Bankless - Where’s the ETH Bottom? | Ben Cowen

Episode Date: September 10, 2024

When is this all going to reverse?  That’s the question we asked Benjamin Cowen, YouTuber, Founder of Into The CryptoVerse and famous chart maximalist who does some fantastic technical analysis. The main goal of this pod is to understand if we're currently going through Ethereum’s bottom but we also cover: - Are crypto 4 year cycles dead? - What’s next for ETH/BTC? - How’s Ben positioning his portfolio for what’s coming? Except to learn that and much more. ------ 🌊 KELP | DEPOSIT ETH WITH GAIN TODAY https://kelpdao.xyz/gain/?utm_source=Bankless  ------ 📣 INTO THE CRYPTOVERSE | GET 10% OFF https://intothecryptoverse.com/ref/bankless/  ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2    ⁠  ⚡️ CARTESI | LINUX-POWERED ROLLUPS https://bankless.cc/CartesiGovernance  🗣️TOKU | CRYPTO EMPLOYMENT  https://bankless.cc/toku   🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle  🦄UNISWAP | BROWSER EXTENSION https://bankless.cc/uniswap    ------ ✨ Mint the episode on Zora ✨ https://zora.co/collect/zora:0x0c294913a7596b427add7dcbd6d7bbfc7338d53f/60?referrer=0x077Fe9e96Aa9b20Bd36F1C6290f54F8717C5674E  ------ TIMESTAMPS 0:00 Intro 5:33 Where Are We? 7:44 4 Year Cycles 22:52 ETH/BTC Ratio 29:28 ETH Price Analysis 37:55 Blue Chips vs Altcoins 55:32 ETH/BTC Final Equilibrium 1:01:11 Idiosyncratic Events 1:13:34 The Flippening  1:16:23 The Bull Market 1:20:58 2026 1:25:00 Presidential Election 1:27:30 Ben’s Portfolio 1:32:08 Closing Thoughts ------ RESOURCES Ben Cowen https://x.com/intocryptoverse   Ben Cowen on YouTube https://www.youtube.com/channel/UCRvqjQPSeaWn-uEx-w0XOIg   ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures ⁠  

Yeah, I mean, I think that I think Ethereum will start to outperform Bitcoin in 2025. I feel pretty confident about that. Again, I could be wrong. You know, I mean, again, it wouldn't be the first time. But I do think absolutely that it will start to turn around as we get closer to 2025. My base case right now is that it just bottoms out sometime between now and the end of the year. Welcome to Bankless, where we explore the frontier of Internet money and Internet finance. And today on this show, we ask, when will Eith?

turn itself around. The ETH-BTC ratio has been down for over 700 days. ETH first to the all coin market is also not doing so great either? When is all of this going to reverse? We got Ben Cowan on the pod today, famous charter who does fantastic technical analysis and also cross-references all of his work with macro forces, monetary policy, the presidential election QE and QT, and he's got some ideas about when ETH will turn itself around and he thinks it's actually pretty soon. But first a message from our friends and sponsors over at Kelpdow who want you to save you time with our brand new product gain so you can farm all the air drops possible just using the Gain Vault. Gain will do it for you. You can deposit ETH, RSE, or other LSTs, and get access to rewards

from multiple layer two networks, restaking platforms or other defy opportunities with just a single click. So you can stop doing all that farming yourself and just use the Kelpdow Gain Vault to do that for you. There is a link in the show notes to get started. You can withdraw as well. at any time is non-committal. This is an episode you're definitely going to want to like catch the visuals for, okay, because we're talking charts the entire time. And Ben is like busy marking up charts on screen.

So if you want to- Charts. Fluent and charting. You can check this out on YouTube, you get the video, or actually Spotify video. It's a fantastic place to check this out because you're going to want the visuals that accompany it.

I would say Ben is a chart maximalist. In fact, we labeled him as such in the episode in that, that's his lens on the world. it's basically what are these assets going to do in the future? Well, we can look at what they've done previously and kind of extrapolate for it. It's a different lens than you and I, David, bring to the table and bankless podcast,

which is mostly about fundamentals and thesis and this kind of thing. But there's a certain purity to just like looking at the charts and just like logarithmically extrapolating them forward and combining with the macro data. I think Ben is one of the best in the biz at actually doing this. So it's valuable to what he has to say. In particular, a question that I wanted to ask him at the very beginning, where I feel like we got a good answer from him is the four-year cycle. Is it dead?

Like, have we even entered a bull market yet? Or like, what is going on? So stay tuned for that. Guys, we're going to get right to the episode. But before we do, we want to thank the sponsors that made this episode possible, including our recommended place to go exchange your fiat for crypto. That is, Cracken, go create an account. If you want a crypto trading experience backed by world-class security and award-winning support teams, then head over to Cracken. the longest standing and most secure crypto platforms in the world. Cracken is on a journey to build a more

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taxes while still maintaining legal compliance. With Toku's guidance, you can concentrate on building your company while Toku handles the logistics. Token launches don't have to be complicated. Talk to Toku today to get a free initial token valuation. Bankless Nation Ben Cowan is the founder of Into the Cryptoverse, most known for his analysts of various crypto charts looking at long-term trends, crypto market cycles. Ben, welcome back to Bankless. Thanks for having you back. Closer to be here. I think we are coming up to some sort of

inflection point in the market. Maybe I can kind of get that take corroborated by you, Ben, with some of the charts here. But the first question I just want to ask, is the bull market over, or did it just start? Or has it not even started yet? I'm wondering if you have, just from the ways that you interpret all the data that's available to you, how do you interpret that question? I like to look at what happened in previous cycles, but I tend to to sort of veer off from just looking at, you know, what everyone knows is the four-year cycle, but I look to see how monetary policy affects the crypto markets. So what I think that Bitcoin has just experienced and overall, you know, the overall market

is sort of a quantitative tightening sort of high interest rate bull market, right? That's what Bitcoin and even Ethereum saw for the last couple of years. And the trend, it looks a lot like what happened in 2019, in fact, right? I mean, a very similar move. The only difference, really, between this, you know, this bull market we had here and the one from 2019 is the time it took to play out. But in terms of the percent gains, they were about the same in terms of what led the market. It was Bitcoin that generally led the market. So that seemed very similar.

So I would argue that the quantitative tightening phase of the bull market is over. Okay. There still could be a QE phase of it that occurs later on. But my guess is if that occurs, it won't be until next year, is what I would generally guess. And so that is where I think we are right now. And the main difference, I think, and I think it's worthwhile to really understand how the two differ, right? So in the QT high interest rate bull market, Bitcoin leads where Bitcoin dominance goes up. Same thing happened in 2019.

In a QE bull market, like you got in late 2020, 2020, 2021, that's where the lower market cap plays start to lead. And so that transition might occur sometime, you know, between now and early next year. Ben, I just have a general question about kind of like bull markets and crypto and as you see them. So this is a conversation David and I had last week. And I don't know that we came to a definitive conclusion. for our own perspectives, we might have different hypotheses on this, but like the four-year cycles,

that's been a thing that has been in crypto since everybody's been in crypto. And the market kind of expects another four-year cycle. Do you think we are still living in the era of four-year cycles, whether that's driven by the happening or whether it's driven by like, you know, liquidity, you know, as Raoul Paul says, but the four-year cycle, is that a thing or is that broken this time around? I mean, it's honestly hard to argue against it. I think it's easy to dismiss it. But the reality is, is, you know, Bitcoin topped into 2013, into 2017, into 2021, right? And it wasn't much more complicated than that.

And it bottomed, you know, after the midterm year here, after the, you know, the midterm here, the midterm year there. And then the same thing, right? So it seems like there is some cyclical component to these market cycles. And actually, if you measure out, you know, Bitcoin's ROI, and we could even look at the same thing for Ethereum as well. But if you look at Bitcoin's ROI from the low and we just look at the last couple of cycles, I mean, this is where Bitcoin always is at this point in the cycle as measured from the low. Right.

So to some degree, this time really hasn't been that different. I think the thing that I think is throwing people off this cycle is the timing of rate cuts. So last cycle, rate cuts occurred in the pre-having year, right? They occurred in, they started in July 31st of 2019. And that corresponded to this cycle right here where you had this QT high interest rate bull market where, you know, Bitcoin USD went up and in Bitcoin, Domit's also went up. We've seen the same thing, and you can see how it got ahead of the cycle

that came before it, and then eventually it sort of bled back down until it got in line with the prior cycle. I think you're seeing the same thing happen again, where we had another QT bull market, and then it's basically just sort of faded, and now it's getting back in line with the prior cycle. So to a large extent this does look awfully familiar, right? I mean, it seems like some things are relatively predictable in terms of the four-year cycle. But I also think there is another component, right? It's not just the four-year cycle. I think monetary policy also plays an important role in exactly how the cycle plays out. And at what point in the cycle do some of the other cryptocurrencies like Ethereum, at what point do they start to take over? And we just haven't seen that happen yet this cycle,

but I think there's plenty of reasons why, right? We have not yet seen the Fed lower interest rates, although that's coming up relatively soon. And we also have not seen the pivot from quantitative tightening to quantitative easing, and that could also be coming up relatively soon, theoretically. So I think the cycle is playing out how it typically does. It's just that the timing of rate cuts this cycle is coming much later than it did, the prior cycle, and I think that's throwing people off. So, Ben, your base case is the four-year cycle we're having again, and we're basically right on schedule as compared to previous cycles. So, like, people should wait. I will make a note in every four-year cycle that I've been a part of around this time when things get flat, people start to doubt the four-year cycle.

Always happens right on schedule. So we're on schedule in the four-year cycle to be in the period of time where people doubt the four-year cycle. Would that be inaccurate some of your base case here? Yeah, I do think that, you know, I do think that it's good to see that the cycle has sort of gotten back on track where it normally was. It was somewhat uncomfortable when it was back over here. If you measure it from other ways, though, like if you measure the cycle from the peak, which is probably not the best way to measure it because, you know, the way I think, I mean, we're going to look at it regardless. But one of the reasons I like to look at it from the low is because it's hard to really take into huge consideration what, happens during a manic blow-off top, right? The markets are just irrational. So measuring

returns from that level, not always the best. But with that disclaimer, if you look at the ROI from the cycle peak, so you go peak to peak for Bitcoin, we are still slightly ahead of where we would normally be at this point in the cycle. What's fascinating is this is really the first cycle where Bitcoin put in new all-time highs before the halving. And that's actually reflected here on the chart. I mean, you can see that this is the green line. We're still ahead of where we were at this point in the last two cycles. So even if Bitcoin were to sell off after rate cuts like it did last cycle, even if it were, it could still pick back up in 2025. I mean, it might just correspond to it getting back in line as measured from the peak. So,

I mean, I do think every cycle is going to throw us a curveball. Last cycle, it was a pandemic. You know, everyone got annihilated. I think you guys, I mean, you guys were there too. I mean, we woke up and the price of it. Ethereum and was back at like $100 and I think we had gone to sleep and it was $200 and we woke up the next day it was like $100. Like what just happened? So yeah, I do think that there's something every cycle that does try to throw people off and this cycle has certainly been no exception.

Yeah. Can I try and be a four-year cycle bear for a moment? Because I'm still skeptical that the four-year cycle is intact and maybe at the end of the day, we fast forward in six months and we're totally wrong. right and like the four-year cycle is intact. But like there's just some things that happened. The ETFs, I think, pulled forward a lot of price action, a lot of demand. And Bitcoin especially has been an experience, the benefactor of that demand.

Like, it's weird that Bitcoin reached an all-new high, but just a little bit. And momentum didn't follow. And in all previous four-year cycles, breaking all-time highs meant following into like price discovery. and we have not had price discovery right in this current in this current market sector right now. Like right now Bitcoin touched like $74,000 ahead of like the $69,000 previous all time high. And it's the only one. Like Ether got the ETF but not the previous all time high. And now we're in like a long, a prolonged crab market.

And maybe I'm just in like recency bias of being here in this present market and rather than the last four year cycle that I was a part of. But this crab market feels real long. It feels real long. also like no new users and no new like things to do. And so maybe that's just contributing more to the idiosyncratic nature here. But like what would it take to truly invalidate this four-year cycle? Because we've got the pull for the one year accelerated like upswing. I'm not going to call a bull market because we haven't had price discovery because of the ETFs. And then we've had this extra prolonged crab market that has like is too long for what I would call like pattern matching

into previous cycles. That's kind of my vibe. How do you take that, Ben? No, I mean, absolutely. I think you're asking the right questions. I think that once everyone becomes comfortable with one particular outcome, it's probably time for that outcome to change. It's difficult because, as always, normally when Bitcoin hits all-time highs, it continues to accelerate from there. I think you're absolutely right. I mean, I think that you could argue that the ETFs helped hold forward some of those returns. And so in 2020 around this time, the market was generally trending up, right? I mean, we had the pandemic crash. And then the market basically exploded up into the summer, a brief pullback. in August and September, and then it kept going up into Q4. We're not really seeing that this time, right? This summer has been relatively boring. August, September, haven't been that great. But I think what's really happening is, and it goes back to what I mentioned a few minutes ago, it's the effects of monetary policy.

So, for instance, if we were to tickle it, and by the way, I mean, I will be completely honest with you guys. I don't, I really think Ethereum could eventually go lower from here before it really gets back on track. And the reason I say that is because what I think has happened is every cycle, there's this thing that happens with Ethereum. I don't know why exactly. I always find it fascinating. I do actually, I mean, I do consider Ethereum to be a blue chip. I only consider two blue chips in the industry, Bitcoin and Ethereum. And there's this thing that happens every cycle with Ethereum. And it's fascinating. And it's basically the Eith Bitcoin pair. Right. It's the Eith Bitcoin pair.

And I think we could learn a lot, honestly, from the Eith Bitcoin pair. And basically what happens? And this is why I think going back to your sort of your observation, which is absolutely valid, is like, what's going on with this market? It just keeps on crabbing. And frankly, it's been going sideways with a slightly bearish bias, right? I mean, Ethereum has been putting in lower highs and lower lows. Same with Bitcoin ever since March. But I think the reasoning, the reason for it, and I think why people might be losing their

way on this is, look, every cycle, Eith Bitcoin goes through this pattern right here. And essentially what it is, is it sets a top. and then it sets a low and you can see that after it does that it puts in sort of like a lower high right and the same thing here right a top and then in between these this bottom

lower high and then sort of slowly bleed back down this time has not been different right this lower high right here that was actually going into the merge which I'm sure you guys remember was a pretty crazy a pretty big event for Ethereum I mean it had been something that they had been working up to for years

and years and years it finally happened But what's fascinating is every cycle we go through this process where Eith Bitcoin, you know, it tries to go up, it comes back down to Earth, goes back up again, lower high. And then it gets into this phase right here, right, where it's just above the range low that it's set in between the two peaks, but it's not enough to really turn it back around. And then what happens is after it sort of crabs in that range for a number of months, it eventually breaks. down, right? It eventually breaks down. So you can see that the first time it broke down in 2016, it had a fake out. It was actually in June, right? So it was actually in June of 2016. It broke that prior range low. The cycle after that, it occurred in July, right? The cycle after that, you can see it first started to break down really, you know, right around January, there's a

wick below it. And then it really started to go below it in March around the time that Bitcoin topped out. Now, it was fascinating about this. chart is if you look at it through the lens of Ethereum, right? So look at it through the lens of Ethereum. And you can see precisely how it has played out every single time. So look at Heath. And remember, the first time it broke support in 2016 was in June, right? And then if you look at Ethereum in 2016, it topped in June. And from there, Heath bled about 70% before getting back on track, and then it went up in the post-having year, right? It went up in the post-having year, which is normally the one year of the cycle where Bitcoin dominance goes down, right? Every other

year, Bitcoin dominance goes down. It's the post-having year where Bitcoin dominance goes down. So that was the first cycle. That was the 2016 cycle. And then if you look at what happened next, right, Eith Bitcoin in 2019, when did it break down? It broke down in the summer, right? June, July, is when Eith Bitcoin broke down. In 2019, Eith, U.S. topped out in, you know, June-July, right? So you can see that both prior cycles, ETH-USD followed that pattern, and after finding that top, it bled about 70%.

Now, it's easy to get sidetracked on that and say, well, why include the pandemic? But I'm not, right? I mean, I'm purposely excluding this pandemic crash. Like, we're just looking at what happened going into the end of this year. So because of that, right, because of that, when I'm looking at ETH Bitcoin, I'm like, all right, well, we saw a fake

out here in March and April below the range low, kind of like 2016. And if you go look at what Eith did, that's exactly when it topped out, right? March, right before the Bitcoin having. And so far, it's already dropped 54%. Right? So to a large extent, this time has not been different, right? It actually is playing out in a very similar manner. And what's fascinating is if you look at at ETH Bitcoin, the breakdown 2016, 2019, after that, right, right after that, that's when Ethereum bled 70%, and then it started to pick back up the following year, right?

The following year. And it bottomed out in both 2016, ETH USDA bled until December, right? So December 2016, December 2019. And then it picked back up the following year. And you could argue that it was picking back up right here in 2020 and then the pandemic happened, right? And it kind of threw everything off course. What's fascinating, if you fit the data points,

these data points with these data points, sort of like the non-bubble data points, if you want to call them that, if you fit those data points together, you get a curve that looks like this, right? So this is the logarithmic progression band. And what's fascinating is every time Eith Bitcoin has broken down, 2016, 2019, and now

2024, every time ETHUSD bled into Q4 into the regression ban, and then it had an explosive move the following year, right? The following year. And then that year, where it has the explosive move, tends to be where it starts to outperform Bitcoin, that tends to be the post-having year. So I kind of...

That's where we would call it the bull market, the true bull market, The main immatical market. Right, like the QE phase of the bull market, right? The phase where Bitcoin is no longer leading, right? Because I think a lot of people think that Ethereum always outperforms Bitcoin in a bull market. And I would say that is correct when there's lower interest rates and money printing, right? But when you're in a phase where higher and higher rates and more and more QT where the fed's reducing the size of the balance sheet, that's where people tend to find. flee higher risk assets and go to lower risk assets.

Now, I'm not, in the grand scheme of things, Ethereum is number two for a reason, right? I think it is the second, you know, the second safest one. But I still do believe just by market cap alone and by the fact that Bitcoin's been around the longest rate, that's generally going to be a safer play for most people, especially in a high interest rate environment. So I do think there's a pivot coming soon by the Fed, and therefore, if Bitcoin should theoretically bottom out sometime between now and the end of the year. So the way that you present this with, like, we have like three pretty strong data points across the ETH-BTC ratio that you're pointing out about the bleed into the, the bleed into the upside.

It seems like it's all going according to plan. At least kind of that's the vibe that I got from you. Like the ETH-BTC ratio is in the middle of like, starting its like fourth pattern that we've seen for the last three cycles. And if you believe in patterns repeating themselves, then we are. perfectly on track for that. And there's like not really much reason to think that we're outside of that bound. Is that a fair assessment? Yeah, absolutely. Actually, you know, I, my, my long-term view for ETH Bitcoin, really since 2021 was that it was

going to bleed to about 0.03 to 0.04. So I, my base case- Yeah, you call this ETH coming home, right? Yeah, yeah. It's basically, basically it bleeds to the 0.03 to 0.04 range. And that's why I've been so bearish on Eith Bitcoin is, and I know I've made a lot of ETH people mad, but it just, it was what I saw happened last. cycle and I was like, you know what?

Like, I do think there's a time to be bullish on Ethereum against Bitcoin, but I think a lot of people have like, you know, they front run it. They think that it's going to give them outsized gains compared to Bitcoin, but I think it was a little too premature. And so what's really interesting, though, is, you know, at this point, I think it's far too late, right, to make that trade. I mean, I think the time to make it would have been back over here in 2021. But if you look here at when Eith Bitcoin breaks down, like the last couple of times, after the

first month that it broke down right here 2016 and then here in 2019, it only went down for like one to two more months before ETH Bitcoin really bottomed out, right? And so I think that it's going to turn around relatively soon, but the reason, I mean, it could still go below 0.04, right? It absolutely could still go below 0.04, but I will say this. If it does not go below 0.04 before the end of the year, then my guess is it's probably not going to. Okay. But in the short term, I would say there still is a chance. And the reason why I still remain, I don't really even want to call it super bearish because it's already hit my target range of 0.03 to 0.04. So it did hit 0.04. So I remind myself, all right, like, there is a chance that the lows already end. But the reason why I would still express some skepticism towards that idea is last cycle, we know if we overlay two things, if we overlay interest rates, you can see that ETH Bitcoin. bottomed out after rate cuts, right? So it was about a month after the first rate cut.

So the first rate cut was in July. It was actually July 31st of 2019. And then ETH Bitcoin bottomed out like the first week of September. So it was basically just a month later. And then also, what's actually, I think, a bigger signal than just rate cuts is the balance sheet of the Fed, actually.

So if you overlay the balance sheet of the Fed, you can see that it was precisely, when the Fed pivoted here from quantitative tightening to quantitative easing, that's what marked the bottom for ETH Bitcoin, right? Like right here. You see that? Right where they pivoted, that's ultimately what marked the bottom last cycle for Eith Bitcoin. And that is likely going to happen sometime in the next few months. And the reason why is it's not because, it's right, it's not because the Fed cares about Ethereum, right? We know they don't, you know, they don't care about the crypto markets. But the reason why we're likely going to see this pivot occur is because

just to briefly get into the macro side of things, right? The unemployment rate is starting to look a little scary, right? It's sort of interred into its nonlinear phase where it's moving up a lot quicker than it had been previously. And so when it does something like this, right, when it – I'm not really sure what this one's a lot bigger, but when it does something like that, when the unemployment rate starts to move up this quickly,

that's when the Fed is going to start to respond. So because the Fed's reaction function, And because the Fed's likely going to react in the next few months, it likely means that E-F Bitcoin will bottom out in the next few months because monetary policy is about the change. Ben, I dream one day to be able to chart like you, man. This is just like incredible. No, you don't, right? You've never tried charting.

I haven't never tried. But like if there was one, you know, skill set, I could just like matrix style, somebody could plug into my like neuronet, it would be like charting. Wouldn't be athletic skills, it would be charting. But I don't want to do the work to get there because there's people like Ben who have already done it. So we were looking at some charts like where Ben was doing an overlay on the ETH Bitcoin ratio of like the Fed balance sheet and also the interest rate. And that's really cool. And so I guess we're getting the picture of the true driver of these four year cycles.

It's not really the having. It's more like the like the Fed and liquidity and interest rate. Is that kind of the true force behind all of this? Yeah, absolutely. Because, you know, I don't even think you can look at even Bitcoin and say that the reason it went up was only because of the ETS, right? The reality is that Bitcoin is sort of a more volatile version of the NASDAQ. And the NASDAQ, right, if you overlay the NASDAQ, this is actually really fascinating when you look at the market this way. When you overlay the NASDAQA with Bitcoin, you know, when Bitcoin started to go parabolic in Q4 in anticipation of the ETF, the NASDAQ was also going parabolic, right? So it's not even, I don't even think we can definitively say that it was the

ETF, I'm not saying the ETF had no effect. It absolutely did. But my point is that if the NASDAQ were going down in Q4 of last year, then there's a good chance Bitcoin would have as well. Right. But it was because, you know, we were generally in risk on conditions. But I think one thing to note and just another similarity between this cycle and last cycle is that I think a lot of people have sort of said like, well, what's going on? Like why, you know, why have equities gone up while crypto's gone down? And actually, what's really fascinating is the same exact thing. happened last cycle, right? There is a period last cycle where you can see it pretty clearly where Bitcoin was going down while the NASDAQ was going up. After, right, that was when,

that was when ETH Bitcoin broke down. That was also when gold broke out was right here. Gold broke out right there. Same thing has happened this time, right? You know, you can look over here and see that the NASDAQ has trended up while Bitcoin has been slowly trending down. So I think a lot of the same things are playing out. Again, I think the main difference is that instead of a current in the pre-having year, it's all occurring in the halving year. But you could argue that the four-year cycle still could be intact. It's just the timing of everything is just offset by one year. Okay. And so let's maybe recap kind of where we are. So you think base cases where in the first part, the first part of the four-year bull cycle, yet again, this is only the, this is the quantitative

tightening part of it. It's not the quantitative easing part of it, which we like could start after Powell starts to, you know, lower rates. And we may be in probably the bottoming range of the ETH Bitcoin ratio. Still could go lower, but like we're kind of close to where you feel like it's going. How about Eith, like with respect to dollars? So have we seen lows there, or are we going to dip below 2000? I've gotten in a lot of trouble. I'll just be honest, guys.

I've gotten in a lot of trouble with my views on Ethereum. Who's costing you trouble? It's just like No, the Twitter trolls, right? Mainly because I've sort of been on the opinion for the last few years, right? If you're going to buy anything

just buy Bitcoin because ETH is going to underperform, right? And so I've had this like, I've had these like bear goggles on for Ethereum because I just kept thinking like, well, why buy Eith when I can buy Bitcoin if ETH is going to go down?

I'm starting to force myself to see the other side of it because I think we're, as you just said, right? I think we're actually near the end of the ETH Bitcoin downturn. But as far as ETHUSD, there's actually kind of a pattern here as well.

You could almost argue that what has happened here is the same thing that happened in 2019. It looks a lot different because it's taken a lot longer. But I think if you overlay rates, if you overlay interest rates, you can see what I'm talking about, I believe. So do you see how this cycle over here rates only went up to two and a half percent

and then they came down? This time they went more than doubled out, right? Well, they went to five and a half percent. But if you look at the chart like this, basically what happened last cycle is that ETH formed this wedge that it was bouncing around between. And if you put a price label,

sorry, price label here, you can see it bottomed out around what, $80? Around $80. This was not this cycle, right? Obviously, the 2019 cycle. And then it had a higher low at around $100. And then it had another low

at around 150 before rallying up. And then you can see that it fell back into the wedge right before rate cuts arrived, where it went down to, guess what? Guess where it went down to. It went, the wick on this, on this return to the wedge, the low was 190. So this move from 2019 is basically one-tenth of the move we've seen this cycle, right? So instead of, you know, instead of ETH bottoming out, right, at 80, 100, 150, and then 200,

it's been just 10 times that, right? 10 times all of that. So you have 800, right? 1,500. And now this wick that we just saw went to 1900, right? So it's basically the same thing. And the reason I think it's taking place on a grander scale is because the rate hike part of the cycle

has taken place over a much longer timeframe. Right? So when you look at it like this, right? So we can see that it's just a 10x move of the prior cycle. When you look at it like this, you can see that ETH has fallen back into the wedge just like it did in 2019. And what's even more fascinating is if you zoom in here, it was right after the first rate cut, the first rate cut last cycle was July 31st. And it was right after that rate cut that ETH USDA.

broke to the downside. And it occurred in the third quarter of the year. It occurred in August. And so the downturn lasted a little bit longer into Q4. And then you could argue that was the soft landing. Right. So that would have been the soft landing. Now, we ended up getting a hard landing because of the pandemic, but that would have been the soft landing. So like, I have to, as much as, you know, it's taken forever, right? And there's been every reason to sort of, you know, make fun of these views because it's been taking far longer than I thought, which is fascinating because I actually thought the Fed would raise rates to five and a half percent. I thought they would keep them higher for longer. I just, I'm actually was pretty amazed by how long the crypto markets held up. And I mean,

I think it is a reflection that a lot of people do find value, you know, in the crypto markets. And even though Ethereum hasn't set new all-time highs, remember, last cycle, it, it, it, it First, Eith Bitcoin had to break down. It had to go home, as I've said. And then after that is what led the rally into new all-time highs. And I mean, you can see that in 2016, right, I mean, this rally was an explosive rally out of here, right? Same thing, the following cycle.

Again, if you just sort of ignore the pandemic drop, it was getting a pretty strong rally out of that. So I think that something similar could happen again. I'm not suggesting that people should like, you know, try to, you know, time everything, right? Like, that's impossible. And frankly, I could be wrong, right? I mean, just, again, just because my views on ETH Bitcoin had been correct does not mean that my views on ETHUSV will continue to be correct at least for March because I underestimated

it. I absolutely underestimated it. So I think it's important for people to recognize that, right? I don't have a crystal ball. I'm just doing the best I can. And actually, you know, as far as Bitcoin is concerned and the ETH Bitcoin ratio, I absolutely think it's time to start hedging those views, right? And that could just mean, you know, instead of being like 99 or 100% Bitcoin for your portfolio

because of, you know, the Bitcoin dominance rally, it might mean sort of tailoring that back, especially as we get closer to the end of the year, because that's normally when Bitcoin dominance goes down. So my base case, my base case right now is that ETH USD, you know, it still stays up here a little bit longer, above 2K, it goes below 2K in Q4, and then starting next year, it then bounces out of that. and then hopefully we'll see if, I mean, my hope is that the Fed has not absolutely wrecked the markets, you know, for a long time. Because, I mean, I think the sort of the caveat to this is, as you guys, as actually you mentioned earlier,

is that, you know, what happens if we deviate off the four-year cycle? And that's always a possibility, you know, if the Fed, obviously if we get a recession or something, that could change things, right? And then all bets are off. but I think that's going to be the base case for right now is that there's still going to be some weakness going into the end of the year and that is where things are turned around

and by the way, when ETH USDA fell back into this wedge right here, then it bottomed at 190, which is where we just bottomed 10X, 1900, and then it rallied back up to right around 240. And right now it's right below 2,400. So I'm wondering, right? I'm wondering if you're just going to hang out here

for a couple more weeks, after rate cuts, fall off, everyone freaks out because they're like, oh, the recession's here. But in reality, that is just where it was always going to go. That's the bottom, yeah. Right? That's where it was always just going to go anyways and where we were going to find a reason for it.

And then from there, I think you could make a strong case that it could get a pretty big bounce. I think another thing that we all have to remember is that by the time, even if we do have a recession, By the time it's declared, normally the markets have bottomed by then. So, I mean, you know, like if the Fed comes out in 2025 and we're like, oh, yeah, we were intercession, the markets probably knew that well ahead of time. And one last thing, I think, actually, that one of the really great things about crypto,

I think it has a way of sniffing out that weakness before, say, the stock market does, right? Because, I mean, crypto's been at a downturn since March. And maybe the reason for that is in the stock market, you have all these, like, passive 401K, investing going on, whereas in crypto, it's not exactly the same thing. So I do wonder, you know, I wonder if Bitcoin and Ethereum have sort of sniffed out that weakness half a year before the stock market, you know, has sniffed it out. So by the time the markets get back down here, it's all been priced in, right? And then it just gets a big move out of it, just like it did the last two cycles. So, so Ben, your, your, um, your takes on ether from like the prices are, uh,

complex. And I can imagine how they don't make you, um, like a fan favorite among the ETH Bulls on crypto Twitter at least. It sounds like you're saying basically the ETH Bitcoin ratio has come home, according to your predictions, according to the charting that you're doing. And also the Eith dollar like price is like pretty close to home too. I mean, we're within a few miles of like we could see the front porch maybe like we're pretty close. And like if that kind of continues into Q4, is there a period of time in Q, or let's say Q1,

2025 or in 2020, in January? general, are you going to like full switch on ether? You did call it a blue chip asset earlier. And you said you only consider two blue chip assets in crypto, Bitcoin and Ether. Can we anticipate a possible future of 2025, Ben, where you are like Ethereum's biggest bull? Yeah, I mean, I think that I think Ethereum will start to outperform Bitcoin in 2025. I feel pretty confident about that. Again, I could be wrong. You know, I mean, again, it wouldn't be the first time. But I do think absolutely that it will start to turn around as we get closer to 2025.

My base case right now is that it just bottoms out sometime between now and the end of the year. But what's fascinating is that doesn't mean I'm going to go full of Ethereum. Like, I'm always going to have some Bitcoin. One of the cool things we can look at is if you do like this, there's this modern portfolio theory tool. This goes back like decades and decades for the stock market. But if you look at a modern portfolio theory simulation of, say, just a portfolio of Bitcoin and ETH, right? Let's just say, I don't care about the altcoin market. For full reference, I don't actually consider ETH and alt.

So when I talk about alt coins, I'm talking about everything besides Bitcoin and Eith. Yeah. And then I sort of put Bitcoin and elite. What? Well said. I totally agree with you. Yeah. But I also think that I think that Bitcoin is kind of by itself.

and then Ethereum is somewhere in between. It's not the alt-coin market, but it's also, it doesn't actually have the same type of properties as Bitcoin. Like, we haven't had an ETH dominance rally during a high-interest rate environment. Like, it was a Bitcoin dominance rally. So, but if you look at just this portfolio, the portfolio that maximizes your Sortina ratio, so your risk-adjusted returns that does not punish positive volatility,

because the Sharper ratio punishes positive volatility, is 80% Bitcoin, 20% ETH, okay? Now, for me, my portfolio has been nowhere near 20% EF because I was, you know, I've been pretty bearish on the ETH Bitcoin pair. But I will say that in 2025, there's a good chance I would start to get my percentage ETH much closer to, and I'm talking about my crypto portfolio. I'm not talking about my entire net worth, right? Just my crypto portfolio would probably be closer to 20% ETH, but not until 2025,

or at least closer to it than we are right now. because I still think, again, still a good chance that we see Bitcoin continue to eat the Alkcoin markets lunch for a little while. And by the way, one more thing about that, you know, Eith has underperformed for a while now, not only Bitcoin, but actually also a lot of Alkcoins. But you could argue that that is about to change as well. And I want to show something that would, you know, that kind of makes me believe that. And I could be wrong about this, but there's a chart.

if you look at all Bitcoin. So this is all Bitcoin pairs, right? These are all Bitcoin pairs. So this is not ETH. There's nothing in this chart that includes Ethereum. It is total three, which is the altcoin market, minus USDT divided by Bitcoin. Okay? So we already saw that Eith Bitcoin has already broken down, right?

And maybe it has a little bit more to go, but I think it's mostly done. I think you might see it go below 0.04, but that'll probably be it. You might see a print 0.03 for a month or two or something. But the altcoin market has not yet really made that same move. And I don't think it's because this time is different. I think it's because it's about to happen. And actually, if you look at monthly candles on alt-bitcoin pairs, last cycle, you can see that it was this month right here, July 2019, when the Fed cut,

that was when all Bitcoin pairs started to sell off. to the range low. And you can see they're trying to hold on, right? They're trying to hold on. But my guess is that they're going to come back down here. But the reason why I think we're about to see a pivot, probably first it'll be alt coins, will start to underperform ETH,

is if you look at the same chart, but instead of dividing by Bitcoin, right, instead of dividing by Bitcoin, I want to divide by Eith, right? So if you do that, and we look at this chart here, let me just redraw all this so you can actually see what I'm talking about, all coins have been in a downtrend against Ethereum since 2018, right?

I mean, again, this is since 2018, right? And this is not, and this goes to show you guys, right? I mean, like every cycle, there's a thousand new all coins, but most of them just wither and die, right? There's only a few cryptocurrencies that stand the test of time. And so when this chart is going up, it means that alt coins are outperforming Ethereum, right? So you would have to cherry pick times where alts are outperforming Ethereum, right?

Generally, alts are underperforming Ethereum because this chart is generally trending down. Every time that this chart has hit this trend line, that's when alts start to underperform Ethereum. So if we think about it, Eith Bitcoin is getting pretty close to a low, I think, right? It's pretty close to a low, probably within, you know, 10%, maybe 20%, maybe not even that, right? It's probably pretty close to a low at this point. we just looked at all Bitcoin pairs. They still seem pretty far away from a low,

especially if you believe that all coins are oscillators at best against Bitcoin, which I don't know why you wouldn't. You know, I mean, a lot of them, a lot of them are going to just go to zero asymptotically against Bitcoin anyways. But if you look at this, I could see sort of the reverse happening. You guys would remember this better than anyone. You guys remember in early 2021 when Ethereum was kind of just stuck at like $2,000, and everyone, like, all these alt coins were popping off.

And everyone was like, oh, sell your eth for alts. And that was like the worst time to do it. Yeah. Yeah. It was the best time to counter trade. Right, the best time to counter trade. Right. Because everyone, all they saw was they were like, oh, all the auctions are doing well.

Let's trade our eth for alts. And that was when Ethereum started to outperform alts. I think the reverse is sort of happening. Like Ethereum has been really underperforming Bitcoin for a while. all coins have been holding up a little bit better, but I think that's about to change, and I think you're going to start to see Ethereum outform the all-coin market.

And maybe the trend reversal could be right around the first rate cut, perhaps, right? Which might occur here in just a couple of weeks. So I do think that's, you know, I think there's a good chance we're going to see this rejected off this trend line again. I just can't imagine the seventh time is the charm, you know, or the six times is the charm.

So if it does get rejected again, it means that alt will start to bleed against Ethereum, which, by the way, that would make a ton of sense because there's one more chart I'd like to look at as it relates to all this, and that's blue chip dominant. There's Bitcoin dominance, which we probably should talk about. But before we get to that, look at Blue Chip dominance. So Bitcoin dominance plus ETH dominance, right?

Right before rate cuts last cycle. This is June 2019. This was right before rate cut. Really, here's July. Bitcoin plus ETH dominance had a whiff down. to right around 71, 72%. And then it exploded up into after the rate cuts arrived. So if this chart here is an oscillator,

meaning blue chip dominance, varies between, say, 58% and 80%. So let's just say between 60 to 80%. That means there's still a move here that needs to occur. And I think some of it's going to come from Bitcoin. Some of it could come from all certain underperform Ethereum. But I do think we're going to see that, at least part of that move. It might not go up the entire way because, you know,

their stable coins now make up a big component now. So you might not actually see it go all the way to 80. But you could certainly see it go back up into those rate cuts just like it did, you know, just like it did last cycle. Ben, question on this. So like what does it take to get on Ben's list of blue chips? Like Bitcoin and Ether are there. Like, everybody with their favorite, you know, alt coin, let's call it, says like, yeah, but we deserve to be in that top slot.

Now we are a blue chip. And I could name this in previous cycles of all sorts of different coins. I remember there was a time where B&B was like purported to be sort of like one of the Eith killers maybe. And we've gone through a lot of, you know, different cycles of this. What does it take to become a blue chip? Do you have to do certain things on the charts? You have to survive multiple markets. Is it a longevity thing?

I think it's a longevity thing I mean I think that the reality is The theorem's been number two For What a cycle and a half I mean I know at some point in like 2016 I believe correct me if I'm wrong But I think XRP

Was yeah XRP flipped Ether in 2019 Yeah as well Briefly right For like a week Okay I don't honestly don't even remember I just I know that

Ether has been Number 2 or right around number 2 for a long time I think another thing, though, is a lot of alts, they put in lower lows against Bitcoin, right? Over a long enough period of time, right? And actually, this is sort of an unpopular view, which I'm no stranger to, right? But, you know, I've said altcoins are oscillators at best, right? Like, meaning they oscillate between parity with Bitcoin, so where the altcoin market cap is essentially equivalent to Bitcoin's market cap.

and then they also come all the way down here to 0.25, meaning they bottom out when all are 25% of Bitcoin's market cap, right? So if you overlay a, if we just put a price label here, right, they bottom out around 0.25 and they top out around parity with Bitcoin. Okay? So that's actually the glass half-full approach to look at it. And you could, and the glass half-full is to say this is just a deviation above the range high, and this is a deviation below the range low, right?

But there's actually another way to look at that, and the more pessimistic way is to say, you know, this is technically a series of lower highs and lower lows, right? That's a high, that's a lower high, that's a low, and then that's a lower low, right? And you can even draw the price labels. I mean, even if you exclude this wick way up there, just take these wicks, right? And you can see it's a series of lower highs and lower lows. And so for me, the alt coin market collectively is a bleeder against Bitcoin, right?

There's a chance that all its bottom lower than they did last cycle for all we know. It's probably not my base case because if they go to 0.25, that's probably good enough, you know? But I'll answer your question, right? So your question was why Ethereum? Yeah, like, why Ethereum? Like, why is Ethereum on the list of Bluchups and not other things? All coins collectively, it looks like they put in lower highs and lower lows, right? Now, if you look at Ethereum, you look at Ethereum, there is an inconvenient truth, right?

I think, look, it's better to address something to ignore it, right? There is an inconvenient truth that it's been lower highs since 2017. But that's the glass half empty approach, right? Lower highs. But there's another reality that it's also been putting in higher lows, right? So my actual base case for Ethereum is that it might actually be converging to whatever the fair value is. Right. So you have a low, you have a higher low, you have a higher low.

And then up here you have lower highs. And, you know, I got into a lot of trouble because people are like, well, you're ignoring the higher lows. I'm not. I just, you know, these are lower highs. But there's also higher lows in here as well. And so that gives me a little bit more confidence, right? You've gone a couple of cycles now where Eith Bitcoin has been putting in higher low. It's also been putting in lower highs. My

argument is this. You guys remember the ETH USD chart? This regression line? You see this regression line how ETHUSD kind of comes back to it eventually? I almost wonder, could you say the same thing about ETH Bitcoin? I don't actually have anything fit right now, but I think

we can imagine, right? We could envision a where's the curve here? We could envision something like this where there's sort of like a fair value associated with the ETH Bitcoin pair, where it comes down to it, sort of the good valuation, right? Like the great time to make the trade back if you have it, right?

And I just wonder if that's what's going on. Like in the same way that ETH USDA, right, in the same way that ETH USDA checks back in with it once every few years, maybe ETH Bitcoin has to check back in with it once every few years. And so you could be getting a situation where Eith Bitcoin is converging to whatever the fair value is, right? Whether it's 0.05, 0.06, I don't know. I got to be honest, right? Like, I'm not really in the camp of it flipping Bitcoin.

I'm not. But that doesn't mean that you can't see Ethereum go much higher. You know, like if Bitcoin were to go up a lot in the future, which I think we probably all think it will, then Ethereum will probably be right there with it, you know? I mean, even at, even if it's still at, a fraction of Bitcoin's market cap. And then the other thing, too, is, you know, the ETH Bitcoin pair is great to look at, but it's not even probably the best thing to look at. Market cap might be a better thing to look at, right? I mean, because, I mean, you guys know, I mean, Ethereum's, you know, well, theoretically, it's deflationary.

Recently, it hasn't been, but I think that's more so a reflection of monetary policy than anything else, if you look at the market cap ratios, look at eth market cap divided by Bitcoin market cap. And you can kind of see like it might just be an oscillator. And you can even see last cycle around the end of 2017, it actually went a little bit lower and then it wicked down and then it went right back up. So I'm kind of of the belief that in order for an alt coin to become a blue chip, first of all, it needs to get to the top and stay at the top for, for more. multiple cycles, right? Multiple cycles.

And, you know, to go back to, just to give an example, XRP, right? That was one that you got, I mean, what, it flipped it in 2019, it flipped it in, or it was number two. I mean, I don't think we can say

it flipped Ethereum in 2016. I mean, Ethereum just came onto the market in 2015. So it was sort of, you know, it was Ethereum flipping XRP. But if you look at other charts, right? Like, if you look at like XRP dominance, right? I mean, it just, you know, once upon a time in 2017,

XRP dominance was like 30%. Today it's 1.5%. Right? This is the way a lot of these charts eventually go and that's why you have to be really careful with individual all coins. New projects are coming online

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Just another way Uniswap is helping you swap smarter. Okay, so I really like this interpretation of ETH. I think it's like not even, it's not even an Eith bear or ETH bowl take. It's just like an ETH, a disqual, a discor. Discovering Fair Market Value is not something I've actually ever considered for Ethereum versus Bitcoin. I've always assumed that it would trend upwards over time. And I think some people will have taken the opposite position where they always think it's going to trend downwards over time. Like Bitcoin Maxis.

Bitcoin Maxis just think that ETH is like the best shit coin chart in crypto. It's going to zero, baby. It's just going to zero over the longest possible time horizons in which all the other shit coins have already gone to zero. Ether is just like holding out until the very end. me and Ryan, of course, are in the camp that, like, the Ethereum roadmap and Ether productivity. Heath is, like, one of the most productive assets of all time. Not only can you stake and get yield, but you can use it in defy at the same time, blah, blah, blah, all this great stuff. And that productivity is going to, like, increase in utility and value as the network becomes more valuable.

And therefore, it's going to go up over time. But I've never actually considered that, like, ETH hits, like, 0.7, 0.6, 0.8, hopefully higher. And then, like, that's its just equilibrium. and it just like warps and bends around that randomly. Always destined to be the little brother forever. Always destined to be the little brother. That's an interesting perspective. And that's what you believe, right?

You believe in like a final equilibrium of the Bitcoin ETH ratio that never really goes too far away from that. Yeah, I mean, it's a market, right? There's always going to be changes. And who knows what happens like 20 years from now. I'm not going to say that it can't, you know, I'm not going to say that ETH can never go back up to higher levels. against Bitcoin. It could. I think one thing to think about, too, is that the longer that we're in

crypto, theoretically, the more mature everyone becomes. Because I think a lot of the people in crypto for the last, you know, decade, a lot, we're all, we've all been relatively young, right? We're sort of growing up into our young adulthood and our, you know, like our 20s, our 30s, sort of exploring crypto. And I think we all came into it, honestly, somewhat immature. And then we're sort of learning about things as we go. We're learning about the markets. We're learning about sort of like the business cycles and that sort of stuff. And so maybe one of the bulk cases for the ETH Bitcoin pair eventually could be if a lot of the scams out there eventually go away and people sort of focus more capital on just the projects that are actually doing something. You know, I've gotten into a lot of

trouble with ETH Maxis over the last few years because, you know, they didn't like my views on ETH Bitcoin because of, you know, they're like, well, the proof of stake, the deflux. relationship, all that other stuff. That stuff does matter. I do think it matters. I don't really think Ethereum has had a chance to shine in that way just because of monetary policy. I think that's what's been holding Ethereum back is monetary policy.

I sincerely hope that the Fed can pivot soon enough to help us avoid a bad recession. And honestly, my base case is not that we get like a 50% drop in the stock market. You know, I think a lot of people look back and like, well, look at the dollar. dot-com crash, look at the financial crisis. This is what happens when you get recessions. That's what happened during those two recessions. But if you look at the 1990s, early 1990s, early 1980s, there were recessions where the stock market only dropped 20%.

And so that could be enough to send Ethereum back to its regression ban, right? If the stock market were to show some weakness. And by the way, I know we're getting a little off topic here, but a lot of times in election years where you have an open field, where the incumbent's not running, risk assets tend to do kind of poorly in September and October, just because of the heightened uncertainty. And that might be spilling over into crypto. So you might get a situation here

where people think that a recession is what's happening because the prices are going down. But it could just be due to seasonal uncertainty due to the election. And that could be where people start to falter by the end of the year if it plays out like I think it might. But yeah, I think that there's a good case to be made that the ETH Bitcoin pair is converging to whatever the fair value is, right?

And that people get in trouble both ways, right? They get in trouble thinking it's going to flip Bitcoin, and then they also get in trouble calling for it to go to zero against Bitcoin. Because again, if you're just an unbiased person looking at this chart, if you don't know what it is, you immediately notice two things. You immediately notice lower highs, but you also immediately notice higher lows, right? I mean, you know, these are higher lows and lower highs.

And so for me, that just means it's converging to whatever the fair value is. It's the same thing, right? I mean, if you look at, even if you look at Bitcoin USD, you can come up with a very similar regression ban and see how, you know, over a long enough period of time, it's just sort of converging to whatever the fair value is. And the reason I say that, I mean, like, asset prices generally go up. That's true.

But regression bans, more of the way. of the gains come earlier on in its cycle, right, in its life, right? I mean, the more explosive gains because the market cap's lower. And then as it goes on and on and on, the explosiveness sort of wanes some. It doesn't go up as much because it takes exponentially more money to move the market cap. So it's not that it can't keep going up. It's just the rate at which it goes up, goes down. And I think you could be seeing something, you know, very similar happening with Eith Bitcoin. But again, I'm not on the camp that it's going to flip Bitcoin. I don't think it will.

But that doesn't mean you can't. You know, that doesn't mean it's not a good asset to hold long term. Ben, I really like that there's like an elegance in your analysis in which it's just like the shape of blue chip charts and macro forces. And as a result of those two things, like you get a lot of different permutations of things that you can talk about. But some things that while we were going through, you were like drawing the wedge on the ETHUSD ratio in the 2019

upswing and then you're also comparing that same wedge to what we're going through now. But one thing that wasn't contained in that data was the 2019 plus token Ponzi. So like this idiosyncratic market event that like isn't really like relevant to either macro forces or the ETHUSD price except for the fact that this like massive Ponzi scheme was going on in China that like impacted the markets.

And then also you talked about well there's there's the burn that happened that was relevant for the for ethereum 22 and beyond but not but not for any of the charts before 22 and same thing with the merge uh so there are things in like the actual fundamentals of this asset that are only relevant for like you know the tail ends of the chart the most recent years of the chart so how do you consider like this idiosyncratic events that don't really actually have data in the shape of this east chart that are are relevant in my opinion are relevant or or do you think that they're not not so relevant how do you incorporate these? things into your analysis. Yeah, no, I think they absolutely are relevant. I actually do.

And I wish, I wish more ETH Maxis, like, realize that I actually do think they're relevant. I just think, I think that none of that has been able to get priced in because of monetary policy and because of the weakening in the labor market, right? I think that, you know, look, guys, when we go to the grocery store today, right, you're spending, what, $200 to get what, 200 bucks to get what you used to get for like 80 bucks, you know? It just means like people don't have as, you know, it's harder to put money, I think, in, you know, risky assets like stocks and crypto. It's harder to put money as much money now into it, at least as a percentage as perhaps in 2019. I mean, I remember the good old days of 2019. Those were some great times because there was nowhere

near the amount of froth, right, back then. Not that there wasn't empty. I mean, you just identified some. But I think that. that's the issue. It does matter. Like, all that stuff does matter. It's just that it hasn't been able to come to the surface and get priced in because it's just where we've been in the cycle, right? We've been in the phase of the cycle. Here's the chart. We have to show the Bitcoin dominance chart, right? If you look at Bitcoin dominance, let's just look at 12 year candles. Or sorry, 12 year candles, 12 month candles, right? Look at last cycle, right? I mean, it was just, it was, look, 2017, Bitcoin Dominance went down.

2021. Bitcoin Dominus went down. And you can see three green years in between. I think that's just what's happening, right? We're in the Bitcoin Dominance rally. It's probably going to end within, you know, within the next three to four months. And then next year, you know, ETH Bitcoin will probably go up, meaning Bitcoin dominance will likely go down.

And the reason is, I mean, ETH is number two by market cap. So if ETH Bitcoin goes up, Bitcoin. dominance is likely going to go down because, you know, just ETH takes up a large percentage of the market cap, especially compared to all coins or any individual alt coin. So, yeah, I mean, I think it matters. I just think that until we get sufficiently loose monetary policy, it's not going to. And really what I think we should look at on, you know, whenever they cut rates, I guess it's going to be, what, like September 18th?

I think the bigger story that I'm interested in, I know a lot of people look in, is it going to be 25 basis points, it's going to be 50 basis points. I think the more relevant story is, is what are they going to do with their balance sheet? Because Powell has been asked before, you know, like, is there a chance you could continue reducing the size of your balance sheet even after rate cuts began? And he said he would. He said they could end up doing that. So that might be the bigger story.

Because remember, it was when they pivoted and they started expanding their balance sheet. That's when Eith Bitcoin bottomed last cycle. So that's what I'm interested in more so than, you know, how much did they cut rates by. So that's what I'm looking at. I think that a lot of what you said about, the proof of stake, the deflationary component, all that will matter. It's just that it can't matter when people don't care.

And by the way, the proof, right? The proof that people don't care is this chart right here. I love looking at this chart. This is the social risk, right? I don't know if you guys are familiar with this chart that I've shown a few times. No, what is this? Yeah, so let me show you what goes?

into it, right? So what goes into it are things like interesting crypto. So like look at YouTube views to a lot of different crypto YouTube channels. By the way, you guys are on the list, right? You can see bank this is right. There's us. Yeah. We're in the index.

Yeah, yeah. So I've actually been tracking this for a while. It takes a little bit of load just because it's so many different channels. But look at the mania phase in 2021. So this is views to these crypto YouTube channels. This is the mania phase in 2021. Yeah, when we got a one million views on our Mark Hart

Cuban interview, just like randomly. Right. This is when these channels collectively were averaging 4 million views a day. A day. What? Again, it's like 20 to 25 channels. So it's a lot of channels, right?

But you can see like, you know, back in early 2021, at the top there was about 4 million views. Today, these channels are averaging 700,000 views a day. Well, yeah. So the reason why that stuff hasn't been able to get priced in is because people collectively have been leaving the crypto space or at least leaving the YouTube side of it. Right?

Also, the Twitter side. Right? If you look at Twitter and you look at our X, as they call it today, right? And you just look at, you know, followers to people on Twitter. By the way, you're on this chart as well. Bank Clos is right there. If you just takes a while to load. But you can see whenever it does load, there is some pretty major tops that you'll see occur

in 2021. and actually that major spike here, it basically caught the top. It was when everyone started to follow everyone on Twitter in crypto. That's actually what marked the top for Bitcoin. But you can see that this time around, we're nowhere near that.

We're nowhere near that. So in order for Bitcoin dominance to go up, right, or for it to go up, you have to have new people coming in, right? You have to have new people because there's a, you know, there's so many different cryptocurrencies. And if you overlay,

or if you overlay Bitcoin dominance, right, if we overlay Bitcoin dominance, and I'm just going to look at it without stable coins, and then you overlay on here the social risk. If the social risk is going down, so if the yellow line's going down or relatively low, Bitcoin dominance is going up. But when the social risk goes up,

that's when Bitcoin dominance goes down. Now, last cycle, last cycle, the social risk did not really, start to move up until look right here, right December of 2019 or so, which was after rate cuts. So again, the best chance for people to eventually come back would be sometime after rate cuts if the Fed has not induced a recession, right? And look, if there is a recession, so be it, right? It means we just have to wait a little while longer.

I honestly think that if there is one, which I mean, honestly, at some point we are going to get a recession, right, in our investing careers, like there will be one. My base case for it, though, is that it'll just make these assets stronger. Because I actually do think, or at least the useful ones, I do think that there's a lot of people out there that will say that a recession would kill off, you know, the cryptocurrencies and whatnot. But I actually think it would, if we can go through that and survive it, which I think we would, I think it would just make the case stronger, that it's actually an asset class that's here to stay for the long term and not just a fluke that occurred when, you know, when we had sort of like

a decade-long bull market in the S&P 500. So my base case right now is I don't really see people coming back for the rest of this year, which is why I still think the market's not going to really go much of anywhere for at least a few more months, but after you get a few rate cuts in, hopefully next year. And I mean, it doesn't have to be like, you know, January. But I do think that sometime next year, the market, the market actually could be. pick back, pick back up. One more thing really, really quickly, before I forget, this year, it actually does look a lot like a combination of 2016 and 2019 for Ethereum. If you look at, I showed the wedge earlier, right? So the wedge looks a lot like 2019, right? But look at the

monthly candles. The monthly candles for 2024, every green month in 2024 was a green month in 2016. And every red month in 2024, it was a red month in 2016. So, So you can look at it, right? So January, February, March were green in 2016. Same thing in 2024, January, February, March were green. That's wild. April was red. April was red.

And then, yeah, and then May was green. May was green. And then June, July, and August were red, just like we just had. What's really interesting is that in 2016, September was actually green, which, you know, maybe it's starting to deviate now because Ethereum's down 7%. But if the month. If September does close green for Ethereum, like let's say if Ethereum can rally back up to like $2,500 or something,

then and Q4 ends up being red, then you almost wonder, is this the same pattern that's playing out over here in 2016? The reason it's slightly different is because in 2016, it always held these range lows, right, except for the last wick, whereas this time it is not, right? It's actually gone below it. And the reason I think it's because it's a combination.

It sort of looks like 2019 as well. I think it's a combination of 2019 and 2016. And in both cases, January, February of the following year, we're green. And normally, Ethereum, when it does outperform Bitcoin, and it's typically in Q1 and Q2. Because we know normally Bitcoin outperforms the rest of the market in Q4, right? If you think about every major top, 2013, 2017 and 2017, is the end of the year. So I could see that.

I absolutely could see that playing out where there's just kind of some weakness like you were talking about earlier. A boring market at crab could still go lower and then next year the market picks back up. It's so funny, Ben, just from like a vibes perspective, like we're obviously, we're very plugged into the Ethereum community. I just put it to, I tweeted this out last week,

which is like I have not seen, I've seen ETH sentiment this bad in crypto to other times. and the one time was after the Dow hack in 2016 and the other time was like 2019 like December it felt like they're just like Heath would never recover Heath was just gas it was just like

destined to fall to zero like in comparison to Bitcoin and like now now in 2024 so the vibes line up with that as well I just want people to know like you know if you've been holding on to Ethereum and and you're looking at the analysis like don't pretend like I know what the market's going to do.

I don't, right? And again, it's more of like a, if this happens, then just know it's what happened last cycle. It's not, this has to happen. Because me saying this has to happen has got me into trouble many, many times. So I'm not saying it has to happen. I'm just saying, look, if by the end of the year,

ETH USD falls below this, you know, kind of like it did right there, then it would really just be playing out like it did in 2019. Furthermore, one thing to consider, right? we've seen ETH Bitcoin dropping basically every month for how long now, like every quarter for how long now? ETH Bitcoin last cycle, it bottomed right here, right after ETHUSD fell below that trend line.

So if ETHUSD does fall below this trend line, right? And it occurred after rate cuts, right? It occurred right after rate cuts. If it does, that might be the ETH Bitcoin bottom right after it falls below there. And then it could pick back up as soon as as Bitcoin does. Ben, I want to cross-reference something that you said and tie about on the conversation, going back to the idea of the ETH-BTC ratio discovering some equilibrium and kind of just like staying there.

And then also about like proof of sake, the merge, you know, ETH productivity, also being more new in the chart than rather than being part of the chart as a whole. How do those things actually square up? Because we have the lower highs and the higher lows, but we also have. these two new like functions in the ETH value accrual mechanism that actually are not related to the previous highs. And so I'm just wondering how you kind of can square those things

because we have the converging triangle, but we only have so much data about the actual strengthening of the Ethereum fundamentals in like the last 18 months or so. Do you think that that means that we could set higher highs than what the actual like wedge is alluding to? That is my hope. I mean, like, anything's possible. I mean, you're not going to hear me say it's not possible because I've seen some crazy things.

I remember seeing when Heath almost flipped Bitcoin in 2017. It was actually in mid-2017. I think a lot of people think it was back in January 2018, but it was actually in the summer of 2017, Ethereum almost flipped Bitcoin. It came really close. And that was actually where the flippinging came from because it actually almost flipped it. And ever since then it has, it was actually this top right here, right? it was this top right here June 2017 is where it almost happened.

Look, my base case is going to be that it, like, that it's converging to a fair value. I get the argument that, you know, it's deflationary now, and it didn't used to be, and it's proof of stake now, and it didn't used to be. But I think maybe the biggest counterpoint to that thinking, and I'm not saying you're wrong, right, but obviously the biggest counterpoint could just be that it's not like, like there has been also improvements with Bitcoin, right? Like the Bitcoin from

2019, when there were no ETFs and there was really not, I mean, there weren't even, I mean, now there's also ordinals and, you know, there's other stuff going on in Bitcoin. That stuff in 2019, you know, Bitcoin in 2019 is a lot different than Bitcoin in 2024, right? So you're not, you're not

comparing the fundamental improvements in Ethereum to what Bitcoin was in 2019. We're comparing it to what Bitcoin is today. And the reality is, is, you know, the ETF flows were a lot better than the Ethereum ETHIMEETF flows. And now that might be because it was just a risk-on environment when they were launched as opposed to Ethereum. It was kind of a risk-off environment.

I don't know. But my only comment would just be that it could just be simply that there's also things that have improved Bitcoin in the last few years. So you're not comparing Ethereum to Bitcoin in 2019. You're comparing it to what it is today. Ben, if you are a maxi of any type, you're definitely a chart maximalist. I'll say that. And I think that is a very valuable lens on the world.

You know, David and I kind of like look at your fundamentals, the community, the projects. We don't often look at charts in the in-depth way that you do. And I think that provides some great value to the analysis. We spent most of the conversation so far talking about like where we are currently in the cycle and where we have been. Let's talk about the second half of the bull market. So let's say we get monetary policy in our favor. what happens with the quantitative easing phase of the bull market to these prices? Yeah, so my thinking here is that, so here's the logarithmic regression ban, right?

My base case is that if it, if, you know, I assume it's going to stay around 2K for a little bit longer, but if it does drop down here, my base case is that it will get a big bounce out of it in 2025. We're talking about Ether here. Yeah, ETH USD. Yeah, ETHUSD. That would be my base case at this point. I know some people are calling for it to go, you know, to just go to zero, right? But I'm still in the camp that it's like, you know, it could be like that 2016 move, that, you know, that 2015 move.

By the way, the 2015 move was also in Q4, right? So it was in Q4, 2015, Q4 of 2016, Q4 of 2019, also Q4 of 2018. Right. So a lot of times when it goes down here, it's in Q4 of whatever year it's going to. So base case is that it will come down here. I don't know how low. Okay. So don't like squint on here and try to see like where it's going to go. Again, I don't know. And also by the way, the regression line is moving up. So like what it is today is going to be different than what it is a month from now, two months from now, three months from now, et cetera. And so my base case is that it'll come down here and then it'll get a, move out of it. And look, the optimist... That's pretty low. Yeah, again, I don't know if it's going to go that low. Actually, my base case right now is that it just goes home.

Home is the middle part of this trend line. So it would actually technically be... Look at 2019. Ignore the hard landing for a minute. Ignore the hard landing. This low here was a higher low. It was a higher low than what it had in the bear market year. So it was a higher low.

So you could have... something similar, right, where it ends up putting in a higher low. And a lot of people think it might go to a lower low, but it might just be like 2019 where it ends up being a higher low. And everyone could be like, oh, well, now you have a recession and a hard landing. But, you know, there's a chance you get a soft landing. So again, I don't know exactly where it's going to go. I would say that if it goes down there, it probably wouldn't spend very long down there. Right. I mean, the last time- Liquid-day some people and get out of there.

Right. I mean, the last two times it went there, I was only there for like a month. Not even that, right? A couple of weeks, if that. So if it does, I think it would be relatively short-lived. And then I would guess that it would get a big bounce out of it in early 2025. Kind of like it did over here in 2016, kind of like it did right here in early 2020. That would be my base case. And look, it could certainly go to all-time highs in 2025. the only way that it wouldn't, in my opinion, is if there is a nasty recession. But I would actually contend that you could even have a recession and still theoretically go to all-time highs. So that sort of stuff is possible.

As far as exactly where it's going to go, I have absolutely no idea. You know, absolutely no idea. I'm not going to just put out a price prediction on how high it could theoretically go. I would just say, well, let's see it. Let's see if that plays out first, right? Let's see it. Like, there's a chance that it might not even go below this trend line, you know? And it might play out differently than it did last cycle.

I mean, the market always likes to keep us on our toes. So I would say, if it comes down here and it looks like the Fed's turning the money printer back on, and it looks like Eith Bitcoin is in an uptrend, then I would say, I don't know where the high, I don't know where the top's going to be, but I would certainly want to be bullish on a at that point and no idea where it actually tops out. Okay, so say we have a bullish 2025, let's say the recession is either delayed or just like not so bad or something like that. What does 2026 look like?

How does that analog to the four-year cycle? Are we in this 2026, you know, 2021 or something like this? I guess it's not really four years apart. But yeah, what does that look like? My guess is that 2026 would be a bear market, honestly. Oh, we're back to the bear. Okay. That's so soon.

Full cycle. Too soon. But I don't know. Look, I don't know. I really don't. I mean, look, 2014, 2018, 2018, 2022, all midterm years, all bear markets.

There's actually one, there's two analogs that might be relevant in thinking about how this could play out. One of which is actually what happened with the S&P in 1980 and 1981, and the other one's from 1946 to 1949.

So just briefly, in 1981. And the reason why the 1980 to 1981, I'm bringing it up, is because it was also coming out of a period of high inflation. Right? There was high inflation back then.

And what happened was the market, right here, you see the sell-off, the sell-off right here in the election year? It was a recession, right? It was a recession. But you see, it was very short-lived. It was very short-lived.

And actually, the better way to look at it would probably be over- over here. So I'm going to pull up this chart, or actually, let me pull up, let me pull up a, I want to get it with recessions and everything like that. So let me just go to, let me just add it really quick. Just give me a second. So I'm just going to go to the macro side. We're going to overlay recessions. And you can see with Bitcoin, there's only really ever been one. But if we go over here and we add in the S&P 500 and then what we're going to do is we're going to get rid of Bitcoin's price.

You can see that in 1980 to 1981, like you see that little recession right there? And then there was a longer recession later on. So you could get something like that where like, you know, Ethereum does this, like it sort of drops into the end of the year, rallies up, sets new all-time highs in 2025. and then, you know, I'm just sort of going to the end of 2025, and then sort of bleeds again into a recession, right,

kind of like 1981, and then sort of keeps going up from there. And that would be a way that it could continue to follow, right, the logarithmic regression trend line, right? Where it just, you know, it checks back in with it every so often, but it still generally trends higher. The other analog is 1946 to 1949. And the only reason I bring that up is because that was also during a period of high inflation, all the money printing that was in World War II.

And you know what this reminds me of, this chart right here? It reminds me of the all coin market, actually. Because if you actually, again, if you take a bar pattern here and then just overlay this would be the more optimistic view. Because, you know, instead of getting a recession in, say, 2026, if there is sort of a one here at the end of 2024, if you look at the all coin market, And this is the 1940 This yellow line here is

1946, 1949 S&P You can kind of see how similar it is, right? It is really similar And so, you know, if there is, and I've not lined it up perfectly, but, you know, I think you'd kind of see it, right? If it does follow suit,

you could see the Alkoyne market sort of sell off you know, like into the end of the year and then bounce into into 2025 and then that just is the low. low, right? That is the low. And then you go up from there. So that's also, I think, a relevant comparison. Ben, you frequently bring up the monetary policy of the Fed and QE and money stuff. How do you weigh the presidential election, much less related to the value of the dollar, but still kind of seems to be everyone's focus on the moment. Like, what are you thinking about

with the U.S. election as it relates to the charts? Yeah, well, I mean, normally, as I said earlier, right, if the incumbent is not running, the stock market normally does poorly in September and October. And actually, this is going back a long time. If the incumbent is running, the market generally trends up into the election. So, market, so basically incumbent not running, market goes down into the election. If the incumbent is running, market goes up into the election. Why is that? Because of uncertainty, right?

When the incumbent is running, it normally, the incumbent usually, wins, except for when there's like, you know, if there's a recession, the incumbent can lose. But normally the incumbent wins just because, you know, as long as the economy is not absolutely crap, right, then the incumbent can often win. And so when the incumbent is expected to win, it's not that that incumbent is necessarily better or worse for markets. So the markets don't like uncertainty, right? So like if you look at sort of prediction markets for who's going to win this election, it seems like it's flip-flopping every couple of weeks or so. right? And so I think the markets just don't like the uncertainty of is it going to be this person,

is it going to be that person? So what, and by the way, 2016 was an open field election, right? I mean, you know, it was Donald Trump versus Hillary Clinton running back then. And if you actually go look at monthly returns by the stock market in 2016, you can see that August and September were red. Right? I mean, and also October, right? So you can see that the S&P actually trended down into the election. And then in November, after the election, the markets picked back up, right? After we knew who the president was going to be.

So I think my base case is that, you know, there's just weakness going into the election because of uncertainty and then following the election. And especially out in 2025, once there's more certainty, that's perhaps when the markets can start. to pick back up. But that's kind of one of the reasons why I just think that, you know, when you, when you, when the markets are extremely uncertain about as to who's actually going to win, there's more, you know, there's more volatility in the markets. Ben, your portfolio, what do you hold in these days, man? So as far as crypto, I basically just blown holding Bitcoin. 100%. For my crypto portfolio, yeah. Well, not 100%. It's like 99%.

I'll call it 100%. Yeah. Basically what I did was in early 2020, I can I converted all of my alts to Bitcoin in like January, February. So it took me a couple of months to really recognize that it was over, you know, from November of 2021. And then I traded my ETH to Bitcoin. It was actually really funny. I traded my Eth to Bitcoin right here. And I felt like an absolute- Right before Three O's Capital got liquidated?

Yeah, so I felt like an absolute genius because I was like, all right, I'm trading my, I'm trading my Eats a bit point at 0.0749. I remember like, you know, putting that out, 0.0749. And not all of it, but a lot of it. And I felt like a genius because it came down here. And I was like, I was like bragging. And I was like, oh, look at me. And then it ripped my, you know, I had this face ripping rally back up. And it really humbled me, you know?

I mean, I think the long markets were like, yeah, the markets humble everyone. But, you know, basically what I did was I think I converted a little bit here. I also converted a little bit here and then a little bit more up there. Sort of going into the merge. And the reason why was because it just looked like a secondary distribution phase almost. But now I think we're getting into sort of this phase over here where it's just trying to find the bottom and it's just waiting. So yeah, I traded my alt to Bitcoin, traded ETH to Bitcoin back then. And I've just been riding the Bitcoin dominance rally.

Now, I do have some other things besides crypto. Are you curious in that? Are you just mostly interested in crypto? I would say mostly interested in crypto. I have further crypto portfolio-related questions. Sure, yeah. I mean, it's basically just Bitcoin. And I have some stuff.

I mean, I do have some ETH. You know, as bearish as I have been on Ethereum, I think it's foolish to not have at least a little bit in case you're wrong. Well, but you have been bearish, but you're actually bullish on the ratio in the future. at least soon-ish. Yeah, I was going to ask you, Ben, are you going to get back to kind of the modern portfolio theory

construction of the optimal ETH, which is 20%, plus you have some catch-up to do, my friends. You should get to at least 30 or 40%, I would say. Let me help out here for a second with the modern portfolio theory stuff. So back in

a couple years ago, it would have called for higher Ethereum allocation. So basically, if ETH Bitcoin does bottom out, in Q4 or even in September, right? It's possible it bottoms out in September. In fact, it bottomed in September of 2019, right? So it's possible just bottoms in September, it's 224.

Then a year from now, this number might actually be higher than 20% if Ethereum starts to outperform Bitcoin. But this number has just been continuing to trend down because ETH just keeps going down against Bitcoin, right? Oh, I see. So back then, I think it was closer to like 70-30. Like if you looked at this two years ago, it would have said 70-30. and it's just slowly changed to 80-20.

My gas is a year from now, or maybe a year and a half from now, it'll probably say 70-30 again. My guess, though, for me is I'm probably not going to go about 20% just because that's just where I feel comfortable. Well, there's also pain in, like, exchanging one asset for another, at least in the U.S. Like, you have taxes to consider in the analysis as well, right? So you have to pay cap gains on whatever.

So that's a confounding factor. That's why I said, you know, if you haven't, you know, if people are looking at the ETH Bitcoin chart and trying to figure out if they should trade their Eth for Bitcoin now, I'm like, look, even if it does go down a little bit more, you're probably going to eat all your gains in taxes, you know? Right. So it probably, you know, I wouldn't, I personally, I wouldn't make the trade now. I would have made it, you know, I made it two years ago. Now I think it's time to sort of look for the reverse trade. And some people have a hard time with that because they don't want to, they don't want to trade in their Bitcoin. and I don't necessarily fault them for that. You can also accumulate Ethereum. If it does go to the regression minute,

you can always just accumulate it with good old-fashioned US dollars, right? And that way you're hedged either way. So, yeah, those are my views. I mean, I think 80-20 is, and by the way, there's two of them. That's the Sortino ratio. If you look at the sharp ratio,

it's actually 76-24. So it would actually be a little bit more ETH. Ben, this has been great. A lot of the charts you showed us are actually part of your ecosystem that you built today. to the Cryptoverse, right? Which is like fantastic.

I think there's a subscriber product for that too, which we'll include a link in the show notes. There's people are interested. People are, if you guys haven't like gone on to the YouTube and started watching the video by now, then you must clearly just love podcasts. But there is meant for watching. There's been this like dashboard that Ben has been just like cruising through, which he built a company at his company into the cryptobverse. And if you want access to that, there's a discount code so you can get access to it in the show notes.

Actually, one last thing. This is the Ethereum Risk metric. And actually, what's really cool is, as you can see, like, in 2016 and in 2019, when ETH Bitcoin broke down, it bottomed out between 0.3 to 0.4 risk, right? So right there, 0.3 to 0.4. And then in 2019, 0.3 to 0.4. So that's where it ultimately bottomed out. Right now, it's at 0.5.5 risk.

So if in Q4, you see it between 0.3 to 0.4, that could be the low. You're here to hear. This has been great. Thank you so much for guiding. us through the charts today. We appreciate your work and we'll see you around. Thanks for having me. Guys, we'll got to let you know, of course, in an episode like this, none of these were price predictions. None of this is financial advice. It's all vibes. It's all vibes. But there are charts backing those vibes. As always, in crypto, you got to know, crypto is risky. You could lose what

you put in, but we're 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.