Crypto market analysis: government selling, Mt. Gox and the next catalyst

Transcript

GM good morning welcome to the milroad show The Daily crypto show that's hotter than a graphic card mining Bitcoin at full blast I'm your host K rehead taking the place of Jay who's currently doing God knows what in New York City at his bachelor party I don't even want to guess what he's up to actually probably sleeping since it's Monday when we're recording that's been a long weekend I'm sure uh but here to guide us is Lark Davis OG crypto investor and content creator who's been educating millions of people about crypto since 2017 today we'll answer questions on everyone's mind which is have we hit the bottom or is there more pain ahead for context the crypto market cap hit $1.9 trillion yesterday down from 2.7 trillion back in March so it's been a little bit of pain

out here Lark how's your bags doing and um what the heck is going on well my bags rough ride and anybody who's been in the market rough ride and that's something that's just par for the course of crypto I know we all love upside volatility you never even hear the word volatility when the markets are pumping but that's up side volatility oh as soon as the prices start going down oh volatility is back no volatility's always been here that's why you're investing in crypto because we love the upside we just don't love the downside so much so yeah look portfolio has been taking some hits obviously altcoins especially have been pretty wrecked recently but um look overall I I don't see anything that is particularly weird or out of cycle or new in the market this is all just more

of the same this is what you can expect basically Bally to happen during a major Market cycle go back and look at any previous cycle there's always huge draw Downs there's always huge fud events whether it's China Banning crypto or India Banning crypto or gosh knows what there's always something that freaks people out in the market and provides these kind of opportunities in the market well there's we're going to talk about the kind of like patterns of the cycle and where we think this is all going kind of at the end but first let's talk about these things that are kind of hurting the numbers right now which you talked about uh not anyone Banning Bitcoin per se but there's a lot of governments that are selling Bitcoin potentially uh I think one of the big things is I mean Germany's obviously selling a bunch of Bitcoin at the moment

or it appears they may be some I've seen some tweets of they're actually buying Bitcoin too so like I don't know what's going on there uh the US may be selling some some uh some Bitcoin and even Mount gaw so maybe let's walk through some of those um what are you thinking through all these is it as bad as it seems like what do you think as I've been saying the bark is worse than the bite right the market is freaking out in anticipation of these events they're actually if you boil down the numbers holy cow crypto has these markets are big we have every potential to absorb the impact of these sales but people are freaking out because of the sales not really stopping to think like hey wait a second didn't Bitcoin ETFs take in 15

billion dollars of net inflows maybe we can absorb $3 billion doar of sell pressure from Germany so people are kind of freaking out but the good news is is that huge amounts of German bit we're talk about the German Bitcoin specifically there's multiple places where Bitcoin is coming from let's talk about the German Bitcoin Germany has sent about 15,000 16,000 Bitcoin in just today so look that's not all getting Market dumped but they're putting a lot of Bitcoin on and the sooner it finishes the better for everybody so we will see that Bitcoin going very soon and then it won't be a story anymore and the market can absorb that you know the amount of Bitcoin again the amount Bitcoin being sold here is not unabsorbable by the market it's just that everyone's freaking out right now also we did see

this story going around from some I don't know C tier uh crypto news publication that Germany was buying Bitcoin no Germany just well you know it it's a story that lacks a large amount of veracity let's just say that right because in theory they could have bought we don't know their exact Buy sell orders on their exchanges but what we do know is they deposited a bunch of Bitcoin to an exchange and later they withdrew Bitcoin from that same exchange likely it was the same Bitcoin likely they were withdrawing that so they didn't take any sort of um uh risk over the weekend that the exchange gets hacked or something like that so they just with Drew it back to their wallet and then redeposited it on Monday right so I you know people people

like to spread rumors real fast in the cryptocurrency market and you can see how rumor and narrative drives the market anyway that's the German Bitcoin 50,000 Bitcoin uh now they're down to 20,000 or something like that so it's going fast it will go fast and then it'll be done and then it'll be an on story and it just think back to hey remember that time in July when everybody was freaking out about the German Bitcoin stuff now we're at $100,000 it looks like they got about 1.5 billion left I don't know if this is live what I'm seeing on Arkham but that's what I have up on the screen yep that that I think should be pretty current so yeah do you think they're going to sell it all or they're gonna hold some or what no I think they're going to sell it all I don't think it

all Germany is not in the business of holding Bitcoin right they're they're going to sell it they're going to sell it for dirty dirty stinky Fiat which they can print themselves it's you know it's a nonsensical move but this is what governments do now the US government let's talk about this we got a few different things here they got 12 billion Bitcoin or 12 billion dollars worth of bitcoin a little bit more a little bit more however however I would like to point out that the majority of that Bitcoin is actually bitfinex Bitcoin now I don't know what's going to happen here because this is crazy to me you see the US Marshals or whatever they caught the bitfinex hacker and they recovered the Bitcoin the vast majority they spent a little bit of the Bitcoin they got the vast majority of that Bitcoin back so does that go back

to bitfinex at some point or is the US government just going to dump it have they have they just stolen it from bitfinex like hey we we found we we found your stolen goods that's ours now we're stealing it from you I don't know if there's GNA be some Court proceedings that's customer money right it's not company money it's customer money that was stolen so whether or not that ever gets back to bitfinex I have no idea but the Bitcoin that's being sold right now now is the Silk Road Bitcoin did you hear this story by the way this is crazy so the guy this Silk Road guy he had 50,000 Bitcoin sitting in like a coffee can under his floorboards for years right yeah that's crazy that's crazy anyway they found the guy they found the coffee can they got the Bitcoin out so they got this 50,000

Bitcoin they've been selling down I don't know why these aren't going up to auctions or OTC deals and stuff like that but what we do know is that again relatively nothing burger store because coinbase has announced they're working with the US Marshals in order to help sell the Bitcoin AKA is going to be managed selling so coinbase has no interest in nuking markets with a three or four billion dollar market sell they're not going to do that they're going to manage that that's uh selling slowly try to get the best price for the US government and of course coinbase is the ETF custodian so when ETF come knocking and say hey we need another a th000 Bitcoin today oh look we got a th000 Bitcoin right here that we're going to sell OTC to you so I think

that's what's going to happen with a lot of the Silk Road Bitcoin so again a bit of a nothing burger here yeah and then the last one's Mount gox I mean this one has been a rumor for years and years and years and years and years uh it looks like maybe there's a little bit more to it this time around um what are your thoughts Mount gax is about eight billion worth of bitcoin and there's rumors they're not selling but they're refunding the customers and then you know maybe they're going to sell who knows Mount gox is finally happening I've been talking about Cox people getting their Bitcoin back since 2017 and actually in 2017 or 2018 we did see the trustee sell some Bitcoin as the market was starting to turn over um that being said still a huge amount of Bitcoin that will be returned to

customers that think it's about 140,000 Bitcoin if I remember correctly something like that um anyway but that's that Bitcoin is now activated it's really happening it's finally here however however once again rumor Inu window is all a bit worse than the reality of the story so a lot of this Bitcoin probably going to move OTC because a lot of funds bought a lot of the Bitcoin um about a third of it I think was been bought up the claims have bought up so those guys are not really interested in Market dumping the Bitcoin unless they're agents of chaos and are trying to short the market and stuff like that that's a risky bid for them they have a lot of money invested here they want to try and maximize returns so

they're probably going to look to sell OTC or do manage selling to get the best price instead of spooking the market we also know that a lot of the people in Mount gaau got Mount gaau happened a long long time ago okay and a lot of these people they are ogs in the market when they get their Bitcoin it's not like the malox happened and they never touched Bitcoin ever again maybe there's a couple guys right and this is like a big payday for them but the majority of those Mount gox people Mount gox happened they said well that sucks I better go buy some more Bitcoin somewhere else then and so when they get this Bitcoin back it's not going to be some giant you know 10,000% gain on their net worth or something overnight it's going to be like oh well I guess

more Bitcoin great so a lot of these guys may not even sell remember these are the exit Fiat crowd these are the guys who have been Diamond handing their Bitcoin for 10 years oh you tell me they're go ahead right they've had the ability to sell their claims previously as well right some of them anyway so some of that selling has already actually happened um and so I think people just don't really necessarily realize that um so look there could be more selling but is it this existential crisis like I don't I don't think so no one other thing I want mention here too is that it doesn't all happen at the same time uh the malox Bitcoin is going to be distributed over months right over months because different exchanges have different parameters for releasing the Bitcoin to their customers so it's going to take a while okay not all that

Bitcoin hitting the market at one time and what does hit the market is not necessarily going to be Market sold okay yeah there's one more big seller out there uh and that's miners Bitcoin miners you can see I got a chart up on the screen here and you can see for the last um I mean for the last while they've been selling a t at least their reserves are down a lot but I think there's other charts showing that they've been selling a bunch kind of typical around the having any thoughts around the the miners and and what they're doing it's all pretty much part for the course sort of stuff um miners tend to sell in a strength we had huge strength around the ETFs you can see huge selling started happening around that time now I I just want to point out for people you

see Bitcoin Min reserves like 1.8 million Bitcoin or something like that most of that's like Satoshi Bitcoin and stuff so that's a bit of a a funky way to look at the numbers but active minor reserves are like tens of thousands of Bitcoin and anyway they've been selling down pretty hard recently which is again normal Bitcoin having comes up these guys need cash they're a cash run business Bitcoin mining businesses are not ironically Bitcoin hodling businesses they mine and sell for cash right that's their primary goal as Bitcoin miners so look the sell down it's definitely had an impact on the market again it's part of the narrative oh my gosh Bitcoin miners are selling yeah but Bitcoin miners always sell and the thing with the Bitcoin

having is that we've just reduced their ability to dump on the market by half right okay so we're seeing a capitulation right now with Bitcoin miners more broadly where you know a lot of miners have become uncompetitive overnight when the Bitcoin having happened so these guys now have to sell Bitcoin they have to buy new machines they have to upgrade and that's been going on for a while but you see accelerated selling around the time of the having and of course that combined with massive strength in the market from the ETFs so the good news is again Lely over so not such a big deal anymore so Lark have we hit the bottom what do you think oh that's a question isn't it last chance to buy Bitcoin under 60k

guys no I don't know look Famous Last Words Right the reality is nobody can know for certain what I do know what I do know is that we had the biggest liquidation event since the FTX collapse generally something like that signals a bottoming situation we also see today um Germany sent a a huge amount of Bitcoin into exchanges and it didn't tank the markets so sentiment buyers are here whales that chart you just had up there was whales showing up and buying Bitcoin right so there's always buyers out there guys remember again that's why I say the bark is worse than the bite for this everything we're

talking about today because buyers are out they Mega whale have been stacking a lot of this market makers and stuff but still Mega whales been stacking so when you look at all this together um I don't want to rush to say the bottom is in because there's still plenty of uncertainty in the market right we could come down and tap 52k or something or high 40s like that's all possible Right but I would say the the risk reward ratio right now is highly in the favor of buyers let's put it that way right so if you're buying now what's the maximum downside you buy at 56 57 K and all know it goes down to 52 but your upside potential for talking specifically for Bitcoin right now is 90 to 100K on the next big run up to the next major sort of Milestone let's say

in the market potentially up to 215 $200,000 by the end of the market cycle so where's your risk reward at how you thinking about markets right now because that's kind of the way I'm seeing it yeah agreed and as we remember from Lark's episode last week talked all about liquidity Cycles right liquidity Cycles is what what basically uh controls the markets right as more liquidity comes into markets tech stocks go up crypto goes up real estate goes up it all goes up any sort of scarce asset is going to go up and I have a chart up on the screen here that I don't know if you saw this one uh Lark but you can see the S&P 500 and Bitcoin are sort of um what's the word I'm looking for here diverging diverging yeah yeah you can see that the S&P 500 and Bitcoin are

sort of diverging in price and they have been for the last let's say 30 days maybe a little bit over 30 days S&P 500 continues to go up and to the right Bitcoin actually going down um and so generally you don't see that or you do and when you do see it it's very short term and then all of a sudden whatever is lower tends to catch up uh and so this to me as much as this looks beish crypto it's actually super bullish in my opinion because if the rest of the markets are going up and up and up it's only a matter of time until crypto just is like a springboard and just jumps back up and reaches those levels and probably not just reach those levels but go much much higher um so chart like this to me is is extremely bullish um

just think we have the ethereum ETFs coming in a few days it's wild it's wild I feel like the Market's not priced that in at all and that's going to be a massive liquidity injection event for the market look what happened when the Bitcoin ETFs came out except now it's ethereum and now it's going to roll down to ethereum Beta plays and altcoins more broadly likely hopefully for my bags right but you're very very right is that we have this massive liquidity injection that has driven indexes up massively they're both at all-time highs sp500 NASDAQ they're at all-time highs Bitcoin because of these Market specific events has been lagging behind but won't last forever yeah and I think eth so all these others that are doing quite bad too I mean no one's selling eth in terms of like governments and stuff like that

it's just when Bitcoin goes down they also just have to go down so like it's pressure that isn't actually on them um so it's kind of a weird Divergence there I think like if you look at Solana right now that it's just ready to just blow up uh once markets turn this thing it's stronger than hell right now it's actually quite wild is there a catalyst though that you think is going to like let's say you know German government stopped selling finally they finish up mount gax isn't so bad US government it's just Silk Road it's not so bad what's the catalyst is there one or or what are your thoughts on like what finally takes us to that next sort of level up in in markets the catalysts already all here it's just we got to clear out the overhang from yeah this sort of Bitcoin and and and the

narrative around that really because again the market has the ability to absorb that it's just that everyone's freaking out about it once we clear a lot of that out people are going to start realizing oh actually the crypto markets haven't died and this wasn't an Extinction event for the crypto markets and all these sorts of things we have all the positive wind in our sales right now we have rate Cuts coming outside of a recession so that's very positive we have huge money printing huge liquidity going on globally we have ethereum ETFs coming Salon ETFs have been filed we're probably going to get those maybe later this year early next year they're going to come huge liquidity coming specifically for the cryptocurrency markets stable coins going to start Rising again massively soon I've seen we've had an uptick recently with you know usdc printers going mad hundreds of

millions of dollars hit in the market so it's all there it's all there already we only need more of it and for this yeah fear event to clear itself out psychologically from the market yeah I had someone ask me this morning in my response to what's the Catalyst for for prices to go back up it's just prices to go back up once prices go back up that is the Catalyst for more people to into the space he's like what are we going to actually how are we going to onboard the next you know whatever and that's going to take the markets to the next to the next leg up I was like it's just the price once this overhang goes away prices will go back up and then everyone will start fumming back in I mean we're down what 25% in Bitcoin or something like that like somewhere around there um

so we're going to mean revert back up once once prices start to go back up it's it's literally that simple and the reason pric are going to go back up is because liquidity right whether rates go down or not doesn't really matter although they will go down it's liquidity is coming because it's just part of the cycle now speaking of Cycles let's sort of talk about these Cycles we touched on this a little bit how there's always this fud in the middle of cycles and for those of you that are listening that are new that haven't been in a cycle before when we say cycle it's these sort of four-year Cycles Lark talked about them last week in terms of liquidity crypto markets tech stocks they all sort of follow this foure cycles and I got it up on the chart here if you're watching on YouTube or I guess

you can watch on Spotify as well this is um I've got a chart up now from the 2014 to the 20 end of 2017 cycle and what's interesting is if you look at where we're at in the current cycle right now with this pullback it is almost identical to the last two cycles that we've had and so real quick if you can see on the screen here from 2014 to 2015 we'll just look from year to year it was down only this was the bare market right a tough time it was down only for exactly a year and then from 2015 to 2016 it was like crypto did really well Bitcoin went up I think more than double in that one year that was like the year that pulled you out of the bare market then 2016 to 2017 it was a painful year there was two r really big pullbacks

that were over let's see 200 days each and one was 30% pullback one was 40% pullback so nothing like the pullbacks today um but we still ended up the year double what we were when we started which is crazy so painful year but up and then it was just like a face melting rip for the next year 20 17 to 2018 and then if you look at the next chart here this is last cycle so most of you listening were here last cycle and again 2018 2019 down only 2019 2020 pull your elves out of the bare Market really good year 2020 to 2021 a hell of a painful year with massive pullbacks that were super super long but we ended up the year way up and then 2021 a face melting rip for an entire year and then the same

thing 20122 one year down only 2023 pulling us out of the bare market and we did really well 2024 the Year we're in now so far it's been a great year but a bit painful because we've been down since March but in my opinion we end up this year you know ahead even though it might be a long pullback you know we're already at I don't know 120 days or something like that so yeah it's tough but we're only down 24 25% nothing versus all the other ones and then we've got 2025 to look forward to which is where Lark just said you know Bitcoin maybe to to 200k something along those lines so like if you just zoom out and look at past Cycles again we're just following liquidity Cycles here we're just doing exactly what we're supposed

to be doing and the fud in between and that one painfully year that still does well it's just always different sometimes it's India and China Banning sometimes it's Mount goau almost always it's Mount go selling Germany selling Etc so what are your thoughts here and you have anything you want to add to this sort of Cycles the Bitcoin fouryear cycle has been my base case for this Market cycle I don't know when Bitcoin hit its new high at 74k everybody said well left translated cycle this time is different no things are always a little bit different but you have to look at the big picture here Bitcoin having post Bitcoin having scenario Global liquidity Cycles those mooving approximate foure Cycles Global liquidity cycle just starting going to see a massive run up over the next year

year and a half whatever until we see the liquidity cycle top out then you need to get the heck out of marcet Run Away really fast and sell everything now what's interesting is the squiggly line you have on the chart here it comes up to a very fascinating level because if you go back and you start drawing some Fibonacci retracements across the uh the charts here you'll find that 3618 line um is going to come up to about 215 215,000 and that's a very interesting level because last cycle that this the 3.68 line was around like $65,000 we a little went a little bit above it what's crazy though is that the 3618 line for ethereum it it came within a few dollars a few dollars it was that

close and that you know that's predictive in advance right so you go back and you draw that from the 2017 Market top to the market bottom in 2020 and um it's very interesting isn't it very interesting how we get those numbers anyway that's $215,000 that's late next year sometime fingers crossed of course that is the number that we end up getting markets are chaos and nobody has a crystal ball right we can only base our models on how we understand things to work and the Cycles as as they work but we are entering this massive liquidity phase in the market and that liquidity phase is just beginning and it's not going to be up only it's going to be a lot of this right so prepare for this to happen again potentially

multiple times between now and whenever an eventual top comes into the market and it could be earlier than people think it could be later than people think but my base case has been sometime in probably late 2025 could come a little bit earlier maybe it comes in the summer or something like that but sometime in 2025 that's probably when we get our Market top it's funny we say that it's going to end at you know 215k whatever it is and we've been saying this I mean I've seen you saying this on your channel for you know since the bare Market I've been saying this as well we're gonna have another typical cycle and so people see that oh it's going to go to two 210k or you know East going to go to 10K and I think they just think it just goes straight up and the right and

I think both you and I have been saying there's going to be many pullbacks along the way but when you get in a pullback like this it's a bit scary especially when people have a lot of money in it um but you need to expect it like we're going to come out of this pullback probably pretty soon according to what Lark thinks and when we do we're kind of on our way up to the the you know the numbers that we've been talking about but as you can see from my squiggly lines here my beautiful drawings put a lot of time and effort into them it's not a straight line we're going to have a bunch more pullbacks and honestly a 25% pullback is Tiny now this one's a little bit long I guess but not that bad but we're going to have probably a 30%

maybe a 40% at some point now it might be quick might be just a couple weeks in length who knows we don't know we're going to have short ones we're going to have long ones we're going to have steep ones we're going to have aggressive ones not so aggressive but we're going to have a bunch we had I think 10 or 11 pullbacks and more than 20% last cycle and then like 13 the cycle before that um so you just it's part of the game as you said it's it's if you want the volatility to the upside you got to play with that volatility to the downside it's just that's the way volatility Works um L as we wrap up here any final advice what do you suggest right now um as we're you know sitting here with with Bitcoin I don't know what we're at but

around 57 58 or something like that maybe even lower um any thoughts to the listeners on what they should be doing yeah just just a thought here is that um you don't need to rush in these markets there always this sort of I have to do things really really fast and that tends to get people in trouble take your time okay there's always opportunities in this market as you see right now there's always opportunities in this market and you don't have to rush in right now for example we're waiting for the market to establish strength at the time that we're recording this we're testing the 200 day exponential moving average we may just looking at bearish retest and we could come back down to 52k or something like that I don't know I don't have a crystal ball but I know that a breakout beyond the 200 day EMA is going

to be a signal of strength in the market and once the big one that we're looking for the big one right and so it all depends on what you're doing are you just stacking for the long term are you looking to do directional trades because the big move I think comes when we breach 72k that's been the major area of price resistance we had five tests of that failed every one when we break over 72k that's when we get the fireworks that's is going to move up to that sort of 90 to 100K range which I think will be the next Market cycle local top before another major correction we grind up to do all this again basically actually I think one of our our future episodes with you L I want to talk about what happens next cycle do we

have another typical cycle I'm starting to debate like do we do we have another huge selloff in this like Long Bar Market again we won't talk about it today but I think we'll have to we'll have to have that chat in the future um because at some point these Cycles need to change you can't just have this literally always although for as long as they do take advantage of them because like the fact that this industry goes down 80% every four years and you just get an opportunity to like Reby in at all this at such a low price is is absolutely wild so anyway don't get knocked off the horse right here the trend is up over the next 12 to 18 months don't let these pullbacks um knock you off the trend stick on it uh but that's all for today folks thanks uh

so much for listening in Lark thanks so much for joining uh everyone have a wicked awesome day thank you for listening to milk Road radio the easiest path to get smarter about crypto if you like this episode share it and hit subscribe or follow so you don't miss out on the next one there's also a link in the description to our free 5minute daily newsletter where we simplify crypto for you while making you laugh and if you're willing to step up your crypto investing game then we'll leave a link to milk Road Pro as well your number one resource to help you invest successfully in crypto one final note this podcast is for educational purposes only and nothing we say is financial advice crypto is risky so you should never invest more than you're willing to lose thank you friends and we'll see you

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