What Bitcoin Did - Why Bitcoin’s Bull Market Isn’t Over | Rational Root

Episode Date: November 6, 2025

The Rational Root is an on-chain analyst and the creator of the Bitcoin Strategy platform. In this episode, Root breaks down whether Bitcoin’s four-year cycle is truly over. He explains why the recent correction “broke the structure” of the bull market, why early Bitcoiners are taking profits at $100K, and how this institutional “IPO moment” could define Bitcoin’s next decade. We discuss what the data says about long-term holder sell pressure, diminishing returns, and the lengthening of business cycles — and why Bitcoin may now be entering a phase of slower, more stable growth led by institutions and nation-states. Root also shares why he believes Bitcoin is still massively undervalued compared to other assets, why the current distribution phase is healthy, and why patience will be rewarded for those thinking in years, not weeks. THANKS TO OUR SPONSORS: IREN RIVER ANCHORWATCH BLOCKWARE LEDN BITKEY FOLLOW: Danny Knowles: https://x.com/\_DannyKnowles or https://primal.net/danny Rational Root: https://x.com/theRationalRoot

The correction we've had actually broke a bit of the structure of the bull market. We have to look at the bigger picture. I think patience is needed and it will be rewarded again. And it will go to a million dollars, but it won't happen in the next two years or so. Institutional interest is here. If we want to get Bitcoin to like a World Reserve asset, we need to go through these faces, right? We need institutions to adopt it because they have the most value to store. We couldn't be recording at a more perfect time, I don't think.

We've got Bitcoin just over 100. thousand. We're living the meme, you know, crashing to 100K. Crashing to 100K. But it is interesting because like tech stocks have been ripping. S&Ps pretty close to all time highs. Gold's had an unbelievable year. And Bitcoin like if you generous has been chopping, um, you could say that it's been crashing, especially over the last few days. And I think the question that probably everyone has now is like, is this over? Did we all get too excited that the four year cycle was dead and is it actually alive? well and are we are we now crashing?

Indeed. We had our all-time high in the Q4 of the four-year cycle, right? And so we're now moving to an 80% bare market, you know, traditional four-year cycle. No, I'm kidding. I mean, it's, of course, very hard to tell. But if I would have to choose, I would say, no, the cycle is going to be lengthening still from the data. There's some conflicting data, though.

And so there are definitely some indicators that, you know, I'm really, tracking on a daily basis almost because, you know, I want to see where this is going. So the correction we've had actually broke a bit of the structure of the bull market. And so that is a bit like the, you know, bad news first, let's say. But there are also still some positive indicators like short tomorrow's supply still rising, which is actually an interesting one. And so that is something to watch. And so it's, yeah, it's.

there's a lot going on, right? Like, there's a lot of distribution happening for sure. Like, you know, the Haughtlers are taking some profits. And, but I mean, I prepared a set of charts. So first of all, thank you for having me on again. And, you know, reaching out and cool that we could meet up so quick to discuss, you know, what's going on. So I don't know, when you're ready, I can pull up some charts.

I mean, I definitely do want to get into the charts. People love the charts. I love the charts. but can we start? I just have a few questions that I want to get into first. Maybe some of this will be covered in those charts anyway.

But I want to know who's selling because I see a lot of sort of commentary on this that's saying this is long-term holders now selling. Is that the driving force behind this? Well, it is indeed, it's a big force. So, I mean, if you compare to previous cycles, which I do, and if you look at long-term holder, sell pressure in BTC terms, you can actually like compare to previous cycles.

It is actually really on track. It's very similar to actually the previous cycles in terms of like the amount of BTC cell pressure. So in dollar terms, of course, that's a lot more, right? Like in previous cycles, you are not able to sell like a billion dollars or so. But now you can. And so that's a, you know, a clear difference in the market. But indeed, so the hollow.

cohort is is really taking some profits and and this goes a bit hand in hand with like the diminishing returns theory so so we've had diminishing returns every cycle and actually i do have some charts on that so maybe maybe i'll use the charts yeah let's bring them up to explain some of these concepts we're back on the spiral chart the spiral chart right like we're as i said we're in q4 you know the four year cycle this is the moment right where we have the the cycle peak traditionally. And so actually, we did have a peak so far like in, you know, in the beginning of October.

So right at the beginning of Q4. But since then, yeah, we kind of started dropping. And so the question is, was that the cycle peak, right? Are we going to move into an 80% bear market? And if you only look at, for example, this type of charts or only at Bitcoin data, you could like kind of expect like, okay, like, you know, from this. psychological point of view where we have, you know, we tend to move like in this four year pattern and so we'll move back into a bear market like starting in 2026. But if we look at the structure

of the actual bull market, there are actually some clear differences. And so we've moved up more gradual. There was less inflow from retail this cycle. So there was this more gradual institutional institutional interests. Of course, there were the Bitcoin Treasury companies that absorb quite some of that supply. And so there are some different dynamics going on than previous cycles. Also, crypto, for example,

was never got any traction this cycle. Also, those suffered quite a bit of losses, which for me, I mean, that was always to be expected, right? But previous cycles, there was still some narrative around like crypto assets. And this cycle, it was actually leveraged BTC through Bitcoin treasury companies that cost a bit of that hype

instead of crypto in general. And so I also don't expect like a real comeback from crypto. I mean, there might be a handful of like crypto projects that still do reasonably well or have good marketing and might see like some pumps, but nothing compared to BTC. This cycle is much more about Bitcoin. And I suppose that there's also less

appeal to retail. Like if you think, like, you know, many, many people come for speculation. And so they were always interested in trading. And so crypto added like to that and this cycle, that was a bit absent. And so I think in general, there was just less in flow from retail. But we at these, at the market cap that we're currently at, we don't even really need retail that much, right? We actually want to get to institutional adoption. If we want to become like the world reserve asset, we actually need

institutional and nation-state interests, which is happening. So I'm actually very positive in that regard. All the things that were really what we need for Bitcoin to move to this world reserve assets are actually happening. We actually have nation-state interests. There's the strategic Bitcoin reserve. There is even game theory playing out on nation-state level with regards to mining. There is, you know, we have institutional interest measurably.

I mean, and so, and quite a bit. And so those are all really positive signs. But the institutions are actually, like, we could call that ETF moment, which is a bit an exception as well here in the chart. You can see we had an all-time high before the having that light blue dot. And so that was a bit of an exception to cycle, but it was the gateway for institutions to really come in through ETFs, you know, like institutions are not going to do self-custody from day one.

I mean, they don't even understand the asset. And so it's normal as new institutions enter that they're going to choose the easy option like ETFs, which they're used to. And so those are all like very positive signs for Bitcoin. So why is Price not reacting to all of that positivity, right? Like, why are we suffering so much at 100K? And for that, maybe we can go to the next chart.

So to do a bit of like a Bitcoin cycle analysis. So this is practically the same view as we had in the spiral chart. We just see the Bitcoin cycles laid out. The orange dot represents like the ultum high. So you have these bullish periods after the halvings. So each cycle, you know, we kind of moved up in order of magnitude. And so we have, for example, the class of 2011, the class of 2013, the class of 2017, the class of 2021.

And so if you think of the diminishing returns theory, a big contribution to that is actually sell, sell pressure from the Hotler cohort. So we're basically, like, we're only 16 years into Bitcoin, or almost 17, and we, you know, 90% of the supply is being mined. And that is, like, especially in the early cycles, that became quite concentrated in hands of the few OGs. But every cycle that we move up in order of magnitude, those hotline groups are sitting on more gains, right?

Like, for example, the class of 2011 is a 10,000 X. Imagine going from 1,000 to 10,000 X. That's just insane. Of course, they took extreme risk, and there's a few of them. And as we move up, you know, to the next cycles, you know, the gains become less. But even the class of 2021 has more or less a gain of, you know, 10X. You know, if they moved in more or less or in 2020, 2021, like at around that 10K level, We're currently at 100K.

So that's a 10-X gain. That's quite like a substantial gain. Not as much, of course, the class of 2017 or 2013, which is sitting on 100 eggs or 1,000 eggs. And so, you know, the point here is, is that the cell pressure of that Holler group is actually compounding over each cycle.

So, and therefore also, because 100K might not seem as much for the class of 2021, but for the class of 2013. that's a thousand X gain. That's a very good price. And especially with Bitcoin now reaching that, you know, $2 trillion market gap, there is actually real liquidity.

You could actually sell a billion dollars of Bitcoin. And so, and this week there was a lot of talk. I don't know, you must have seen it. Like Jordi Visser called it like the IPO moment for Bitcoin. I don't know if you... Yeah, I thought that piece was really interesting. So he, just for any of... who's not seen that piece, he's like a trad-fi person who's been looking at markets for a long time.

And he describes this dynamic from like when a company goes to IPO, all the people that took huge risk early on, that's their first chance to have real exit liquidity. And Bitcoin's obviously not a company, but with all the ETFs institutions, like this is the first time those whales have had actual liquidity to get out of their positions. And he frames that as a good thing, not a bad thing. That's a sign of success, not failure, because it's Bitcoin getting to the level where people can actually get in and out at huge size relatively easily. Yeah, so I thought that was actually a great take. Like, and I mean, it's not like, it's a good analogy, right? It's not, Bitcoin obviously doesn't have an IPO. And there was distribution average cycle. But, you know, in the early cycles,

for example, like from the 2011 peak to the 2013 peak, like that cycle, we had like the 42x, is actually shown here in the chart. Then the next cycle we did, like, from the previous ultim high to the new ultim high, we did like more or less a 15x, then at 3.5 acts. And now, like, so we're kind of converging, you know, like if you extrapolate, like, you know,

those diminishing returns, like the 1.8 X that we're currently at is, is not that strange. That's why I always was kind of conservative with my estimates. I always said, like, Bitcoin, like, is likely to reach, if we continue in the four-year cycle, Bitcoin is likely to reach like 140K is already a reasonable price if we, you know, if we continue that.

And so my max price was always like 200K, you know, depending if like retail hype would really come in. But even then, like, in my opinion, like the most bullish case was kind of 200K for the end of this year. Now, the more like conserved the case was 140, which I already thought was reasonable. And currently we have had 126. Now, I'm not saying this is the cycle peak. Actually, I believe there's a high chance of Bitcoin continuing further, even though we might have a bit of a consolidation here.

I still think it's possible for the cycle to continue. And that's because of the difference in cycle structure. But so the compounding effect of that Haughtler group makes the early haulers sell faster at lower prices. So for them 100K, if you're sitting on 10,000 X gain, that 100K price is a very attractive price to, you know, especially in a liquid market to sell some of your Bitcoin and to diversify or like whatever you want to do with those gains. And so that compounding effect of cell pressure that kind of converges into that

IPO moment of Bitcoin where, you know, now we're, we're only at a 1.8x of the previous ultum high. And so we're kind of getting to that volatility, the same level of volatility that we see in stock market. And so we also actually have now institutional interest, which are absorbing some of that Bitcoin. And so you could call that an IPO moment, like an initial public offering, right? So I was actually really, I thought it was a good take because it really, I mean, there's a lot of nuance to it because we've seen distribution in every phase. But as I said, we're converging now to that volatility of the stock market. And with like those extreme high gains from previous cycles,

there's just like quite a bit of cell pressure. The cell pressure is actually reasonably similar to previous cycles. It is just happening at like more early stages. So we haven't seen like that parabolic move up, which you would expect like for Bitcoin to do like in previous cycles. But still that Haller group is already taking a lot of profit. And so equal amounts to like previous parabolic faces. So I think there's just like satisfaction, like that 100K was such a psychological level also that we've been waiting for two cycles.

And so, yeah, I think people are, especially from the early cycles, are very happy already with that 100K price. That was kind of like, so the IPO, if you think of the IPO moment, that was Bitcoin's initialization phase. You know, Bitcoin succeeded. Now it can be adopted by institutions and become like slowly this. World Reserve Asset, volatility is dropping. And so it's also unlikely that we'll see the gains in Bitcoin that we did in previous cycles. I think we're going to move up more gradual because institutional demand is more gradual. Now, might there be a new hype phase at some point, probably?

But we're now building that new base because the point of IPO is literally like distribution, so meaning like a consolidation, which we don't really know. how long that's going to take. That could take up six months. It could take only a few weeks. More likely it will take slightly long. So I wouldn't be surprised if we still have some chop, you know, some sideways chop.

Look, like to me, like this moves to 100K is a little bit of a worrying drop because we kind of broke structure in the bull market. I will get to that later. So that is something we have to look for. But other indicators point that there's still a high chance of a continuation. And if it would be the top of the four-year cycle, like, let's assume that it is, then I actually, I don't think there's a basis for like an 80% drop bear market that we've seen like in previous cycles because we haven't had the overextension either.

We have never reached, like, highly overvalued levels. So there's also not really like the case to move to like highly undervalue levels. So if we get a consolidation, it will more likely be, you know, still, it could still be a reasonable drop, like, 50% or so, but I don't expect much more than that. What if you could lower your tax bill and stack Bitcoin at the same time? Well, by mining Bitcoin with Blockware, you can. New tax guidelines from the Big Beautiful Bill allow American miners to write off 100% of the cost of their mining hardware in a single tax year.

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and earn up to $100 in Bitcoin when you buy. That's river.com forward slash WBD. So I think one of the interesting things here is obviously if old coins coming back online, we've seen massive amounts of selling. But Bitcoin prices, like it's down, but it's, what is it down? So like 22% or something like that. It's not a crazy amount. And it's absorbed a huge amount of sell pressure.

So who's on the other side of that trade? Like who is buying and who is keeping Bitcoin? Well, I was going to say above 100K, but now below 100K. Yeah, we're really testing that. level. Yeah, so I mean, so the cell pressure is obviously like a big amount is indeed coming from that hot or coal, like all the classes that are shown here in the chart, which is like this compounding effect. Now, the buy side is there's a lot of institutions. Also, like, there's also people from the class of 21 that still want to accumulate Bitcoin, right? They're long-term holders,

but they're buying from like the earlier classes at these prices. You know, this distribution phase might take some time, but Bitcoin will obviously change into stronger hands again, or people at least that are sitting on less gains. And I don't know, the data is not out yet for institutions for, you know, for this quarter. So it's hard to say, but there's definitely some institutional interest as well. And I think if we look at just all the assets in the world, like gold is at ultimate highs, stock market is at ultim highs. real estate is at high prices.

What are you going to invest in? Actually, also this price like Bitcoin under 100K or around that 100K level becomes an actually quite undervalued asset, in my opinion, because if we look at historic price moves of Bitcoin, like we haven't had that parabolic run up yet. And so it means that the phase for which we're in, Bitcoin is actually quite under. And it's still, not everyone, you know, understand, probably like most institutions still have no clue what's the actual value of Bitcoin. And so, I mean, for someone that does, Bitcoin is highly undervalued, right?

But I think still, you know, comparing Bitcoin to other assets and we can see because Bitcoin was actually is quite heavily correlated to stocks. And currently we're even performing worse than the stock market, right? So to me, that means also like Bitcoin's price becomes very attractive if you want to hold a piece of it. So I wouldn't be surprised if we suddenly got like a big reversal and momentum shifts the other way again. Now everyone like on Twitter is super negative and like, okay, the bear market is going to come or, you know, Bitcoin is even performing worse than stocks and why hold than the volatile asset that is Bitcoin. But yeah, if you think of that IPO moment where there's just like naturally a lot of distribution and we've had basically 90% of the supply mine, most of that is in hands of OGs and long-term holders

which are now distributing a bit at this liquid market. You know, we have to look at the bigger picture. I think patience is needed and it will be rewarded again. I think Bitcoin has still a long potential and it will go to a million dollars, but it won't happen in the next two years or so. And distribution is a good thing. This makes the market more robust in the future if it's not just all concentrated in a few sort of OGs. If you had to try and put like a percentage on it, what would you say in terms of this being just a normal bull market dip as opposed to us entering a bear market?

Yeah. So it's a bit of a difficult one because we literally like today we actually broke the bull market structure like falling below 107, 108K. we actually, and we're probably close below it. So the daily close is not in yet, but it looks like if we're currently at 100K that we're going to close below it, which is a, it's a bit worrisome. Like that I would have loved to stay within that bull market trend,

which we've been in for the past three years. But otherwise, I think, you know, since we haven't had like these highly overvalued levels, I still think there's and looking actually at macro at the macro data there's actually a very reasonable chance to continue I would give a higher probability

to continuing the bull market than to now move into a bare market and I know we're currently like decoupling a little bit from the stock markets or or also from like global liquidity for example like global liquidity is up, but Bitcoin is not. But I think this is like a temporary Bitcoin thing. Like it's a bit of a unique Bitcoin event and eventually it will turn around again. I think everyone is just kind of negative and we're at the end of the four-year cycle.

So people expect it to be the end. And so there's some extra cell pressure and, you know, everyone is just kind of negative. Like you have those moments in Bitcoin, which it really feels like one of those moments where I think actually we're nearer bottom. And I'll I'll show in a little bit and some other charts why I think that is. Now, that structure could also break, so we'll still have to watch how this unfolds further. But, yeah, I would definitely give a higher probability to continuing the bull market. I mean, it's always risky doing stuff like this when the show is going to go out on Thursday morning. So we'll see how right we were.

But what would you like to see Bitcoin do? What would give you confidence that this is just a dip? Does it need to get back above like 115K? Do you have any of those sort of targets in mind? I mean, ideally, you know, the structure that is breaking, like if we could move back into the channel, like, so as I did a regression, I mean, I can move to that chart. Yeah, so this is a bull market growth channel.

So what I did here is basically this is the entire bull market. It's since the bare market bottom and, you know, at the end of 2022, we've been in this three-year uptrend, of course, with a lot of volatility. But if you do a regression on this, that is actually that dotted line, the black line in the middle. That's the regression. And here, actually, I took out a bit of the peaks of the data because there was hype in that having period and there was hype in the election period. And so I did not want those high periods to be part of the regression because that's not

like the natural growth that is like hype based growth, which is slightly different. So I took out like some of those, some of that price data. And I just did like a linear regression on this. And we, we get this channel. And so for three years, we've respected the channel. And we're mainly in that bottom part of the channel. except for periods of hype, we move to that upper part of the channel. And then we always correct it again to the natural growth of the bull market.

Now, literally today, for two weeks, we were kind of like testing the bottom of that channel again, just like we did here in 2023. But literally today, we broke the downside. So that is breaking the three-year structure of the Bitcoin bull market, which is a bit worrisome. If you wouldn't know, if we would just look at Bidcoin, Bitcoin and we would think like, oh, the four-year cycle will continue. You would think like, okay, this is maybe the end of the bull market, right?

But there is some macro data which we should take into account and we'll get into that in a bit. But so, yeah, this is definitely a bit of a worrying signal because what does that mean? Like if we break it three-year structure, it means momentum is going down, right? Like we're not respecting that upward move again, and momentum is slowing. and so we could start to turn around and there's less potential for like a higher rallies again to the upside. Now, what I'm hoping is that it's just a fake out, obviously.

Ideally, we just have a fake out because of extreme fear. Like there's extreme fear currently also on Bitcoin Twitter. Like everyone is super negative and so we dropped it at 100K price. So ideally, I hope to see that it's a fake out. But if it's not, that's a bit worrisome. I mean, ideally I would like to stay in the channel and then so then also like those higher targets for this cycle are still like much more in play than if we break. So that is a bit of the negative side.

Now the positive side, like maybe we can get into still some of the cyclical behavior of Bitcoin. So in this chart, I just show the Bitcoin RSI. So because what I want to do here is compare Bitcoin to macro because we always think of the four-year cycle. But the four-year cycle has always been correlated to the business cycle, the macro business cycle. And so we've been always very focused on chain, on the cyclical behavior of Bitcoin, but it's very likely that it was always heavily influenced by the business cycle in general as well. And so, of course, for traditional assets, like if we want to compare to the stock market, we cannot use on-chain data, right?

So we have to use traditional data like the relative strength index, Arizona. Here I took like a 12-month Arsai, so the yearly has Arsai of Bitcoin. And so we can see this cyclical behavior, right? We move into that 90s, like this really like mania territory, which gold is in, by the way, now. And Bitcoin is clearly not. No, like we're just above 60. We're kind of hanging out here in those 60-70 range, which is,

actually with the halving, we reached the most momentum for Bitcoin. That was also when there was most retail hype because like, oh, the institutions are coming. That was like a big moment. And since then we have kind of trending down. And so this cyclical behavior, like, of course, those, the halvings in the beginning probably had like an impact in the gains. Also, there was less cell pressure from that long because there was no,

like not much compounding yet, like of, you know, it was like kind of the first cycle, so you don't have like that compounded cell pressure. So together pair with like the having, obviously, it probably contributed a lot to have like this blow off top moments in Bitcoin historically. But as we moved on, we got more like distributed tops because there was more cell pressure to market became more liquid. And, you know, we have that compounded cell pressure from that Hotler cohort. And so, but if we now at the Airsai, the one,

year out of the S&P 500, we see actually very similar behavior. So we've actually always been kind of correlated to the behavior of the S&P, and the SMP is actually correlated to the business cycle. Now, this allows us actually to look further. So here I added the ISM, which is the Institute of Supply Management. They have like the purchase manager index. It's actually a survey that they do on a monthly basis. This is like the go-to metric for macro,

in terms of like, where's the business cycle going? And, you know, Bitcoin obviously came forward out of the 2008 financial crisis. And, you know, since then, we've kind of had this four-year cycle period in that PMI metric. But currently, we're actually not respecting that four-year period. And so we've moved up a lot slower in terms of like the business cycle. And so is Bitcoin, you know, and so is the stock market. And so macro analyst, and here I'm actually referring to Raul Powell, which I'm not a fan of him because he did a lot of shit coining in the beginning, no, like a bit unethical behavior he showed. But he has actually quite a good reasoning, which I think like with regards to Bitcoin being part of the business cycle.

I agree. I've always agreed on this. So the havings were always a contribution. There's many factors. but the business cycle and global liquidity in general, which Bitcoin has like a rough correlation to, which is actually not respecting currently because global liquidity is moving up,

but the Bitcoin is actually moving down. So we're having this bit of like a moment within Bitcoin itself. But the ISM, like so the business cycle is actually not reached high levels yet. We're not even above 50. So the macro analyst in general, they still expect this to start moving up to those. higher levels. And so that would mean actually also more favorable conditions for Bitcoin, which could mean like a continuation of the bull market. So all this to get to like, so Bitcoin

came forward out of the 2008 financial crisis. We, we kind of naturally went into that four-year cycle, which was the business cycle as well. But if we look further, for example, if we look at the dot-com crash to the 2008 market, we had actually an eight-year cycle. And so it looks now also the cycle structure is chaining. So we just had like four, four-year cycles in the business cycle, but now with the business cycle, we're also lengthening. At least that's what it, what it starts to look like. And so it's very likely that Bitcoin might, you know, move with this. And so therefore, I think there's a big increase in probability that Bitcoin will still continue its bull market further than the road. Even though we have a correction now, you know, this healthy distribution

or IPO phase that we're in, call it an IPO phase. I still think there's like more continuation of that bull market. And we probably continue a bit of like that gradual channel. Obviously we now broke that three-year structure, which I just showed. So maybe we'll move into like an even slower structure, you know, a new channel. But but looking at the macro, like unless we got like a recession like in the next weeks or months, you know, it looks more likely that the cycle will extend. And so I think the impact of macro is actually more important, especially since institutions came in.

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And if you're looking for the ultimate VIP experience with exclusive networking plus premium food and drink, then grab the whale pass, and the whale night party even include surfing, so you know I'm going to be there. Tickets are on sale now. Use code WBD to get 10% off at checkout on all pass types. The website is mina.b.tc and use code WBD for 10% off. So just on that, you said that you think the business cycle may be lengthening. Do you have any idea of why that could be happening? Yeah, so there are some forward-looking indicators, which as well as global liquidity, that it seemed to indicate that the business, but I'm not, no macro expert, you know,

I'm just looking at what they're doing here. So it's hard to create a forward-looking indicator, in my opinion. So I also am still skeptical about this. But in general, the IZM moves, you know, it has bottomed here in 2020, 2020, actually. And it has been moving up since. And so it's likely that it again reaches like those higher levels, like the 60s. starts moving down because it always has like this cyclical behavior the business cycle now if we

move to recession from here it's possible you know suddenly we could have like a drop even like to the 40s or so in that metric but as far as i can look like the indicators like you know people have been waiting for a recession for a long time like the inversion of the yield curve and and all kinds of metrics but it it just hasn't come like now now it might suddenly come now but To be fair, I actually think we might even have more of a melt-up than melt-down. So in my opinion, looking now also that there's going to be a continuation of rate cuts and a restart of QE, it actually, you know, the conditions are actually more favorable for the business cycle to pick up instead of a slowdown.

Yeah, I did see just before we started this call, I saw a tweet that Luke Groman put out saying that Bitcoin is sort of the last functioning smoke alarm for liquidity. And I know you say you're not macro expert. So maybe this is a conversation to have with someone else, but it is interesting to think of maybe Bitcoin is signaling something to the market here. And I don't know where that liquidity will come from, whether it's through QE or something similar, but perhaps liquidity is drying up in the system. It could be. It could be.

You know, I'm not sure if Bitcoin is a a big enough assets to really be that leading indicator. But of course, we have also gold at Autumn Highs, which is also a telling story. I mean, there's a loss of trust in the US dollar. And so there's definitely a lot going on in the macro world. But in my opinion, I mean, there have been calls for a recession for over a year now. And it, you know, to me, it seems like it can go on a lot longer still. especially with the conditions that I come in with regards to QE that I mentioned.

So in my opinion, it's more likely to continue to moving up. But indeed, maybe Bitcoin is that leading signal. But I actually think that's giving too much credit to Bitcoin yet for the stage that we're in. Okay, fair enough. All right, let's go on to the next chart. Yeah, so as I was saying, Bitcoin is very correlated to risk assets. So the S&P, Nashdag. So here is actually a chart where I just look at the performance.

So percentage gains since I took not, I mean, a lot of times she will just do year-to-date performance, but I took actually the moment in time late last year where all three assets had like an autumn high. So that seemed like a better starting point than just a random like the first of the year. And since then, and I've been tracking this chart for a long time, we bought it, bottomed at an, like Bitcoin was more volatile, but actually had very similar performance. Sometimes we, you know, we overextend a little bit,

and then we revert, we had a reversion to the mean, or in this case, like the SMP and NASDAQ. And currently we're actually undervalued. So either, you know, Nasdaq and the S&P will come down or Bitcoin will make a bottom soon and move back up. This is funny because like this is obviously, for the vast majority of the year, it's been incredibly correlated,

seems to have broken a little in October. I think when everyone talks about Bitcoin decoupling from the NASDAQ, they expect it to go the other way, but we're dropping as they're still going up. Exactly. Yeah. And now we have moved down like earlier in other parts of the site. Like if we look here, also there were autumn highs,

for example, in a hashtag S&P, and Bitcoin already started dropping. So in that sense, yeah, Bitcoin is indeed, like, because it's such a liquid asset, it might be a leading signal. But, yeah, correlations is also different than, like, performance, right? Here we're looking at the performance, and we actually have very similar performance. You can also see that it's correlated, but Bitcoin has been, like, slightly more volatile. Sometimes it will, like, move down, move up. And so, like, even if, like, some people are saying, like, yeah, Bitcoin has,

a less correlation now to the Nasdaq or whatever. But if you look at this chart, you can actually see why. I mean, we've just been like kind of hovering around. And that is also, to me, shows again a bit of that distribution, right? We have suddenly like some distribution. And so Bitcoin will just kind of like be like more volatile move around. But in terms of gains, we have actually tracked the S&P and NASDAQ, you know, almost identical. And so currently we're actually, like, you know, looking at this chart, you could say, like, okay, Bitcoin is really undervalued.

And so it also becomes actually attractive to invest in again. So I guess the question really that I would have on this is that it's always, like I can see that it's been more volatile, but it's always been following the same trend until October. Do you think that could be a sign of something else? Like, is this Bitcoin decoupling from these markets? is. I actually, I don't think so. I think Bitcoin is indeed having just like a temporarily, like you could call it a temporarily decoupling,

which we've had like several times. You know, Bitcoin would move up here, for example, and kind of overextend and then move back down. Now we're like underperforming. I think these will again, you know, move more in tandem in the future. Like either the Nasdaqdeg and SNP will come down and Bitcoin is a bit of a leading signal for like something that's coming up or you know, Bitcoin just bottoms

because there's a lot of fear currently. Like there's so much fun. Oh, the sense of it. It feels like we might bottom as soon actually and then, you know, we're probably ready to move back up again towards the performance that the S&P and Nashdak has. Is gold correlates these shots at all?

No, not at all. No, so gold is really doing its own thing. And no, it's, well, gold of, obviously had very good performance, especially if we would add it in the chart, it would be up a lot because gold has been performing very well. But yeah, so Bitcoin really is a risk asset currently. Like it's seen as a risk asset is not, you know,

we're not near the stage at all to be seen as a hatch against uncertainty like gold is. And in my opinion, that is really something for like the next cycle or so, if it ever will be because I always think Bitcoin will be different, will behave different than gold does. Gold is like, you know, about fear in the world and about destruction and like, you know, uncertainty. You want to invest in gold if you're really uncertain times where Bitcoin, I see it like as a new invention, you know, it's like a tech stock.

It adds value to the world. And so it's, and actually I see it as a very positive thing that Bitcoin currently is trading as a risk on asset. It's just the stage that ran where in the early stages still of institutions. adoption to Bitcoin, and Bitcoin is trading, you know, as an asset like similar to stocks, which to me makes a total sense, you know. So I think that's a phase that we have to go through. And at some point, we will start to decouple, but I think it's still way too early for that.

So you don't see the correlation is necessarily a bad thing. No, not at all. I think it's actually, it shows that institutional interest is here. And so I think that is needed. If we want to get Bitcoin to like a World Reserve asset, we need to go through these phases, right? We need institutions to adopt it because they have the most value to store, actually.

And with Bitcoin being a store value, that makes total sense. All right. Let's go on to the next one. Yeah. So in terms of like, you know, so we broke that three-year structure, which is a worrying signal. But if we look at terms of like over, overvaluation, undervaluation.

And so there's a bit of a change in structure. Like if you look at previous bull markets, we had a lot more hype. And you see like in terms of standard deviations above that, short and older cost basis, you know, we had like extensions up to four, for example, in the previous cycle and also with, you know, heavier corrections, like this, like an 80% bear market.

Now, currently we've like only had like mild overvaluations, mild undervaluations. and especially the last peak is relatively low, you know, like if we look at the shorter molar cost basis. And so my reasoning here is always that like the more overvalued you get, the more fears the correction will be. And you can actually see that, like we move to the top of the channel, we move back to the bottom of the channel,

but that took us to like a 1.3 standard deviations from, from the short Moldercost basis and move to a minus 6 correction, which a minus 0.6 correction. Now, currently, you know, we only got to like a 0.72 on that last run-up. And so the correction, like that looks more similar to like the one in 2023. So actually, I think we're, you know, looking at this, you could like say that we're near a bottom. I don't know what exactly the bottom will be, but it looks like we're not far off.

I don't think we're going to suddenly move into a bear market here, considering the overvaluation, the mild overvaluation that we had. So it's more likely to just get a correction similar to the one we had in 23 than to move suddenly all the way have a correction like similar to, for example, a bear market in 2021, which was like two standard deviations below the short of mold of cost basis. This is something that Checkmate said to me a few times. He says that the bull market authors, the bear that follows.

And like if we just put our bearish hat on for a second, let's say we were all wrong. The four year cycle is alive and well. We've had the top. It was 126K. How low do you think a bear market would go now? Do you have a kind of idea of where the floor might be? Yeah, it's still difficult to say. So the realized price is currently at,

at like 55K on the top of my head. So it's already reasonably high. Usually we drop slightly below realized price. But before we get there, it might, it might even be in the 60-70 range. If we look at supply distribution, there's a bit of a gap in that 70K area, like 73K or so, I believe.

So like a correction to 73K would still be in the cards if we would get like a bear market. But actually, I don't think we'll go much lower than that, given the mild overvaluations that we've had. And we've also had already stronger corrections. There's been a lot of distribution. Plus, also, like, institutional buying is more gradual.

There's more passive demand for Bitcoin. So even though there's, like, some more sell pressure. But I think also, OGs, like the Holler group, is a bit of a special type of investors. right? Like, they believe in Bitcoin. They just want to take some profits when prices are reasonable. But once Bitcoin start dropping, like below 100K, I don't think many people will like love to sell their Bitcoin. Like they're going to do minimal selling below 100K unless they really believe like, oh, the bear market is in. So we might have a bit of that now. Some people that think like,

oh, the four year cycle will play out. The bear market will come. I should, you know, take some profit while still can near that 100K level. But I think in general, like most, you know, Hotlers, they're below 100K, they're not going to be that interested into selling. That's why also I think like, where will all that sell pressure come to go to 70K? I, you know, I think there's still, you know, room for a continuation of this bull market. Yeah, me too. I mean, what I is, do you watch the derivative markets at all? Because it would be interesting to see if a load of shorts end up opening like down here

at 100K, that would seem like a good potential bottom of what you. in those shorts get blown out. I checked the futures market today, like, for, you know, if there were like liquidations, but it was very mild, like not near levels, for example, that we saw. Recently, like, when we had to drop from the cycle peak, obviously that was like a bit of a mental, like historical occasion. Like we had the most liquidations ever, like in the crypto market in general, like moving down from the so-called cycle peak then that we have now.

But the liquidations were very minimal now around that 100K level. Actually, I expected more of that. So I think there was already such a big flush recently, like the biggest flush, actually, and the futures market. So I think there's less leverage now in play for that to have an effect. That was already flushed a couple of weeks ago. Okay. What have we got next?

Yeah. So an interesting indicator is actually short-term holder supply. So in general, that means like an increase in hype in the market. And you can see like in previous markets, it got up pretty high. Like this market, we have not. Like only for DTF pump and election pump, we had an increase in that short-term molar supply metric. And but for now, like even though Bitcoin is dropping, you know, short-term haul of supply

seems keeps rising, which is actually. People are in the debt. So also that is an indication like, okay, there's still potential for a continuation of, of, of that bull market. Now, if this starts to roll over for some reason, that would be, you know, a last positive sign. But for now, you know, there's a bit of a bullish divergence

because price is going down, but shorter moral supply is moving up. So that's just people buying the dip. Seeing some cheap sats and buying them. Yeah, but they have, yeah, so there's still enough demand in the market, you know, like for each seller, of course, there's a buyer as well.

And so short moral supply shows in general a bit of like new people moving into the space, right? So it's a supply first get, actually supply gets classified as short-term holder in general if it's like a new entity. But if it's an existing entity which already has long-term order supply, it will immediately be classified as long-to-moral supply. So if, you know, if haulers are buying here, it will not show up as much in short-to-mold supply metric.

It's more like new entities coming into the space. and so like it's a positive sign that that this is rising. That's interesting. One of the things that Checkmate has been bringing up recently is that under 105K, over 50% of all the dollars that have ever entered Bitcoin are underwater. And I think the reason that he uses that and he's sort of cautious around that number is because basically like sentiment, what does that do if 50% of all dollars that have ever come into Bitcoin are now underwater?

Is that something that you pay any attention to? Yeah, I think if you look in, if you measure in BTC terms, I think like 30% of the supply or like nearly like it's like 27% of the supply, I think is currently underwater, which is a fairly big amount indeed. And so this can, you know, this is why sentiment is so bad, you know. So and when sentiment is bad, people start selling out of fear and, and, but that, that indeed causes like to reach a bottom, right? like people will kind of capitulate at those levels.

Now, indeed, like if such a high percentage is underwater, it's not a good thing in general for a continuation. It means like that actually some distribution probably needs to happen. And, you know, people, some of that, some of those losses needs to be taken. And so we got like a more healthy base to build up from again. It's going to be interesting to watch the next few weeks play out. Okay, have we got any more charts before we close out? Yeah, so the last one that I had was actually,

so I think this chart illustrates very well the difference in structure that we had, this bull market. This is actually short a molar profit, so supply and profit. And that reaches like near zero levels like in bare markets. So there's a lot of like of these profit reset signals during a bear market. But this bull market, unlike previous cycles, we actually have seen three corrections where we had a complete reset of short-volder profit, which is kind of unseen. Like in a previous cycle, that never happened.

And so this actually became like a signal to watch for potentially forming a bottom. So currently we're right about here. Actually, that doesn't include today yet. So today's data is not included. So I'm looking forward tomorrow to see how this evolves. But hopefully, actually, we got soon to the bottom and we got this reset signal so we can actually start moving up again. So this is a chart I watch. I follow closely because this bull market, it has shown near perfect, like, a,

resets. And so that's very interesting in the terms of the structure of the bull market, because when you get a complete reset of short molar profit, you kind of start with a clean slate again. And so the bull market can continue to move up. And so that's why, like, of course, you see a lot of these signals, like there's, if we got like an 80% bear market, a lot of these signals will start firing, like if you look at previous bear markets. But in bull markets, there was never such a reset signal. And this time we've had it three times. And so to me, that shows there's been more consolidation. We've had this more gradual move up. Also, the downtrans here were pretty heavy. You know, after the ETFs, we had like a six-month downtrant or after the election.

And so, you know, people are dissatisfied with the upside of Bitcoin. But actually, you know, we've had a lot, much more consolidation happening than in previous bull markets, which to me is, again, to believe that we can continue for much longer. And I guess that just signs that the market is maturing. Also, also the volatility is down, more liquid market, you know, more participants distributing. And as I said, like this IPO moment, it kind of shows like there's a lot of distribution happening.

And, you know, so to me, this is a good chart to watch. I would love to see a reset soon in this metric because that will be a bit of a defining moment. If we get a reset and we have, we get a pull back or we kind of start to recover, we get a rally after. That would be, in my opinion, a very bullish sign. I mean, I wouldn't be too mad at a drop to the 70s again,

another chance to stack some cheap sats. But if anyone is sort of panicking, What's your kind of message from all this? Is it just remain cautious but bullish? Yeah, so indeed. Like if we look at Bitcoin, all the developments that have been happening in Bitcoin, it's really only price that's been maybe a bit disappointing.

Like all the other developments are actually playing out in front of our eyes. Like we have institutional adoptions. We have like the biggest ETF approval, like, in terms of gains, like the institutions are here. BlackRock is behind Bitcoin. We have a strategic Bitcoin reserve. All these things are happening that actually one could wish to happen

for Bitcoin to become like a rural reserve currency. And so price is still disappointing, but in my opinion, that is because of 90% of the supply that's been mined in the hands of the OGs, which is compounding cell pressure that is kind of converging now. and Bitcoin is now slowly, like more gradually adopted by institutions. And we're getting like, there's a lot of change happening for Bitcoin in terms of maturity as an asset class. And like we're in this distribution phase now.

And so patience is needed, but it's a good time to accumulate with this long-term vision. I still think the long-term vision of Bitcoin is very promising. I truly believe it will go to a million dollars. but the time frame might be slightly off. We might not be in this four-year cyclical pattern and that it's just within 48 years where a million, the cycles can chain, it might start to move up more gradually.

So can we just go back to your spiral chart very quickly? I have a question on that. Because I'm curious whether you think end of 25, early 26 might be the first time that this spiral chart has ever been broken. I imagine, I think we, started last year just over 100K. Do you think these lines could overlap for the first time at some point soon?

I don't think so because if we look, we're now in Q4. So historically that means that the bear market starts. So we have like this 80% drop in the previous cycles. And so unless, you know, Bitcoin starts dropping, you know, even more, which we just kind of explain that it's unlikely to happen because we have not reached those overvaluation levels. So and if we get an extension of the cycle, then we actually start moving up.

So it's even more unlikely to cross. So I think in the next year or so, it's very unlikely to cross, but it might become visible, like if we get another ultim high in the next year or so, that would clearly point to like the four-year cycle breaking or that we're moving, trending away from the four-year cycle. But I don't think the lines will cross anytime soon.

All right, Root, this has been amazing. Do you think this will be the last time I ever record a show under 100K? We dipped, I think, 99 during this call. It would be cool if we hit the exact bottom. Yeah, so we're in the process of bottoming, in my opinion, like looking at shorter motor profit, but we're not there yet. So, you know, we might still hoover around a bit at these level tests. I'm not sure.

Like, we could test it a few more times. But I do think in the next couple of weeks, we might form a bottom. and then indeed. So I hope the next time when you interview me that we're well above 100K again. Me too. I'm hoping this is the last time I'll ever do a show when it's

not over 100K, but we will see. Bitcoin will do what Bitcoin does. Thank you, Root. I really appreciate it. As always, this has been a lot of fun. Tell everyone where they can go and get your newsletter and find out more about you. Yeah, so you can find me on Twitter and Noser at the rational route.

If you go to my profile, you can also click on the link to go to the Bitcoin Strategy Platform or I have Bitcoinstrategy.substack.com where I write a weakly loose letter and provide access to live access to these charts and indicators. Awesome. Thank you, Rue. I appreciate you, man. I will speak to you soon when we're well above all-time highs, hopefully. Thanks so much, Danny. Thanks.