Bankless - The State of the Charts with Benjamin Cowen

Episode Date: November 17, 2021

It's that time again. Time to dive into the charts, this time with Benjamin Cowen. With energy flooding into the space, and prices at the top of everyone's mind, Benjamin brings his consistent, disciplined approach to Bankless listeners. Dive in as we explore what Benjamin looks for in the markets, and what the state of crypto prices are today. What does the rest of this market cycle hold in store? No one knows for sure, but Benjamin's insights will sharpen our prospects. ------ OPOLIS | YOUR CRYPTO CAREER https://bankless.cc/Opolis  ------ SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/  ️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/  ------ BANKLESS SPONSOR TOOLS: ️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum  MATCHA | DECENTRALIZED EXCHANGE AGGREGATOR https://bankless.cc/Matcha  LEDGER | SECURE YOUR ASSETS https://bankless.cc/Ledger  ALCHEMIX | SELF-PAYING LOANS http://bankless.cc/Alchemix  ------ Topics Covered: 0:00 Intro 9:00 Into the Cryptoverse 14:25 Market Cycles 21:58 BTC Controls the Market 28:51 Supercycle? 37:20 Blow-Off Tops 40:35 Much Much Time Left? 47:53 Catalysts and Events 54:00 Ethereum Cycles 58:45 Bitcoin Dominance 1:03:50 The Flippening 1:11:29 Blue Chip Assets 1:17:49 Advice 1:21:07 Closing & Disclaimers ------ Resources: Benjamin on Twitter: https://twitter.com/intocryptoverse?s=20  Benjamin's Youtube Channel: https://www.youtube.com/channel/UCRvqjQPSeaWn-uEx-w0XOIg  Into the Cryptoverse: https://intothecryptoverse.com/  ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures 

Hey, Bankless Nation, welcome to another episode of State of the Nation. This is the episode where David and I get into the charts. Well, not just David and I. We brought a special guest. Who do we bring on today's State of the Nation, David? Benjamin Cowan from Into the Cryptoverse, who is my favorite charter when I go and decide this time to look at the charts and kind of just want to get myself grounded as to where we are in the world.

And charting is this interesting word, right? Charting as in like, you know, the candles that you see on, a chart, but charting is also like charting a course and like navigating a course. And so on the inevitable metaphor of going westward, we're bringing in our cartographer to help us map out where we are in the world of the markets. Where are we in this market's market cycle? Are there cycles even more at all? So we're going to ask some pretty broad questions to Ben, our resident cartographer, so where we are in the world of these charts. Yeah, and I don't look at charts very often. It's kind of a, but it's, I,

I do enjoy it. It's kind of like candy to me, David. So it's like, I, you know, I touch it sparingly or else I'll all overindulge myself. But what I love about Ben's work is that he looks at the kind of the macro market cycle as well. So it's not just like, what are we doing on the daily or what's the weekly looking? But like big picture, where are we in this long-term trend? So I know we're going to talk about that.

I know we're going to talk about the dip that we have experienced just like right now as we're recording this. And then I know we're going to talk about the close of 2021, because I know we're going to talk about the close of 2021. because this is almost a year wrapped up and then what 2022 will bring. Everyone is curious about that. David, we've also got some news in the Bankless Nation. So we dropped an episode with the former CFTC chair, Crypto Dad, Chris John Carlo,

the guy who brought us Bitcoin Futures, made a lot of this possible. Just a fantastic episode. It was, I think you said the most dad episode ever that we've done on Bankless. And that's because Chris has all of this fantastic fatherly advice that he was, imbuing on the bankless nation and on crypto. And also he had some great insights from being in the trenches, being a regulator. So make sure you catch that episode. Also, David, you did an episode with G Money, who is a trader, kind of a chartist himself. I listened to that this morning. It was fantastic. What's the preview of that episode? Yeah, G Money is this guy that's just exploded

onto this NFT scene. He's the famous knitted cap ape on crypto Twitter and really left left crypto after 2017, 2018, unlike a lot of people that stuck it through the bear market, he was like, nah, this is too crazy. I'm going to leave. Yeah, it's too long. He comes he comes right back, right at the start of DeFi summer, the perfect time to just get back into it, and then ends up going through DeFi and then down the NFT rabbit hole. And overall, I think it's a story of a guy who was focused on TradFi markets and then got into crypto and then into NFTs. And it's also a story of like culture progression, where there was zero culture in TradFi, a decent amount of culture in Defi, and a ton of culture in NF2,

NFTs. So while this guy's story is progressing along different markets, it's also closer and closer towards culture. And of course, that is always where we finish off with every layer zero. Yeah, we'll talk about a guy always being at the right place, the right time, too. So his timing is just impeccable. It's really, a really cool story. Also, guys, we want to tell you about our friends at Opel.

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com. That's O-P-O-L-I-S. All right, David, I'm going to ask you the question. What is the state of the nation this week, friend? Yeah, I already leaked it a little bit. But we are charting. We are charting a course. The charts always go to the right. So when we keep on going right, what is out there? Are there monsters out there that be lurking in the seas? Like I said, Ben is a cartographer.

And he's a, the actual title is the technical analysis, a quant. But in the world of crypto, where we have frontiers to explore, he is our cartographer that's going to hopefully illustrate what might be ahead of us as we wrap up 2021 and what might be in store for us with 2022. too. We shall see. Well, guys, I'm really excited to hear what Ben has to say about this because I don't know what's in store for the next month or the next three months. I have a fairly good picture of where we're going to head in the end destination, but not sure apart from that.

So we will be right back with Ben. But before we do, we want to thank the sponsors that made this episode possible. Arbitrum is an Ethereum scaling solution that's going to completely change how we use defy. And now it's live with over 100 projects deployed. Fast fees on the Ethereum L1 sucks. Too many people want to use Ethereum, and it doesn't have enough capacity for all of us. And that's why teams like Arbitrum have been hard at work developing Layer 2 solutions

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and stay tuned as more apps come online. And if you don't have a Ledger hardware wallet, what are you even waiting for? Go to Ledger.com, grab a ledger, download Ledger Live, and get all of your Defy apps all in one space. All right, guys, we are back with Ben Cowan from Into the Cryptaverse. Ben is a prolific charter. He's a prolific YouTuber and also a prolific live streamer,

which is perfect because that is exactly what we are doing today. Ben, welcome to the show. It's a pleasure to be here. Thanks for inviting you on. I'm excited to dive into the charts with you guys. Yeah, yeah. But before we get in there, can we talk about what it's like to become knowledgeable in charting? What's the, what's the background that you have that makes you so good at this? So I don't, I mean, I don't even necessarily know that I would say that I have a background in, in like your traditional technical analysis. Like a lot of that stuff I honestly don't even really know or put too much merit in the first place,

especially on the shorter timeframes. But so yeah, my background, I have a bachelor's in mathematics, a PhD in engineering, nuclear engineering. And I, you know,

after that I worked as a postdoc and a staff scientist at a national lab. And I started doing this stuff, you know, in 2019. In fact, one year after I'd started my, postdoc. And I thought it'd be interesting to sort of navigate the cryptobverse in a more quantitative perspective, not your typical like head and shoulders or that kind of stuff,

which I don't really put too much weight in in in the first place. And I thought it might be cool to try to look at it from a sense of like data science, right? And you're sort of mining long-term trends in the market, that kind of stuff. And then yeah, the channel took off. And then I ended up quitting my job. And yeah, I've just been doing this full time since January, actually, of this year. So, congrats on that, Ben. You've got a fantastic channel, over 600,000 subscribers at this point in time. So some absolutely massive growth.

Congrats on all the success. And I'm curious, like, why crypto? Of course, you could apply these skills in other industries. But why did crypto draw you in? Yeah, so crypto drew me in because when I was back in 2010, I was getting my undergrad in mathematics. And in the spring semester of my junior year, I believe, I took a class in cryptography, actually, because I was doing a math major, and it was one of the electives. And they didn't, I mean, it's not like they taught us about Bitcoin back in 2010, but naturally,

if you're learning about cryptography, I saw Bitcoin. And then I started to follow it some. I didn't invest in it at the time, unfortunately. But then I followed it a lot. And then I really was following it while I was in grad school, just because I thought it was a really cool alternative to, you know, to the traditional banking system that we have. And thinking that Bitcoin is basically the soundest money. And then you also have Ethereum, which I'd more or less just consider them to be the blue chip cryptocurrencies, Bitcoin and Ethereum. And I saw a lot of people get burned in 2017, 2018. And I was like, all right, well, you know, there's got to be a better way for people

to navigate this stuff than they just blindly, blindly throw their money in in a bubble mania phase and then basically cash out at the worst possible time and then only to return again at the worst possible time to get. So that was sort of the goal was to say, all right, well, let's come up with a method to the madness, which actually, I guess at the end of the day will probably help reduce volatility in the crypto space. But yeah, that's sort of the backstory. Before one more question before we dive into the charts. Ben, would you say that you kind of have developed your own style of looking at the charts or have you followed in the footsteps of,

you know, experts that have come before you? Or is there some sort of actual like, you know, history to your style or did you kind of make it up yourself? I mean, I think some of it I made up myself, but it's not like everything I do is, it's not like I'm the first person to do all the different types of analysis you see. I mean, I imagine, you know, you're going to have clients on Wall Street that are probably doing, you know, they're probably mining data as well and trying to look at long-term trends. Some of the stuff we looked at are like sharp ratios or Tina ratios, that kind of stuff, which is basically looking at your risk-adjusted returns. Of course, people are going to do that. That's been, you know, that's,

that's just sort of classical theory and has developed decades ago. I mean, I'm certainly not the first person to look at a logarithmic progression. But I think, you know, I think when you look at all this stuff and you put it all together and you mine the data and you look at, say, the trends between one crypto like Bitcoin and then another one like Ethereum, you can sort of tell, you can kind of tell a cohesive story that makes a lot more sense than trying to say, you know, what's going to happen today or tomorrow because I don't, I mean, I don't know what's going to happen. No one does.

I mean, not only does no one know what's going to happen tomorrow. We don't know what's going to happen next year either, but at least we can try to come up with a plan on how to navigate the crypto space. Really, no matter what happens, is, I mean, that's the ideal goal. Well, you said it, and I'll say it again, no one knows what's happening. All of these things are just models or predictive models. But now that that is out of the way, Ben, let's go into the charts so we can try to figure out what actually happened, what's going to happen next.

Yeah, show it's what's going to happen. So, yeah, so the first question I have is, like, the concept of market cycles. Where are we in this current market cycle? Does the concept of a cycle still exist? And if it does still exist, how do we know where we're at in the cycle? Are these all fair questions to ask? I think it is a fair question. And I think the definition of market cycle is somewhat ambiguous.

It's basically one of those things where the longer we go, you know, the longer the cryptocurrency asset class is around, the harder it's going to be to discern from one market cycle to another. And then you can start questioning, well, what even is a market cycle? What constitutes the market cycle? Does it have to be an 80% drop? Is it, you know, if the definition is just, all right, well, if the asset class drops by 80%, then you have a new cycle. Some people prefer to measure it by the having, right?

and a lot of people like to measure it by the Bitcoin halving. The problem I have with measuring it from the having is that, you know, like a lot of times Bitcoin can rally significantly ahead of the having. And so then you kind of miss out on what happened before then. You can also measure it from potentially like a market cycle bottom. But, you know, if you measure the ROI of Bitcoin from the market cycle bottom, you get a nice chart that looks like this. Of course, one of the issues is, again, there is some ambiguity in what constitutes the cycle.

because if you just said it's an 80% drop, then you could argue that 2013 is two separate cycles. You know, you could say, well, this is a one cycle and then this is another cycle. So I think there is some subjectivity there. So again, it's not something I think you can take to the bank or anything. But if you were to allow yourself some subjectivity in what you would constitute a market cycle

and say, well, the first one is more or less the 2011 cycle where we basically just went straight up. And then we came straight back down. Then we had the 2013 double peak cycle. the 2017 cycle, which I'm sure a lot of people are familiar with at this point. And then we also have the most recent cycle. And sorry if there's a lot of background noise right now, there's someone blowing these right outside my window. But we're currently in the 2020, 2021, 2019 cycle. And one of the things we've discussed is, well, how do you know where you are

in a cycle? And one thing, you know, there are a lot of people that are calling for these crazy moonshot predictions for Bitcoin, you know, right now, right? Like literally, like, as we, as we speak, they're calling for these crazy mania moves to begin and take us into the very end of the year, followed by a year-long bear market. And I think the problem with that is it's very deterministic. It also gives people, I think people are giving themselves too much credit in thinking that they know exactly what's going to happen in the market. To say that everyone thinks that, you know, it's going to just go to 100K or 300k by the end of the year. That's really not how markets work.

You know, if a lot of people are expecting something, then people are going to front run that. And then there's going to be more people that try to front run the people that front run it. And then therefore it sort of doesn't really happen. It's sort of the same thing that happened in April. You know, I was looking at this chart back in April and I thought, look, guys, this is great. And crypto is doing really well.

But we're also, in terms of the cycle ROI, we're ahead of schedule. And it would make sense for us to have a cool down phase. that should last at least three to six months at the very least. Now, the other interesting thing is when you look at these cycles, a lot of people assume, again, they have to happen every four years. A lot of that's built around the Bitcoin having. But I would argue that if you really mine the data and look at it from, say, market cycle bottom,

you could easily argue that, look, the cycles lengthen, right? And I think it makes sense that they link them. Because every cycle, there's more to speculate on, right? 2011 and 2013, there wasn't really a whole lot to speculate on other than those initial sort of narratives about what Bitcoin was and, you know, it's ultimately going to be, you know, the, it's going to overtake gold and whatnot. But then in 2017, you had more to speculate on, right? You had the ICA craze that Ethereum brought us. And unfortunately, 99% of those were outright scams. And I think, therefore, you know, people wised up to that. And then by the end of

2017, early 2018, you know, I think people sort of realize they're throwing all their money into these ICOs that are essentially just false promises, you know, someone with some basic experience on how to spin up a WordPress site and mint an ERC20 token were promising the next best thing. And it became abundantly clear that a lot of these people were just blowing smoke, right? And we were nowhere close to where they wanted us to be. And then you fast forward to this cycle, and this cycle is even more, it's different in the sense that you actually have something to speculate on, right? You have decentralized finance, right? You have all these centralized platforms that a lot of people like to use.

And I mean, I get that a lot of people are anti-centralized stuff, but look, a lot of people in the world don't want the responsibility of managing your own crypto. And that's just the way it is. And so there's going to be some centralized platforms and whatnot. But you also have institutions coming into the space, not that there weren't any institutions back then. necessarily, but the narrative this time is certainly stronger than it was last time. So I think from a fundamental perspective, it makes sense that the cycles should lengthen. And then technically speaking, from a market capitalization perspective, it's going to be hard to push the price of Bitcoin another 10x, right? Everyone wants to promise it's going to go up another 10x or another 100x.

But the truth is, is every cycle so far we've seen diminishing returns. And that's sort of a buzzword that people don't really like to hear. But again, even in crypto, the returns that you're going to see with assets like Bitcoin and Ethereum and Altcoins, while even though they may be technically diminished from what was possible in prior cycles, you're still likely experiencing returns far greater than you can find in most other asset classes. If you take Ethereum, it was at 80 bucks, what, 18 months ago, and today it's trading for over $4,000. And technically speaking, we are nowhere, I mean, we're still very much in diminished territory, right? I mean, a $1,000 investment into Ethereum back in November of 2015

would have been worth $2 or $3 million by January of 2018. So that gives you an idea of, you know, Ethereum can still go up a lot and still experience diminishing returns. So I think it makes sense from a lot of a lot, you know, from a fundamental perspective, from a technical perspective, it just seems like it's going to take more time, a lot more capital, to push, you know, to continue pushing the price further and further up the curve. And therefore, you know, you look at the chart and I know a lot of people think that we have to end the cycle.

Now, a lot of people thought it was over in April. A lot of people thought it was over in September, you know, because of some various metrics. But I look at the chart and say, I think we still have a long way to go. And I don't think there's any reason it has to end this year. The only reason I think it would end this year is if Bitcoin went parabolic in the next six weeks. right and and i don't think it's going to go to you know 200,000 dollars or something in the next six weeks um therefore i think it's likely that we we still have a ways to go so ben when i see this chart two questions pop up for me because let me ask the first one uh first so what we're seeing is a

chart with uh four cycles here we are in the fourth cycle you are you are maybe predicting or contemplating longer cycles for each and indeed this is getting close to the longest cycle and maybe it doesn't peak at the place that the other three cycles did. But this is also a chart, I believe, is this just Bitcoin? Is this just plotting Bitcoin? Okay. So let me ask about that assumption. So obviously that was the assumption in the first cycle and the second cycle. It was heavy Bitcoin, maybe in the third cycle. In the fourth cycle, do we still think Bitcoin is the only crypto asset to watch or the primary one to watch? Why chart Bitcoin rather than total market cap of all crypto, for instance?

No, that's a great question. And I think it's important to do both. I do think that Bitcoin controls the market. You know, I know people don't like that. And it's not, it doesn't mean that if Bitcoin goes up, everything else has to go up. It just means that if Bitcoin is healthy, then the rest of the market is free to fly, right? Like, look at the last few weeks with Bitcoin, more or less. I mean, Bitcoin's gone sideways for the last month.

Ethereum's been trending higher. We know that if Bitcoin's going sideways above its 20-week moving average, then a lot of other cryptocurrencies are free to run. They don't have to stay stagnant just because Bitcoin is staying stagnant. But if Bitcoin is, say, below the 20-week moving average or, you know, if it's trending down, then what happens is a lot of the alt-value, of the octoin Bitcoin pairs. They trend down as well. So not only are you losing money in terms of your USD valuation of your octo-coin,

but you're losing valuation in terms of what it's worth in Bitcoin is if you had converted it all to Bitcoin, how much Bitcoin would it be worth? And I like to say that, you know, it's important to sort of know where Bitcoin is because if we think Bitcoin is getting to the end of a cycle and it's going to go down 70% or something over the course of a year, then it's going to very likely drag, you know, 99.9% of the market with it, right? There's always going to be a couple coins that do, well during the bare market. But for the most part, that's where a lot of assets go down.

But you know, you ask a good question. And we can look at the total cryptocurrency market capitalization as well. So, you know, this is the total crypto market cap. And you can see that last cycle we made it to just below one trillion in terms of the market capitalization. So far, this cycle, we've been able to break around three trillion, right? So this one, I believe it was around 840, 850. I don't remember exactly what it was, and it depends on what website you use, but we were somewhere over 800 billion. So far, this cycle, we've reached around $3 trillion. You know, I would argue that we still have a ways to go. I'd like to see us hit the top of this, you know, this logarithmic regression channel. And I think this is sort of one of those

things that can help try to provide some guidance to say, look, you know, even though Bitcoin, you know, there could be some evidence, as the bears have pointed out back in. in August when they said, all right, this is just going to be a dead cap balance and we're going to go back down. I think that you can look at the total crypto market cap and say, well, it still seems like we have a lot of juice left in us, but we're not going to expend all that energy and say the next two months. It's going to take a lot of time for us to really get to the top of that curve. And so it sort of brings into the idea again, lengthening cycles. And if you take the percent difference between the total crypto market cap,

which is the white line, and then the fair value logarithmic progression trend line, which is the red line. Note, again, this is a key concept, I think, that I really fail, I fail on my end to explain it properly a lot of times. The red line monotonically increases, right? So it only goes up. It doesn't go down. So what that means is that the fair value of the asset class as a whole is trending higher. And the only thing changing is how far are we overvalued from the fair value, or how far are we undervalued from the fair value? And the bear markets are when we're below the line, right? When we're below the red line, that's really where the bear markets are.

And that's, honestly, that's the best time to accumulate crypto. You know, I mean, are people accumulating crypto now? Of course they are. I'm even accumulating, you know, various cryptocurrencies right now. But right now is not the best time to accumulate. It might be the best time, you know, for, you know, over a certain time period, depending on what your time preference is. But the best time is always in the bear market.

And that was back over here, you know, one to two years ago. This was the best time to sort of load up. And then now we're sort of in this overvaluation territory. But I wouldn't say that just because we're overvalued, it means we have to go back down. There's been plenty of examples in the past where we stayed overvalued for years before going back down to the undervaluation area. And so if you take the percent difference between the white line and the red line, and then we shift it by 100 percent just so we get the undervaluation right here, this is what it looks like. And so you can kind of see that, all right, well, as time goes on,

we, you know, the extension from the fair value is diminished. Okay. So like if you were to go over here and measure the percent difference between the white line at the peak to the red line, it's further than this one to here or this one to here. And so the argument then becomes, well, it's likely that the final market cycle peak extension from the fair value, it's probably higher than where we currently are,

but it's probably going to be technically diminished from the fair value compared to the prior market cycle peaks. Okay. Now, one more interesting observation on this chart is that despite the fact that we are at a higher market capitalization now than we were back in April, we're not as overvalued now as we were back in April. And the reason is because our reference point is the red line. And the red line used to be, you know,

the fair value used to be seven or $800 billion, but now the fair value is $1.09 trillion. So it's all in reference to what the fair value is. And again, the fair value is turning higher. I mean, you can see, you know, in several more years, the fair value will be $5 trillion, right, for the entire asset class. And so it just slowly trends up with time. So I think the question about, do you just look at Bitcoin? It's a good question.

I think you really should look more than just at Bitcoin. There's a lot of other assets that are going to grow. I think Ethereum is one of the biggest ones that's going to do very, very well. And so I do think it would be a mistake to sort of just look at Bitcoin and that's it. With that said, I think it is important to have charts where you do look at Bitcoin so that you can kind of figure out where it is in its life cycle or its market cycle. It's fantastic information, Ben. So my second question on that cycles chart is just a question about the concept of cycles.

Okay, so some people, and I think people maybe say this every cycle, like this is, this cycle is the end of all cycles. This cycle is the super cycle, and we might have dips, but we're never going to see the sorts of cycles we did in the past. What's your, I guess, reply to people who believe in the super cycle and you're thinking in terms of a fourth cycle here? Do you lend any merit to that, any credence to that? Well, I think a lot of it is sort of like what's the definition of a super cycle. A lot of people say things like, well, you know, to assume that the cycle is going to go into 2022 is assuming that this time is different, right? And a lot of times, you know, the, the implication of anyone ever saying this time is different is usually they get, it doesn't work out so well for

them because a lot of times it's not like this time is not different, right? It tends to repeat. But my retort to the statement, this time is different, is to say, this time would be different if the peak occurred in December. Because the prior peaks, as we can see, have technically lengthened from market cycle bottom, right? There's several hundred days longer for cycle two than cycle one. And even cycle three was a couple hundred days longer than cycle two. So to assume that the peak has to occur in, say, December, that would actually be assuming that this time is different. And I know that a lot of people are probably not going to agree with that, but that's what I think. I think the obvious trend is that the cycles are lengthening.

And so that's what I think's going to happen. I think ultimately the cycles are going to lengthen and we're going to go much further out. So I think the question, though, going back to super cycle is what constitutes a super cycle? cycle. You know, if the, if the cycle were to extend another year, does that mean it's a super cycle? I don't, I would not consider that a super cycle. I think the idea of a super cycle, right, as you said, it's just, it's just going to go up and we're occasionally going to get some pullbacks, but the general direction from here on out is up. I would disagree. I think the general direction is up for a while. But eventually, we are going to hit a market cycle peak,

and there's probably going to be a whole lot of fud that comes with it. You know, it could be government intervention or, you know, government bans or attempted bans, regulation risk, right? I don't know, you know, and a lot of us don't really know what it's going to be yet. But, I mean, stable coins, that's another thing, right? But there's always going to be something that I think is going to create another bear market. And I think the other point is even this, even this year, we saw a 55% drop, right? So we clearly know crypto is capable of dropping 55%. We know if you go back to 2020 2020, we saw it drop, what, 60, 70% in just a matter of weeks. I mean, everyone got a rude awakening that morning back in March 12th, March 13th of 2020 when everyone woke up and their entire portfolio was down 60% basically overnight. So I think the idea that we're never going to experience another bear market is probably wishful thinking. It's probably not

we probably will have a future bear market. But I also think bear markets tend to strike when people, you know, they probably aren't going to think they're going to strike. So we could get into this phase where everyone kind of just gets into this mood of, all right, yeah, like it's a super cycle. We're just going to trend up forever. And then we could have a brutal, you know, one or two year bear market, you know, later this decade.

And it could really, you know, sober. sober some people up on the idea that it's only ever going to go up. So I would say the idea of a super cycle, I think we will have future bear markets, but I do think the cycle will lengthen. With regards to these lengthening, lengthening cycles, this whole market cycle thing inside of crypto has turned into a total meme. It's like, oh, where are we in the cycle? Like I asked this, this is the first question I asked on the show, like the cycle, the cycle, the cycles. And cycles are not really something that you see in legacy markets, right? Like they don't talk about like, oh, where are we in the market cycle when it comes to like your your equities portfolio. And so as,

and especially as we can see these Bitcoin charts, one is just like very aggressively vertical, orange, not so aggressively, but still very vertical. Yellow and purple, more modest. And the idea is like these things like don't, aren't so vertical over time and instead they're more horizontal, right, implying that the market cycles are getting longer. At some point is a logical conclusion of these lengthening markets cycles just turns into the market and we can just remove the whole cycle word from this? Yeah. Yeah, I think so.

Eventually, eventually we're going to get to the point where you can imagine that the slope on a theoretical cycle is just, it's not going to be very far removed from the, from the X axis, right? And so at that point, you could argue that it's more or less just another typical asset class, like the stock market, like precious metals, like commodities, whatever it might be. and that you're going to have, you're going to see it probably generally trend up with time, but,

you know, I don't think you can just point towards something like the having or a market or, you know, what you might call a market cycle bottom is, all right, well, has to trend up for the next eight years or something.

Because, you know, at some point, at some point, you know, if the idea of lengthening cycles continues to play out, right? The first cycle was,

you know, a few hundred days, like, you know, 200-something days. This one was like seven or 800 days. The third one was over a thousand days. At this one,

up being 13, 1400 days, you know, eventually you get to the point where if a cycle lasts like 2,000 days, you know, what is how useful is that information if there's still going to be two or three 60 percent drops along the way? So I do agree that I think eventually the whole idea of market cycles will tend to go away, but I still think we're in the phase where we could probably say, look, there's going to be a bare market at some point and it will, it will distinguish kind of the phase that we're in right now to the next phase. Like I think a lot of people can agree that 2018 more or less separated last cycle, like the cycle before this one, because it was just a brutal bear market. And basically anyone that wasn't super interested in

crypto completely left a space, right? I think we will get another year like that. Another interesting chart, by the way, is to look at this chart on a linear scale. And it really shows you the idea of diminishing returns. And it's also one of those things, too, where, like, you know, people, people paint me out to be the bad guy for saying, like, oh, diminishing returns, right? But it's, I think it's something that it makes sense from a fundamental perspective. And you can use it to your advantage, in fact, to assume that the cycle can't outperform the prior cycle, right? And if it does, then, I mean, look, there's always a possibility. but I think that it really goes to show you how close we are already getting to the x-axis

when you look at it on a linear scale and look at prior market cycles. I mean, the first one was up like 700x or something. This one was up 500x. This one was up like 110, 120x or so. And so each of these times you see this parabolic move, right, at the very end that leads into the market cycle peak. And then here's the other one that leads into the market cycle peak. Here's the third one that leads into the market cycle peak.

the purple line, the last two or three years of all this Bitcoin volatility is summed up in the purple line that you can essentially barely distinguish on this chart. So that gives you an idea of what diminishing returns means. Because again, if we weren't experiencing diminishing returns, if we were following, say, cycle two, then we should have already been at $2 million last year, you know, but we're not. And so eventually I would expect this purple line to, you know, I think it's going to go past this point, right? Because, I mean, this one would pass this one, this one.

So I would say eventually, you know, I imagine it will turn up and then that'll be the market cycle peak. But I would probably assume that it won't make it to the same ROI that the last cycle made it to. The blow off tops on these things are so clear. Whereas you can point to every single one. And so I'll let a Ryan answer, ask his question. But I also want to pick your brain as to whether you think a blow off top is inevitable. Yeah, that's a great question.

Yeah, why don't you answer that? And then I'll do mine. So what do you think about the blow off the top then? That's an interesting question. If you, you know, back in April, everyone was saying like, yes, a lot of people were calling for they, they were saying like, oh, this can't be the top, right? You know, at the top, we don't just go sideways for three months, right? but I think the issue was is I think part of it is the market is maturing and and people want to front run what they think is the market cycle peak.

And so rather than get this mania phase, we actually got a more distribution like phase. I still think there is a decent probability that we will have a blow off top. But I don't think it's going to happen this year. And that's the thing. I don't think it's going to be this year. I think we have a ways to go. But I think that it will likely have a blow off top because at some point, I think Bitcoin's going to break 100K. And then above that, I think that's where retail FOMO comes back in. You know, I've looked in my YouTube statistics. And my daily views are nowhere close to where they were back in April and May. And so when I look at that, maybe I can actually pull it up here. When I look at that, I say, look, there's a, there's a decent chance that the money in the crypto space right now is not new money. It's just, it's all of us, you know, the people that have already been here for, you know,

for the cycle, it's all of us just continuing to. We're just like cycling between coins right now at this point. Yeah, yeah, sort of something like that. But like look at this chart. Let me show you this chart over here. So can you see that on the screen? Yep. Yep.

Yep. So like here's my number of new daily subscribers. You can see back in like March and April, I was getting like, you know, 6,000 on Sunday. Like you can see how much higher it was. Today it's like background noise, right? Like I mean, it's still, I mean, a thousand subscribers a day is a lot, right? But compared to what happened back over here, you can see that today is completely different. Now, today it's actually gone back up, right?

Because everyone's freaking out and everyone's wondering what's going on. But I look at a chart like this, you know, or the watch time and say, it seems like we're not at these like this mania phase right now. Like we're not up in these areas. We're sort of all the way down here. And I look at that and say, I don't think FOMO, I don't think retail FOMO has arrived back to the market. I think that the people that are here for the most part, are the same people that were here earlier this year. We haven't ushered in the Nick Nekx crypto class yet.

Daily YouTube subscribers is not the chart I expected to be doing TA on today, but here we are. That's true. Actually, you know what? You got to use everything. So to me, this is not, I don't know what you guys consider TA and what's not. But like some TA kind of loses me, to be honest. But like, these charts are the kinds that I love. Like these charts really tell a long-term story.

and on, you know, bank lists, our kind of philosophy is very sort of long-term oriented. So I love these charts. And I've got a question for you, Ben, too. It's like, so we're talking about cycle four, lengthening cycles. I think you mentioned, you know, you wouldn't be surprised to see 1300 days, 1,400 days. How long do you think cycle four is going to be? And, you know, what does that imply about how much more time we might have left in the fourth cycle? Are we talking like 100 days, 200 days, 300 days?

know some people think it will end to December and you don't, but like, what, what do you think? How long will cycle for it be? And how much more time do we have? Yeah. So a lot, I think a lot of people, a lot of people assume it's going to end this year. And I will say, like, I'm not going to sit up here and promise everyone that it's not going to end this year. Because if in, if in four weeks, Bitcoin's trading at $150,000, like, I'm going to be running for the hills, to be completely honest. Like, I'm not, I'm not going to be sitting here, you know, claiming it's going to keep going up in 2022 if like next month, Bitcoin's trading at like $150 or $200,000. I think that's the point where it's just, it's gone up too quickly. And despite all the great fundamentals of 2022,

that we probably can't sustain those prices. But, you know, realistically, I don't think that's going to happen. I think we have a ways to go. I think that, and I'm going to, I'm trying to answer your question as methodically as I can, if you look at the yearly ROI of Bitcoin, and I think I have it on another, on this one. If you look at, say, the yearly ROI of Bitcoin, and you look at say 2011 was a good year, right? We went up over 10x. 2012? Yeah, it was what, two or three X. No one's getting into bed for that. 2013, pretty good year. 2014, that was a bad year, right? We were below 10 to the zero. 2015, no one's getting out of bed for. 2016, certainly no one got out of bed. 2017 was another good year, right?

2018, bad year, 2019, humdrum, 2020. Somewhat okay. But what you notice is when you, when you isolate all the ones that have done very, very well, it's just 2011, 2013, and 2017. And then the ones that have done very poorly are 2014 and 2018, the red ones at the bottom. All the other ones are the yellow ones, and they're just more or less humdrum, right? We sort of went up, but we also kind of went down, or maybe you can just argue. that we slowly trended up with time, right? We ended the year higher than where we started it at,

but we didn't end it with a parabolic rally. If you look at the current year, the blue line, this has been a pretty humdrum year for Bitcoin. You know, it hasn't been the year of the parabolic rally for Bitcoin, right? And you can see that on the chart. I mean, despite what people have promised, it just hasn't actually transpired. Now, it could theoretically transpired.

It hasn't transpired yet. So, but to answer your question, you know, I think that when we look at these charts, we can potentially look at a couple different things. One of the things we can look at is this analysis here. And I think this one is probably pretty dubious, in fact. But the whole idea is the first peak to the second intermediate peak here was a certain time period, 672 days. And then the time between, say, the first peak or the intermediate peak to the second peak was another 235 days. If you were to if you were to sort of propagate that over here and take that same time ratio, it would actually put the next peak out in July of 2022.

But I would say that there's still a good chance that we could go beyond that. And the reason, there's a couple different reasons. One of the reasons, actually, this is an interesting analysis. If you take the peaks and isolate each peak, peak one, peak one, two, and three. and then you plot them when they occurred based on the number of days, and then you invert time, so you take one over time, you give something like this. And again, this is a very dubious extrapolation.

I'm not going to pretend like it's not because it is extremely sensitive to when the prior peaks occur. But if you were to fit that curve and then extrapolate out to where the fourth data point would be, where would the fourth market cycle peak be, it actually puts it in August of 2023. And I know a lot of people would probably look at that and say that doesn't make any sense. And even to me, it's sometimes hard to think that like it could go out that long. But I also look at the chart today and say, look, you know, Bitcoin is only 3x, the prior all-time high, right? By this time, the prior cycle, Bitcoin was 100x. Or sorry, it was 100x from the cycle bottom, right?

But from the prior all-time high, it was up about 20x or so. And so I look at it and say, yeah, I mean, technically a 64K peak or a 69K peak could be, you know, that could be the diminishing returns that we're talking about. But it also seems like we should be able to push a bit higher than that. And so I just look at it and say, look, you know, I think that the next cycle or sorry, the current cycle is highly likely to go beyond this year. I think it's going to at least go into 2022 and probably beyond the beginning. of 2022 as well. Like, I mean, Q1, while it is a possibility, I would still argue it's more likely to go beyond Q1. Could it be in Q2? Maybe, but look, Q3, you have Q4 of 2022. And then, you know, then you could get back into that seasonality that people always talk about. I always thought

that would be pretty funny if the, the market cycle peak came a full year after when people were expecting it to come. Like, you know, like let's say December of 2022 or something. But I think the other thing to consider is while I put a lot of effort into kind of like trying to understand, you know, market cycle peaks and when they're going to occur, I don't really trade that. I have a risk metric that I use. It's this thing. And basically, whenever it gets overheated like this, I basically just take profits on the

way out and then I just wait for it to come back down and then I move back in again. And so I don't really concern myself so much. with when exactly it's going to occur because there's nothing about cycle theory that would have told me we were going to have a peak in April of 2021, right? No one was saying that we're going to have a market cycle peak in April of 2021. But this is the risk metric that I use. And it told me back then that, look, like we are kind of heated right now, whereas we're almost as heated as we were back in 2017. And it seems like there's a reasonable chance that we get a pullback. Now, that doesn't mean it's a market cycle peak. As you can see in 2013,

we had two of these heated phases. But my argument all along is that if this is a double peak cycle, it's probably a stretched out version of 2013, not a carbon copy of 2013. You know, it's so fascinating to me as your whole analysis is very price based and time-based and has nothing to do with catalysts. Right. So like you mentioned, you know, possibly the cycle could kind of end in, it could end any time, of course, but it could end in July 22 or could get extended to August 23 or even longer than that. It's interesting. It's like July 22, around that time, the ETH merge should happen, right? Some people have called this the triple happening. But that doesn't factor into the analysis at all because it, like, maybe over the long time scale, these things

don't seem to matter. Is that what this is teaching us? It's just like time and price and cycles. And if we pay attention to those things, then we're okay. And catalysts don't matter so much. It's an interesting thing because if I say that stuff like that doesn't matter, it really has a way of pissing a lot of people off. I'm genuinely curious your perspective, right? It's like, you know, I'm not pissed off at all. I'm curious what you think. It's interesting because, you know, you would think that all these things would make a big difference. But I guess the counterpoint is, well, what if Ethereum were to say, $25,000 in the next five months. And then people could then use that to say then going into the merge in the summer of

2022 that, okay, the price is only going to keep going up, right? Because if it's already at 25K now, then why can't it keep going up after the merge, which is only going to make things better, right? But at some point, we have to understand that the prices that these assets are, it's not that they're necessarily being fairly valued. It's just that we're riding up on momentum and hype around something and then once that something is actually delivered, a lot of that hype can actually die back down. And it doesn't mean that the project hasn't improved. It just means that the hype around it has sort of died off a little bit. And so I think that even in the bear market, there's things that happen that are good for the asset class. It's just that no one cares about

them because everyone's just complaining about why the prices are so low. But in the bull market, no one really cares about the bad news either. I mean, you know, in the in the bull market, everyone always shakes off all the all the stable coin fear, all the China fear, all that sort of stuff. You get into a bear market and that's all anyone ever wants to talk about is, oh, what did Elon say? What did, you know, what did China say this week? But as far as I'm concerned, Elon, and again, this goes against what a lot of people would say. I don't, I mean, I don't think Elon is responsible for what we saw happen back in May. I don't. I think that, and I was saying this back over here, I said, look, guys, like, you know, people are going to rationalize why,

why their predictions don't pan out, right? They're going to rationalize why Bitcoin's not at 300K by September or why it's not at their price valuation. They're going to call, they're going to screen market manipulation or something. But look, at the end of the day, Bitcoin went from $3,800 to $64,000 in the span of about a year. And to say that we can't have a sizable pullback unless some catalyst causes it, I think is a bit, it's probably a bit ignorant. So that's why I think that people like to use these events to rationalize why things don't pan out the way they think.

But I think that, you know, at the end of the day, we were just overheated. And also you have to, you have to think, too, again, with things like the merge, people are, it's not like it's a secret. So if people are buying Ethereum today, they're buying it because they expect it to do well, probably because they expect the merge to go well, right? So you could argue that it's already been factored into the price anyways. And if it doesn't go well, then it could cause a sharp sell-off, right? So just because something occurs doesn't mean it necessarily has to affect the price.

I mean, if you go back and look at what happened to Ethereum, you know, I mean, Ethereum has done nothing but I feel like just great news for a long time and you have the network effect. Everyone's using it. I mean, the gas fees are high, but they're high, right? I mean, it's also a sign that people are actually using the network, you know. So it didn't stop Ethereum from dropping from $4,400 to $1,700 in the span of a few weeks, you know. So it's a highly speculative asset class.

We're all sort of figuring out what these assets are worth. And we just have to go through these boom and bust cycles, you know, over and over again to ultimately reach a fair value. And I think a lot of that's actually captured in the logarithm and progression stuff. It does, you know, curve over with time. The best gains are early on. And then as you get further in time, it takes a lot more time to continue to push up that curve. And you can see it sort of folds over as well. Okay.

So that's generally the idea. Absolutely, Ben. I think the label of cartographer is becoming just more and more accurate. I feel very, very grounded right now in the charts. I want to see if I can get you to zoom in. on some closer time frames with regards to Bitcoin and Ethereum, because as of the last couple days, we've dumped off a little bit. But meanwhile, Ether has had this very long, sustainable run-up for all of October. So we're going to go ahead and get there right after we talk about some of these

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All right, guys, and we are back with Benjamin Cowan of into the cryptiverse. And we've been talking all about market cycles using Bitcoin as a frame of reference. But here we've got the market cycles of Ethereum, of which there are only two. So, Ben, when we look at the market cycles of Ethereum, do we see a different story, the same story? What are the differences that we see here? Yeah, the one issue with Ethereum is that it launched at sort of like in the summer of 2015. And so the market cycle bottom for Bitcoin was actually January of 2015. So to measure it from the market cycle bottom of the entire asset class is not possible.

If you measure it from the market cycle bottom of this cycle, and then when it launched, which was in the middle of last cycle, you get something that looks like this, right? If you translate this to instead start here in March of 2020, which is sort of like, you know, trying to emulate as if you were starting in the middle of this cycle or say not like in the middle of it, but just not at the very beginning like last cycle was. And you shift it, you get something that looks like this, right? And what you notice is that Ethereum in the last market cycle had a very similar move up and then it just

went sideways for a year, right? Everyone thinks about 2015 to 2017, 2018 is just nothing but up for Ethereum. But look, this is a span of a year where Ethereum just went sideways, right? Here's a span of six months where Ethereum just went sideways. And Ethereum went sideways at around a 30x up or so from the bottom. I thought an interesting thing was sort of the double bottom on the return on investment from that local bottom in the first cycle was right here. You can see it right around 20x or right below 20x. And also look at this cycle. It's also right around that same area after we had that sort of that local top that we had and we came back down and we're sort of slowly trining back up. So I look at this chart and say, you know what? Could Ethereum go sideways for a while?

I mean, well, I mean, recently it's just been going up. I don't actually have the most recent dip on this chart because I did these charts like a day ago. And then since then the market dropped 10%. But you can imagine that even a 10% drop is basically just a pixel on the screen. Right. I mean, Ethereum's trading now at $4,200. I mean, we're essentially now at the prices that once upon a time was the, you know, the blow off sort of top for Ethereum earlier this year. Right. So the prior, the prior blowoff mania phase is now the FUD price, right? So it really does, you know, put things into perspective, I think, into kind of where we are. And I look at this and say, you know, is it possible that we come back down and continue to grind sideways for a while? Absolutely, right? Of course that could happen.

I still think we ultimately have higher to go this cycle, but it doesn't mean we can't ultimately grind it out for a bit longer. A few other things I'm hoping to look at is Bitcoin dominance. Is that an informative chart for you, what the Bitcoin dominance chart looks like? And what does that tell you as a story? Yeah. So I was trying to draw out potential paths. This is one of them.

But what I'm thinking sort of about the Bitcoin dominance, more or less, is that we know that when Bitcoin goes parabolic, the dominance goes up, right? We also know that when Bitcoin goes down really quickly, the dominance goes up. So if it goes up too quickly or it goes down too quickly, the dominance of Bitcoin generally goes up. We also know, or I guess we don't know it, I would expect that if the market cycle is going to continue, you know, into 2020, and whatnot, that in order for it to continue in a healthy manner, at some point, Bitcoin has to go up, right? Like, it can't just stay at 60K forever. I think it'd be good for the entire asset class at some point if it were to go up to 80K, 90K, 100K. But I would actually prefer a slow grind up as opposed to a parabolic move because the downside to a parabolic move is it's one,

you know, it's done in a few weeks and then you have to spend a year in a bear market. So I look at the dominance and say, look, I mean, you know, so far, It looks like we've had, I mean, I don't know how much weight you put into these things, right, but it looks like it had a double bottom around 40%. It has been moving, you know, first of all, it started, you know, it started late September. It's been moving up from 40% all the way up until mid-October. It sort of had a local top at 47, 48%.

Recently, we've been coming down some. My sort of thinking in terms of where Bitcoin's ultimately going to go with regards to the dominance, the cycle, I do think the dominance is going to go a lot lower than where it currently is, but I don't necessarily think that means the dominance has to go low now, right? So I assume that the next market cycle peak is somewhere, like let's say the dominance is below 32%, but it could be somewhere way out here, right? And it could maybe like this box or something, which would be a pretty crazy time in the asset class. So imagine that the final market cycle peak is something like that.

Then I think the only question is, well, how do we get there, right? Does it just sort of, does it just go straight down? Does it go up first and then back down? Again, I would argue that at some point, Bitcoin is going to make a nice rally. And when it does, the dominance will go up. But we also know that after that happens, the dominance will then probably go further down that it has already. So that's what I'm looking at.

I mean, obviously the counter thesis to all this is if the bears are right. and the market cycle peak is in, then the dominance is actually more likely to just go back up, right? So I would say that I think that if the market cycle peak is not in, which is what I think, then the dominance is likely to go down over the next, you know, 12 to 18 months. But in the short term, it could always go up if Bitcoin is moving up too quickly or moving down too quickly. But if the market cycle peak is in, which I don't think it is. But again, in order to prove that, we have to wait a while because a lot of people think that, oh, well, that just means by the end of the year.

No, I don't think it has to mean that. If the market cycle peak is in, I would just assume we're going to go up because then you go back to, say, 2018, and you can see that once the bear market was ushered in, we essentially got rid of a lot of the garbage in the space and everything just went back into Bitcoin, right? Or back into U.S. dollars or something. So if the bear market's in, we're probably going to go up. I don't, I mean, we could still go off in the short term, even at the bear market's not in, but I would argue that it's more likely the cycles are going to go on for a while. So we'll probably find ourselves at a dominance that's much lower than the current dominance, but I don't think we're, you know, imminently at that time.

Like we still have a ways to go before we could, you know, see a sharp drop. And you can see that this drop happened really quickly when it occurred. So, you know, imagine we were to repeat the phase of, say, September through, through May again at some point in the future, you could still imagine a scenario where the dominance goes up, something like that, but then it could still come back down if if octains then rally after it, right? So that's sort of what I'm looking at. And one of the reasons I think is, you know, I think if you look at this, it seems like the dominance is generally in a macro downtrend. At least that's what I think. I guess technically speaking, someone might try to argue, well,

maybe this is an up trend, you know, like maybe it's, you know, maybe it's actually slowly moving up or something. It all, that's the thing I have with TA, right? Like, you can tell whatever story you want to tell as long as you draw the right lines, right? So I do think the dominance will ultimately go down, but, you know, I certainly do expect Bitcoin to put in a fight on more than one occasion this cycle and send the dominance at various phases up, you know, 10, 15 percent higher than where it will be when it starts that move. Ben, if people have been talking about the flippinging for a long time. Okay, I'm talking years. Remember, Eith people are talking about this in 2017?

Since before the first block was mined. Yeah. So what's your take on that? So, I mean, this may be there's a story of Bitcoin dominance decreasing every cycle. Do you think that there's the possibility or probability that Eith flippins Bitcoin this cycle? It's an interesting question. And one of the things that I think is interesting with it is when we talk about the flipping, a lot of people like to talk about other cryptocurrencies, right? And they say, well, you know, this octoin's going to flip Ethereum or this octon's going to flip Bitcoin.

I would say, you know, I don't think anything's flipping anything this year, right? Like, I don't think any octon is going to flip Ethereum. I don't think Ethereum is going to flip Bitcoin dish like, you know, in 2021. I've been saying that for, you know, since 2019. But one of the things we can look at to answer your question is we specifically want to go look at the ether Bitcoin valuation, right? Because that's what matters. Well, maybe technically the market cap, right?

Because the supply isn't necessarily constant. But you get an idea generally with just the ether Bitcoin pair. And if you go look at, say, the daily time frame. And I think a lot of people kind of think that the flipping and can't happen just because it would be so monumental. But one of the things you can do is you can see here on June 13th of 2017. So let's go take a look at June 13th of 2017. And this is a historical snapshot. Ethereum's market cap was at 36 billion. Bitcoin's was only at 44 billion. So Ethereum did in fact come within striking distance of overtaking Bitcoin once upon a time. So I know it's sort of one of those

things that if you say the flippinging is going to occur, a lot of people are just going to naturally roll their eyes and say, you know, you're just, you're, you don't know what you're talking about. But look, I mean, it came just within a few percent, basically, of flipping it in the past. And I think another thing to consider that that could that could make the flippinging more likely is typically the market cycle peak for Bitcoin happens before the market cycle peak for Ethereum. So, you know, if the market cycle peak for Ethereum. cycle peak for Bitcoin ends up being like 150K or 200K or something like that, then that

doesn't mean that we have to compare it to what the maximum price of Ethereum could be at that time. Because it could be that Bitcoin goes to like, you know, 150K or something. And then it drops back to 75K and then it has a dead cap bounce to 120k. And during that dead cap bounce, Ethereum goes to its market cycle peak of whatever that's going to be. So that's the general question is, well, can we get to that level? And my thesis on the Ethereum Bitcoin valuation, and I've had, I've had this drawn since like 2019, these lines. It's just that we're generally just in this macro uptrend channel, right, where we are slowly climbing higher. And recently, we've actually broken out of it. And we're actually sort of writing, writing this line up

here. In order for for me to think that the Ethereum valuation is, or that Ethereum is going to flip Bitcoin, this cycle, I think it would probably mean the cycle has to go to 2023, I believe. because, you know, we would need to break, we need to be breaking up to like these valuations up here. And I would imagine that these white lines, by the way, are showing where 2020 is. So anything between these two vertical white lines is 2022. Could we make it to this region, like say next year? I would say it's possible. But the problem is that I think that in order for Ethereum to go to these really high

valuations against the U.S. dollar, it's assuming that Bitcoin's probably going to have its own parabolic move, which means when Bitcoin has its own parabolic move, Ethereum usually takes a backseat for the time being. So what I would be looking for, if I were to assume that flip it and could occur this cycle, I would say that it might occur, but it's probably going to be a while if it's going to occur. And one of the things we've seen with Ethereum before against Bitcoin is seasonality. It tends to go parabolic against Bitcoin in January. And I'll show you what I mean. So in previous fourth quarters, you can see the Ethereum, Bitcoin valuation tends to bleed, right? This is down in Q4, 2015. Where did the parabolic move start

of the Ethereum Bitcoin valuation? It started in Q1 in January. Look at this Q4. It bled. Where did the parabolic move start against Bitcoin? It started in January. This one, again, this one started in mid-December after bleeding for most of the year, especially in Q4. And then we had this parabolic move that was in the beginning of the year. Again, this one here started at mid-December and it lasted for part of Q1. Again, here, you look at a Q4 bleed. We had a parabolic move, sort of a parabolic move, not really, but at least it was a nice move to the upside by the Ethereum Bitcoin valuation in January. Same thing last year, it bled in Q4. We had a nice parabolic move in January. The interesting thing, though, for Ethereum this year, so far, things can change,

of course. It has not been bleeding in Q4. This is the first Q4 Ethereum's ever had where it's not bleeding against Bitcoin, right? It's more or less going sideways. If you go look at quarterly candles, we're actually technically up right now by about three and a half percent. Now, that doesn't mean it's going to stay like that. We still have what half the quarter to go. I mean, we're only at mid-November right now. But I think Ethereum is actually looking relatively strong compared to where I would have expected it to be. And you can see it's really putting up a fight. So one of the things I would say is that if it's going to flip Bitcoin, it would be nice to get a, you know, a couple more nice January's under our belt, right? So not only January of

2022, but also January 2023. And if we can, if we can reach that point, if we can reach that point and we get a parabolic rally up after Bitcoin has a parabolic rally or something, then it is certainly possible that it could flip it. But I would argue, though, I would argue that if it does flip it, it probably, it probably won't sustain it in the bear market is my guess. Just because we know that Ethereum does tend to bleed a bit worse than Bitcoin in the bear market. But I mean, it also gives you more upside on the bull market. So it kind of makes sense. So could Ethereum flip Bitcoin? I think it could, mainly because we've seen the historical snapshot, it's already come extremely close to doing it before. It's in a very long macro

trend up. It seems like time is on our side with regards to lengthening cycles and it still seems like we have a long way to go. The only way that we don't flip it, or I don't want to say the only way we don't flip it, but one potential way we wouldn't flip it this cycle is if the cycle, you know, if it sort of peters out in a few months, like if it only goes, say, in the Q1 or Q2 or something, then I don't think Ethereum has really any chance to have, you know, to be able to flip it, to flip Bitcoin. But if it goes on for another year or something, then you're getting into the territory where, hey, this long-term momentum shift to the upside is really going. It's not going to take that much longer. I mean, if we keep riding this lineup here by the summer of 2022,

you know, we could be at point one, right? And point one could be a launch pad to get us to that, you know, to that flipping status. So I don't want to say that it has to happen, but if the cycle extends long enough, it certainly can't happen. Ben, we talked a lot about obviously these cycles and Bitcoin and Ether in particular, you called these two assets sort of the blue chip assets. I'm curious why you think these are the blue chip assets, right? Because of course, like we've seen other coins have runs. Some only last a cycle. You know, some, this is their second cycle and it's hard to know what's what. Why do you think Bitcoin and Ether are blue chip or like, are they special in any ways? Yeah, I mean, I think they're the two most

massively decentralized protocols. And I don't think it's even close. between any other assets. I think they are, I mean, with Bitcoin, you just simply have the network effect. Obviously, if someone were to launch Bitcoin today and Bitcoin didn't exist, it would be seen as like sort of like a dinosaur type thing. But it is the first one. The only reason we're all here looking at this stuff is because Bitcoin initially existed and sort of gave everyone the insight to, hey, let's explore this idea.

That's where the network effect is. if we, if, you know, what's going to be around in 10 years? These are some alt coins going to be around? Yeah, some of them will survive. But you just really never know. One great example. Look at 2013, or sorry, 2017. You have Bitcoin and Ethereum.

But look, I mean, you have, yeah, look at all these coins that aren't even in the top 10 today, right? Some of these coins, some of the viewers here probably have never even heard of them, right? They've never even heard of them. Where's the IOTA supporters on the YouTube today? The NEM supporters. Go back to say 2013 and take a look. I mean, look at this. You have things like not a lot of people have heard of peer coin, name coin, feather

coin, nova coin. Don't even get me started on BBQ coin. You look at this and it's like, you know, in 10 years, we really don't know what auctions are going to be around. But I would say it's highly likely that Bitcoin will be around and it's highly likely that Ethereum will be around. I think that people give Ethereum a hard time because the guys, gas fees are high. I mean, I've given this speech before, right? But again, the gas fees are high

because people use it. And if they wanted to lower the gas fees, they could, but they would, of course, be sacrificing some level of decentralization to do so, right? If they raise the block size and make it so that you have more computational requirements to run it, you know, to run a node, it's going to make it, it's going to make it somewhat more centralized. And you sort of have that trilemma. But I think that a lot of other projects sort of tout themselves, as being better than Ethereum, but a lot of them are, I mean, they're just, they're not, right? I mean, they might be, they might be better at some aspects, right? Like, some of them might be faster.

Some of them might have lower fees, but they're probably, they're, they're, they're, they're sacrificing somewhere else, right? Like, it's an engineering problem. It's all about optimizing things. So maybe they have higher gas, or maybe they have lower gas fees because no one uses the network. Maybe they have lower gas fees because it's extremely centralized, right? Again, the Binance smart chain originally started as a clone of Go Ethereum. You know, it's not like, and the gas fees there are really low.

It's not like it's groundbreaking technology. It's just that they're willing to sacrifice things that Ethereum developers are not willing to sacrifice. And I think that Ethereum is pretty far out ahead in terms of development and stuff and transitioning to becoming roll-up-centric, et cetera. And so I look at this and say, you know, from a technical, from a fundamental perspective, I think they're the blue chips, right? From a market cap perspective, they're the blue chips, right? They're the safest.

From a technical perspective, if you were to measure out the sharp ratio and the Sortino ratio, Ethereum, if you just ran it against Bitcoin and Ethereum, the optimal portfolio, that maximizes your risk-adjusted returns is actually 65% Bitcoin, 35% E. That's not my opinion, by the way, right? That's just if anyone can run that same analysis, where you figure out what maximizes your sharp ratio of those two assets, and it ends up being 65% Bitcoin, 35% Eath. Again, if you run the same analysis and include light coin in it,

it comes out with 0.0% light coin. The reason is not to say, again, it's not to say that light coin can't go up. It's just to say that, look, if light coin does go up, it's also highly likely that Ethereum has gone up a lot more than light coin, right? And I can't pass up the opportunity to show the light coin Ethereum chart just because it really sort of hammers down, hammers home opportunity costs and why Ethereum is a blue chip. Are we talking like coin, which is Bitcoin silver? Right. Yeah, yeah, yeah, yeah. I mean we're talking about it? Yeah, yeah, yeah. This is what I'm talking about when you're talking about bluechups and people say, well, why can't you have a large position in some of these other other cryptocurrencies?

You look at these projects and look, will light coin trend up against the U.S. dollar with time? Yeah, probably will. is blood 91% against Ethereum over the last two years. So to me, a blue chip, I want it to outperform a lot of the, you know, a lot of the asset class, right? I want it to outperform. I don't want it to, you know, to see this downside. And I could go through a ton of different coins that all they do, all they do is they bleed against Ethereum over the macro scale, right?

I mean, here's XRP. It just bleeds against the theorem over the macro scale, right? Here's some other coins that were relics of the last. market cycle. They bleed against, they bleed against Ethereum over the, over the macro scale. So the argument, of course, just become simply put, will your octoin trend up against the US dollar in a bull market? Yes, right? But anyone can pick out cryptocurrencies that will probably do well during a bull market. You always have to, always have to ask yourself, and it's sort of become a meme now on my channel, right? What if it bleeds against Ethereum?

And a lot of cryptocurrencies, if you go look at their valuations against Ethereum, they bleed over the macro scale. So if you do have all coins, make sure at the very least, at the very least that they oscillate against Ethereum or they go up against the fear, right? If all they do is go down, you're essentially taking on more risk for less reward. Ben, this has been extremely insightful. And it's nice to, I really appreciate somebody that can draw these charts and focus on the charts while also connecting to the fundamentals. I remember, and you were probably like this too, back from when I was in my first cycle in 2017, 2018,

I would pull open blockfolio and check it roughly 70 times a day. For somebody that has like chart addiction or just like they can't pull their eyes away from their charts, what advice would you have to somebody like this? Yeah, I mean, I think a lot of times like these short-term price movements are just noise. And, you know, the likelihood that someone's going to want to sell today anyways is pretty low, usually because they,

a lot of us just, you know, and people just kind of hold on for dear life and whatnot. Look, you know, you can look at it all you want, but at the end of the day, it's an investment, and it's not, I think people should look at it like an investment. Gambling is something that I think it's easy to get into and call it investing, but it's actually gambling, right?

These microcaps are gambling, using a lot of leverage or any leverage. It's gambling. There's a difference between gambling, and investing. And if you believe Ethereum or Bitcoin or, you know, your favorite all coins, if you, if you believe in their mission and what they're doing and where they're headed, then what happens today is just completely irrelevant, right? I mean, and again, we're as, it's a great time to be saying this because, I mean, as I'm saying this, Bitcoin is now it, you know, it's below $60,000. But again, you know, I'm sure there's a lot of people out there

glued to their screens and wondering what's going on. It wasn't even that long ago, literally like two months ago, Bitcoin was at 40K. You know, so today is the market down this week by about 8 or 9%? Yeah, it is. But if you go back a couple years, think about all the stress that you probably had on this red candle, right? Or this red candle here or this red candle or this red candle. Like all that stress that you probably had every day watching the charts 70 times a day,

who cares, right? You're not here for the little bunny hills, right? You don't really care about that. You're generally here to see the asset class trend higher with time, and I believe that's what it's doing. So while there are, while there definitely are, you know, time periods where we go down and stuff, I would still argue that the general direction is up

and it's going to remain up for a while. Could we come back down and test some lower levels again? Of course, right? I mean, you will never hear me say that Bitcoin has to go parabolic in Q4, I think it's honestly absurd that so many people think it does. But you'll never hear me say that. I think it's better to just invest responsibly to get positions and assets you like and you want to have in your portfolio. And then just to wait for the bubble to happen because it's only a matter of time before another bubble happens whenever you have the next narrative or whatever it's going to be.

There's going to be another bubble. There's going to be more retail coming into the space at some point. So until then, I think it makes more sense to just keep your head down. invest in the projects you want to be in and be patient. Benjamin Cowan telling the bankless story through charts. I love it. This has been a fantastic conversation. Ben, thanks so much.

Where can folks check out your YouTube and find out more about Into the Cryptiverse? Yeah, go over to my YouTube channel. You can just search my name and you can find my YouTube channel. We basically just put out one or two videos a day. Sometimes we talk about macro stuff. Sometimes we talk about, you know, some weekly trends. We don't typically talk about like hourly trends or anything like that unless we're watching the one-minute chart on the live stream

and we're trying to break a certain milestone by price. So yeah, go check out the YouTube channel. Go check out Twitter. And then there is my website, of course, at Into the Cryptoverse.com. Guys, it is fantastic as well. Whenever something is going on in the markets, when you want to give that price information, I always direct folks to Ben's channel.

Ben, thanks so much for joining us. We really appreciate it. Yeah, thanks for having me. It was a pleasure to come on. Of course, Bankless Nation, none of this has been financial advice. Never is. Bitcoin is risky. ETH is risky. You could definitely lose what you put in. But we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot. Hey, we hope you enjoyed the video. If you did, head over to Bankless HQ right now to develop your crypto investing skills. and learn how to free yourself from banks and gain your financial independence. We recommend joining our daily newsletter, podcast, and community as a bankless premium subscriber

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