The Rapid Fire Bitcoin Cycle Update
Level 1 - NGMI
Welcome Avatar! For those that are on the paid section you know that we’re done accumulating BTC and haven’t done so for quite some time (about 6 months now). The drop to $25K marked the last time we mentioned a good time to accumulate more BTC.
Some of our paid readers still want to know about BTC so we figured we’d do it for free since we’re not buying it anymore. While all time highs are going to happen in our opinion, the cycle for crypto has been the same since 2012. BTC needs to clear an all time high before the alt-coins really move. Yes we’re aware there is always a meme coin or alt coin somewhere going up like crazy but we’re referring to pure speculation and gambling mentality.
This post explains how greed gets in and the new tokens (source) and this post explains the incentives around running up the alt coins (source)
Part 1: Who is Buying This Cycle
Before a Bitcoin Maxi gets upset, we stated we’re no longer buying. This does not mean we’re selling. Our last buys were at $25K and we don’t plan on adding since we assume BTC all time highs will be hit. This sounds contradictory only if you believe there is no alt cycle (we disagree).
Cycle: Generally speaking, prices are up 3 months post halving. You can see from the blue dots here that roughly a year after the halving you’re pretty much near/at the cycle high historically. Sure there is variability with 2021 having a double top and there is also the extreme froth from 2017 but the point is the same, the major parabolic move usually happens 6-12 months after halving and it’s done. Essentially the clock has started ticking.
Who are the Buyers? Largely speaking it is ETFs and whales. Anyone with even 5 minutes of research knows that buying an ETF makes no sense at all. “I don’t trust Coinbase, I trust Blackrock”… meanwhile the Blackrock coins are stored at Coinbase.
You’d think that this would coincide with a massive increase in coins being held on Coinbase, but the first sentence was clear as day “ETFs and Whales”. The whales are smart and realize if they remove it then there is less supply on the exchange. As price rerates higher they can OTC sell later on at ATHs.
Massive Drop in BTC Held at Coinbase
In about 6-12 months, assuming all time highs are hit you’ll then hear people talking about new paradigms and whatever price target they had (say $100K or $250K - does not matter which) will be revised upward. On Wall Street they call this Thesis Creep.
As emotion enters the market, the reason for owning it and what it is worth constantly changes to justify what they are doing. In the end, all these cycles are built on leverage and greed.
Part 2: New Financialization of Bitcoin
At this point, even Bitcoin Maxis are starting to support NFTs on bitcoin and there is a massive market for “historical coins” such as the coins used for the first Bitcoin Pizza. Back in 2021 the only real “historical coins” were physical bitcoins called Casascius Bitcoin which sold at a premium to standard BTC.
All this is going to do is create more financialization of Bitcoin. It will be harder and harder to claim you’re a true baller unless you have some obscure OG level bitcoin. This could be one of the bitcoins from the Pizza transaction or it could be a Hal Finney related coin. Who knows. We’ll see how it evolves.
L2’s On Bitcoin: L2 is being talked about a lot as it relates to ETH but L2s are being built for Bitcoin as well. This has been a long time coming and multiple products were launched back in the rough 2018 time frame (finally getting traction about 5-6 years later). Stacks being the most famous at this time.
Without getting into details, the functionality of BTC L2s vs. ETH is much more limited. This doesn’t really matter for “number go up technology” because that’s all anyone cares about. We’d wager that 95%+ of holders of BTC couldn’t even tell you the basics of how it works.
Therefore, when L2s begin to trend here and there through the bull market, expect the Maxis to push the narrative of L2s are already on BTC. (people will ignore the fact that it is limited they will just hear L2 /side-chain and get more bullish)
Here is a youtube video with practically no views to explain BRC-20 (~6K to be exact!) because it is good. (source)
Part 3: What Typically Happens Each Cycle
Now the fun part, “when moon”. Oddly, we’re not seeing a lot of moon-boy memes related to BTC which suggests the obvious: majority sidelined or sold out.
This is actually a good sign because without leveraged gamblers in the system, you can have high confidence in additional price appreciation. When you start to see people suffer from thesis creep and MVRV Z-score spike to 4+… you can come to your own conclusion.
Then The DownTurn: Generally speaking during a downturn, you don’t bottom out at the prior peak. For simplicity, Bitcoin bottomed out at ~$16K when the old cycle high was $20K. Since the 2021 cycle high was around $69K, it would suggest the next cycle low would be ~$55K.
That should help explain why we see no reason to purchase more BTC here at $52K. It’ll go to a new all time high and then whenever the crash occurs it’ll probably go into the $50-59K region. Per usual, this is based on historical information and isn’t financial advice.
Instead, on this side of the web since we’re nearing the end of accumulation phase (anything in the $50K range is last time to logically purchase) and we’ll be moving into alts as many of our paid readers know.
Once BTC runs to all time highs, wealth effect leads to speculation which leads to greed and euphoria which leads to another crash in the future.
Part 4: Conclusion
As you can see, there is no real reason to have a massive newsletter dedicated to just one coin. Those that have been around for awhile already know how these cycles work and it doesn’t require constant monitoring. Your job is not to “sell the top and buy the bottom” it is to make enough to be happy with your returns and avoid the feeling of greed.
As a final jab to prove we’re always going to be on the side of Decentralization, we would like to offer everyone $100,000 for every single BTC they hold with BlackRock. Just send us the bank account and give us the BTC. Oh that’s right. You can’t.
Disclaimer: None of this is to be deemed legal or financial advice of any kind. These are *opinions* written by an anonymous group of Ex-Wall Street Tech Bankers and software engineers who moved into affiliate marketing and e-commerce.
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