What Bitcoin Did - Bitcoin is Undervalued, But the Bottom Isn't In Yet | Rational Root

Episode Date: March 15, 2026

Is Bitcoin's four-year cycle still intact, and what does that mean for the next six months? In this episode, I sit down with The Rational Root to break down where we are in Bitcoin's cycle, why on-chain data is flashing bear market signals despite Bitcoin holding up through the Iran war, and what the bottom formation could look like from here. We discuss the shift from retail hype to institutional adoption, why OTC buying from ETFs and treasury companies dampened this cycle's price action, how gold and AI stole Bitcoin's mindshare, and whether passive flows from the likes of Saylor could prevent another leg down. Root walks through his key on-chain charts and explains why he thinks there's still a probability of one more drop before Bitcoin starts its next move up. THANKS TO OUR SPONSORS: ANCHORWATCH BLOCKWARE LEDN BITKEY SWAN CLUB ORANGE FOLLOW: Danny Knowles: https://x.com/_DannyKnowles or https://primal.net/danny The Rational Root: https://x.com/therationalroot

I think setting in a new ultum high this year would definitely be a reason to assume that we're moving away from the four-year pattern. It's a big opportunity because, you know, we basically have another few months of checking extremely cheap sats and Bitcoin will turn around again. I mean, Bitcoin is not going to zero. It's literally the only hope we have on a better future for humanity and to even live in peace with AI. And Bitcoin is already heavily undervalued. In my opinion, Bitcoin is worth much more than 200K, and probably will go into the millions.

Fear, holler, have patience for a couple of months, and that will be rewarded. The rational route, the big carrot, you are back. Welcome back on the show, man. Thank you so much for having me, Danny. We've got a lot to talk about today. The world is going pretty fucking crazy at the moment. And the most interesting thing to me over the last week or two is that while, you know, the U.S. is at war with Iran, the S&P's down, even gold's down, silver's down a bit, and Bitcoin's up. What's different?

Yeah, so I think, I mean, Bitcoin obviously had a big crash beforehand. And so I think this, the news of the war was not really a reason anymore to go lower, which actually is a very positive thing, right? because Bitcoin is all about fear and greed. And so, you know, all these conflicts in the world, they create fear in the market. And that affects price action or it affects people's behavior, right? And so the fact that we actually had a war coming out like with Iran and it didn't do much to Bitcoin shows that, you know, we're fairly, you know, we're a long route in that bottom formation. let's say. And we, I mean, there might still be a reason to go slightly lower and I'll explain with some charts why I think that might be the case. We don't have to get there. But, you know, this is a positive thing. We had, we had this like on the 5th of February, we had, of course, a heavy leg down. And Bitcoin is

already at very undervalue levels. If you look at, you know, many on-chain metrics, you know, Bitcoin is heavy undervalued. But it doesn't mean that we cannot go lower. I mean, usually in bare markets, time is also important, you know, like it just takes sometimes a couple of months to form that bottom. And so I don't know if we'll get another leg down, but I do think we still have a couple months to go before, like, we really go back up again and go into the hundreds and so forth. Yeah, I mean, I know that we obviously had gone down a lot before this, but normally when there's a big geopolitical event, especially they always seem to happen when markets are closed, which again happened this time. with the Iran War, Bitcoin normally falls off a cliff. And this time it was, I think it was up on the day of the actual, the start of the Iran War. And it's even higher today. Like, do you think that this is just because we'd had a big leg down, there was no more sellers at that point? Or do you think there's

people waking up to Bitcoin as an idea? And I mean, we know a lot of people are trying to get out the Middle East as quickly as possible and probably take as much with them as possible. And we know Bitcoin is the best thing for that. Like, how much of this do you think is a narrative shift, rather than just like we were already down a lot and Bitcoin didn't really want to go down further. Well, I think mainly because we had like a big crash beforehand, that was a reason why Bitcoin didn't drop any lower, even though we had another catalyst because we already had several catalysts.

We had a couple of, we had a war each month. And so, you know, another war, okay, like, you know, it didn't affect Bitcoin as much. But there's some truth to like, okay, people in Iran using Bitcoin and stable coins for that. matter, probably maybe as much stable coins because, you know, the value is slightly more stable. And if you're in a war, you don't want to really deal with volatility as much. But so I think that does play a role.

I mean, I literally met people from Ukraine who escaped Ukraine on Bitcoin and were able to start alive in Europe with their Bitcoin, you know, taking their value across borders. And so I think some of that might happen in Iran as well. I'm sure people in Iran are aware of the value proposition of Bitcoin, but then dealing with volatility in times of war and uncertainty is a reason to use stable coins as well. Now, I'm not sure what the reasons are for the war. I mean, I'm not a macro expert, but I'm happy to give some of my takes. you know, this conflict, you know, again, one of many this year. You know, we saw Venezuela before, now we see Iran. I think Trump is doing everything he can to keep the economy up before the midterms.

So I'm not sure if, like, I'm sure he wants this war to be over before the midterms, but I don't know if that's going to happen. I think maybe things are not going his way. And then I don't know how much Israel is obviously heavily involved. and I don't know how much that has to do with Trump. You know, I'm also not really going to speculate about that. But stablecoin uses is a very interesting factor for Trump, you know, because stablecoin uses is a demand for government bonds.

And so that is, you know, needed. And so maybe a key factor also that contributes to the start of this war. And so we will see how this turns out. I don't know, like historically the middle. terms are obviously generally like a bad year for markets in general. So we see usually stock market crash like around the midterms plus Bitcoin and Bitcoin is usually early. I have a chart on that. Yeah, that's interesting because you'd have thought that going into the midterms, whoever's at the seat of power would want to have the markets pumping as much as possible.

Yeah. So this one is specifically on the midterm cycles, midterm elections. And you can see that that more or less around every midterm their, you know, Bitcoin makes a low. And currently we're at these. So this is actually the yearly IRAI that we're looking at for Bitcoin in orange. And the yearly IRAs for the SMP 500 in light blue. And then we have the business cycle in dark blue. And so coming out of COVID, we had a bit of an after effect of COVID in terms of the business cycle. So we, instead of going up steeply, we were kind of like at these values below 50,

which actually means a bit of a recessionary environment. And that took longer than usual. And so there was this question, our cycle shifting, our cycles extending. But what we see now at Bitcoin is that Bitcoin is actually exactly following the four-year cycle. And so we're at these very low values like below 45, which is, historically where we find those bare market bottoms. And the S&P is actually rolling over. And so I don't know if it's going to crash like before the midterms.

I'm sure Trump doesn't want markets to crash. So he's doing everything in his power. But I don't know who, you know, who is in control of this war. If it's Israel or Trump, you know, it seems to be that Israel has a lot of power, a big stake in this as well. And so I don't know how much influence Trump really has. And then, you know, this war is definitely affecting the economy. If we think of the, you know, the straight of for Moose, that is, you know, a big impact.

That's a bit similar to the COVID supply shock that we had, but then for energy, right? And so, so that will for sure have a big impact on markets. And I'm sure that's not what Trump actually wants, you know, especially not before the midterms. And so, so I don't know, you know, if he's able to resolve these things in the next couple of months, then it could have a positive effect still on the midterms, but if it doesn't, you know, we could actually see markets crash maybe before the midterms, which historically has been many times the case.

You know, whatever the catalyst was in the past, you know, there's clear, they are clearly catalysts for this time around. And like Bitcoin obviously tracks the NASDAQ pretty closely. Do you think if there was a broader market crash, Bitcoin would go with it? I think, I mean, Bitcoin already is that heavy, their value levels. And so maybe that would be like the final nil in the coffin, let's say, like that we have this, you know. The capitulation event. We could have another capitalization event that brings us to, you know, one more leg down. So, so that would definitely be an option.

But I don't think it will drag Bitcoin down much further. I think it will be more like COVID. You know, you have initially like maybe a crash or a bit of a capitalization event and then, you know, Bitcoin can shoot up again. So, so I think. I mean, forming this bottom will still take a couple of months, in my opinion. I mean, historically, it has in the four-year cycle. And, yeah, everything just looks like we're still in the four-year cycle. And I know, like, some of the dynamics are shifting, like the, you know, the ISM-PMI, the business cycle, which we show here in dark blue in this chart, you know, had a longer

time, and it seems like it is extending. And that might still be the case, but Bitcoin has followed the exact path. if we look at on-chain indicators, we actually see so many similarities with previous cycles that, you know, the probability is just the highest that Bitcoin will just take a couple of months to form a bottom, and then we kind of have this slow grind up. Because hype is away. Hype is not in Bitcoin's market currently. Definitely not. You know, we, of course, have a big hotler group, which is here, you know, the Bitcoin maximalists are here. You know, they always are.

But there's not a lot of new people coming in to Bitcoin at this moment. And a lot of that hype of that mine share has been taken away by AI and gold. So I have the chart on gold as well. So if we look at gold versus Bitcoin, I mean, gold, you know, gold had its 50-year run, right? Since the start of the Fiat system, gold now is at Aresai levels. We're still looking at Aresai in this chart. gold reached

an era's eye of 96 which historically has been like the the top of the bull markets in previous cycles and so gold position currently is also not sustainable although we could see

like a double peak which we also saw in Bitcoin many times you could stay at these high 90 range for a couple of months so I think that that's very likely for gold to happen as well gold could still go higher. But Bitcoin at the other hand is really forming a low. And Bitcoin is really showing a different behavior than gold. You know, Bitcoin is not really like even though with this war, yes, we had an

an uptick in price, you know, even, but I don't think, and some, I mean, some people are using Bitcoin even as a safe haven in Iran. That is true. But I think that's such a small piece of the market, you know, of the global market that Bitcoin has. So Bitcoin really is still correlates. much more heavily correlated to risk on assets and not so much a safe haven. But Bitcoin is very liquidity driven. And so Bitcoin, in my opinion, will never really behave like digital gold or like the analog gold. Bitcoin is really, yeah, I've said this before.

It's more about optimism and tech and really solving, you know, the monetary issues in the world where gold is a bit of like it always has this negative. connotation like it's always about you know an escape for war and so then we go back to you know to the to the old metal let's say that that you know instead of like thinking of new tech and and living in a digital world people you know go to use gold as a safe haven but so i think bitcoin in the near future will not really start behaving like a safe haven it will still be heavily treated as a as a tech asset let's say do you want to pay less in taxes and stack more Bitcoin. Of course you do. Well, by mining Bitcoin with Blockware, you can. Under Section 168K of

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is insured while not giving up custody. So whether you're worried about inheritance planning, wrench attacks, natural disasters, or just your own silly mistakes, you're protected by Anchor Watch. Rates for fully insured custody start as low as 0.55% and are available for individual and commercial customers located in the US. Speak to Anchorage for a quote and for more details about your security options and coverage. Visit anchorwatch.com today. That's anchorwatch.com. Yeah, I mean, you said there that Bitcoin, there's no high. hype around the Bitcoin market at the moment, which is definitely true. Like, sentiment is almost as low as it gets, it seems. But I don't even think we had that much hype in the last bull market. Like, when

Bitcoin was above 100K, there wasn't that much hype, not like previous cycles. It feels like you have to go back to really like the launch of the ETFs to get any kind of real hype around this. Do you think that is coming back, or do you think the sort of makeup of the Bitcoin market, the people that are involved, the people that can actually move the price has changed to the point where sort of retail FOMO doesn't really matter anymore. I'm sure we'll still get a phase of retail FOMO at some time in the future. But it is true that this cycle has been much more about institutions getting involved and not so much retail. And I think so what happened is actually, so 90% of or even 95% of the Bitcoin supply is mine, right?

We have currently 20 million coins in circulation since this week, by the way. So still, the final million will be mined in the next 100 years. And so that is in hands of basically retail, like most of it, you know. And this cycle was about that transition from retail to institutions. And, I mean, some of these institutions also represents retail again indirectly, which we see with ETFs. But there's also many institutions getting involved. And we're still at the beginning of that.

But this is actually what we want for Bitcoin adoption to happen. We cannot not have institutions adopting Bitcoin and become the World Reserve asset, right? That's impossible. Institutions are built out of people. And so if Bitcoin gets the world adoption, we naturally need actually institutions to come in the space. I mean, I would Bruchwater see Gen Z totally interested in Bitcoin and coming into the space. But they're not at the age, like some are starting, but they're not really at the age of where they're start thinking about pension and savings as much.

And so I think what mainly happened is that in the past 10 or 15 years, much of retail, like the people that would become interested in Bitcoin have had the chance. You know, we've had several hype cycles, you know, for people to be waking up to Bitcoin and to hear about Bitcoin. And so if you're not in Bitcoin after these 15 years, you know, it's unlikely that you will also get into it in the next 10 years or so. And so I think what we now see institutional adoption is actually a great step forward. This is what we want.

We now have BlackRock behind, behind Bitcoin, you know, we have the strategic Bitcoin reserves. And yeah, some of it, of course, is not as good as it sounds. I mean, I don't, Trump is not really a bit coiner. You know, he did this for, you know, he was basically bought off to, to have this, but his sons are very interested in Bitcoin, obviously. And so they have had banking issues in the past. And so they at least understand some of the value proposition of Bitcoin. And so I think regulation is getting, you know, much better in the U.S.

So I think also it's going to be possible soon to get, you know, like to borrow against your Bitcoin. So which will reduce sell pressure also from retail. But in my opinion, yeah, we're really in this IPO phase. where, you know, basically the people that bet on Bitcoin in the past 15 years were right. And so they have made a lot of gains. And so we're now in the transition phase where some of that money flows to institutions. And I think that's totally natural. That's actually, it's the success of Bitcoin.

And so it might seem like, oh, you know, less retail is coming into Bitcoin. And so that's a bad thing. But we actually see like really observable institutional adoption. And that is what we want to see. And I think that we'll continue into the next cycles. And so I think, you know, we're currently at price levels that are not as attractive to sell as a Hotler. But I think the 100K was really a psychological level, just like 10K. We took a long time to like surpass that 10K level.

And I think for 100K that is, you know, we have, we need to go through a similar phase where, you know, we have a lot of self. We have seen actually a lot of cell pressure from the Hotler cohort. Yeah, we do, like institutions need to get Bitcoin, just don't give them your Bitcoin. You've talked about the four-year cycle, and this has been a big question to me. Like, I was on the wrong side of this in the sense that I thought this time was going to be different. I still think it potentially could be. But like, what do you think is actually driving the four-year cycle if it's still intact? Because we know the impact of supply issuance is getting to the point where it's negligible,

whether it is now or not, it's probably debatable. But, like, what do you think is actually driving this? Yeah, so I think there's still a lot of psychology around it, like Bitcoin has historically only moved in this four-year cycle pattern. And so it's expectations that also set these dynamics. And I think it also, you know, there's these catalysts that have an effect on Bitcoin events that happen in the world. And I think we've had a lot of distraction this cycle. I mean, we had so we had institutions come into space. And as you said correctly, the most hype we've had was actually institutional hype.

like before or right around that ETIF approval. And so that was the maximum hype we've seen in this entire bull market. And then it started slowly fading, fading away a bit. So what I think is the main driver of the four-year cycle is that since a lot of mindshare went to AI, and actually, you know, there is a lot of value in AI. I mean, it's really going to change the world. So it's understandable that some of that mine share got taken away. And then we had gold like on a run, you know, not seen in 50 years, basically.

And so, you know, a lot of hype went to other markets. And this actually took away a bit the hype from Bitcoin's market. And that I think contributed to the fact that we now got to the lows that we are currently at. So do you think the reason the cycle's intact still is. is because of basically it being a self-fulfilling prophecy and because it's happened in the past, people think it's going to happen again in the future and therefore sell coins come the end of the year.

So I think indeed expectations from previous cycle dynamics played a key role. But I also think that for some reason, I mean, the timing of hype around AI and gold happened at the exact moment in the four-year cycle such that the hype was taken away from Bitcoin. And so Bitcoin started dropping. And then it became a bit of the self-fulfilling prophecy,

that we again, we're in time-wise. We're again at that stage where Bitcoin should move into a bear market. And then we had actually key reasons to do so, which mainly, for example, hype being taken away by other markets. So what would have to happen for you to say, yeah, the cycle is broken? Like if Bitcoin got back above 100K close to all-time highs in the next like say six to nine months, would that, would that to you feel like the cycle is actually broken then? Not really because we already are actually at substantial bear market levels currently.

Now, I don't know how low will go. Actually, I think so. I think it's the probability is the highest that it will still take a couple of months to form this bottom. But we do see passive flows moving into Bitcoin from, you know, these treasury companies like Sailor keeps buying on a weekly basis or so. And so, so those passive flows that move into Bitcoin also will suppress a bit of the downside. And so, so we don't have to go as low this cycle just as we didn't go as high this cycle because, you know, we had more like gradual institutional adoption rather than a very hype driven retail hype

in in, in the cycle. And so so I, I, um, I think it's possible to still hoover around these lower levels for the next couple of months. And possibly we get a lag down. And it depends on some of these macro circumstances and catalyst. And a bit also like, you know, if Bitcoin doesn't move anywhere, you know, patience, you know, kind of dries up with the whole or cohort. And so some might, there might be another capitalization event be needed before we really set in the low. And then we can start it gradually move up. But so like bull and bear cycles are always going to happen.

But what like what has to happen to break out of this four year cycle for you? Like if we got new all time highs this year, would that say the four year cycle is not real? Like I want to know what it would be that would make you go, okay, that's now not the case. Like we obviously always going to have bull and bear markets. But yeah, how does it how does it break that sort of psychology around the four year cycle? I think setting in a new all-time high this year would definitely be a reason to assume that we're moving away from the four-year pattern. Now, we did, we're basically at lows, and you can see it in this IRA's eye chart, you know, we're at lows of similar to previous bear market bottoms.

And so, yeah, we haven't seen a 70, 80% drop yet, but that is because we never had this blow off top. We had the most distributed cycle so far. And so we don't have to go as low to get to these bare market levels. But so I think we're already at, you know, substantial bear market levels. time-wise, there's still a couple of months on our side. That's why I say we can hoover around these lows for a couple of months still. But in a way, price-wise, we're already at heavy undervalid levels.

And so if we start gradually moving up from here, that actually keeps us within the four-year cycle. Now, we still have a couple of months. But if we would make an ultum high, a new ultim high this year, then this whole bear market would be indeed a mini-year. bear market and as such and more like a mid cycle dip right like a or it's a 50% drop that we're currently at and but it would start to feel more like a 2019 situation where we had this a bit of like this mid cycle dip which was pretty severe like actually that was a struggle around that 10k level then we had this mid cycle dip and then we had COVID and then we started moving into a ball market now that is still a possibility and given that the business cycle is actually coming out

of this recession out of this recessionary state that is an option so i'm i'm entirely open to that situation i just don't think it's the most um you know probable outcome i think it's much more likely to since hype is away it takes time for hype to move back into bitcoin and so i i think we still need a couple of months to set that low and then gradually bitcoin starts moving up and when again we start reaching those 100k levels there might still be some cell pressure from from that hot cohort, like people that actually would have wanted to take more profits maybe around the top, but we never reach those price targets that we're hoped for. And so you get some gradual cell pressure still. And then once we move past that, we are actually really ready to make new

ultimat highs. Yeah, I agree that the probability is that we sort of hang around these levels for a little bit. But what probability would you put on us hitting a new all-time high this year? I think they are very low. I think an autumn high this year for me is like around 30% or so. Okay, not that low. I'll take it. Yeah, there's still a 70% chance to just follow the four-year cycle. Should we move on to the next chart?

Yeah, so maybe we just start with this chart. So we had basically this book. So we had basically this bullish trend in Bitcoin, like since the 2022 bear market low, we had a bullish trend, which you can see in this chart. This is actually the low of a channel that I drew based on a regression on all of the price data from that three-year bull market. And so once we started, soon after the ultimate high that we made and we started like dropping below the short-term holocaust basis, we also fell below that bullish trend.

trend. And that was for me, you know, severe warning signal. Okay, you know, Bitcoin cannot sustain. And actually, so bullish trend, so it looks, it's a linear line on this chart, but it's actually an exponential trend because the price data is shown in lock scale on this chart. And so, so if you would look at it in linear scale, it would be a curved line up. And so an exponential trend is never sustainable, by the way. So it will always end. And so the bull market will at some point end and we'll fall into the bear market. And so soon after making the ultimatheye, we broke below that trend line.

And so that was a severe warning cycle. And that didn't mean necessarily that it was the end of the bull market, but it did mean that we were not going to sustain that bull market at that trend. Now, once we started dropping below that $2 trillion cap line, which actually coincides with the 100K price level, very psychological price level for Bitcoin. that was again another signal, okay, hey, this consolidation

or this dip is going to take slightly longer. And so then we had a retest of the shorter holocaust bases, which I warn my followers, okay, you know, we're time wise, we're in the four-year cycle, it looked like we,

it looks definitely like we could move into a bear market. If you cannot sustain a year-long bear market, this is a good time to take profit, you know, because, you know, it's, of course, always risk management. Nobody knows where Bitcoin is going to go,

but there was a big likelihood that, you know, this dip was going to take a long time. And so I took profit at the level. I shared that way in my followers. And then actually then soon after we had that another leg down to that minus 50% from the ultimate high. And that was a severe capitalization event, but still not similar to previous bear market bottoms.

It was like, and during a bear market, of Bitcoin, if we look at on-chain data, for example, profit levels and so forth, we can actually, you know, estimate, like, or see how, there's, there are actually usually several capitalization events, and we can actually look at the size of the capitalization event. And so we can compare that. And, and, and so this, this drop seemed more like a, like a June, June, June, 22, uh, drop in, in the previous cycle, uh, which I have. have a chart on that, maybe we can move to that. I think it's this one.

So the current drop here, which you see in that gray area, is very similar to the June drop in the previous bear market. And we've seen that also in previous cycles. And so you can see that there's still a couple of months of this bottom formation after such event. And so we had a severe capitalization event, but not of the size that we saw at the bear market bottom. like FDX, for example, here at the bear market bottom in 2022.

And so to me, yeah, that means that we still have a couple of months time-wise, and so people need to be a bit patient. So you said there you took some profit. What have you bought back in yet? Or what are you waiting for? No, I'm actually not. I took some profit to sustain the bear market year. So I, you know, as a holler, I also looked to improve my lifestyle.

And, you know, I knew that there was a high risk of having a year-long bear market. And so I did not want to risk, you know, not having enough funds to sustain the whole year for the lifestyle improvements that I'm undergoing. And so that was for me a key reason to take some profit at those levels. Okay, fair enough. It's not something you were looking to buy back in with necessarily. No, I have a long-term stack, and actually I have like a stacking goal still as well. But, you know, given that we're moving into a year bear market or that likely was very high, it was a good moment to take profit. Now, I do, I might buy back in if we really get another leg down and we get to these heavy undervalue levels. And I have some charts on that. Later, I can show you where that would be.

No, price might just be too good. And I might. move some funds back. But basically, I plan on some lifestyle improvements. And so instead of waiting for potential higher prices of Bitcoin, I took some earlier profits to sustain a bare market year. Fair enough. You've got to live your life, man. So the thing that I've seen around this chart or a similar chart on Twitter from all the TA people out there is that people are calling us another bear flag now. I don't know how much. I don't put too much credence on TA, but is that something you're watching? Yeah, I mean, I put more thought into on-chain analysis, and I have some very good charts

on this, but indeed, it could be. And so I still think there's a reason that we might have another leg down. I think their chance is fairly high even, and that would happen over the next couple of months. But as I said, we also have passive flows into Bitcoin. And so we don't have to get there this time. Just as, you know, we didn't have this a blow of thought, or like we had some. We had such a distributed top, but we also didn't even reach 140K, which was a bit disappointing, I guess, for many. Also, I think now maybe some people will get disappointed by the lows that we make or that we cannot buy cheaps ads. Make sense. Okay, let's go on to the next one. What else will we got? Yeah, so as I say, so we have all this conflict in the world, but it basically always

comes down to fear and greed, like within Bitcoin, right? And so this, the, the events that we have seen actually now made us drop so in this chart i actually have some levels based on the short-term holder cost basis and basically those levels are you know how much loss can a short-term holder sustain and so we have this short-term holder floor and the in the mezzanine level in between and so with that that february fifth drop we nearly reached so these these are this is actually daily closed data. But if you would look at the actual price, we nearly touched that short-to-molder floor level. And now we kind of moved up again above that mezzanine level. So we're in the middle of those levels, which is a very common level to get to if we look at Bitcoin's history.

And usually, so for example, with COVID, we reached that shorter molar floor. But during that 2019 mini-bear, let's say, we only got to that mezzanine level. If it wasn't for COVID, we would have probably stayed around that mezzanine level and slightly moved up again from there. But in the bear market, you see we can hit that floor a couple of times. And so we did that actually in June of 22. We also reached that. So again, very similar to the June 22. And then, you know, we started moving up.

We still had a final leg down. That was, again, only to the mezzanine level. But as you see, like that floor level moves down also heavily. And so I think this is a very useful chart. I think so we're now at that mezzanine level. I think we might have another retest in the next couple of months maybe or in the next month or so towards that short-to-molar cost basis, just as we did after June 2022.

We kind of hoovered between the mezzanine and short-to-molar cost bases a couple of time. But I think it's likely that we'll still reject off that short-to-molar cost bases because it's an interesting level in a bear market to take, you know, people are actually even then with their investment. and so it's often a reason why they get out of the market. So I think that is still possible to, of course, those levels will be moving down. And so I think a retest of the shorter molecule cost basis. And then maybe again another tryout to the mezzanee level and then up from there.

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The application took me less than 15 minutes and in a few hours I had the dollars in my account. It was super smooth. So if you need cash but you don't want to sell Bitcoin, head over to ledden.io forward slash WBD and you'll get 0.25% off your first loan. That's L-E-D-N-D-O-4-S-L-L-L-S-E-S-E-E-S-E. WBD. Do you not think that the sort of structure of the market will change the behavior of this, though? Because if you look back at the last two times, we hit that lower band.

It looks like it was COVID, and that was a very quick touch, and then straight back up, basically. Which obviously a huge event that affected the world globally, affected the economy. Then we've got the crash after FTX blew up, which was a very Bitcoin sort of crypto-specific crash. It was one of those moments where you were like, how deep does this go? How systemic to the entire Bitcoin market is this? It was like in some ways an existential threat to a lot of the businesses that ran within Bitcoin. We saw so many closed down. This time's different, I think, in the sense that we have the passive flows in the ETS.

Institutions are here. I think people are probably looking at Bitcoin right now as being very good value. I certainly am. Does that not change the behavior of this chart? Yeah. So actually, it might. So as I said, like, maybe this will be the low since we have passive flows moving into the space. And maybe time-wise, we'll still just move around these lower levels.

But maybe we already sat in the low in that recent rent, the February 5th drop, like, similar to June 2022. Like, so in June, if it wasn't for FDX, we wouldn't have gotten like another lag down, you know, temporarily. But this time around, there's also so much macro uncertainty. So I don't know. I mean, if we are now the straight of foremost, like how much effect will it have on global markets? Yeah, true. You know, what if we get a, what if we do get a recession in the next year or so? Like really a crash in stock markets?

That would be definitely enough of a catalyst to have like a potential short, another leg down, let's say, to that mezzanine level and then go back up from there. So I think there's enough uncertainty in the world to, to, you know, function as a catalyst for something like that to happen. Yeah, that does make sense. Like if we see oil go back above $100, the economy start really teetering. It's already at $100, you know. Is it back at $100 today? It depends on which metric you're looking at, but some like crude, like I think you as crude is at 96 or something. And so, yeah, you're right. Yeah. So I mean, I think in that scenario, yeah, I could totally see Bitcoin going down further. But I also think it increases the chance of them just doing a mega print. and who knows what happened the next.

I mean, yeah, so as I said, so that very much depends. So if Trump is able to resolve this war and, you know, in May we're going to see a change of the Fed chair and we know that there's going to be like a brick print coming, you know, wars are inflationary. And so, you know, but if the war could be resolved somehow like before May and then in May we get the print, you know, then maybe indeed we, you know, we sat in the low and then maybe the February 5th was the low and we started like gradually moving up and maybe into the midterms

we won't see a market crash. That's obviously what Trump is trying to do. Now, if it's going to work, I don't know because, you know, I don't think he expected, you know, the straight of Hormuzk being closed. And, you know, and that's a, that's, that's a COVID similar type of shock to the world's energy supply. And so I don't know how this will unpack. Yeah. We want to see Bitcoin go up, but not like this. All right, let's go on to the next one. Yeah, so I thought maybe we can talk a bit about where we are in the cycle, since we are exactly within the four-year cycle.

So this is actually the four-year cycles displayed here, and it showed the days until the halving. So cycles are aligned here with the days until the halving, and those dotted lines are the realized price, which is a basic, like very key on-chain metric. It's the average purchase price of all Bitcoin in circulation, right? That's the realized price. And so if we line the market, like if we line the realized all these cycles with the realized price,

we see that during that bare market bottom formation, which, you know, in my opinion, there's a high probability of that to happen in the next couple of months, we fall, we kind of fall below that realized price. And so that could bring us to levels. Currently, the realized price is around 54K or nearly 55K. So, you know, there's a big reason we could potentially drop below that, below 55K still with one more leg down in the next couple of months. And so it depends very much on the macro circumstances. I agree. We have passive flows. and so we don't have to get there. But I think if you're looking to get into Bitcoin,

it's probably the best strategy is to DCA over the next couple of months into Bitcoin. And maybe you catch that another leg down. Like if you don't, okay, if we start moving up and we already stand in the low, great. But yeah, I think there's still enough uncertainty in the world for one more leg down to happen. See, the thing in this chart that I would fade, and I'm willing to put myself out on a limb here and this could age like milk. But this would suggest that we have another year

of sort of sideways down. And I just can't see that happening. I could be totally wrong, but I can't see that happening. My gut doesn't say that's what's going to happen. So to really form the bottom would only take, like give and take six months at most. And then indeed to kind of start to recovery,

which would already be the beginning of a bull market, by the way, So if we, I mean, going back to, do I have a chart on that? So going back to that. So do you consider the bull market starting the day we hit the lowest print? Yeah. So, I mean, I mean, this is what we look at, like if we look at the bull trend, then we also start counting from the bear market bottom, right?

So if you get in around that bare market bottom, you have a three-year trend, like a three-year up trend, an exponential up trend. And so in a way, in the next six months, and it could also maybe, maybe it will be, only be four or three, you know, maybe in May, before, like, when the print is going to happen. You know, like so, so, but I think if we, once we set in the low in the next couple of months, and then we start moving up, then in a way you could look at that already as the start of a new bull market. Although you don't really know if we're in the bull market yet. I mean, we really have to move up, like above that short tomorrow cost basis, get a retest and actually, you know, stay above it.

That would be like a confirmation of the start of a boomer. bullish trend again. And so that's what I'm looking for in the next couple of months. But indeed, that means that we get a bit more like sideways price action for potentially a year. Because we, I mean, if we drop to 50 still in the next three months and then we start moving again up and we'll be around, you know, maybe 80s, 90s in eight or nine months or maybe 10 or 12 months even, yeah, that would look very similar to previous cycles. And I, I think that's a realistic outcome. I would take the bet on this one.

Let's say in two years' time, if we were to look at this chart, I think we will look at this saying this time actually might have been different, but this could be pure cope. Who knows? Yeah, I mean, I agree. With the business cycle changing, as I said, the business cycle is actually coming out of a recessionary state. But yeah, maybe all these dynamics that are currently going on

with Straito from Moose closed and the supply energy, supply shock. It could, maybe it moves again back below for some reason. I don't know. Although, yeah, there could be an extended cycle. So maybe we'll only get a mild bear market. As I said, we do also have passive flows. But for me, I mean, the highest probability is to still continue the four-year cycle path.

The reason being at most because hype is out of the market. Hype is in AI. Hype is in gold. Hype is not really in Bitcoin. Then there's all this conflict in the world. And then so, you know, Bitcoin is. patience will be tested over the next couple of months. And some will lose faith a bit.

Like, okay, maybe Bitcoin is not going anywhere. You know, if we steal another two months of sideways price action, I think, you know, some people will be inpatients and, you know, they want to chase profits. And so maybe they also flipped to AI again. Like many already did. But so I wouldn't be too surprised if we get such a scenario, which is portrayed here in the chart.

Fair enough. Okay, let's go on to the next one. Don't sound happy about that one. I'm just, I'm not unhappy about it. I just, there's a lot of dynamics in there that I don't know if I totally agree with the premise on. Like, I think, I do agree that we've obviously, we've not had the hype. But I wonder if there's people now looking at gold being over $5,000, you know, you showed that indicator before the RSI is way up there in the 90s. Like, does some of the. that money, you know, does it feel like gold's topping at some point, even if it's only short term

and does some of that money start rolling back into Bitcoin? I think there's a lot of dynamics that you could look at that might suggest something else. Yeah, I agree. So indeed, it is true that if we look at anything, like where, would you want to put money? Gold is heavily overvalued. The stock market is heavily overvalued. But Bitcoin is very attractive at these prices. And so, Now, I don't know how much money necessarily is now chasing this attractive investment, you know, because it also feels risky. We had some of the quantum threads. There's some uncertainty, you know, and then we have all this conflict.

And then gold is actually performing very well. Bitcoin is not? And so a bit of loss of confidence, like, oh, is Bitcoin really going to do what is going to do? But if you really look at the fundamentals, Bitcoin is actually exactly doing what is going to do. And so I'm super optimistic. actually about Bitcoin, right? Like, okay, I'm pessimistic about the next couple of months. I mean, I even think we don't necessarily have to get that lag down. As I said, there's passive flows, and so maybe we don't. And also the reason the business cycle is extending, maybe that also

will have an impact on Bitcoin and we'll bottom early, or this was already the bottom, and we started gradually moving up. But if we look at the on-chain charts, and for example, in this one, we see such a similarity to previous bear markets. We see these rat lines, like the amount of short moral profits, which is shown here. You know, it's hard to neglect like it looks exactly like a bear market would. And so, yeah, for me, unfortunately, also then the probability is the highest that we will continue exactly as how a bear market usually has functioned in the past. And, yeah, it doesn't sound that attractive.

but I think it's also a big opportunity because we basically have another few months of checking extremely cheap ads and Bitcoin will turn around again I mean Bitcoin is not going to zero it's literally the only hope we have on a better future for humanity and to even live in peace with AI

and to be all you know and so I think it's so Bitcoin is already heavily undervalued and my opinion Bitcoin is worth you know much more than 200K and probably will go into the millions. But yeah, we have to move through this phase. I mean, hype is gone.

We have seen this every cycle. You know, Bitcoin has to form a bottom. That takes time. There's a time factor to this. And so it will take a couple of months. But yeah, those months are an opportunity as well. Totally. And I think the place where I might have some disagreement with you,

and to caveat this, you're going off data here. I'm going off fives. And I'm also always ultra bullish. It's clear we're in a bear market. No denying that. It's just obvious. But what I'm unsure of is why it has to necessarily rhyme with previous bare markets in this sort of cycle theory.

Because the halving impact is so much small than it has been in the past, I just don't know what it is about the sort of months of the year that mean that Bitcoin has to go down or up. I guess that's where I'm coming from. Yeah. And we saw this, I mean, getting back. to the cycles. I mean, since the start of Bitcoin, Bitcoin has moved in this four-year cyclical pattern.

And of course, in the beginning, the having had a huge impact, and that is indeed negligible at this point in time. But before, you know, before we had also an eight-year cycle. So, for example, if we look at the 2008 crash, for that to happen, that was an eight-year cycle. And so I wouldn't necessarily rule out that maybe we get an extended cycle this time as well. Of course, these four-year cycles are influenced by presidential cycles, which are based on the four-year period. And so all those dynamics have an effect on the market. And so I'm also totally open for the cycle to change. So I'm not saying we will stay within the

four-year cycle for the next, you know, we will have that. I'm not saying we will have two more four-year cycles in Bitcoin coming up. So I'm just saying currently we're still exactly in that four-year cycle pattern. And so, you know, maybe that will change into the future. Like, as I said, for example, on all-time high this year would kind of disprove or would prove that we would be moving away from it. But currently there's no such proof yet. And so we have to kind of assume that it will continue. Now, there are some indicators like the business cycle, which, you know, maybe are a reason indeed to move away from that this time around. But yeah, so far Bitcoin is not showing any of those trades yet.

We're actually at bare market lows, which we have, you know, every cycle around that midterms year. But I also think an eight-year cycle is possible into the future. You know, dynamics are definitely changing. It feels like so much is going on in the world with Trump now.

And so maybe the dynamics of markets will change and will be extended. Yeah, that's fair enough. Yeah, that would just mean like a bit more reduced bare market, like maybe the end the low was in, as I said, and we kind of start

gradually moving up from here. So I think that's entirely possible. Fair, and only time we'll tell, I guess. Okay, next chart. What if we got next? These are a little different to normal route. I'm enjoying it. Okay, great, great. We've not had the spiral yet. No, I didn't include a spiral chart yet,

but I mean, you want to look at the spiral? I can open I can open one if you want, but these are great charts as well. They represent the cyclical behavior in Bitcoin. For example, here we're looking at the on-chain value map. And this is very interesting, in my opinion. So we didn't really reach those heavy overvalue levels, which you see here, like the red line in the top, the red band. And so maybe also we won't reach those heavy undervalue levels.

And here again, we see there. is still room for another leg down. And then so that's what, again, another reason why I say, okay, we cannot necessarily rule out that we'll have another leg down. But I think if we do, that will also be kind of the final nail in the coffin and then we kind of move up from here. And so basically we have six months to do just that. Now, maybe it doesn't come again because of passive flows. I actually hope it won't. It would be great. That would be exciting for the future as well. Bitcoin is changing. But if we do, it feels very much similar to his pattern.

As much as I want to see Bitcoin go up, I'd take the opportunity to buy 45K Bitcoin. So this is actually the level that I also probably will move some funds back in. It will just be too cheap to

leave. I mean, it's like a COVID opportunity, you know? Like we literally saw here, COVID dropping to the heavy under value levels. I mean, it becomes too attractive to buy at such level. So I also, I think, yeah, if we would drop there, I would become a buyer as well. Yeah, the COVID diff is my proudest buy, I think,

because that was a terrifying time. If we saw anything like that ever again, I'm just going to be selling everything I possibly can. Yeah. Yeah, and currently, we're having a bit of issues similar to COVID, like with now, for example, the energy supply shock. 20% of world's energy is going to the straight for a month. So that is, you know, I don't know. So far it hasn't been like Bitcoin has been moving up and been stable. But yeah, I don't know. I will, we will see how this conflict will evolve over the next couple of months. Yeah, that's to sell your chairs to buy Bitcoin kind of opportunity. Cool. I mean, the funny thing is like this, this is the bear market that has least affected me sort of in an emotional sense. And that just could be that

I've been through these before. But, you know, the numbers we talk about in terms of percentage up, percentage down are just, they're a joke now. You know, where's the 80% drawdown gone? This is nothing. Yeah, it's very unlikely to get to a 70% drawdown even. And I've shared that with my followers. I've shared some charts and we actually looked at drawdowns and, you know, levels that likely would get to.

And actually, we'll get to some of those levels in the next couple of charts. I actually made some charts to look really at how, what that bottom formation looks like. And then again, I'm saying that we don't have to get there, but this is kind of, I think it's a good thing to kind of assume that we might get there. And if we don't, you know, it will only be good. But yeah, I think a 70% drawdown is very unlikely. We have some on-chain levels. And this has to do also, of course, because we didn't have a blow of top, you know,

because we had such a distributed top, we didn't even reach those heavy overvalue levels. So also, you know, as a consequence, the percentage drawdown is mild. Yeah, I think the thing we've missed in this is that, you know, you spoke about all the retail fomo in gold and in AI stocks, but like also treasury companies. Like so many people were just phomowing its treasury companies, whereas previously they might have bought Bitcoin. I think that definitely had a dampening effect on the upside. Yeah, that's actually a great point that you mentioned.

So I actually recently explained that as well with my followers. So there's there's the this was actually like if we talk maybe we can talk about about the differences this from this bull market to previous cycles. So in so we saw a lot of gradual institutional adoption. And so instead of some of that money flowing to spot exchanges like to have an effect on spot price, we actually saw money flowing to indeed treasury companies, for example. And then we had buys from Sailor, but those buys are like most likely through OTC desks. And so they try to kind of like have a minimum impact on price. You know, like how can we acquire Bitcoin and and, you know, because if you start like buying spot Bitcoin, like 17,000 Bitcoin or something, whatever, you know, if you buy that spot, it will have like a huge impact temporarily on spot price.

So you screw yourself, right, if you're buying. So you want to make these deals OTC. And this is actually what ETIPs do and with in kind of redemptions and also, you know, treasury companies. And so in a way, so with this gradual financial, like gradual money flowing into Bitcoin through institutions, also means indeed that many of those Bitcoins were bought OTC. And so there are OGs out there with thousands of Bitcoin. and they're happily to stake some profit. But yes, and they sell often through these OTC desks.

And so this was probably in this cycle the least impactful on spot price. And we also see that. I mean, we had a very distributed price, very distributed price action. We, you know, nothing of the like that we saw in 2017, which was very hype driven, retail hype driven, very spot driven market. this market was much less spot-driven. Yeah, and I guess if you're buying on the spot markets, then you start liquidating shorts and then you have the volatile moves up

and Bitcoin has to figure out if it can actually sustain the price. And so that volatility was all taken out of the market because of the OTC desk is what you're saying, I think. Yeah, so a lot of that spot action, which indeed has much more effect on Bitcoin's price, was now reduced because of indeed OTC buys by ETFs. and ETFs were one of the key drivers and treasury companies of this bull market. And so I think therefore, also we have seen such reduced price action like to the upside.

Yeah, that makes sense. All right, what else have you got for us, route? Yeah, maybe we can go a bit into that bottom formation. So we already looked at this chart. So this is basically comparing the current drop like to the June 2022 drop. And so what we look at here, actually, we're going to start combining some of these key on-chain metrics

that I already introduced. So here we're looking at the short-term holder floor, which is actually this level of that short-term holders, based on the short-to-holder cost basis. So how much of a loss, like what is the maximum loss that short-term holders can sustain, basically? That's the short-term holder level. And then we have the realized price,

which is the average purchase price of all Bitcoin. And so we just now had the cross of the short model floor falling below that realized price. And if we look where that historically happens, you know, that was around June 22. And so we're like very much the current drop in terms of capitalization. So if we look at capitalization in Bitcoin terms and compare that to previous bear markets, it very much looks like this June 22 event. If we look at the shorter molar floor versus realized price, it very much looked like the June 22 event.

And then we can introduce actually some more metrics. So here we, this is actually the low of the on chain value map. The on chain value maps low is based on one of my custom implementations of coin value days destroyed, which was originally a metric that Willie Wu came up with. But it has been very accurate in actually setting like a floor for entire market and the interesting thing about this metric is that it never moves down so where we look that short the molar floor that you know those bands they move up and down but this coin value this destroy level only moves up and so so so that sets the floor and that's currently i think around

nearly at 45k as well and so that will keep on moving up towards like in the next couple of months and so it's very likely that maybe like these these high 40s are still within the cards but I don't think we'll move much lower. And then, as I said, again, you know, falling in repetition here, but these passive flows, you know, might be a key reason why we won't even get there. But we still have to assume that we might, you know. There's this probability out there. So, and then, so what I actually define this period that we're currently in

is the bottom formation. So those are highlighted here by those. bars. So this is actually when the realized price moves in between or when the short model floor moves in between the realized price and those coin value these destroy levels. Because we see that we we we actually the the short of mold floor moves lower than than Bitcoin eventually will because you know Bitcoin starts moving it start actually moving towards that shorter molar cost basis again and tries to get back above it in bull territory. But the bands.

still they move much lower. And so the short molar floor is a great level to see like, okay, we're currently at heavy undervalue levels. You know, if we, you know, like we saw with COVID, for example, we dropped to that short molar floor. That's a level that you absolutely want to buy at, actually. It's a, it's a short-term floor for Bitcoin. But the eventual floor of the bear market might be lower and historically has reached like

levels of coin value days destroyed, which we see here in this chart. well. So we're currently at the stage where the shorter motor floor moved between the realized price and that coin values, the destroy level. And for me, that is the period of bottom formation. Now, historically, we see that like, yeah, that takes a couple of months. And so, you know, we're in, we're now one month in, basically, since the February 5th drop. And so we still have a couple of more months to, to, you know, be in this bottom formation stage before we kind of move back up. It's time to take the opportunity to get some cheap sats. Who knows if he'll go lower, but this is good value right now. Root, we can't do a show with you without the spiral chart. Come on, let's see it. All right, let me. Has that chart broken now?

Because it wasn't the idea that the circles were ever expanding? And have we now crossed? We have not crossed. And I also don't think we will cross in the next year and a half. I think the chances of crossing are very, very low. Oh, okay. We need to see this chart. Okay, I got it up.

So this is the 3D version, by the way. And so this is actually based on the on-chain value map. I can't tell where we are now. Where are we now? We're currently here. Ah, okay. Oh, I see this one is not completely updated. I don't know why it stops here.

So we'd have to go down. I need to check into the reasonable amount. now below that surface level. So we moved below. The surface is actually the fair value that we just looked at. If we looked at the value map, that green level was always the

fair value price of Bitcoin. That is what the surface represents here. And then we have periods of bull markets, which is, you know, the entire bull market, we were above that surface level. And now we moved back below the surface. but we'd still have to go a long way down from here for those circles to cross

yeah so so historically we see towards the end of the year that would be and this could be slightly earlier because we see that that because one one full rotation in that spiral is represents the period of four years and so so we see those bottoms so for example this was the the 2018 bottom that happened in in December you know the prices of 3K, then we had here the 2022 bottom, like 16K, let's say. It was in November. And so, like, maybe now this time in October, we'll get a bottom that, you know, the spiral chart would actually imply that.

And so we now moved below the surface already. I'm not sure why this is not updated. I need to check, actually. And I need to look into that. But we're now below that surface level. we are below a fair value. And so we're actually a couple months because this is exactly,

I mean, this one stops here at the end of 2025, I see, but we're currently already three months in, right? So we're three months already below that surface level now. And so we still have a couple of months to form that bottom. And this is what the four-year cycle would look like, you know.

And I mean, so yes, we didn't get to, we didn't have a blow off top. and we had a bit of like a distributed bull market, but look at how similar those green dots were during this whole phase here compared to previous cycles that we did that. That looks very similar. Now here, here was the halving,

and this was actually the ultimate high before the halving, you know, the ETF approval. That was like a lot of hype. That was a key difference this cycle. We had an ultim high before the having, but there was a clear catalyst, you know, big reason why we did. And so I think that's,

that's normal. So this was the halving and so yeah, what's next is we are now below that surface level we form a bottom at some point it could be the February low but then that red dot would be here which is kind of still early on the four year cycle

basis. It's more likely to happen in the next couple of months so potentially another leg down and then start moving back up and you know go to the next halving event. The spiral chart is intact the spiral chart is intact route this has been amazing anything else you want to go through with us before we close everything out now everything is always about probabilities and so i don't claim to know what the future holds we will see

maybe this time is different i'm open to all these scenarios but but it's clear that we are in a bear market it's clear that we're undergoing a bottom formation uh you know maybe the february 5th was the bottom uh but i still think there's another uh like there the probabilities are higher that we'll still see one in the next couple of months. It might be a bit reduced due to passive flows. And, yeah, we'll see from there. But I'm also up to, I mean, if we start pushing against the short monococast basis and we move back above it, I become a bull again, like short and bull.

I mean, I'm a long-term bull all the time. But, you know, short-term, we have to be realistic. And, yeah, I think time is a factor in this bear market. We need to go through. So my message would be, you know, if you're a hauler, have patience for a couple of months, and that will be rewarded. Have patience. If you've got any cash flow, double, triple the DCAs. This is the opportunity now. Root, thank you so much, man. Where can people go to find out more about your work? Yeah, so you can go to Bitcoin Strategyplatform.com or subscribe to my newsletter, which is Bitcoinstrategy.substack.com.

and you can of course follow me on on Twitter and Noster as at the D-Rational Rood and you know if you follow me consider becoming a paid subscriber you will get access to all the live charts and I will actually keep you

I give you more info and I'll go through you together to kind of dissect this bear market and where to enter exactly around that bottom area awesome thank you man I will speak to you soon I'll probably see you in Vegas. Do you want to make a bet on the price by Vegas?

What? Higher or lower than today? Vegas. That's already next month. Actually, I think Vegas might be still higher than today. That means I've got to take the under. I can't be bearish. Because I think we're going to, you know, potentially we'll might be like around that

short-term holder cost basis level doing. Vegas. And so we could potentially like, you know, move back above it, but I think there's still a chance that we'll reject off it and then get that set the low in after. So, so. But the only, the only price information that's more accurate in the four-year cycle is that Bitcoin always tanks around the conference. Yeah, exactly. So maybe, you know, there's this potential to reach the shorter molecule spaces and then we reject right at the conference. Well, I can't take the under. I'm too bullish for that so we'll just have to wait and see but thank you man i will see you out in Vegas i'll catch soon thank you danny see you in Vegas