start early freaks that's it James I hope you enjoy the rest of your day thank you and I'm sure we'll be catching up at some point uh as the volatility increases 100% good on you mate thanks for having me on all right peace and love freaks
