Matt Crosby on whether the Bitcoin bottom is already in

Transcript

All of these are kind of pointing towards the fact that if we haven't bottomed, we're so close that it it's it's risky to to not be scaling in at these levels. Bitcoin has been rangebound around 64K for over 45 days now. Are we just going to bounce in this channel forever, or is Bitcoin about to break out, break down, or break dance? Hello and welcome to the Milkro Show, the podcast that knows that staying parked at 64K is not what most people had in mind when they said that Bitcoin was a store of value. I'm your host, John Gill, and today is Tuesday, August 18th, and today we are joined by Matt Crosby. Matt is the former director of research and analytics at Bitcoin Pro, and is now pivoted back to look into Bitcoin. We'll have him explain what all that means. Uh, but he is a great

onchain technical analyst. He is an expert on market cycles, on Bitcoin, and all things Bitcoin in general. He's going to share a ton of alpha with us today. I'm going to ask him to unplug Bitcoin and plug it back in and see if that fixes things. Uh, but if that sounds good to you, make sure you like and subscribe. Share this episode with somebody who's going to enjoy it. A reminder that our podcast today is free and that would not be possible without our wonderful partners at saber.money, the stablecoin payments platform built for Asia. So keep an ear out for more information about them later in the episode. But without further ado, for now, welcome back to the Milkro Show, our old friend Matt Crosby. How are you? >> I'm very well, thank you. How are you, John?

>> I'm doing pretty good. I would be doing better if Bitcoin was over 100K. Uh >> wouldn't we all? Wouldn't we all? [laughter] >> I I would like to start there, Matt. Uh, Bitcoin has been chopping around like a lumberjack in this range for like over two months at this point. I think Bitcoin is almost at exactly the same price it was the last time you were on this channel. Just give me your updated outlook on Bitcoin here. What's the high level picture you're seeing in the markets? >> It's been a long summer. [laughter] There's been a whole lot of nothing going on. Before I come back on the milk road, I like that I'm a bit more of a recurring guest. I always go back and look at the previous episode to be like, "Huh, what did we talk about? what can we talk about this time? And as you

said, literally nothing has happened. It has been the most boring, sideways, choppy, consolidationary summer in recent memory. But in terms of where Bitcoin is, I'm still thinking Bitcoin looks pretty attractive down at these levels. And I don't think this period of nothingness is going to continue too much longer. So if we look at the Bitcoin volatility which is just as cyclical as the price action, we have bull and bare markets and we have periods of expansion and contraction. If we look at the Bitcoin volatility as measured by the rolling volatility on a oneweek basis, as measured by the Ballinger band widths on the standard 20-day basis, we're in some of the lowest levels ever recorded. This was a

few days ago, but we reached the bottom about 1.5th percentile, meaning that it's incredibly rare to see Bitcoin's price action so stagnant. And the one thing that we need to take from this is is again, Bitcoin's volatility is cyclical, almost like a spring being compressed. Once we see such low levels of activity and an exciting price action, it's not long before that resolves in a much larger and more trending move. So if we actually compare the price action volatility, the the range that we typically see prior to Bitcoin reaching such extreme levels of low volatility, we can see we usually have a move two plus times greater than the volatility we'd previously experienced. So the median move after

we've seen Bitcoin in such low periods of volatility, we finally break out is about 10% in a week, another 50% in the following quarter. So, I think we are very, very close to seeing Bitcoin finally breaking out of this $64,000 range. I was writing an article earlier today and I had that that Groundhog Day meme where it's, you know, Bitcoin's at $64,000 again, it just feels like never ending that we've been going sideways, but I don't think that's going to last too much longer. And in terms of why I think this is still a good reason to be considering accumulating Bitcoin is because even if you think we could have a bit more of a volatile move to the downside if there's a black swan, if you're a fouryear cycle believer, whatever it may be, I think it's hard to

deny that there is a hell of a lot of value to be seen at these levels. This is one of the newer charts we have the MVRV quantile bands. Now, I actually showed something similar to this on our previous stream, but that was just in Trading View. That was almost a working prototype. Now it's officially live, published, and free for everyone to use. It shows you relative to the realized price or the average accumulation price, the cost basis of all Bitcoin on the network. The ratio between the underlying price and that cost basis gives us these MVV quantile bands. When we're incredibly overvalued, you can see we're reaching these upper 90 plus percentile ranges. And if you don't want to sell, that's fine. But maybe these levels you can maybe scale in a little bit less aggressively, put a little bit

of cash to the side for days like today where Bitcoin is at incredibly discounted levels. recently in the bottom fifth percentile, currently at around the 12th percentile. Regardless of which way you're looking at Bitcoin, if if you're waiting for $55,000, $50,000, if you're waiting for October 6th or whatever it may be, I think it's risky to not consider at least having a little nibble at these prices because to me, it's buy one get one free sats. >> Hi everyone, this is John. Listen, our Milk Road Pro analysts nailed this AI bull market. They had dozens of calls pay off in a big way for our community.

If you want to see how our entire team of analysts are positioning for the crypto bull market that's going to come after this bare market finally ends, you can join us now at Milkroad Pro. It's just a dollar. Link is in the description. You'll get access to all of our analyst trades, their watch list, and see how they're navigating this in their portfolios and get access to ask us questions in Discord anytime, day or night. It's just a dollar. Links in the description. Milk Road Pro. Join now. I'll see you there. Okay. So, I want to unpack a couple of things. You just went through a lot of information and a lot of charts here, but that first point about volatility, I think, is what really stands out to me. I I was watching another uh onchain analyst and he said that Bitcoin throughout its

history, 94% of its history, it has had more volatility than it does right now. So only 6% of Bitcoin's entire history, the entire history of Bitcoin has been this low in volatility. Um, so a lot of people are saying, just like you said, that that's unlikely to continue. we will see a a rise in volatility on Bitcoin. Um, but the question that comes up naturally is volatility doesn't have a direction. Do you have any kind of tilt in your bias in the data you're seeing one way or the other if you're expecting that volatility to be the upside to the downside or are you not sure right now?

>> So, as as any good analyst, I have an answer for both directions. Almost a get out of jail free card if you will. So, I always have a backup by saying, well, I did say that could happen. But no, I my bias is to the upside. As we've said, we're at some discounted levels right now, but I do have some data which kind of supports the fact that I think we're so close to a bottom either occurring or having already occurred that the path of least resistance is to the upside. So, I'll I'll first cover the bullish case and and then I'll cover the bearish case. Again, if anyone says they know exactly what's going to happen, they probably have the best snake oil in town. If anyone says there's no chance we can go lower, you know, again, they probably have a little bit of an

incentive to to sell site subscriptions or something. And by the way, if you do want to subscribe to look into Bitcoin, I'm joking. I'm not going to do that. I'm not going to be that obvious about it. But if we look at the long-term holder supply of Bitcoin, we can see that this recently surpassed about 80%. Meaning that a vast vast majority of Bitcoin just hasn't moved hands in a long, long time. And people are realizing the opportunity cost of potentially moving their coins at this time. But another way to look at it rather than just looking at these raw percentages is if we look at the cumulative percentage of Bitcoin moved by long-term holders throughout the cycle. So what we can see on this chart here is looking at the as I said the cumulative percentage of long-term holder Bitcoin that's been transferred

throughout bull and bare markets. There's a huge amount of similarity between bull markets topping out at somewhere around 38% of all Bitcoin held by long-term holders changing hands. Very very consistent. But it's very similar for the downside as well. Somewhere around 10% of long-term holders capitulate and move their Bitcoin as we're finding a bare market low. And very recently, we actually reached this exact same level, which again just gives me some insight of to the supply and demand economics. I I just don't think there's enough people looking at Bitcoin right now and thinking now's the time to be selling.

We can look at it through another lens as well, through the long-term holder percent in profit. [snorts] If we look at the level of pain experienced, the the amount of Bitcoin actually held by long-term holders and the amount that's underwater, we can again see it's bottoming out at the exact same levels as the two previous bare markets just around that 50 to 60% range. Again, just showing that when most, well, not most, but a huge portion of long-term holding participants are experiencing pain. It it kind of carves out these these lows that we see in the Bitcoin cycles. We're going to take it another step further.

Oh, you're going to you're going to dive in. I'm rambling. >> Well, no. I just want to make sure I understand that point before I let you continue here. But what you're saying with this chart is that long-term holders of Bitcoin, which again, define that term for me. Just like how many how many days is a long-term holder? But most of them, you're saying now are underwater on their investment. That's what you mean when you say pay. Correct. >> Correct. So, this is using the static 155day threshold of defining a long-term holder. Now, it's 155 days because if you hold beyond that, the chances of you spending it over the next week essentially drop towards zero. I think it should be a more dynamic threshold, but that's a story for another day.

Maybe we covered that in the last episode, but yes, essentially when these more experienced holders that aren't likely to be moving their Bitcoin anytime soon, when a huge percentage of those start experiencing losses on their position, their their accumulation price was higher than what it is today, that's where we start to see the the supply and demand economics kind of working in the favor of there just not being enough additional sellside liquidity to push prices significantly lower. It's not actually 50%. It's it's somewhere around the 55% region. It doesn't actually reach a majority. But what we can do is actually take that a slight step further. So rather than just looking at long-term holders, again, we can look at the entire supply of Bitcoin. And

recently that supply in Bitcoin in profit did drop beneath 50%. So again, this isn't just long-term holders, this is long and short-term holders. And it's a pattern that we see in every single cycle. Once we drop beneath this 50% level, it usually gives a good indication that you know this is this is capitulation. This is blood in the streets and we can transform that chart a little bit. So rather than just looking at the percentage of supply in profit, we can take the the realized price that we looked at previously, the average accumulation price, but rather than looking at the the mean average, which takes into consideration Bitcoin that was mined over a decade ago for a fraction of a penny and is lost in a landfill somewhere. If we look at the median realized price, so this is the

the most common average accumulation price. 50% of people accumulated above this level and 50% accumulated beneath it. Then that median price is somewhere around 62 $63,000 and we dipped beneath that indicating that again a majority of investors were actually at a loss on their position. And it also plays in the fact that a lot of people saying I'm not going to buy Bitcoin until we reach this realized price. I I think that is too heavily weighted by a lot of Bitcoin acquired at fractions of a penny and that may be lost and Satoshi's coins which are never going to move again. If instead you work in medians by looking at at what level 50% is above and 50% is below as we see with this chart then I think it can better define levels of

maximum pain and capitulation when a genuine majority of participants are at a loss on their position and we've already dipped beneath this level the level which has marked the the most opportune moments to accumulate in previous bare markets. >> Okay. So this is another way of slicing the data that basically says that we've seen enough pain in your opinion to say that the bare market bottom may already be in. >> I believe so. Yes. And just to throw even more fuel onto the fire, we can look at that through a slightly different lens. So again, rather than looking at the amount of supply, so the the medium realized price we looked at there was almost 50% of the accumulated Bitcoin. But again if we look at the raw UTXOs to to try and look at not the amount of supply not the percentage of

circulating supply but looking at the actual transaction. So at what point 50% of all transactions would be at a loss. We can see that recently we actually dropped to somewhere around 40%. Which is the lowest level we've experienced since around 2015 over a decade ago and considerably lower than we experienced in the previous two bare markets. And again, all of these just screaming that this is as close to peak pain and capitulation that we could possibly experience. Now, could we have an unforeseen black swan event that takes markets lower? Yes, of course. Realistically, Bitcoin is incredibly correlated to US equity indexes like the NASDAQ and the S&P 500. And due to the geopolitical uncertainty, if we do see a big escalation there, if we do see again

another major bearish catalyst that sends equity markets into a 10, 20, 30% draw down, Bitcoin is almost certainly going to struggle. But I I think having a black swan event is your base case thesis to accumulate lower because we haven't gone down x percentage from the all-time high is is missing what really moves markets and that's supply and demand economics. investor psychology. It's it's the behavior of people that are actually participating in the market rather than static calendars of the month or static percentages on a chart.

I think these levels are what's actually moving the price and these are the levels that I I think most people right now are overlooking to a to a large extent. Okay. Yeah. And just so our audience knows um UTXO stands for unspent transaction outputs which is like the raw Bitcoin wallet addresses. Um so that's what Matt is presenting here. Um and so again this aligns with what you're saying is that there are a lot of ways to look at the data but a lot of what you're seeing on chain seems to indicate that you know compared with prior bare markets we are at a point of of pain and of um of loss of profit that is is comparable to those markets. So you you think we might be uh at or past the bottom?

>> Yeah 100%. And and again, this is why I do think charts like the the quantile bands which we looked at previously are going to be incredibly popular going forward because so many people are focusing on is this the bottom? You know, are we going to go to 56, 52K, whatever it may be potentially. But if you ask the person in the previous bare market who was buying Bitcoin at $18,000, $19,000, do you think he is furious because he was buying 20% higher than where the ultimate bare market lowers? No, they don't care. That's a huge amount of Bitcoin for the amount of dollars you're actually investing in a few years. If you're watching this

video, you're bullish on Bitcoin long term. You shouldn't be arguing and squeaking out and risking not accumulating over a few percentage points. So when you can look at the market through more probabilistic viewpoints such as these, taking into consideration the macroeconomic factors, the technical factors when we see Bitcoin crossing above and and regaining support on the 200 weekly moving average, the onchain data again looking at the the holder composition, the flows coming into the market, if we look at ETFs, if we look at derivative markets, all of these are kind of pointing towards the fact that if we haven't bottomed, we're so close that it's it's risky to to not be scaling in at these levels. So, the risk now is not having exposure as opposed to having too much exposure. Um, Matt, I want to raise a

couple of objections here. This is a lot of great onchain analysis. A lot of what I'm hearing from analysts in the Bitcoin community right now is more things around seasonality. People saying that August is a historically bad month for Bitcoin. People saying that, you know, the bottom can't be in until October because the four-year cycle calendar says so. Um, how do you square a lot of what you're doing here in your onchain analysis with some of these seasonality or cyclicality arguments and and and how do you see like, you know, how do you give credence to that in your own analysis as you're thinking about Bitcoin here? >> Great point. It's probably one of my more controversial and unpopular opinions when it comes to this type of thing because a lot of foyer cyclists.

The thing is is I wholeheartedly completely understand the viewpoint of do not change what isn't broken. It of course Bitcoin traditionally has followed this four-year cycle where we have the having event followed by a big bull market followed by a big bare market followed by a transitionary period up until the next havinging. I think the h havinging events which which undeniably drove a huge amount of the cyclical performance of Bitcoin have massively reduced or or diminish their influence on price action. We're at about 95 to 96% of all Bitcoin that will ever exist are already in circulation.

So if for a second we just assume and I hate assuming when it comes to this analysis because again don't fix what isn't broken and don't rely on data that doesn't exist yet. But if we look to Bitcoin's correlation to other markets such as US equities, specifically the S&P 500, we can clearly see Bitcoin, especially since 2020, has become incredibly correlated, almost a high beta play of US equities. Now, I wanted to look to see if there was some seasonality in these markets because if Bitcoin is going to start trading a little bit more like a risk on US stock or potentially like a commodity, precious metal like gold being the the digital gold narrative being fulfilled, is there true seasonality in these other

markets? And there was there was some interesting finds. So, I'll quickly run through it. If we look at US equities, and this was looking at where we are in the presidential cycle, because a lot of people are looking at markets right now and saying, "Yeah, but we're in a midterm cycle, so obviously markets are going to struggle. Bitcoin is going to go down. We're in a midterm year. It's always done this." Well, it's also always aligned with where that having kind of lined up. And if you look at the Bitcoin four-ear cycles, everyone ignores that the first two cycles didn't play out in a four-ear cycle way. It's only the previous two. So, it's an incredibly small sample size. But equities do, in fact. I hope my hands up have historically been poor performing in midterm years. If we look at gold, however, though, so again, it kind of

comes into question of where do we see Bitcoin going going forward? Are we going to be this inflationary hedge asset? Because gold actually performs the best in midterm years. But a lot of people look and say, well, it kind of depends on what the US dollar is doing. But the dollar index, the DXY, actually usually goes down in midterm years. So, if Bitcoin has this inverse correlation, you'd be anticipating Bitcoin to actually be doing well, which it isn't. And if we look at the S&P 500, which again usually has its worst performance in midterm years, excluding this year, in which it's been performing exceptionally well and continues to rally to new highs. And that effect has actually massively dampened over the past few decades. If you look over the past six presidential cycles, it's basically in a coin flip. been 50/50

whether the midterm year is going to outperform the the pre-election year, the following year. It's been a coin toss. No one's been able to decide if this seasonality is actually working. It's mainly a consequence of the earlier years back. We're going back way to the 70s and 80s before this seasonality was was a concrete thesis. Over the past 20, 30 years, it it's not really played out like that. And I looked into if the party currently in power made a difference. It rarely makes a notable difference. Maybe gold performs better with a Republican president, but for equity markets, it's essentially exactly the same. And then taking the presidential cycle out of things and looking at the month-on-month seasonality, a lot of people will say, you know, sell in Maine, go away. Q4s where markets really start ripping to

the upside. And again, I I looked into this and there were there was some truth to this. With gold, not so much. There was there was so much variance every single month, it didn't really make a difference. But with the S&P 500, there certainly was some notable months where it typically performed better. November, December, January were usually a good stretch of performance. However, again, this is an artifact of of days gone by. If you look pre202, then winter beat summer 72% of the time, but in the past 23 years, winter's actually beaten summer only 55% of the time. Again, it's pretty much a coin flip of seasonality of what six-month period of the year outperforms the other. So I think people relying on the seasonality what calendar

where the moon is in the sky are really simplifying a a much more complicated process because if we look at the things actually moving price action the relationship between the US dollar declining and global M2 increasing and inflationary rates and and bond yields etc. these have a much more quantifiable influence on all markets and and Bitcoin without a doubt is going to start trending in that direction. That was a very passionate and informative uh speech, Matt. But just to summarize, it sounds like what you're saying is that a lot of these ideas of seasonality and cyclicality are maybe artifacts from prior market cycles that are, let's say, if not completely gone, maybe losing a little bit of their predictive power.

Um, and I'm sure that's extremely controversial, so I'll let you deal with that in the comment section. But, um, I I do want to ask, is there a bare case that does seem credible to you? Because you gave us the bull case, right? Like basically saying that there's a lot of onchain analytics that points to the fact that we may have had enough pain for the bare market to be over or at least have bottomed if not over. Um, is there anything that you're seeing that gives credibility to the to the bare case that maybe there is additional downside still ahead of us? >> Yes. So, for a couple reasons, >> I was afraid you would say that. [laughter] [gasps] The Global M2 chart, especially over the past few days, has has been really popular on Twitter. I'm not sure if you've seen this, but there's been a

huge amount of people saying, you know, Bitcoin has decoupled from Global M2. It no longer follows it. And if you just look at the raw Bitcoin versus Global M2 chart, it kind of makes sense because Bitcoin over the past few months has obviously been in a bare market. We're all very much aware of that. But Global M2 has been skyrocketing to new all-time highs. So, is this relationship dead? Can we no longer follow liquidity? It's no longer a good proxy of potential Bitcoin price action. Well, again, it depends on the lens you're looking through. If you zoom out further than the history of Bitcoin exists, global liquidity almost always trends up and to the right. Governments just love printing money. So instead of looking at it just on a raw basis, if you look at it on a year-on-year basis, and again I

think this is something we actually looked in the last episode, but if you look at global M2 again on a year-on-year basis and lay that into Bitcoin, it has a substantially strong stronger correlation than just looking at it on a raw basis, especially if you add around a 10 week 70-day offset. They really do line up exceptionally well. And this is actually pointing towards potentially a few more weeks of bearish choppy sideways consolidationary price action in towards midepptember. And along with that, the US dollar index the the DXY has also been doing something fairly similar. Now, if we look over the past few months, again, lots of people are pointing towards the fact that global M2 has been rallying, yet Bitcoin's been lagging behind. But if we look at the US dollar index, the DXY on a year-on-year basis, this has

been absolutely skyrocketing over the past few months. But it peaked out on July the 1st which is exactly or one day off where the the most recent low has been and since then it has been declining. So clearly the inverse relationship between these two is incredibly notable. But again over the past few days this has been moving to the upside. I do think if inflation continues to run rampant I do think if interest rates rise I do think if more people are going into bond markets and we see the TV yield rising global liquidity contracting that's not going to look good for Bitcoin. That is that is my short-term bare case. I actually have a long-term bare case on Bitcoin, which isn't the jolliest topic and of conversation to have at this point in a market cycle. But again, if we look at

Bitcoin objectively and and remove all emotion, because again, I'm a Bitcoin analyst. I'm a little bit biased that long-term it's going to be great and all the world's transactions are going to be happening on chain. But if you look at Bitcoin from a fundamental perspective and again I don't think this is something we need to be worrying about right now but a lot of miners have been pivoting away from Bitcoin. Marathon have sold 1.6 billion I think they announced recently of Bitcoin. Riot have been transitioning into supplying AI data infrastructure and have just agreed a massive $9 billion ideal I think with Anthropic. I think this trend could continue. Not because BIP 110's coming about and, you know, is trying to block

some nonsense for 1% of onchain transactions, but Bitcoin's block subsidy is trending towards zero. It's it's an undeniable fact that at some point the block subsidy is going to be zero. So, what's going to actually sustain and incentivize Bitcoin's onchain security? because the premise is well everyone's going to be using Bitcoin and the revenue generated from fees is going to surpass you know the block subsidy and the miners are going to be incentivized to secure because everyone's using Bitcoin etc. But the more people are seeing Bitcoin as a a treasury asset, a reserve asset, something that you don't spend, it's something to save and and not actually use, the fewer transaction fees are

actually generated. And and recently, the yearly average revenue from these fees decreased to its lowest level since 2011. Now considering the current block subsidy is 3.125 Bitcoin, the entire day of Bitcoin revenue generated from fees was lower than the block subsidy of one block and we get 144 blocks a day. So it is a tiny min minuscule percentage and in the not tooistant future the entire Bitcoin security incentive system is relying on this which has a dubious future. And I know a lot of people are going to say yes, but you know, people are going to set up individual solo miners and people are going to be mining Bitcoin just to secure the network and the difficulty is

going to decrease, etc. But if we do see an age of exponential computational power and quantum computing and we're relying on everyday Joe's with their, you know, tiny little lottery miners to secure Bitcoin, I think it's some point that leads to a large centralization risk and again the potential for a 51% attack by a nefarious nation state or something. So, I'm not saying that this is definitely going to happen, but I think people arguing about NFTTS on Bitcoin or arguing about whatever it may be are really missing the larger picture of Bitcoin needing a better mechanism to secure itself decades into the future.

>> You know, one thing we've talked about a lot on this show is that crypto is quickly becoming a huge part of the global payments infrastructure, and nowhere is that more obvious than in Asia. But if you're actually running a remittance company or a payment business, you know that the hard part isn't moving the stable coins. It's dealing with local banking partners, compliance, liquidity, and all of the operational headaches that come with sending money into places like India and Southeast Asia. That's why today's partner is Saber. They give payment companies stable coinpowered infrastructure to collect and make payouts across Asia without having to build all of that complexity themselves. They've already processed more than $3 billion in transactions across 40 different countries. So, this isn't just a concept. These guys are actually doing this for real. If you're building payment infrastructure or expanding into Asia, make sure you check out

saber.money. Well, that's I think a very deep in the weeds kind of a Bitcoin specific topic, but I think it's an important one. And I think, you know, to me, the way I've been reading this is just it's a symptom of the bare market dynamics. When the value of Bitcoin drops, the demand for the network's usage drops, um, and the the the value the miners are getting drops, it's it's kind of natural that some of them leave, some of them look for other sources of revenue. But I do think that if price and sentiment turn that a lot of them will come back to. So, I'm not too concerned about that yet. But yeah, I think you raised some valid points and like it's something that everybody who is a Bitcoiner or a Bitcoin investor needs to be thinking about. Um I I I'm curious if if there's

anything here that we can end on um to give us a little bit of a a view of the road map ahead, you know, for the next month until we get you back on um like what you're what you're looking at, what you're anticipating and just what what we should be watching for as we go forward here. >> Good question. Uh, I think right now the the important level to watch for Bitcoin is of course the the 200 weekly moving average. Something everyone's watching, someone everyone's hoping we can continue to break and and continue to hold above as support. But for me, I think probably one of the most important levels right now is the short-term holder realized price. So, we've mentioned a lot today about the long-term holders and the the, you know, the general cost basis and the median price, etc. But the short-term holder

realized price is the level at which new market participants on average accumulated their Bitcoin. And what we can see throughout Bitcoin bull markets, it typically acts as a very strong level of support, almost like a moving average, but adapting based on the the genuine supply and demand economics and flows of the network. Yet through a bare market, again, it kind of does the opposite. Acts very strongly as resistance. What you'll notice is this is the previous bare market. We was rejected of it multiple times. Once we finally broke back above this level and retested it as support, that kind of kickstarted the subsequent bull market.

Same thing, exact same thing happened in the previous Bitcoin bare market and the one before that as well. If we look to where this level is today after bearishly rejecting from it two separate occasions during this current downwards move, it's not that far above where price currently sits today. And again, we're filming this on the 18th of August. Hopefully by the time I come back, we've actually broken above this and we've had this volatile move, but it's only sitting around $67,000. Now, this would be a big psychological flip because for the past few months, anyone who's been buying Bitcoin has been seeing it just consistently continue to decline. And every time it's come back up to their average cost basis, their accumulation level, they think, "Oh, amazing." And it break even again. And we immediately get rejected.

So, from a psychological standpoint, it's a pretty key level to be breaking. But alongside that, it also aligns quite closely with some key moving averages for Bitcoin. So that $67,000 is the average accumulation. That cost basis for new market participants is pretty much bang on. It's not going to load now. My internet's going to break out. But it's pretty much exactly aligning with the 200 daily moving average. Now again, just from a psychological and technical standpoint, that'd be a pretty key level for Bitcoin to break above. If you look at the Bitcoin price chart, that's also aligning with a major resistance zone again at around 6768 $69,000.

So for me, realistically, the trend is your friend until the end. I'm not getting too bullish right now. I'm accumulating, but more on a mean reversion basis. And this is for Bitcoin that I'm intending to hold for the very, very foreseeable future. If you are someone that's a little bit more active in the market looking at where the price action could be going, then I think really we can't be too bullish until we break above kind of the $70,000 level, I think that'll be a big major bullish catalyst because that also aligns pretty much with where the previous cycle all-time high was. And again, if we look at the previous Bitcoin bare market, once we actually dipped beneath that all-time high, reclaimed the 200 day moving average, retested that as well as the previous all-time high, that was kind of the, you know, the all systems

go moment. But one thing you need to consider as well is Bitcoin when it moves off the bottom, it really doesn't hang around. So, anyone who's thinking, you know, I'll take my time. I I'll wait for the trend to, you know, really confirm and come back, etc. If you look at the three previous Bitcoin bare markets, once we'd actually broken above the the key levels of resistance, be the 200 day moving average, the short-term holder realized price, within 100 days, in all instances, we had rallied practically exponentially. So from 2015, within 100 days, we'd gone from $250 to about $460 within just a couple of months. If we look to 2018, 2019, we'd gone from around $5,000 to within a 100 days about $14,000. So again, a pretty exponential rally. similar thing in

2023. We've gone from around 18 $19,000 to over $13,000. So once Bitcoin starts moving, again, people forget we are still this relatively small $1.5 trillion asset. If you look at gold, I mean, it's it's probably reclaimed $ 1.5 trillion of market cap increase in the past week alone. We're a minuscule asset and it wouldn't require a huge rotation of capital from other markets to really get the ball rolling. And as we can see, we are still the best asymmetric asset in the world. If you're looking at Pokemon cards and thinking, maybe I should be investing here, there, or wherever else. I think just zoom out, look at the big picture of things, realize that this bare market is long and as boring and as painful it may have been. It's reassuring that Bitcoin does

have these passive flows coming in and supporting the price. All previous Bitcoin bare markets had 70, 80, 90% plus draw downs. Right now, we're at a 50 55% I think from the all-time high to that recent low. we set and we're already talking about the bare market potentially being finished. I think it just shows that Bitcoin is maturing as an asset and potentially people are underestimating the the long-term effects of having passive flows from pension funds, ETFs, hedge fund managers, etc. I'm just again I'm a little bit biased, but I I'm incredibly bullish on Bitcoin over the coming few years. And for me, I sound like a broken record, but the opportunity granted to us at these levels is is too hard to ignore.

Gotcha. Okay. So, that's some good price targets for short-term resistance at, you know, you you said 67, 69, and you'd like to see us above 70 to feel like we've really kind of gotten over those levels and cleared a lot of those moving averages. Um, Matt, I I've seen a lot of people talking about rising open interest on Bitcoin and I I don't know if you have a take on this or not, but I wanted to get your thoughts. Do you think that you're seeing anything in the rising levels of open interest of leverage that's coming into Bitcoin that tells you anything about which direction the market is betting that Bitcoin moves here? In other words, are more people coming in to short? Are people coming in to go long? And just what direction do you think the market is betting that Bitcoin picks here?

>> Well, we can cheat. We can just see which way they're betting. I've seen I've seen a lot actually. Yeah, the um the open interest rising I I don't think it's at levels that are too worrying right now, but the fact that a majority of them are actually betting on further upside isn't exactly what you want to see and potentially leads me to believe that we may have a little bit of a fake out or some tom foolery to the downside before we can actually have any positive momentum to the upside. Because if you look at the Bitcoin funding rates, now these are calculated by the premium paid by leverage derivative perpetual futures traders every eight hours just to keep their positions open. Now, when this is positive, they're essentially paying to

keep their long positions open. And people shorting the market actually get paid the privilege to do so. And we can see the unfortunate reality is a vast majority of leverage traders are wrong most of the time. When Bitcoin bottomed out in the previous bare market, that's when everyone shorted. That's when everyone thought it was going to go significantly lower on multiple different occasions. And when we started rallying again, what were leverage traders doing? Thinking that the train was going to continue. Don't stop this. It's going to continue rallying until I can buy two bright orange Lamborghinis.

Yet now, what we really want to be seeing is people shorting the market. And that's not because I want people to be losing money. Not at all. But if we look at when people were really starting to short the market as we first dropped towards $60,000, we had this big shorting spike. People were betting on further downside and that kind of solidified that that was the low for a few weeks and then we started trending a little bit higher and higher. But now everyone's actually longing the market and these are coin derived or denominated sorry funding rates. So these are when people are using their underlying bitcoin as collateral but it's a similar story if you do USD denominated funding rates. People are trying to catch a falling knife right now and that's not something that

typically works for most market participants. So for me to get truly 100% bullish, maybe we need to see this start trending to the downside because not only does this going negative provide the the contrarian viewpoint that we need to deal with the opposite of what majority are doing, but it also gives the potential for what's called a short squeeze. So when price starts moving in the opposite direction of where a majority of derivative traders have actually placed their bets, eventually when price moves that way, they're forced to close out. They're liquidated. And to actually cover their position, the exchange has to buy Bitcoin if they're shorting the market or sell Bitcoin if they're longing the market. And that has a little bit of a positive influence on the price action.

If this is a short squeeze, price moves up, short traders get liquidated, the exchange has to buy. Price moves up a little bit, but that's going to squeeze more traders. that's going to liquidate more and this is where we get these big exponential moves very very quickly in price action. So, that's one thing that I would like to see. And again, I like to try and be rational. Of course, I'm I'm bullish, but you need to take all of these things into consideration. And realistically, for me to have been 100% bullish, I'd like to be seeing some differences in the derivatives markets. But if anything, I think it's just showing that people are bored. I I think this is again playing into the volatility argument we had previously in that periods of chopping consolidation and sideways, boring price action.

People get a little bit angsty. People are looking for something to do. People are starting to place their bets. And this is potentially where we have the the most explosive moves in Bitcoin. So hopefully it is to the upside. Potentially it's it's a wick to the downside. Fake everyone out. Move to the upside. I don't know. I I'm not very good at speculating on on very short-term price action. It's much easier if you zoom out in Bitcoin. It almost always goes in one direction. But I would just say don't try and outsmart the market. Don't try and take any leverage long or short positions and try and big brain everything. There's too much game theory involved and there's too much data to support that. Acting alongside a majority, not just in Bitcoin, but in any markets is unlikely to play out in your favor. But if you

just zoom out and look at Bitcoin objectively, there's so much value down here. You don't need to be leverage longing. There's no other asset that's potentially going to provide a 2, three, four, 5x in a couple years time. Bitcoin is still the only one that can do that. If you do believe Bitcoin is going to be flipping gold at any point in the near future, then we still have what, a 25x or something on the cards, you know, it's the opportunity of a lifetime. I don't want to say we're still early because anytime Wall Street's here and pension funds are buying and we're arguing over, you know, what regulation should be coming into effect, it's not early. But in terms of the percentage of Bitcoin as global capital, we are still a absolute minuscule drop in the bucket.

>> Matt, I really appreciate the outlook on that. And what I'm hearing you saying is that if you zoom out, take a bigger picture, the the volatility on Bitcoin is at a historic low. That should change too soon and it could go either direction in the moment. And there's some short-term targets you're looking for and and the market is trying to figure this out as well. But zooming out the bigger picture, this is a great time to be accumulating and taking a longer term view of the asset, the asset class, and that'll pay off in the long run. Not financial advice, of course, but I like that framing of things and and getting a little bit of the the big picture and the short-term targets to watch as well.

U Matt, you are under new management, so I would love for you to tell us where we can send our audience to find more of you and your work online. >> Yep. So, Bitcoin Magazine sectors that kicked us out the door. No, that's not true. It was it was a mutual conclusion. So, we um we were originally looking to Bitcoin and then we partnered with Bitcoin Magazine to provide their data and analytics. So, we were Bitcoin Magazine Pro for 2 years, but it genuinely just came to a nice and and mutual conclusion. We're actually still going to be providing some articles and data for them for the foreseeable future. So, thanks to their team, but it is good to be independent again back as look into Bitcoin. So, if you go on to YouTube, Twitter, wherever it may be, and just search Look into Bitcoin, then

you'll find all of our content, charts, indicators, whatever it may be. And yeah, I I'm excited to be able to not be at the the helm of the big evil corporation as everyone sees Bitcoin magazine, but it will be nice to be again independent and and focus on just Bitcoin. The one thing that really matters, providing Bitcoin in a more open source, a more favorable and actionable manner to retail participants, to investors, to people who are just interested in learning a little bit more about Bitcoin. Hopefully we can be the uh shining light to do so alongside the other joint best channel in the space which is of course Milk Road. [laughter] >> I appreciate that Matt. I've always been a big fan of looking to Bitcoin and of

your work. We always love your your content, the wisdom you share with us here at Milk Road. So thanks for being on the show. I hope next time we speak, Bitcoin is not at 64K. Um but thanks for being on the show and I hope we speak again soon. >> Thank you very much. It's always a pleasure and looking forward to be back again. >> Thank you Matt and thank you all for joining us. I hope you all learned something today. There's a lot of alpha in this one. I'm going to have to go back and watch this and digest it again slower myself. But until next time, stay safe, stay educated, stay bullish, and we will see you all on the next episode of the Milkro Show. Thanks for being here, everyone. Bye. The European Blockchain Convention returns to Barcelona on September 16th through

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