Is The Bitcoin Bottom In? | Checkmate

25:01Everyone was saying 50K, 56K, 200-week moving average, realized prices are 55. The base case bear market at 80K was 55. Now that we got to 59 and change, I'm seeing people 25, 30, 40. Everyone's now lowering their bear. The acceptance phase has come in and they're now deciding it's going to go much, much lower. It might. It absolutely might. but that's also kind of, you're in the bottom fifth. To get down to those levels, you are pushing every mean reversion model into sub 5%, sub 1 % odds of occurring. Can it happen? Yes. There's no zero for anything. It's just really, really unlikely.

25:44Checkmate:Yeah, see, I'm the opposite of that. Whereas, like, if you'd, last time we recorded a show in November, I don't exactly remember what I said, but I'm sure I would have said we're not going to go to 60. I think we use the anecdote, if you go down to 50K, the average Hodler can buy 0.1 corn with a 5k slug. Yeah, that's too good. Which is just too damn cheap. So I was very happy with a 6k slug. I'm going to step in on that. That was my general base case. Like, yes, I can find six grand lying around. You can even get 50. I'll find more slugs. Yeah. But like, I could be totally wrong again. I would say there's no chance we go to 40.

26:17Checkmate:I could be proven completely wrong. But like, I always trend the other way there where I'm just like perma bullish. But one of the things that you always say that I really like is that the bull market author is the bear that follows. But I don't know if that's happened because this is a super volatile downswing that we've just had. Like we're over 50 % down or we got to over 50 % down. We didn't really have moves like that up. We had the omega candle. Let's not kid ourselves here. Every other bear, I think people forget what a 75 % down is or an 80 % down is. That's another 50 % from here. So, you know, it's the classic thing.

26:51What is 95 %? What is it, down 95? It's getting cut 90 % and then getting halved again. That last 5 % is really, really painful. So I think a lot of people miss that convexity of downside. 55%, again, if we were to bottom out here, it will be, by just about every metric, significantly less than every previous bear market. The damage just isn't anywhere close. So I think that's something you've got to keep in mind.

27:19Checkmate:It's not just the percentage move, though. It's how it moved. Like, it was basically across a few weeks just down only, very violently. We didn't have anything like that on the upside that I remember. Yeah, yeah. But generally speaking, bear markets, once people just recognize, like, bear markets are more volatile. They are more volatile because people lose hope, you know, and choose your weapon for why people are losing hope. Like, even the people who are bearish because of quantum, I saw over the last week being like, okay, 60K is a bit too bearish. Like, yeah, it's getting a bit too low now.

27:48It's like even folks who have been bearish are like, ah, it's kind of low. But yes, look, there's dynamics there. But, you know, once bear markets kick into gear, downtrend, same as uptrends. Once people believe it's an uptrend, they buy the dip. They buy every dip. Once people believe it's a downtrend, they sell every rip. And, you know, bear markets tend to move much faster. Bull markets go for, a lot of people like to say that the bull market starts when you crack all-time high, when you've already put like 5X of the 6X behind you. like for me the the last day of the bear is the first day of the bull so bulls go for a lot longer because human beings are naturally geared to be bullish we're naturally full of hope um the upside is takes a lot longer it's a grinding process and then you know you get euphoric or rounded tops bottoms tend to be an event and no one believes the recovery no one believes that's why i call it a disbelief rally because it's just another lower high.

28:44If you look at the on-chain side, 2023. 2023 was a massive year of losses, realized losses. That middle period, I think we rallied till about May or March, I think, and then we grinded sideways. In August, we went from 29K, it was like a vertical Bart Simpson down to 26K. The amount of losses that kicked in in that August, September, October period before we ran up for the ETFs was like, you could see that people were afraid that we were going, that's just another lower high and we're heading back to the lows. A lot of people sold in that August 2023 period and we just kept grinding higher. So there's like disbelief fades.

29:26Checkmate:We got the Omega candle finally. In both directions. Down and up. So who's manipulating the market? Yeah, I know. Manipulate. It's amazing. Your favorite topic. It's always manipulation to the downside. If I can just bring up something that I found very intriguing, how annoying are the silver bugs? How annoying are they? I've not even seen them. Why are they being annoying? No, no. Market goes down 15 % an hour. Manipulation. Market goes parabolic to the upside. It's all they want to talk about why your coin is worse. The silver bug episode of watching how painfully irritating they were, it's a mirror for what we look like in the bull market.

30:04Do you want to know why the critics don't like us? it's because we look like that so you know the silver bugs immediately we go literally parabolic every sign under the sun was guys this is the frothiest this is just froth froth froth and yet it goes down from a parabolic vertical move and everyone goes manipulation no no you've got a bunch of old hands who've been stacking silver since they were you know 14 years old and now they're 70 they've decided to sell because they've waited their whole life for this move. So all these silver bugs are selling, and who's buying? The people I saw at the silver shop when I was selling.

30:40Didn't know what a Troy Hounds was. So, you know, you've just got the speculative new money coming in. Short-term holders bought the top. Long-term holders sold the top. It's exactly the same dynamic. So even the silver bugs like to claim manipulation when a parabolic move pulls back 15%, 20 % in a couple of hours. It's like, no, it's a blow-off top. It's a blow-off top.

31:01Checkmate:So you sold, have you sold all of your gold and silver now? No, no, no, no. I've still got all my gold, all my platinum. My silver, so silver and platinum were always my speculative positions. You know, precious metals is 10 % of my holdings. Platinum, silver are 5 % of that 10%. So they're a small chunk. Silver, and both of my view, is a speculative trade. But basically when the market went absolutely parabolic, I was like, I mean, I just see froth everywhere. Every group on Twitter is talking about silver. One of my mates who's very competent in markets, She goes, my uranium channel is all silver.

31:37And by the way, uranium is doing well too. So that's another big signal. It was the day before Australia Day on the Friday. It's gone parabolic. They had, I think on Australia Day, so all the bullion deals are closed, $36 billion in the SLV ETF. It traded more than the stock market did, the ETF. Again, signal, signal, signal. Went up, I don't know what the actual number is, but it was like a five sigma move to the upside. and I was just like, I just have to sell some here. So I'm up 3X. So I went and lined up, sold a third of my silver. Basically, I'm flat on my total holdings now so I can just let the market do its thing.

32:17The people in the crowd, like lining up behind me, the bullion dealer, I was first in line. Like, I'm up 10 grand from my buyer yesterday. Oh, silver is the greatest. You know, I've been telling my friend, no one wanted to buy.

32:28Checkmate:I was like, God, just get the fuck out of this thing. I was like, those guys are speculative like anything. Again, the lady next to me, I was selling mine at 150 Aussie. I think I got like 2 % below spot. She was selling it or buying at 220, right? 50 bucks above my cost, more than 50 bucks above my cost basis. I paid$50, like my cost base was 55. So she's paying above my cost basis in premium to buy silver that I'm selling right next to her. and I'm just like, the next lady was trying to buy some gold, didn't know what a three ounce was, didn't understand the difference between different mints.

33:04I was like, I just...

33:05Checkmate:Isn't it so interesting though that that's where like the FOMO retail investors went this time? Again, people retail lining up out the door to buy silver coins. It's probably steamy at a minimum if I didn't sell a third, get my money back. Now I've got play money, which I can now stack sets with. Where did my slug come from? I traded my silver for gold, for Bitcoin, sorry, on the way down. So I'm like, you know um gold silver ratio got to 45 it hasn't been really below 45 for more than a couple of days in my life in my whole lifetime right the last time i did this was 1979 where it was better than that and really it's like if you look at the gold silver ratio long term it's just trending higher which means silver is losing premium versus gold yeah it goes on speculative runs what happens after every speculative run it goes down for another 50 years so i'm just not there for it.

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36:20Checkmate:And if you want to find out more and download the app, just search for Club Orange on your app store or go to cluborange.org. But you held onto your gold. So why? Do you think that trade has still got legs or is it just something? Yeah, yeah, yeah. So silver was always a speculative play for me. Gold, I really do view it as savings. It's ballasting my portfolio. So, you know, again, I use the analogy of like, what am I actually chasing? The housing market here in Australia. If I found a house that I wanted to buy right now, and, you know, people mocked me for a long time for holding gold. I did.

36:52You did. If I wanted to go and get money for a housing deposit right now, I would kick myself for selling my Bitcoin at 70K, right? And people can say, oh, but borrow against it, blah, blah. Yeah, sure. That's all well and good. I don't want to take more leverage on top of more leverage. Just kind of want to own the house, right? I just want to get in the market. My gold has done exactly what I needed to do by not being down when I might need it. Same trade, just not going to go through that volatile process. But, you know, gold hit 1979, just about levels of overstretched. It's probably like RSI of 95 on the monthly.

37:27It's probably got several months, right? Chop consolidation, gold bugs coming for you.

37:33Checkmate:So do you think, like, obviously, the debasement trade was like, was it JP Morgan that came out? of the debasement trade. And that was gold, silver, Bitcoin. But Bitcoin's obviously not really been a part of that trade. I don't think the debasement trade's been what's driving the market, though. I think this is people, again, like, is there really significant QE and monetary debasement going on? Anything close 2020, 2021, even post-GFC? Right now. Not really. So, you know, this idea of the debasement trade, and it's really important to just recognize gold and silver and Bitcoin, they all have different supply and demand profiles.

38:07I think honestly of the one thing that killed sentiment treasury companies were bad um uh crypto has been bad but like watching gold go up I think has been the the nuclear bomb for bitcoin as sentiment but I think they just got the story wrong there was zero chance that all the sovereign nations were going to go yes let's buy bitcoin at a two trillion dollar market cap over gold which we've already got tons of and I don't have to convince my old man what gold is I don't have to explain a thesis for gold. They get it, right? It's a cultural thing in many places in the world. So from my view, gold just has that sovereign beard.

38:43It's always going to have that sovereign beard. It just, you don't have to explain it to anyone. Silver's had a supply and demand deficit as an industrial metal for a long, long time. Throw in there some folks who are willing to pay a$70,$50 premium for silver coins and you've got a speculative bubble. Platinum, it's, you know, are we getting rid of the internal combustion engine anytime soon? No. what's died off recently, that everything's going to be EV-ified. So, you know, catalytic converters, platinum, number go up, plus some speculative demand. Bitcoin's its own thing. It's going to take a long time for people to come around to it as a savings asset.

39:17You and I see it as a savings asset, but it still has that, you know, it's a levered tech stock, blah, blah, blah, but over time, and just think about this for a second. We're going to bottom. Again, if your decision tree is that Bitcoin's dead, then ignore everything I'm about to say. if bitcoin doesn't die at some point we set a bottom once we've set a bottom and it starts moving higher all these narratives about bitcoin being shit and dead will just go out the window momentum traders will come back it will have its silver moment and if you look at like if silver can do what it did if gold can do what it did you're telling me that bitcoin can't do what it's going to do so from my perspective price often solves all narratives time generally solves price you give it a long enough time podler's going to put a floor in this thing will start moving and then suddenly all these narratives like if you go through another all-time high suddenly people just go oh now i can't blame it on stimulus i can't blame it on the ico boom i can't blame it on the ets going live i can't blame it on the president suddenly it's like i'm just actually wrong aren't i it's going to get to the point where the crisis realizes i just actually am wrong this thing just keeps coming back so from my perspective right once we put that floor in We're going to start moving higher.

40:26Momentum traders come back. The debasement trade will come. It's a longer term view. And I think it's so easy for people to take long term, guaranteed, mathematically guaranteed, macro things and expect them in the next daily price candle. It's going to happen. It's just not going to happen in the next daily price candle. Macro moves at a glacial pace and then all at once.

40:46Checkmate:One of the other things I've seen a lot since people have kind of come around to the idea that we are in a bear market now is that treasury companies stole some of the upside from us. in the bull market. I believe that, yes. So why do you think that happened? Is that because people are buying treasury companies and then sort of hedging that on? No, where did the marginal buyer go? To the treasury company. To the treasury company. But that marginal buyer that goes to the treasury company is the treasury company then buys Bitcoin. No, did they buy Bitcoin? A lot of these were pipe deals. Like, did they actually buy, and this is the thing that I, I wrote a piece recently about strategy and how I'm, like, I'm a shareholder.

41:19I've re-bought about 158 bucks. I'm waiting for that capitulation signal and a bit more evidence to put my second half in because I do want to have some exposure, again, small exposure, but I was thinking about this. When they diluted a 1x MNAV, and again, I'm going to put strategy, as we all know, it's in a separate bucket here. When strategy is diluting in a 1x MNAV, my general big picture view, if Bitcoin dies, everything I'm about to say goes to zero. If not, strategy is more or less trading like an ETF, right? It's going to more or less track the Bitcoin price because what is MNAV going to go to 0.4?

41:52you know at some point it's going to come back to 1x m nav it's going to have some it deserves a premium in some form so if i'm buying mstr just as a case study if i buy mstr at a 1x m nav and they're diluting in a 1x m nav what am i buying i'm buying a hundred dollars worth a hundred dollars for the hundred dollars i put in of bitcoin exposure plus the company's infrastructure i'm buying the full history of the business from then until now with that hundred dollars so i'm buying not only the Bitcoin, but all the infrastructure as well, management team, the whole lot. If I buy strategy at a 3XM nav, then I'm buying 30 cents worth of Bitcoin and paying a whole lot for that extra premium, right?

42:31All the business and all the rest of it and hoping that it goes higher. So I'm actually very okay to buy at a 1XM nav because I'm kind of getting my money worth. And by the way, I don't mind if they dilute at 1XM nav because I'm kind of buying Bitcoin. They're buying the Bitcoin with it too. I'm buying the system with all the history. with a lot of these treasury companies, if you invest at the peak, if you invest and you get six cents, 10 cents, 15 cents worth of Bitcoin, and then the stock price goes down, were they really able to buy Bitcoin with the dollars you gave them? Or did the premium get slaughtered so quickly that your capital just got destroyed?

43:07You kind of just destroyed your money, right? You kind of lost your money. That's basically, and it's never going to come back. A lot of these companies will never get their premium back. So that is a loot loss position forever. You might get some of it back, but a lot of these things are never going to go up to 6x, 20x, 50x MNAMs again. So that ride down, just straight destroyed capital. If you had bought the Bitcoin, at least you'd have put$100 worth into Bitcoin.

43:32Checkmate:Yeah, that makes sense. It's that marginal bid. And we kind of lost that at the same time that we had the biggest sell side that we've really ever seen in the whole market history. So you kind of had massive supply side pressure and treasury companies that didn't really buy any Bitcoin with your dollars, right? They gave to kind of the insiders, kind of made a lot of money. So that's how I see it anyway. Yeah, I almost feel bad kicking them when they're down, but like NACRA have become the sort of poster child of this exact thing you're talking about. I think they're down 99.2 % or they were for a time at least.

44:05Well, what's that? That's down 90, down another 50 and probably down another 50 from there.

44:09Checkmate:I think that's right. And I did see someone put on Twitter that that's the same as Hex, which is pretty brutal. Do you think they've got zero chance of ever coming back? I don't know. Because, and truthfully, I just don't care to look into the balance sheets. And this is the thing. Everything I've said here is very generalized. I think there's a handful of Treasury Games that make sense. I saw your interview with Saylor. I think my interpretation of that, I get where he's coming from. What he said, I probably could have approached it a bit better, but what he said makes sense. However, there's just a lot of capital destruction that's probably never going to come back.

44:43And by the way, that's capital markets. Welcome to markets. It's full of risk. That's part of the game. But there's a handful that have the potential, what if you have 2000 Bitcoin, 500 Bitcoin, Bitcoin goes to a million dollars. You're not changing the insurance market, right? You got 5 ,000 coins, you're a$5 billion company. Okay. What are you doing? Changing the bond market? You know, you're just big enough. We've got a lot of$5 billion companies. A lot of$5 billion companies. So it's kind of near the hill there.

45:13Checkmate:Yeah. So how long do you think this bear market will last? Because again, going back to the bull market authoring the bear that follows, do you think we have sort of V-shaped recovery here? Is we another period of chop solidation? What do you think is going to happen? So historically, V-shapes, COVID's the only time we've had a V-shape event. We haven't really seen many of those. Bottoms tend to be a bit of a process. Now, there's a few interesting stats. 50, I think it's 45, I'll get one of it. It doesn't matter. We had a crossover of there was more supply in loss than in profit. We crossed that 50 % threshold at 60k.

45:48So, generally speaking, when you hit that level, you've got, you know, 2015 was a year-long bear market floor. 2018 was December through the start of April. So, that's what, four or five months. We had COVID, which was two days, One day we had 2022, which was, you could argue from June all the way through to January. Really, it's probably the right way to think about it. When was the second top in that? So the 22 base started in June when three arrows blew up.

46:19Checkmate:Yeah. We chopped around until November. Then FTX came and blew up. Got you. And then we had that kind of second leg of the base. So, you know, we've got anything from five months through 12 months. I don't think we're going to be at the top end of that. I think we'll be on the shorter end of that. It will all depend on what the next couple of weeks and months looks like. How does this kind of, you know, do we actually have put in a serious week? I mean, it kind of looks like big weekly hammer candle at the moment. It's good to see. We will see what kind of strength comes in. I'll be watching things like the ETFs and whether we, I want to see fear.

46:49Actually just, I know this sucks, but the reality is people who bought the top, they may not know it yet. They're going to capitulate eventually. They're going to run out of steam. They're not going to be able to handle the process that comes after this. They're going to just continue to see FUD confirmation bias, reasons why it's all over. And they will eventually just go, I'm done. What's that classic Bitcoin meme? Bitcoin is finally stabilized at$35 a coin or whatever it was. And it's obviously, I may as well get my money back as much as I can. And that was like 36 bucks or whatever it was.

47:21Brutal. It happens no matter what the price is. That's the human condition. So we are just waiting for that. It's so over, I can't do it anymore. more, usually time pain is what's ahead of us.

47:34Checkmate:I know you like watching the macro side of things. How much do you think that played into both this sell-off and how much do you think it will play into the sort of coming rally whenever that happens? Yeah. I mean, so the macro setup is really interesting. I mean, it's clearly a pretty volatile, challenging time. You know, we've had, it's start of February and we've had presidents getting arrested. We've had threats of bombs. Like, you know, countries are at each other's throats. It just feels like no one, there's so much uncertainty in the macro world. No one knows what's going on, where to place their bets, like what to do next.

48:03Totally. I mean, the economy is not in good shape. It very much is that K-shaped economy. Some parts are doing terrifically. There's trillions of dollars of CapEx spend coming from the AI boom. In Australia, most countries, where the government is spending the money is where the economy is doing very, very well. Elsewhere, it's just doing really not that great. And there's a lot of evidence to show that there is, in fact, a correlation between just like the real economy and like actual people and Bitcoin's performance. Real economy is doing poorly. Bitcoin hasn't been doing that great. All this stuff kind of lines up.

48:34But like at some point in time, whether via stimulus or by actual recovery, we're going to, like the world isn't going to be a doomish place.

48:43Checkmate:This is where I like Joe Carlosari's perspective. Yeah, I like Joe. What are you going to do? Assume there's going to be a recession for the rest of our lives? Like it's improbable. And once it gets to a sticky point, the powers that be come back in. So, you know, we're seeing a lot of weakness in the, a lot's probably the wrong word, but to me, when I look at the S &P, it looks like it's curling over. It looks like it's just run out of gas. Sometimes markets just need to puke, get some of that excess risk out. It's a richly valued stock market. Bitcoin does tend to front run this stuff, bottom earlier, start to move higher again.

49:14So I'm actually very optimistic. I think Bitcoin's actually in a really good place. And you're going to give me these prices. I'm going to take them all day. And at some point, this thing comes back unless your decision tree is Bitcoin is dead, in which case you're probably not watching this.

49:28Checkmate:so what percentage chance i'm going to put you on the spot here do you think we get an all-time high in 26 uh that's a good question i look i'd probably i'd have to give it like 15 20 percent i think right however it does depend because if we get i mean the the odds of that i think really requires a real pivot a crack in the sovereign debt market a it actually requires a big print type event for that to happen, I think. The odds we put a bottom in already, I would probably put it more than 50-50. I would say probably 60%. Damn. Yeah, yeah. Well, I mean, at a minimum, we are in the bottom fifth unless all your models are broken and Bitcoin is going to zero, right?

50:12In which case, all your models are broken anyway. So we're in the bottom fifth. And at 60K, we're in the bottom, like, the bottom tenth of where we're likely to go. So it's favorable.

50:23Checkmate:See, I just, the most entertaining outcome, I think, is always the most likely. And I think we hit 58K just for 58K, gang. We got damn close. We got close. We got very close. I think we're going to try it again. Yeah, well, generally speaking, Bitcoin does tend to retest those lows. Why don't you put a capitulation event in? Which, there's no question that what we saw on Friday was a capitulation event. Just like a top, distinguishing between a top and the top, a capitulation and the capitulation, that's really where markets are made, we had a capitulation event. The question is, do we have the capitulation event in play?

51:01And truth is, we just don't know until we see the market play out from here.

51:04Checkmate:I think we should zoom out. This is the thousandth episode of What Bitcoin Did, which is insane. Which is an honor, by the way. Well, no one I'd rather do it with. Maybe Pete. But we are all the other side of the world from each other right now. But when you think about it, So what Bitcoin did start at the end of 2017. Like the place that Bitcoin was in then and the place Bitcoin is in now is worlds apart. Like price, 10x difference or whatever it is. But that's not even like the start of it. Like one of the, I was looking up things that have changed since then. With 80 times the hash rate, which is insanity.

51:41Checkmate:We've got, we didn't have the Lightning Network. We didn't have El Salvador. We didn't have like BlackRock, ETFs, Wall Street. We didn't have, there's so many like fundamental things that have changed. Like, if you take a step back and you look at where Bitcoin is today as like a very relevant geopolitical asset that's becoming more and more relevant, like how do you take that in? How do you try and give people a more long-term perspective and not panic about what's happening right now? Totally. I mean, let's go back to what I was saying about strategy. There's a line that Peter Dunworth said at the Bitcoin Alive conference in Sydney a couple of, probably two years ago.

52:13I think we would have probably been the 2021, it was in March, so it might've been like 50K or something like that. Anyway, it doesn't matter. The, his line was, whatever the price was, 30K, 50K. Yes, it's not the cheapest price of Bitcoin's ever been. But the amount of risk that has been removed, you are buying a de-risked asset. That is why the price is higher. When you're buying Bitcoin at 70K, 60K, 50K, 100K, whatever, you are buying, like strategy, all the history. You're buying the history of where we've come from to now. It is worlds apart. And again, let's think about Twitter as a case study here.

52:53How many analysts who are TradFi and wouldn't have even cared or known what Bitcoin was when the first What Bitcoin Did episode came out? Something happens on a Sunday, Bitcoin does something, what are they posting? Bitcoin price charts. What do they have on their Bloomberg terminal? Bitcoin price chart. Why? Because it's information. Skeptics, you know, even skeptics. I saw Andy Constant, who's been skeptical of microstrategy, be like, even I'm looking at this and going like, you know, these are good prices, you know, come on. Even he's starting to buy Bitcoin, right? You just see all these different characters who they're buying.

53:24They understand that a lot of the risk is gone. There's going to be people who are going to hate this thing forever simply because it's digital. They're going to hate it because they can't hold it. But, you know, I've got a five-month-old son. Is he really going to be buying physical coins? No. He's going to be very familiar with digital wallets, you know, phones, all the rest of it. That's going to be second nature to it, right? I've seen Marty and Matt playing around with these bots where they just move Bitcoin around. And why do they go to Bitcoin? Because they know they can have a private key and even their owner can't shut them down and take it away from them.

53:55Kind of cool, kind of interesting. So from my perspective, when you look at just all the infrastructures that have been built behind us, again, ETFs, you know, there's going to be challenges, David Dredge-style challenges with, you know, leverage and structured products and all this stuff, but also that allows bigger capital to come in who wouldn't have come in before that. You know, we're at the stage where pension funds are interested. And a lot of people say, well, it has to be the next bull market. It's going to be shit unless we get sovereign buyers. And I just look at the amount that these institutions have allocated, you know, 0.01%, 0.001%.

54:26And that's millions, tens of millions, hundreds of millions of dollars. No, they just have to go from 0.01 to 0.02, or maybe get to one. You know, then we're talking about just tremendous amounts of capital. So over time, Bitcoin punches, just allow yourself to believe that Bitcoin will eventually hit a new all-time high. how many institutions are going to ignore everything they're going to realize that i'm also buying a de-risked asset with all the infrastructure i can now buy this thing i'll put it into my balance sheet i'll put it as part of my portfolio hey look yes it has drawdowns but the sharp ratio keeps kicking ass the metrics just continue to show that it does really really well over long periods of time um and as we've seen unfortunately in the wrong direction is an uncorrelated asset.

55:11So, you know, there's all these factors that price solves all these things, time solves that price. And that's just because hodlers keep buying this thing and they will continue to buy this thing.

55:20Checkmate:One of the things that I'd like to see is the critics of Bitcoin have changed significantly. So like, it's not the Peter Schiff arguments that are just nonsense anymore. I think Andy Constance is a good example. Like he's a smart guy. Like he's a nice guy. He was right. Yes. But also like, even when he was being super critical of strategy, he kind of is like yeah bitcoin might be interesting just buy the corn yeah exactly even the critics are like a bitcoiners now um which is like i don't know exactly why that happened i don't know if it is almost you know larry fink saying this thing's okay now and so people like moves the overton window and people can talk about it in a more favorable way but i feel like we've moved past the nonsense fud maybe take the next the last few days out of it because everyone no no the last few days is a perfect example we were talking about this before we record the fud has turned into of people who can't do arithmetic, showing how DCAing for five years, you're not down, you're up hundreds of thousands of dollars.

56:14But they're saying, look, you've got to DCA for five days. People who can't do arithmetic are coming out of the woodwork as critics. The FT, it's 70 ,000, oh hang on, 71 ,000. It's Peter Zeiharn level of it's going to die, but guys, how could you put that slop out? How would you as an editor, could you possibly allow it to go out?

56:32Checkmate:I think the FT piece was written by Jemima, is that right? She is unbearable. Her criticism of Bitcoin is the most brain-dead criticisms I've ever read. This is where we're at. You know, like if you really peel back the onion, what are the true FUD pieces left? Right, the true FUD pieces that are left, Quantum, which we're going through at the moment, and the other one is security budget. They're the two last bastions. Talk about a de-risked asset. Now, potentially a problem with Quantum, potentially a problem with security budget. Are they solvable? Time will tell, right? We will go through the motions of dealing with these things, but that's where we're at.

57:10Environmental FUD's gone. You know, it's only used for criminals. FUD's gone. We're just waiting for that IMF paper to come out saying it's the last stand again. And then it's off to the races.

57:19Checkmate:It's funny, the FT, so Isabella Kaminsky used to be at the FT as well. And she wrote some way more thoughtful, critical pieces of Bitcoin. She's really smart. I like her a lot. It was her and Jemima. And then since Isabella left, now it's just absolute nonsense. And this is like the biggest financial media outlet in the world, probably. It's totally embarrassing. Like they should be ashamed of themselves. And it's not as if like mainstream media is doing any favors for themselves, but like this is just, like I actually can't, as a profession, I can't imagine how you could allow someone to issue such absolute drivel.

57:53Such absolute drivel. It takes five minutes to the bunk,

57:57Checkmate:that's what you're saying. It's crazy. Okay, so for anyone who's watching, panic in a little bit, price is down. Maybe it's the first time I've been through this. Maybe it's not. Like, it still kind of hits the air, the same emotional part of your brain every time. Like, how do you think people should be approaching this bear market? Because this is where, really, you can change the next bull market for yourself in a significant way. Oh, 100%. Again, I come back to the original concept here. If we're in the bottom, like, again, your decision tree is, is Bitcoin dead? You're not watching if the answer is yes, right?

58:25Now, there is a world where Bitcoin dies, but in my view, it's improbable. I always come back to what I think is the most bullish thing about Bitcoin, which is the Bitcoin that are involved in it. Just think about your thousand episodes of people who've been on this show. That back catalog, you're telling me that all those people have... By the way, they all came to that conclusion while the media, the government, their weird uncle, their family, everyone was telling them that Bitcoin was a scam and was dead. All these engineer types and they all came to the same conclusion and go, yeah, no, I think you're wrong.

58:58I think you're wrong, actually. And they pressed on. They all came to that same conclusion, irrespective of their profession, irrespective of where they lived, whether they're in finance, whether they're a doctor, whether they're an engineer, they all came to the same conclusion. They just have no idea what they're talking about. I think that's improbable. I'm not betting against that pool of people. So from my view, the people involved is just tremendously bullish.

59:18Checkmate:That's one of the things that first made me go Bitcoin only. Yes. Is the people that were interested in talking about Bitcoin. It was like when, because I was into like shit coins and stuff. And then 2018, when everything kind of went to shit, I remember looking around and being like, where are the smart people in the room? Yep. And that was one of the big, it was, I've said this before on the show, but it was Pierre Richard's articles that ended up like really pushing me over the edge. But it was like everyone who was interested in Bitcoin were like serious people with good principles, good morals, and like talking about Bitcoin in a way that there was no one in Ethereum talking like that.

59:47Checkmate:It is where the grownups in the room were at the time, and I think it still is today. And still is today. Yeah. So I think that the people is tremendously bullish. Now, how do you deal with this process, this bottoming process? First things first, Again, look at mean reversion, that whole side of the equation. Statistically speaking, if you're formulating a bear case right now, you're not a very good bear. The bear case was months ago. Sure, we may go lower, and yes, we may have a process ahead of us. But if you are formulating a bear case right now, you are doing it wrong. We're in the exciting, interesting phase of this process.

1:00:22so many people think that they fantasize about buying the bottom expand the bottom to be that whole process go on there's a thousand one dca tools out there go and run a model of just dcaing go into 2018 start buying in the middle of 2018 where it's 6k and still went down to three and a half just dca for 12 months see how it does um it's like lump summing over a period of time Why do you do this? Because you actually don't know where the bottom's going to be or when it's going to be. And I like to use the 2018 bottom. I was also shitcoins. I bought Bitcoin at the top. First bounce, sold it for Ethereum.

1:01:01Second bounce, sold Ethereum for a spreadsheet full of stuff. You know, 10, 20 grand in. And then I got 50 % on Bitcoin. It was like 90 % down for everything I held. And I've got 10 cents left. I thought, I've got to read the white paper and start again. Oh, makes sense. Now, back then, I've discovered the realized price. I was trading about 6K. and I looked at 2015 and I said, oh, cool, I'm on my shitty London engineering salary. And I'm like, okay, we've got 12 months below the realized price. I've got my engineering spreadsheet. How much am I going to accumulate? How much disposable income do I have?

1:01:32Gets through to April, straight to 14K, right? In two months. First time I felt pain to the upside. Now, we then had a second bear market that followed. That was the plus token Ponzi. Plus token Ponzi. But I kept buying through that 2019, listening to what Bitcoin did, just like building my conviction. Do I regret a single one of those buys? No. So think about the bottom as a process and a probability distribution. If we go to 40K, are you going to be sitting there with your limit order perfectly there to take it? If we've already bottomed at 60K, are you going to kick yourself if we start rallying higher again?

1:02:05Turn on a daily DCA and just buy the bottom. Don't worry about the event. Buy the bottom. And people ask me, is it better to do monthly, weekly, daily DCA? i've run a bunch of models like basically if you do monthly when you get paid i did that for many years you get paid you empty your bank account um the challenge with that is if you had a bought at 80 you kind of miss a lot of the move here so if you do it weekly one of your buyers is at 80 the next one's at 75 and then the other ones are 60 something so um the more your grand more granular it is the more you get an average price and like do i want to buy the average of that bottom yes i do it's just the right way to do it get a nice granular dca and just buy all of it chug away and my general framework i started my dca again really i haven't i've been like buying occasionally up around 100k but like above 100 wasn't really buying that much in fact i was buying gold instead right i've been buying more precious metals since 24.

1:03:03once we got down to 95 i turned back on the dca once we broke 80 the true market mean dca went up to double and then And what my plan was, once we go below 70, I'm now in slug mode as well. And that's more or less what I'm currently executing. Double daily DCI, which keep chugging away. Every time we go below 70, I'm just going to put slugs in. That's the way I'm approaching it. When do I turn that off? When we get back above the true market man at 80K. Because then we are in the second half of the bull.

1:03:30Checkmate:You turn what off? You turn the DCI off? Turn the DCI off. Why? Because there's a few reasons. One, when you've got the DCI, I've been in Bitcoin since 2019. I've reached a point as I think a lot of hodlers this is probably another good lesson a lot of hodlers are us millennials where are we in life's journey? I've got a five months old son I've got a 50 % down primary asset in my portfolio but I've got gold which is doing fantastically that's the other 10 % do I want to build up assets in like I'd love to buy more BHP I'd love to buy more ExxonMobil I just have to have a bit more stuff I'm in that phase of diversification in my just general portfolio because I'm really, really, really, really long Bitcoin.

1:04:16My business is Bitcoin. I'm just very long this asset. Am I buying it now? Yes, because I think it's really, really attractive prices. But once you get above 80K, and this goes back to like my deal I made with myself in 20, I think we did in 2020. Listen to a Michael Saylor podcast. He's early on the scene. I had like, I don't know, 20 grand worth of gold. I sold it. As soon as I got home, I was like, I'm just going to sell my gold and buy the Bitcoin instead. Great trade. But then I said, I have to buy back the precious metals at some point. So 2024, you know, HODL calls it the bit life crisis, where suddenly it's just like your dollars just don't go that far.

1:04:51You've got a memory of what you could have bought back in the day.

1:04:54Checkmate:It's changing the last few months a bit, though. Hence why it's back on. Just make a deal. Like, I just need to have other stuff in the portfolio. I don't really want to sell the Bitcoin for it, but I do want to have other things. And I'm just in that phase where, like, it makes sense for me to put my marginal capital elsewhere because it helps me live my life, right? I don't need to be fully geared towards Bitcoin. And by the way, do I care about selling BHP at a peak? No, not at all. Do I care about selling my gold? It's a bit harder, but not really. Do I care about selling my silver? No, off the table.

1:05:26Bitcoin, cold dead fingers, right? The boy gets more of that. So it's very much that long. The Bitcoin is my longest duration asset. What do I use it for? Eventually, I'd like to not buy the house. I'd like to clear the house, pay the mortgage off. Eventually, I'd want to put the kid through a good school. That's what it's there for. I'd like to give him a good nesting. That's what it's there for. Bitcoin is my longest duration asset. BHP is a decent asset, but I'm very happy to sell a letter.

1:05:52Checkmate:So you can give me some financial advice here because we're similar-ish age, both got young kids. I am literally all in Bitcoin. Do you think I should be doing what you're doing? Once we get above the true market mean. Because I don't want to sell Bitcoin for anything. No, exactly. And like last bull market, I just have a DCA all the time. I never turn it off. Which, by the way, there's nothing wrong with that. It's very, very hard to beat a daily DCA. It doesn't matter how good of a quant you are. It's actually very, very difficult. And it's because there's like 10 days in every cycle that is responsible for all the gains.

1:06:23You can go back and run this across all cycles. I need to do it for this one, actually. If you run the 10 best days, if you miss those 10 best days, now no one's going to miss perfectly unless you're a terrible trader. If you miss the 10 best days, you're flat or down on the whole cycle. So basically the 10 best days offset every day of chop, every day of down, all the pain, but you've got to be there for it. If you miss the 10 worst days, which is what people who are trying to trade in and out are trying to do, you go from like a, you know, we had a 6x this cycle. You might've got like an 8x or a 9x, but you give up the upside of the whole 6x.

1:07:00So you risk it all to get slightly more return, right? It's not slightly, but you get the point. Be in the market. But from my view, you know, you should have something as ballast in your portfolio. And I think a lot of Bitcoiners are getting to the point where it makes sense for them to do that. It does make sense for them to do that because life changes. Goes back to the same, like for up the top. My view was, I just don't want to sell my Bitcoin at the top. I'm just not going to buy. Because what does that give me? Like, if I think about my overall setup, if I don't buy the top, what do I have left over?

1:07:38Cash. If I sold the top, what would I have at the end of the bear? Cash, right? I could also just not buy the top. And that's equivalent to me just selling, but without a tax bill. And in my case, I decided to allocate it to gold instead, which my top buying was fantastic. It's done very well. So, you know, just thinking. And now what I will say is it's actually very hard to find assets to buy. there's always a bull market out there somewhere but like my general thesis is just like hard real assets why i like commodity businesses just makes sense um you know stuff that we need stuff that has high replacement cost but it is just really hard to find something i don't want to buy the ai trend look at it it's like it's it's it's ballistic yeah and then the companies are now taking on debt they don't have the cash flow anymore um you know i you most people use ai Do you pay much for it?

1:08:23Not really. Not enough to justify it.

1:08:26Checkmate:I do. Yeah, anyway. I don't know if the revenue model is there. I think it's very hard to justify trillions in CapEx, maybe one day. But it's hard to find stuff to buy, which is why I know Bitcoin. I understand Bitcoin in the back of my hand. Gold, it's kind of like analog Bitcoin, same principles apply. And commodities is just real stuff. I just keep it really simple. Fair. All right, bear with me for this last thing because I want to set this up. If you had to explain the difference between the 2021 bull market and this one, and the one we've just been through, what was the difference? There's a lot of differences.

1:09:02So 2021, let me just try and think about the key points here. First thing we need to flag is GBTC. GBTC hoovered up like 600 and something thousand Bitcoin in, it was like four or five months, arbitraging that premium. Now you can argue it's a little bit like a treasury company thing there, but it's, I think, very different because those treasury companies just purely destroyed capital. GBTC actually bought the Bitcoin. So GBTC, what I think a lot of people didn't understand at the time, myself included, trapped a lot of funds that believe that premium was guaranteed. Yeah. That caused a whole lot of havoc.

1:09:40That mid-2021 sell-off, in my opinion, broke the bull that May, June, July period. Every metric from on-chain activity to profitability was bear market territory. that second peak in November, a lot of people think that the first peak was curtailed. No, the second peak was fake. So we hit a top pretty much. It was like February and then we started curling over because that premium just disappeared and that was the buyer. In 2022, there's another thing I talk about a lot called supply air pockets. Imagine a heat map. I've got these on my website, by the way, but imagine a heat map showing you where every, like dense zones where people bought their coins, on-chain, what's the cost base where everyone accumulated their coins.

1:10:22Between 10K in 2020 and 30K, there was no supply bought by long-term holders. No one bought there and held. There was just a big gap. When we shot straight through, we came down to that 30K zone, which is kind of the base of the supply. I'm pretty sure a lot of the move back to the all-time high in November was FTX, playing silly buggers. If you look at the on-chain volume, it was through the roof. There was also this very weird thing. It's a bit esoteric, but I think it was called RenBTC. FTX bought RenBTC. There was some Ethereum-pegged Bitcoin thing. They were churning, I think it was like 80 ,000 or some huge chunk of Bitcoin every five, six, seven blocks.

1:11:04The whole 80 ,000 Bitcoin was being spent. Every deposit withdrawal. FTX were playing some kind of weird games with that thing. Tons of flows between them and Binance. We ran a study where Binance was the central hub. you could see that like every other exchange we did it was like an inflow outflow reliance ratio how much of the flows for tiny little exchange you've never heard of a was dependent on binance and it was just market makers moving funds back and forth ftx was a huge huge flow of funds between the two so there was a ton of that stuff going on then we had a complete and total evisceration of the industry there was no lending market left genesis was involved celsius went the whole just a complete forest fire in our current market structure we had i guess you could say the spot bid etfs strategy some treasury companies um there was also just like just straight buying in the spot market like the etfs and strategy account for like 25 30 percent of the demand the other 70 60 percent was just spot tons and tons of spot buying through that process the pattern of the bear market looks very similar actually just because you have 80 of the supply of the invested wealth underwater a lot of things behaving very very similarly from that perspective but that's just how bear markets play out why top heavy markets too many people buy too many coins too high of a price you get the unwind but what i don't think we have is we might have some transfire leverage out there we've got a couple of firms blowing up there's not the outright for it though yeah i don't think we have a complete evisceration of the industry uh 2022 was the end of the wild west era i i've kind of been thinking about this period you know if you drop a rock in a pond the first waves, right?

1:12:46Same for four-year cycle. Think of the four-year cycle like this. The first waves in the pond come from the halving and the four-year and then the second half, four-year, blah, blah, blah. By the time you're 10 ripples away from the centroid, suddenly those waves start to change. They hit interference. Some hit the shoreline. You get some kind of interference in those waves. I'm of the view that, and this is why I think like people who are like, it's going to be October, man. It's going to be October. I think we're getting more and more interference in this stuff. right? And over time, eventually you're not going to, because you're waiting for that ripple to be the perfect sine wave as it always has been.

1:13:21It's going to change, deteriorate, evolve, be a different structure. You know, the macro world, is it the same world now as 2017? No, it was the same world as 2020. Fastest rate hikes in history. Now they're ending QT and we're just like, there's geopolitical stress and there's just a whole lot of things. The world isn't the same. Why would anything be the same? The world doesn't operate on these four-year cycles. So yeah, I think just be really flexible in your thinking moving forward. Allow the market to tell you what it's doing. Look at what investors are doing. Don't anchor to a date or it has to be the halving.

1:13:57Folks who share the halving cycle chart, right, that shows performance, you're forgetting that we hit an all-time high because of the ETFs prior to the halving. So of course it's going to look like a shit cycle because you missed most of the good bit. You've got to, like, the first day of the bull is the last day of the bear. It doesn't feel like it at the time. That's how markets work.

1:14:16Checkmate:So if from the last bull market to this one, I guess the big difference there is the market just matured. It became a kind of real asset. For sure. What do you think the next one looks like? Very good question. I still believe, like, whatever this bear market is, there's no question. It's got a lot of people off guard. Like, once you accept it, it was a bear market, you just kind of accept it. Assume it looks like previous bears. until proven otherwise. And that's not because of four-year cycles. That's because investors behave the same way. The psychology of bears is the same. But if we're buying all the history of Bitcoin, knowing what we know, one thing that I think is very different this cycle in the bull, we had people from the IPO moment, people from all years.

1:14:58Most of 20, in fact, the stats are, I will be off by a few percentage points here, but the 2017 top, if you look at how much of the profit taking was like what we would call like, for folks who don't like the five-month long-term holder status, hodler hodlers, multi-year hodlers. It was less than 10%. In the 2022 cycle, it was about 25, 30%. Sorry, in 22, 21. In 25, 75 to 80 % of the sell side was coming from long-term holders, OGs, big multi-year holders. We had a rotation of capital we've never seen before. from that perspective like i like the ipo moment i think that's a very valid and sensible way to think about this 100ks it's a big number it's a big number it couldn't have been hit in 2017 you couldn't imagine it no finally it was hit um and the regulatory environment allowed a people allowed these big entities to cash out what have we seen since november profit taking which was the number one headwind through 25.

1:16:02Number one has collapsed. Absolutely collapsed. So what I like about long-term holder metrics in general, there's signaling what they are doing by them taking profit. There's also signaling what they're not doing. They're no longer taking profit. Ask yourself as a Bitcoiner, imagine you sold a ton of coin at the top and you got a bunch of cash. And now you're looking at the world around you and the current Bitcoin prices. you're telling me your convictions has gone to zero what are you going to do if you're not saving profit you're either waiting or you're probably starting to accumulate again now pro tip because you are guaranteed to see this in twitter for the next couple of weeks long-term holder supply is currently climbing that is not long-term holders buying right now it's really important to get your head around aging out coins so long-term holder supply is an interesting metric because spending is immediate.

1:16:55A coin that was one year, two year old that spent is immediately not one year, two year old. Immediately goes from long to short.

1:17:00Checkmate:Yep. A coin going into long-term holder takes that five-month window. Why do we use five months? Statistically speaking, probabilities, it's where behavior changes. So that five-month period, there's opportunity costs. You're not in gold, you're not in NVIDIA, you're not in something else. You are in Bitcoin and you're not holding something else. It's a long enough time where the behavior has a signal involved in it. I don't care if someone who bought yesterday sells tomorrow. Who cares? Daily noise. Somebody who bought six months ago and holds it and then sells, they're not happy with the momentum.

1:17:31They want to rotate into something else. They're scared of something. So long-term supply is climbing now, but that's because of top buyers. That's the people who bought the top and have huddled and they're still huddling. Now, if you are one of these folks, even if it's with a party or stack, there are tons of people who are becoming long-term holders right now who bought the top. They generally get to the end of the bear, whether the capitulation event or the time pain, and they flush all of it out at the exact wrong time.

1:18:03Checkmate:They're going to buy the top and sell the bottom. Stay the course. The storm is mostly behind us. Push through to the other side. And I've been using this analogy where things are really good. Bison turn into the storm because the fastest way to get to the other side of the storm is to go through it. You're already 80 % of the way. The other story is like, you know, Your dumb friend who swims 80 % from the desert island back to shore, gets tired, turns around and swims back. You're already 80 % of the way there. Push the last 20%. It's going to be fun. It's going to suck. Just buy the whole bottle.

1:18:31Checkmate:Stack sats and make your kids stay out. There is no, I mean, the age old wisdom, stay humble and stack sats. This is what it's there for. Why do you stay humble? Because that red candle we just went through, that's the humbling bit. Now you've got to do the second part. This is the time. Checkmate, you're the best man. Thank you for being the thousandth guest. Thank you, mate. It's been a real pleasure. Where can anyone go to find out your work, check your newsletter, all that stuff? Yes, you'll find us over at checkonchain.com. We do two reports every week, written and video. Again, we write for hodlers, not for traders.

1:19:03We're just trying to help people navigate. And the way I see it, what I love about on-chain data and ETF data and futures data and options data, we can visualize what people are doing. And when you can visualize what people are doing, and you can reason about it, it just makes it easier. So like, you know, the air pocket from 80K down to 70K, the thesis was it's probably going to be straight down. It's probably going to be straight down. And then that 60 to 70K zone is going to be an exciting place to be. I don't know if that's going to happen. But, you know, as long as you can visualize it ahead of time, when it happens.

1:19:38You know what you're doing. A success metric for me is when something really bad happens, like last week or something really good happens, the shock value of it happening goes away like that because you've thought about it, you've trained your mind to at least have envisioned what it might look like. Shock value goes away and then you go, okay, now I've got to execute because the only thing you can do is make a decision. That's the only thing you have control over. You can't control the tide of markets. Just visualize what might happen and what you will do if that happens and then make that decision at the time.

1:20:11Checkmate:Love it, man. And we should chill cheat code. Yes, we should. You're coming back to Bedford. Yes, we will. So the whole Check on Chain team will be over in Bedford for the week before and we're actually planning to do a, we'll do a meetup of some form for Check on Chain subs somewhere in London. So stay tuned for that. And yeah, come to Cheat Code because it's a bloody great conference. It is the best conference in Bitcoin. It is. March 27th and 28th. It is, end of March. Yeah. Go to cheatcode.co.uk. Buy tickets. Checkmate's going to be there. It's going to be awesome. I know. Why do you come to Cheat Code rather than any of the conferences?

1:20:43uh the i love the football side of the equation i think the i actually quite like bedford you know going for a walk along the river it's really nice there's nice parts it was just i mean i think you and pete do a really good job first and foremost i think the operators are good um but i also think it's like a 400 odd four or 500 those small compact groups and also i think it's it's london is close enough for americans to come across and for europeans come across it's hard to do that in Australia. Totally. So if I'm going to do an international trip, it's one that I'm willing to do the jet lag for.

1:21:15So yeah, no, we'll be in Chico. I think it's a great tight-knit group. It's great. Let's go. All right, man. I will see you in Bedford. Thank you for this. Thank you, mate. Cheers.

1:21:38Thank you.