What Bitcoin Did - Bitcoin All Time High: Has the Cycle Broken? | Rational Root

Episode Date: July 16, 2025

Root is a Bitcoin on-chain analyst and the author of the "Bitcoin Strategy Platform" Substack. In this episode, we discuss the current state of Bitcoin’s bull market, why Root believes there’s no basis for a prolonged bear market, and how institutional demand is changing Bitcoin’s price dynamics. We cover Bitcoin’s structural adoption through ETFs, treasury companies, and sovereign buyers, and why these may limited downside volatility. We also get into the psychological stages of the market, why 100k could now serve as Bitcoin’s new baseline, and how macro factors like interest rate cuts and Trump’s policies might influence the next leg up. THANKS TO OUR SPONSORS: IREN RIVER ANCHORWATCH BLOCKWARE LEDN Follow: Danny Knowles: https://x.com/\_DannyKnowles or https://primal.net/danny Rational Root: https://x.com/therationalroot

Technologically, Bitcoin is developing. We have like e-cash, lightning. It's all getting more integrated in a protocol level. Everything looks actually fantastic, but it's the macro uncertainty that probably might cost some damage. Prolonged bull market is possible, and we won't, because then there's no basis to really go into the bear market. I actually think there's a fair chance we stick within the four-year cycle. But if we just continue like the gradual channel up, I think we can get prolonged and actually break the four-year cycle. This episode is brought to you by River.

In every bull market, there's always a bunch of new investors. I'm with it, a flood of new companies and products and promises. But if you've been around long enough, you've seen how this story ends for a lot of them. Some cut corners, take risk with your money, or just disappear. That's why when it comes to exchanges, I only recommend River. They deeply care about doing things right for their clients, and they're built to last with security and transparency at their core. River is also the only Bitcoin-only exchange in the US with proof of reserves.

So to open an account, go to river.com forward slash WBD and earn up to $100 in Bitcoin when you buy. That's river.com forward slash WBD. This episode is also brought to you by Iron, the largest NASDAQ listed Bitcoin miner using 100% renewable energy. Iron are not just pairing the Bitcoin network. They also provide cutting edge computing resources for AI, all backed by renewable energy. We've been working with the founders Dan and Will for a long time now and have been really impressed with their values, especially when it comes to their commitment to local communities and sustainable computing power. So whether you're interested in mining Bitcoin or harnessing AI compute power, Iron is setting the standard.

Visit iron.com to learn more, which is iri-en.com. Mr. Roo, the big orange carrot, I'm very, I'm excited for this one, all-time highs, although we have crashed. We have crashed down to $119,861. Wow, we're below 120, man. It's just over. It's pack it up. It's over. Time to go home for four years. Yeah. No, no. I'm very excited, of course, about the price action. You know, 120K. Let's round it, you know, to 120. It's pretty good. You know, we're in the next lag up. And I think there's still some room for more upside. But yeah, let's, I've actually prepared some charts. So let me know what you want to cover as well.

Cool. There's lots to talk about. We can get into all of that. But maybe the best place starts. So we last spoke in February. Bitcoin was at basically 100K. And since then it's kind of like, to be honest, it's been sort of six or seven months of relatively sideways.

And obviously now we've broken out, hit 120. Do you want to just give us a bit of a recap to start with? Yeah, actually, I do have a really great chart to recap on that part. Let's do it. Maybe I should share the chart weekend. we don't have to do it in the order that, well, let me share my screen. I'll try and describe these as well for anyone listening on audio. This one.

So basically, you know, Bitcoin has been very correlated to risk-on assets still. You know, we're still that early, I guess. But here I compare the performance of the risk-on assets, like the SMP 500 index and NASDAQ-100 and Bitcoin. I've a starting point I chose actually the 16th of of December 2024 so so many times people look at performance year to date right like so how well like what is the return on Bitcoin so far this year and but here I took the 16th of December because that was the moment that like all of these three assets had an all-time high at the same moment in time and so it's a good it's a better starting

point, more fair starting point. Because actually all of, so all three have been like kind of, um, found resistance at this 0% line, which was kind of the plateau for Bitcoin that was 100k. Of course, for the, for NASDAG and the S&P was a different price range. But, uh, but you can see that the performance of all of these three and we were kind of like, the more times you hit that resistance, the more you're like you, you're like building up and eventually going to push. And so Bitcoin is, of course, the more volatile beast.

So that was like we had a bit more downside. We also had a slightly early ultum high. But you could see like they all kind of marked this same bottom, which was in April 2025. And since then, like risk on like they have all in line been moving up. And so for me that was like risk on momentum was building again. And we were going to push again against that plateau. And so when the S&P and NASDAQ pushed through, I also, yeah, communicated with my followers, like, okay, Bitcoin is going to follow true as well, you know, like because just momentum is building up. And, yeah, Bitcoin is now at all time highs. And so, so I think now this plateau, so for Bitcoin, again, that's like kind of the 100K zone is now going to function as a support zone in the future. And so on this chart here, it looks like obviously Bitcoin's broken out, the NASDAQ and S&P haven't broken out.

to the same degree. Bitcoin is like to talk about decoupling. Is it too early to say Bitcoin's decoupled here? Or do you think that is a possibility? Yeah, yeah, it's definitely too early. You know, as you can see, it's very correlated. Of course, the further you zoom out because Bitcoin is more volatile and Bitcoin will have like, of course, bigger returns, it will outperform and, you know, you won't have the same correlation if you start zooming out. But in like shorter timeframes, you can definitely see the correlation still there. So no, Unfortunately, Bitcoin is still seen as where it's gone. And since we have so much institutional interest

and kind of like the traditional financial system now interested into Bitcoin, I think it will remain correlated for some time. And what do you think has driven this move? Is it a load of shorts getting squeezed? Definitely that was part of it. But also, yeah, I think there were a lot of macro events that were kind of causing fear in the market.

You know, we had the tariffs, we had real wars going on. And so it was not just Bitcoin. It was all risk on assets. And so we had, yeah, just downside, like a long consolidation. And you can see now also, like there were again some new tariffs by Trump. But this time it didn't have, like now it doesn't hardly have any impact. So that's a very positive to see.

And for me also to believe that indeed this leg still has more upside. So you don't think we're going to stop here at 120K. How sustainable do you think this move is going to be? I mean, we might have some short consolidations of a few days or even a week or whatever, but I still think there's going to be more. I think it can still continue to move up further. Yeah, I mean, we'll get into some of the details with all of the charts. I don't know, maybe we should just walk through some of the charts first.

Yeah, let's do it. Because actually I wanted to start off with the spirable chart. I saw this chart on your Twitter and I really like it. So this is, for anyone listening, this is a Bitcoin version of the Wall Street Cheat Sheet. Exactly. And we use the cool way to show the cyclical behavior by using the spiral chart. And then align like all the faces, which so far in Bitcoin's history has just been playing out, like, you know, extremely well. And so it's, you know, human beings are human beings and the psychology will kind of remain the same.

Now, of course, there might some be some slight difference from cycle to cycle. You know, as macro events now have a bigger impact on Bitcoin, Bitcoin is a $2 trillion asset now. And so, you know, if there's some macro event like terrorism war, Bitcoin is affected as well. And this might cause some slight variations to a cycle. But overall, I mean, Bitcoin has been moving in this four-year cycle. cycle pattern. And so the question is also, will it remain in the in the in the in the in the four year cycle pattern? It's a it's still tough to answer although there there are actually this time some some on-chain early signs why maybe it might be different and we'll get

into some of those details as well. And I mean I'm still skeptical because every cycle, you know, people have been calling for lengthening cycles or shortening cycles or all kind of super cycles. But you know, we've always kind of. to remain in the same pattern. And of course, because human psychology doesn't change. And I really do think we're kind of in the thrill phase, right? Like, do you feel thrilled, Danny? Do you know what? It was, this move is the first time this bull market where I've actually had a bit of like excitement going on. I'm kind of numb to a lot of it now. But when Bitcoin went like hit 120K, that was the first time I felt something again. Just before we get into this, just I mean, I'm sure most people listen to this

we'll already know your work and know the spiral chart. But for anyone that doesn't, like this chart looks wildly different to anything else people will have seen. Do you want to just explain the spiral chart before we get into it? Yeah, I'll just give a quick explainer. So it starts actually in the top of the spiral in the center, but from the vertical line.

And that's 2009. And then a full rotation in the spiral represents a period of four years. And so you can see how Bitcoin expands. And each ring is on lock scale. So it's a move time stand. So we go from $1 to $10 to $100. And so we continue.

Like the most already the outer ring is actually 10 million. So the one before that is $1 million. And we're now, we cross the 100K ring, which is pretty exciting. And so Bitcoin has been moving in the same pattern. Actually, the color coding that you see here is based on short term holder behavior. which in general short term holder data, which comes from, which we take from the on chain data is very susceptible to price action. And so if we get over or overextended or undervalued based on a standard deviation to like the average purchase price of people that are a relatively short amount of time in the market,

we can actually color code the chart. And you can see, for example, that second quadrant is all red with all the bottoms and the cycle bottoms. actually those big red dots in the south of the chart. And of course, in the first quadrant, towards the end of the year, we have all these, we have these big green dots, which are the cycle peaks historically. So they've all been kind of at the end of the year. And so that gives us more or less in the four-year cycle still, you know, five to six months time to make a cycle peak if we will stay within the four-year cycle. Okay. So we're going into the thrill stage now. do you think, so like you said, this gives us five to six months left in this bull market to make a top.

Do you think that's actually likely? Because when people talk about things like the super cycle or elongated cycles, I'm with you. I'm always kind of cautious about that kind of claim. But there are some things happening in the market now that are very different to anything that's happened before. Do you think this could end up being elongated? Yeah, I think actually we've been really moving up in a structural way and we might get a prolonged bull market actually. There are some early signs for why that could happen, but it doesn't have to. So I'm still skeptical because, you know, every cycle, you know, people have called for this. And so, you know, I don't want to be, but, but indeed, it's, it's good to track those signs and we'll get into some of them. So I'll explain a bit what those signs

are in the, in the coming charts. But, but yeah, we're now in a trail phase and it kind of feels like it. You know, I think there's now, you know, before people were really thinking, oh, the top might be in, you know, this might be it. And now, now, you know, everyone really does want to tell everyone to buy. So, so I can't wait to feel like a genius again. But we'll see, you know, it depends a bit. You know, in my opinion, also if we stay within this four year cycle depends on how much more upside do we get. Like, if we get significant, like, again, hype in the market and, and. and perhaps like a blow off top or really like fairly high prices, like maybe 200k and above,

we could see like a prolonged bear market again. Like we might follow the same path. But if we kind of keep on moving in the structural way that we have been, yeah, maybe this time might be different. So yeah, it's too early to tell still. What do you think is driving the Bitcoin price at the moment? Because like normally when you see Bitcoin flying, the volumes on sort of the exchange data go through the roof. And that doesn't seem to be happening from what I've seen so far. So is this all coming through ETFs?

Like where is the buy side coming from? Yeah. So there's definitely, you know, Bitcoin treasury companies and ETFs that have a big impact. So institutional interest, which is measurably there. I have a page on institutional adoption and we can actually track and it's growing. So that's very exciting to see. Indeed, hype is currently low. So we've had a bit of, well, let's maybe get into the next.

next charts. So here we look at the the average purchase price of short-term holders, which is currently at 100K. So that's pretty cool. We broke 100K now with the short-term holder cost basis. We've, you know, we've had a two-year bull market. We've been kind of moving up in a structural way. The 100K is now becoming like the support zone. As I said before, we kind of touched that plateau that was like this area here. We touched that plateau a few times and then we managed to break out now above it. So now this previously resistance zone now becomes support. What we did have so far, we had like two times a bit of an extension, right?

We had after DTF approval, we had a bit of hype. And so that allowed us to like this big lag up. Then we had like a reasonable consolidation, quite a long one. And then the election pump, we had again like a bit of hype in the market. And then that faded again. And so in April of this year, we had the bottom. And since then, we have been moving up again. And so it's still a little early to tell if truly like hype from retail and so forth is coming really back.

But we've always kind of had this structural bit on the Bitcoin price by, I even think like Bitcoin treasury companies have been limiting somewhat the downside price action. You know, Sailor, you know, whenever we had like a significant dip, you know, sailor would announce like a billion dollar purchase or so you know and that kind of limited the downside there's even some some evidence for that in a way like on chain like to see that that realized losses have been very low we'll we'll get to some of that as well but so now we have the 100k zone and actually that that big black line that i drew there now is the is the two trillion dollar market cap line so we actually have a bit of confluence of a of a few things so we have the the shorter motor cost basis of the 100k which is

middle of that zone. We you know the 100k well more from like a technical analysis now we you know we had resistance before now that becomes support and you know we have the two trillion market cap right there and I actually also think like people like sailor probably won't like Bitcoin to fall below the the true trillion dollar market gap anymore because you know we're now a multi trillion dollar asset right that and so so I'm pretty sure he would prefer to defend that that level as well and So I think possibly this level might be like the new baseline for Bitcoin. So we obviously, like I said earlier, we've spent six, seven months around the 100K zone. Do you think that is kind of building the support for the next bear market?

And that might be the next bear market floor. Because when I look at these things, I always think the funniest outcome is the most likely. And so I've had 58K in my head for a long time. But do you think that 100K support is going to be hard to get through now? Yeah, it's definitely going to be a critical level. So it might possibly be a new baseline because it's like the $2 trillion market gap. It's the $100K support. We're now hanging out here for a relatively long amount of time.

But if we think of like if we get a prolonged bear market, we tend to fall below realized price, which is the average purchase price of all Bitcoin. So where the short-term holder realized price, so the short-to-holder cost basis is $100K, the realized price, which is the average purchase price of all Bitcoin, is at 50K. So that's still quite low. And so if you think of, like, getting a prolonged bear market and falling below that one, that would kind of still hurt. But there's still room, of course, it is rising.

And I think in the next months it can get to 60, 70K as well, especially, you know, depending if we get like an X lag up, it starts rising faster as well because people start buying at higher prices, which moves that average purchase price up. And so it's still too early to tell. But I do think there's no real basis for a prolonged bear market at this moment. And I'll explain also in a bit why I think that's the case, because we've had a bit of a few resets this, this, you know, we've been moving up in a structured way. We haven't really had like a huge overextension.

And so, so I, and we've had actually like fairly good resets as well, which are kind of, showing on chain. I'll get in a bit to a chart where I can actually show it is. But for me, that means there's there's just no real basis for a prolonged bear market at this point, except for maybe like macro circumstances. I don't think that a prolonged bear market this time would be Bitcoin related. It could be macro related, you know, if we get a recession, or if war breaks out again or whatever happens, like some, you know, we could like if stocks are going to start moving significantly down. Bitcoin could go with it. But Bitcoin by itself at this point, I don't think can have an 80% drop from here, right? Like that there's just no real, there hasn't been

a buildup of unrealized, you know, profit in a way that that could happen. And so I think that's, that's very unlikely for here. So I actually, yeah, I do think there's still room for upside. I mean, on the macro side, that actually could go the other way. Like, it looks like Jerome Powell is going to leave his position. Trump is almost certainly going to bring someone in who's a bit more doveish. And, like, I think this could get pretty nutty. Indeed. Like, the psychological level of 100K is obviously, like, those big round numbers always attract, like, support and resistance.

But after 100K, we're now at, like, 120. Where is the next psychological level? Is that 150K? Is it 200? Like, where do we go before we? we hit one of those big psychological numbers. Yeah, I think 100 is really significant. I mean, maybe a round number like 200 or so. You know, I suppose there will be some profit taking there.

But of course, the million is the next really true, like psychological numbers. But that might not happen this cycle. I do think, you know, that will still take another, you know, five to eight years, to be honest. But I do think prices above 200K are possible still this cycle. It might, you know, maybe it depends on how hype will pick up. I mean, if we get it fast, we will also get like a more fierce correction, like a like a bare market with like a more significant drop. But if we keep kind of moving in the structured way up and and maybe ask for stocks, you

know, if they do kind of the same thing, then we can gradually move to those levels and just have like a leg up consolidation, leg up consolidation, you know, and then because with each of those consolidations, we actually got like, like, a fairly good reset of like unrealized profit that that has been built up and that gets kind of reset to zero and then you know there's again room for the next lag up so that that seems to me what's actually happening currently and that is also what it causes me to believe that potentially we might get a prolonged bull market into 2026 instead of the four-year cycle but it's still to see i mean i would like to see it depends a bit on you know where where's priced by the end of the year you know like if we

really get to prices at 180, 200k or so by the end of the year. I mean, I personally think there could also, there's room for a bare market again. But, and it depends also in which way it happens. I mean, if there's really going to be like a lot of Bitcoin treasury companies that, you know, are going to take like severe risks, like, you know, then then there's, you know, maybe more reason for downside than, you know, if we just get this kind of gradual move up. Yeah, that's definitely something I see as a risk. for like causing the next spare market.

So at the moment, while Bitcoin's ripping, the mempools basically empty. You can get in the next block for one sat. Like how much does on-chain data, like how accurate can on-chain data be right now in the sense that so much stuff has moved off-chain with ETFs, like options are becoming a bigger and bigger part of the market? Like how valuable is the on-chain data still? Yeah. So I still think it's very valuable.

But indeed, a lot has moved to secondary markets and therefore, and one has to take that into consideration. You know, some of the ETFs are actually, you know, their stash is basically, you know, classified as long-term holders. So even though there might be new entrants, they will not all be classified correctly, you know, necessarily by on-chain. But I do still think that the direction of on-chain is correct. I mean, also, for example, ETFs like bit-wise actually, you know, that, does show up as short-term holder. So maybe it's not like the absolute levels of data that is, you know, maybe representable, but the direction of where that is going is, in my opinion.

And so I still think, yeah, there's very valuable data on-chain. That makes sense. Okay, cool. So should we get into the next chart? Yeah, so here I wanted to show how, you know, Bitcoin has been moving up in that structured channel. And, yeah, what actually? can see here is that so so we have this ETF pump which kind of reached the top of that channel

and the same for the election pump which reached the top of the channel but be like the the other price action is kind of all between that bottom and that middle part of the of the channel up and so that and this is because really we had a bit of hype in in in in that first leg up and also in that second leg up and so it depends if if hype really comes back we can again move to the to the top of the channel which is currently more or less at 180k um but you know, if we don't, we might just kind of start like hovering, you know, between the, this middle line of the channel and the bottom line of the channel. So, so, yeah, then, you know, we could get like a consolidation around the current price more or less where we are, you know.

So that is, this displays how, how, yeah, what, it's really different from historical Bitcoin cycles. I mean, you can see on the left edge of that chart, like the bull market in 2020, 20, this looks completely, completely different. Yeah. So even in previous bull markets, it was even higher. But in 2020, we had, like, of course, a lot of hype by retail in the market as well. And so we saw indeed four standard deviations from that short to molar cost basis, where now we had just really like a mild overvaluation and a mild undervaluation.

So of course, the bigger you go up, the harder you crash, right? And then this time it has been much more structured. And I guess it is because, yeah, of institutional demand for Bitcoin, which just has been more gradual over time, a bit less affected by price action. And a bit of the absence of retail, really. Like we've had a bit during that ETF phase and also bit during the election. But we haven't reached levels similar to previous bull markets yet. And so that could come.

And actually, if we look at the next chart, this is a, I like to use it. Just quickly before we move. Is the reason for that because people like, like Sailor, I just buyers regardless of price. Like they're not impacted by price. They just buy every week. Exactly. That's why I think Sailor has been limiting downside price action.

And this has cost actually just does more gradual move up because Bitcoin treasure companies just buy on a weekly, monthly basis and they don't care about price. Same as El Salvador. You know, you're stacking one Bitcoin per day. And so you got this passive demand for Bitcoin. And by the way, like, yeah, for Strati, now there might be soon the S&P 500 inclusion which would you know if you know strategy gets included in the S&P 500 we're gonna get lots of passive demand for

Bitcoin again and and so so I think all that demand I mean it puts pressure on price right but so I think it actually more limits downside than it really you know causes like gigantic upside because it's like it's just gradual demand so it starts a limit downside and you know whenever there's a bit of hype we can see that we reach the top of the channel and and you know down we get you know of course a bit overextended and we you know consolidate and we do that again and so it seems that that is happening again now that makes sense okay cool so let's go on to the next one yeah so in the next one i wanted to show how you know short to molar supply can actually be used as a measurement for a hype in the market so so again

we had like this huge peak of short molar supply in the in the 2020 2021 bull market where this time we just had like kind of more, you know, smaller peaks, you know, not very overextended. And so, and now we, we are kind of forming this bottom formation again. So we've had like a peak. We, we formed the bottom. We had again a bit of hype. And then we're forming now, it seems like we're forming a bottom again. And so it depends. So if we get like hype, if hype really starts to build up, still just a little early to tell, you know, we could start moving sideways as well or it's still down from here. So It's not like guaranteed, but I'm tracking this pattern as well. And, you know, if we start to move up significantly here, then I also believe there's, like,

more room for that upside to reach like levels to 180K, like the top of the channel currently. Is it sustainable for Bitcoin to reach the top of this channel in the short term? Or do we want it just hovering around that midline and just gradually grinding upwards? Personally, I prefer like gradual adoption. I mean, I prefer actually to have limited downside and just like a constant upside. But that would mean that we would move out of a four-year cycle. Now, psychologically, I don't know if we're all human beings, we're emotional. You know, if we get the trill and euphoria phase, you know, maybe we'll get a huge demand wave here.

That might happen, you know. So it depends a bit on, you know, if that happens if we continue in the four-year cycle or if that doesn't happen, like, if we would just go flat until the end of this year here, then, yeah, I indeed don't think we could reach the top of that channel as easily. We might just move in the bottom part of that channel. you know, but then there's also maybe not so much, like there's no real basis for a prolonged bear market because we, you know, we haven't overextended. So in a way, like these, these, these, these huge peaks of short molar supply are just a buildup of, of unrealized profit, which is unsustainable, you know, and then, and then, you know, it comes crashing down. And it's a natural part of the cycle, obviously. Yeah, I mean, I love to see this. I think a more sustainable,

longer bull market is good for everyone. I also think so. But people will find it boring and we'll say like, oh, TradFi is taking over Bitcoin and, you know, and in a way, that might be the case. You know, I actually do think Bitcoin treasure companies are potentially limiting

downside price action. But I don't think it's a negative. I think personally, I think, you know, Bitcoin is like the Trojan horse. I mean, it will infiltrate, like Wall Street might think that they now are controlling Bitcoin somehow, like, you know, maybe by limiting down.

side or, you know, or just that they can still have an influence on the market. But eventually, I mean, we're going to have sound money and then the Fiat games will stop, you know. So, so I think it's the other way around. I think Bitcoin is infiltrating into the, into the traditional financial system and not the financial system, you know, taking over Bitcoin, which some, you know, claim. Yeah. So on this chart, you can see, obviously, the previous ball market, compared to this one and they look structurally completely different. A lot of people have compared this cycle to 2017. Do you have any charts on here that show like this, the comparisons to the two side by side? And do you think this time looks like 2017? Yeah. So let's get a bit into the evidence

also why I think we could get a prolonged bull market. And also why structurally this cycle is a little bit different, even than 2017. So in this chart, we're actually looking at short term holder profit. So we look at the amount of supply of short-term holders that is in profit. And what we see is generally in a bull market. So let's take 2017 as an example. It's a very good example. We see this huge build-up. It's still volatile, of course, but there's like a clear build-up of unrealized profit for

short-term holders, which at some point becomes unsustainable. And then we come crashing down hard when we get this prolonged bear market. And those breadth signals are actually, you know, when we get like a big crash near zero, those indicate like, yeah, severe crashes and potential local bottoms. And so, you know, we had, so after a huge buildup of unrealized profit, we get like also a prolonged bear market. And in 2021 or in the 2019, we had a bit of an early run-up, which then also caused, here was also the COVID crash deal, which was a bit of an outlier. So it was, but after that 2019 run up, we had a bit of a correction.

Was that the Chinese Ponzi that one? in 2019. Exactly. Yeah, it was that one. Yeah. It caused the market to go up like actually early in the cycle. But then we had a heavy correction because again, it wasn't sustainable. It was not yet time, really, to move up, you know, like significantly. Then we had the COVID crash here right before the third having, which caused, again, one of those signals to, you know, that was a bit of an outlier in a way. Because then actually, you know, we started to have build up again of that unrealized profit for short-term holders. And then that was again followed by a long, prolonged bear market. But this time, we've had actually limited buildup of that profit, and we've had to reach that every sense.

And to me, it seems like this is exactly what's going to happen again. What are those pink lines on here? What do they represent? So they actually are a reset of profit. So all the unrealized profit that's in the market gets completely evaporated. And so it's actually, in a way, a reset of the severity of bear markets. And so to me, what that means is that, you know, we just had it in April. And so in a way, we start with a clean slate again, you know, like, and so, so that's why

I also think we could potentially get like a prolonged bull market and why there's no real, like, basis for a prolonged bear market at this stage, because we just had a reset and we're again moving up in this structural pattern with more passive demand for Bitcoin. And so, so yeah, that's what I, you know, think is likely to happen. But I see compared to 2017, there was none of those. Like we had, I don't know how long that is, two years without a single reset. Exactly. Yeah, it was just build up.

And then, yeah, of course, unsustainable and prolonged bear market. And so this time is very different in that sense. You know, we haven't had, we haven't had as much retail hype. You know, it's just been more destructural demand. And so, yeah, indeed, it is a change in the dynamic of the cycle. And we're still human. So we're still in the four-year cycle and we're still approaching the thrill and euphoria phase. And so I don't know how much influence will that have.

Like, you know, it depends. Also, if we start to get this build up now in the next five months, like to peak, like, similar to maybe 2020, 2020 or 2021, you know, maybe then indeed we do get a prolonged bear market. But if we kind of just keep hoovering at these levels, I think it's fairly likely that we just continue to structure channel up. It looks far more sustainable. You're making me bullish here, route. Yeah. Yeah, and if we then look at actually the realized profit and loss, and in particular, realized loss, that is also very interesting because like those, these red spikes actually represent realized losses, so where people actually capitulate. And so there's this dotted line that, you know, you can see in the bear market bottom, for example, of 2018, you have this huge spike which even reaches that dotted line.

And so this really could be seen as a capitalization event. And so far, for two years, we have hardly had a spike. And so to me, like that means there has been very limited down, like muted downside. And I think it's because of like Bitcoin treasury companies, structural buying from institutions, ETFs, like these passive demands into Bitcoin, which have just caused limited downside. Now, we also haven't seen like the heights of realized profit as we have during previous bull markets that might still come. maybe we still get a spike like that.

But it depends, of course, like the higher price moves up. Yeah, more profit will be taken by long term. I still think many haulers are not very interesting in selling at these prices. Maybe if we get to 140 or 200 again, of course, there was some selling around that 100K zone. But I still think, you know, people have been waiting for 100K Bitcoin for more than a cycle. And so 100K just doesn't feel high anymore to most people. It just feels like we should have been here a long time ago. It's totally true, but it's a wild thing to say.

Do you think the part of the reason that we might not be having the same sort of capitulation spikes is down to sort of education on people understanding what Bitcoin actually is? And it's not going to die. It's not going to go away. So it stops the kind of panic selling. I think there's definitely conviction in long-term holders. That has been true. But indeed, the pattern is just more of.

now, you know, we have the natural, the power law that Bitcoin is following. It's just unlikely to stop, you know, like, you know, like, if you think Bitcoin goes either to a million or to zero, I think it's so much more likely that it goes to a million, right? And so I think, you know, people in general, maybe, I mean, some people want to take profit. Maybe you want to buy a house or a car or whatever, you know, at a certain price level for everyone that is a bit different. But, but I think in general, yeah, there's a big, there's a large, group of haltlers that use Bitcoin as a savings vehicle, you know, like, and, you know, instead of real estate, which used to be the savings vehicle for, for the boomer generation.

Do you think there could also be another thing that's going to prevent people from profit taking in the same way as previously, in the sense that the sort of financial services around Bitcoin have got so much better, taking loans out against your Bitcoin and things like that? Yeah, and that is still in the making. I mean, using Bitcoin as collateral for a loan with your own bank, that would be amazing. And that seems to be coming as well in the US, at least. Europe is still far away from that point at this moment in time. But in the US, that seems very likely that is going to happen.

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short to mold or profit but i've also built a short to molder momentum indicator which uh helped was actually more identify these local tops. And so again, you see these red vertical lines. Those are actually pullback signals. And so this cycle we have had two so far. And so what I'm also waiting again for is like, you know, I think there's still room for like in this lag up because we haven't had a spike here yet. You know, so someone else kind of waiting for this spike to happen.

Of course, if there's like going to be more buildup of hype, so for example, by looking at short molar supply like a peak there, then it's also more likely that, that, you know, this will start to spike. And you know, as soon as it, it starts to drop, we get, you know, we, we, we got a pullback signal fired and that might again indicate like a local top or potentially a cycle peak, you know, like it depending on, on how much of that buildup has been there from from profit, you know, unrealized profit. So, uh, if we kind of get mild, unrealized profit.

build up and we get like a pullback signal, then again, I think, you know, we could just continue in this structural pattern. But if we got like a large buildup of, you know, if we got more hype in the market and we get a large buildup, you know, that like one of these signals could potentially indicate the start of an ex-bear market. And so I don't want to put you on the spot here, but I also do want to put you on the spot in a way. Like, what do you think the top of this ball market is going to look like? Yeah, that's a good. I mean, I mean, I've been kind of consistent. I think 240K has always been kind of my estimate. So I'm not, to be honest, that would kind of be my maximum estimate. But yeah, it depends much. Like, as I said,

like do we get really hype still in the next coming months? And do we continue in the four-year cycle? Or start we, or do we continue like a structural pattern? Because then we just have a more gradual move up. And then, you know, that means basically lower for longer, uh, instead of like having a huge overextension to some random price, which could be one, I mean, it could be 160, 180. It could be 240, you know, like it depends on how much hype or how crazy the market will go. But, but so far it looks more structural. And, and so, uh, I think that that might prolong the bull market. And, you know, there's actually some, some evidence, which I just showed like, you know, because we had a proper cleans of the market with like a reset recently in April.

And we kind of start with a clean slate. Like maybe if we just like continue this gradual pattern, we could move into 2026 and still continue gradually up with like longer sideways price action. And it might be boring for people and people will again be confused like, oh, is this the top? Is the top in? But I think, yeah, much is also going to depend on macro with Bitcoin being at a

two trillion market cap. It's now like really a mature asset. And so I think macro events might be even, you know, have more influence on Bitcoin's behavior to move into a bear market than Bitcoin price action itself. Because within Bitcoin, actually, everything is fairly well. Actually, from a regulation point of view, like in the US at least, it's going great. And, you know, we've actually had like a proper reset of crypto in 2022. Two, dominance is going up. Bitcoin treasury companies kind of took the stage of altcoins.

You know, for me, technologically, Bitcoin is developing. We have like, you know, e-cash, lightning. It's all getting more integrated. And so there's really limited, like within Bitcoin itself, like on a protocol level, you know, everything looks actually fantastic. But it's the macro uncertainty that probably might cost some damage, you know. In terms of like Bitcoin dominance is obviously, been crushing. Like, I think Ethereum is still way below its previous all-time high, which

I'm sorry to anyone listening to Old Ethereum, but I love to see it. Sell your Ethereum and buy Bitcoin. Do you think that's going to continue? Yeah, I mean, so again, so if we really get like a hype, hype phase still in the market, like into in this next five months, let's say, I also think there's still some potential for altcoins to outperform Bitcoin temporarily, you know, like because you know they're just smaller market caps or more easily to move and or like whatever there can be again a meme coin that does very well suddenly you know for short amount of time obviously but uh i think yeah i think 22 in general was very damaging to the crypto narrative in general and hopefully permanent to be honest and i actually i also like to see how bitcoin treasury companies

are kind of taking the stage of what used to be all coins you know like you actually can use leverage Bitcoin with Bitcoin treasury companies. And so you can, you know, the gambling can continue there, but at least it's based on Bitcoin. And it's kind of a speculative attack on Fiat. So I much rather see that than some random entrepreneurs trying to scam people. I totally agree with that. And when we've talked here, like a lot of this demand is structural, institutional demand for Bitcoin. And we've really not seen retail come back in the same way that we have in previous ballmark is. Do you think at some point, if we do get into that hype stage, retail will come back? Or do things like just the unit bias, the fact that Bitcoin is now $120,000, is that just putting

off the retail investors? Yeah, in a way it is. Of course, with Bitcoin Treasury companies, they have different prices. And so there's the unit bias. This problem is a bit solved. So that's actually nice to see. But indeed, it's, it's becoming harder and harder to become a whole coiner, right? So it's There's unit bias when Bitcoin that is a bit of a problem. I also think it's the market gap. I mean, we are at the $2 trillion market gap. And so, you know, retail as a whole doesn't have as much impact as it used to do, you know, like on a market gap that was $500 billion or so.

And now it's four times bigger. You know, it has less impact. And so, you know, I think institutional demand, therefore, is needed. And so I love to see, you know, the S&P 500 inclusion of strategy that would again put like a lot of passive demand for Bitcoin. And there's, as you said, you called it already. Like if Powell, like if interest rates will be cut, that would also be really a trigger for like a bull market. And so maybe we're just waiting for that moment and, you know, to get like a hype phase as we saw in like 2020, 2021.

And based on human psychology, that's actually the more likely outcome, right? Because, you know, people are not good at structural, like, moves and gradual increases. You know, like, that is more like a phase that happens before the explosion. And so, you know, I think, although, I mean, passive demand definitely causes limited downside. So that is true. But, yeah, from a psychology standpoint of view, you know, if we're now in a trail phase and people actually start recommending everyone again to buy, you know, maybe we will get like a retail hype wave still in the next month. Yeah, I'll be interested to see what happens there. All right, let's move on

to the next one. Yeah, so we're getting to the to the end. I just wanted to kind of close down with like the on-chain value map. And I still have a 3D spiral version of this as well. But in the on-chain value map I tried to use on-chain data to you know to have like a heavy undervalue level and a heavy overvalue levels and and all the levels in between of where price can go so actually we have a fair price which is currently at 80k and we can see here also actually coincides with that upper part of the channel we have the 180k as the heavy overvalue level and so to reach like those heavy overvalue levels we of course need like hype in the market like a bit of

actually unsustainable height, you know, because if we reach those levels, that's usually unsustainable. But what we can see now is currently we have kind of been hovering in that overvalued zone, like to the upper part of the overvalued zone to the bottom of that overvalued zone. And we're now more or less at that overvalue level price at 120K. And so, yeah, I don't know if we will get to have a overvalued. As I said, that depends very much if we really got like hype back in the market, which we should probably know. soon by looking at shorter molar supply, like is that continued to move up or are we just going to go sideways there? You know, like if there starts to be a buildup, that would mean for me like,

okay, actually those price ranges are possible. But if we start sideways, it's more likely that we'll continue just around that overvalued range, which these levels are all moving up generally as well. So if we're in five months, where like fair price is not going to be 80K, it might be 95K or so. And so that starts to move up as well. But yeah, so I think this has been pretty spot on. And this is based on chain data. So we actually look at coin days destroyed. So the amount of coins that, you know, if a coin moves, a coin builds up days as it actually sits silent.

And as soon as there's a transaction, like each coin has an age. And so those, the age measured in days. get destroyed and actually based on that information we can we can kind of have this bottom indicator here of this chart so they have the overvalue level is actually based on that information if a lot of long-term holders start selling then a lot of coins coin days gets destroyed and then so that that kind of marks that we use that information to calculate that undervalue level and for the top level i actually have a different approach so there actually i look at tradable supply so actually support that's quite active because a lot of supply is kind of liquid because, you know,

it just sits in long-term holder wallets or cold storage and it doesn't move. But the actual tradable supply, so it's that's all of the circulating supply and mine is that illiquid supply. That is actually the supply that has much more impact on price action. And so what I use there is actually by looking at capital inflows, because we can actually see how much capital is flowing into the market, at least on chain. And so we use that information to calculate that top. And this has been spot on. I made this value map years ago.

And it called perfectly the bottom of the 2022 bear market. And it's now it seems to be doing fairly well as well with those overvalue levels based on, for example, if we look at the channel that we're in and it kind of coincides with that overvalued zone, which to me is kind of interesting. Even the top of the channel is the 180K price. So there's some confluence there as well again. So before I brought up the memples being pretty much empty at the moment, is that actually bullish when it comes to on-chain data because of like there's less

transactions that are destroying the coin days? True. Yeah, there's indeed less transactions happening on-chain. What there, like a lot of that has moved to secondary markets. And therefore, I also, you know, I look at ETF flow. and actually, you know, I have an ETF tracker where I look at those flows. I look at the institutional data from, from the SEC, you know, like by, by, to actually know, okay, how much of this of the ETF flows are institutional. Then we have the, the treasury data, you know, which, because, you know, like some of the,

for example, I gave example already bit wise, okay, they are, they're actually, their supply is actually classified correctly, but there's also some treasury companies like were coin based, which is actually actually. quite a big part they are they are likely classified as a long-term holder supply where some of it should be short-term holder as well and so there yeah indeed you get a disconnect and and so that is contacts that should be taken into consideration as well but so far yeah I think the on-chain data still has done really well and you know I try to take those things into consideration of course the context is important and as I said also the the absolute values of like supply or like they

don't matter it's also the direction that matters and I still think in the direction there's still like you know only if there's a few ETAVs that are classified correctly you will see like the direction of of of that flow in the right direction and so so more so than in absolute terms and so I yeah I think on chain of course the bigger the market and more complex the market gets, the more we need to look at, you know, a whole range of things like, you know, futures and options data as well. And so the ETF, that's a whole separate part, but I still think on-chain plays a vital part

and has so much information. You know, if we think of the Bitcoin blockchain, like we think of Bitcoin as like the most valuable ledger, right? So that ledger also includes super valuable data, right? And so that's basically what we're using. So if you think that Bitcoin is valuable, then all the data in those transactions is valuable. And so, yes, but over time, indeed, with lightning as well. I mean, so if we, you know, we got a lot of more secondary markets and it will become more difficult with on-chain to measure these things correctly over time, I think, in the future. But we're still pretty early.

I think there's still, yeah, a lot of insights that we can get from on-chain. Yeah, I think so too. Help me understand the Coin Days destroyed thing because every transaction isn't a transaction to an exchange to sell. So how do you sort of trade those two things off against each other? Yeah, you don't. So it's just, again, a proxy. You know, you try to get an estimate.

And so what you do, as soon as there's a transaction, nobody knows if that is, well, we can actually classify some exchanges. And so we do know some supply that is moving to exchanges and will be sold. But we don't know all information 100% correct every time. What you try to do is just to have something that is more or less correct and at least significant for terms of indicators. And in general, I think that's still the case with on-chain transactions.

And even though, so there's not that many on-change transactions. currently that is also because actually hype is quite is is more or less gone and it's it's mainly it's like institutional adoption through treasury companies and etiifs which is taking part and that just happens on secondary markets but but yeah so uh coins a destroys you just look at all transactions every transaction is just included and and you look at the days that have been destroyed since the last move and so the the accumulation of all those together determine like how many days in total are destroyed on an average day and that that information again we can use can you filter out things like transactions

that people just consolidating coins or do you not even bother doing that we don't buy for some indicators you do so I for example I've also made a multiplier you know the the multiplier has been a bit of a hype around the multiplier and know like how much capital inflow do we have on chain and then you know how does it reflect into the price of Bitcoin like what is the multiplier you know for each dollar that I put in how much you know upward pressure on price does it put yeah but yeah so there actually for example with indicators like that I've tried to really separate on chain data because you can look at inflow and days of outflow

and you try to like filter bad data out but it doesn't happen for example for the realized price which is the average person price of all Bitcoin, you just look at all transactions, whether it either it moves or not. So there's some error margin there. But I think over time that that error margin is relatively small. And so that doesn't matter for the direction of that indicator. Yeah, that makes sense. Okay, cool.

So just to close out, can we get a bit speculative, do some guesswork? When I spoke to Joe Carlos Auerre on the podcast a few months ago. I can still share the saying, oh yeah, we've got the 3D chart. as well. So when I speak to Joe Colosseri, he was saying he thinks Bitcoin is just going to bore everyone to a million dollars. I would like you, if you don't mind, to close out with what you think this cycle looks like, both in terms of price and in terms of, are we in for another four-year cycle or is this going to be different? And I know this is speculative. This is guesswork. Yeah, this is very difficult. Well, currently, you know, based on the data I've actually

showed here the charts we went through I think there's fair reason indeed that we can get a prolonged bull market and get this structural way up but you know I'm still careful and I'm skeptical because you know every cycle people have been calling for extended cycles and so I don't want to like I want to give the disclaimer and I you know it depends very much on how we end the year because you know if we look at the 3d spiral so so the end of the year is actually around that hundred K text mark And so there's still like the five months of like green bullish upside.

So this this this this three spiral chart is actually the same as the on chain value map that we just looked at. And the fair price is actually the surface of the spiral. So the over extension. Which is about 80K. Yeah, it's 80K currently. You know, like so it changes of course through the cycles. But so so the heavy overvalue level currently again is 180K that would give us to like these top prices, you know. And so we still like historically, I mean this.

quadrant has been the one of bull markets where, you know, we, we, we never found ourselves below that fair price. And we actually reached that heavy overvalue level at some point. And so, so I still think there's room here for like more of that green price to continue. And it depends a bit. So if we got to those overx, heavy overvalue levels, it depends on how much hype will come into the market. If we still starts taking part, which could because we actually start, you know, 120K price starts sounding attractive again. And people are getting trilled, you know, we're literally in that phase. And so where people are starting to tell like people to buy.

And so I still think that, yeah, retail hype can come towards the end of this year. And so depending on how overvalue we get there depends on also if we stay within the four-year cycle. Because if retail doesn't really come in and we just continue this kind of gradual path as we have been, which we can keep measuring, then I actually think a prolonged bull market is possible. we won't because then there's no basis to really go into the bear market which is what i've been trying to tell you know the the whole podcast kind of that currently there isn't because we just had like a kind of healthy cleans of the market and and i don't think we're we're not even at like insane levels that we were like if you think of the previous bull market where we had so much built up of

fdx exchange with paper bitcoin and and so much altcoin craze like none of that has happened so far and So yes, there's some bit, there's leverage, you know, through Bitcoin treasury companies. But I think actually they're fairly sustainable companies. And so, so I don't think we're in any of those crazy times yet. And so we just had a cleans of the market. So, so yeah, I mean, I need to see how it is turns out to the end of the year. So if we get like overextended to heavy overvalue levels by the end of the year, I actually think there's a fair chance we stick within the four year cycle.

But if we just continue like the. gradual channel up, I think we can get prolonged and actually break the four-year cycle. I think, like, we've mentioned it already in the pub, but I do think one of the things that may break the four-year cycle is what happens in sort of the broader macro world. Trump is going to want to run things really hot into the midterms next year. If he brings in someone to replace Jerome Powell, I think things go out pretty crazy. Indeed, I agree. Like, the cutting interest rates will be a catalyst, but potentially also a catalyst to to reach those heavier overvalue levels.

I mean, if we if we would get them in January next year and, and then, you know, get to heavy overvalue levels here, you know, maybe that is not sustainable and we got a bare market after like so. So I, uh, I would say if we get to heavy overvalued, it's more likely to continue maybe four year cycle. If we just, you know, stay at overvalue levels, which we're currently at and just continue to gradual path with like a reset as we've seen, uh, like another local. bottom, then there's lower for longer, you know. So we'll have to see how this plays out. I don't

pretend. Yeah, I cannot know the future. We're in wait and C mode, but things are looking good. Rue, I've really enjoyed this. Things are looking pretty good, man. We're making it. I agree, man. Bitcoin is just the best performing asset for the last 16 years or so. So, you know, I think it will continue for the next 16 years. me too all right i appreciate that route and where do you want to send everyone where can they kind of check out your work and follow you yeah of course i have my substack newsletter it's called bitcoinstratory dot substack dot com and you can go to the bitcoin strategy platform dot com where you get like access to also these uh you know local bottom local top indicators and and i what i

try to do is not to give an overload of charts to people i kind of like tried to guide them with each week through like the most important charts that kind of cover what's happening in Bitcoin the story like what is likely to happen, what to watch next. And so yeah, so that is, so please sign up and like there's over 20,000 subscribers now. So it's going fairly well. Damn. And yeah. That's amazing. Well, we've got 36 hours or so until this show goes out. So I'm just praying that Bitcoin doesn't like crash back down under 100K or go to 150K. in the meantime, but hopefully it stays pretty flat before the show goes out. That could happen.

I mean, either way, I think a consolidation is possible at the, you know, we just reached like this highly overvalue, or not the highly overvalue, but the overvalue level and that middle part of the channel. And so a bit of consolidation is fine. But indeed, there might be room for the next lag as well. So I'm excited to see what happens by two days. Me too. All right.

Thanks, Rue. I appreciate the time, and I will speak to you very soon. Thanks, Danny.