Ramblings on crypto: Why the true peak is in already
Hello friends.
Remember when we said that Bitcoin "cycles" are dead?
Our argument was logical and based on the fact that ideas that are given too much importance by retail traders tend to fail. 100k BTC 2021 is a good example of a narrative of this nature. It didn't happen. Why?
Because that would have been too easy.
Since then, they added another band onto the Bitcoin Rainbow Chart, and now some traders are waking up and realizing that the Rainbow chart and any other Bitcoin cycle idea is useless.
But they can be coerced into changing their mind by a pullback to the upside. They want to be deluded. They enjoy being lied to and having their bias affirmed. All it takes to convince people that the next cycle is happening is a little Echo Bubble back to ~$35,000. They will buy the top and thank the market for the opportunity.
And then they will have to be punished again.
It is reasonable to assume that the probability that Bitcoin has reached a peak that will not be broken in dollar terms for over a decade is very high. It is also reasonable to assume that the real value of bitcoin (inflation-adjusted) may never in history make a new high. The assumption that almost all Bitcoin market participants make is that Bitcoin must always make new highs, but this assumption is too popular and based on nothing but delusions.
Here is an under-considered perspective: Crypto's *final* peak makes sense to occur at some fraction of the value of Gold's investment use market cap. Let me explain this idea further. Crypto is seen as similar to gold in that they are both finite, expensive to create, and considered "good stores of value" by many traders. So some traders think crypto should reach the full market cap of gold or even higher before the bubble pops. That's not logical at all.
Only about 1 third of gold is used for investments or storing value by banks. The rest of the gold is used for real-world use cases that crypto does not and will never have. So take 1 third of the market cap of gold. Currently around 4 trillion dollars. And then realize something astonishing. The total market cap of crypto at its peak during the massive bubble ALREADY reached 3 trillion dollars! That means crypto collectively peaked at ~75% of gold's investment market cap. (gold fell a little since the peak, and no one knows the actual perfect market cap of gold, so this is not exact). But the point is not precision, it's the general idea of this fact.
Phrase it this way. That was the moon. We landed on the moon. "To the moon". No. Listen carefully.
We've already reached the moon.
When Shiba Inu flipped Dogecoin in market cap briefly, it landed on the moon. What happened next? You tell me.
Every space trip is two ways. One trip to the moon, and one trip back to earth. Living on the moon is not yet possible. So stop trying.
If you had to pick any price for the joke that is Bitcoin to reach its final peak at, what would you pick? I would pick $69,000.00. The Binance market manipulators clearly have a good sense of humor, since they figured the same thing. Crypto market makers f--ing retail 69 style and making that message obvious in the charts, just as God intended.
Our wave count is just one idea of what might happen, but overall the idea that crypto is finished from here on is based on logic. How many people have ever bought crypto, out of all the people who might buy it? That's a useful metric for determining how much further a Ponzi can scale before it goes bust since we all know infinite growth is objectively impossible within a finite world. The amount of fools, although constantly growing, is finite. Near the peak, nearly 9 out of 10 Americans had at least heard about crypto, and 16% of them had "invested" in it. Depending on how stupid you think the majority of people actually are (only half can be below the average IQ!), there may be a little bit more growth potential, but ultimately the lemon doesn't have much juice left, and its difficult to argue for another huge wave upwards -- how much impact would introducing the other 1 in 10 Americans who don't know about crypto really have?
Regardless of all this, the short-term echo bubble thesis is also logical. It makes sense to have a bounce that will serve one main purpose: For those that sold, make them feel pressured to buy again, so the market manipulators can harvest more liquidity to short crypto heavily. After that, they let it rip to the downside again. We think Bitcoin is unlikely to go below $8,000, and would say it can bottom even in the high 11-thousands based on the volume profile which shows a strong support cliff around that area.
During the huge leg down, we expect much of the similar drama that occurred the first time. Plenty of bankruptcy, massive amounts of fraud and scamming, and stablecoins going under left and right. If USDT finally gives way this time for good, or any number of other black swans occur, that will tend to mark the bottom, just like the FTX bankruptcy showed us the bottom for crypto by taking away the ability of many crypto traders to hold, and forcing them to basically sell the bottom for zero.
Our trading idea is to long GBTC, until the echo bubble likely ends much later this year, and then, after the peak short the heck out of Bitcoin miners (many more will likely go bankrupt), Coinbase stock (Coinbase is likely to go bankrupt in my opinion), and various scam coins with high token unlock rates.
Remember when we said that Bitcoin "cycles" are dead?
Our argument was logical and based on the fact that ideas that are given too much importance by retail traders tend to fail. 100k BTC 2021 is a good example of a narrative of this nature. It didn't happen. Why?
Because that would have been too easy.
Since then, they added another band onto the Bitcoin Rainbow Chart, and now some traders are waking up and realizing that the Rainbow chart and any other Bitcoin cycle idea is useless.
But they can be coerced into changing their mind by a pullback to the upside. They want to be deluded. They enjoy being lied to and having their bias affirmed. All it takes to convince people that the next cycle is happening is a little Echo Bubble back to ~$35,000. They will buy the top and thank the market for the opportunity.
And then they will have to be punished again.
It is reasonable to assume that the probability that Bitcoin has reached a peak that will not be broken in dollar terms for over a decade is very high. It is also reasonable to assume that the real value of bitcoin (inflation-adjusted) may never in history make a new high. The assumption that almost all Bitcoin market participants make is that Bitcoin must always make new highs, but this assumption is too popular and based on nothing but delusions.
Here is an under-considered perspective: Crypto's *final* peak makes sense to occur at some fraction of the value of Gold's investment use market cap. Let me explain this idea further. Crypto is seen as similar to gold in that they are both finite, expensive to create, and considered "good stores of value" by many traders. So some traders think crypto should reach the full market cap of gold or even higher before the bubble pops. That's not logical at all.
Only about 1 third of gold is used for investments or storing value by banks. The rest of the gold is used for real-world use cases that crypto does not and will never have. So take 1 third of the market cap of gold. Currently around 4 trillion dollars. And then realize something astonishing. The total market cap of crypto at its peak during the massive bubble ALREADY reached 3 trillion dollars! That means crypto collectively peaked at ~75% of gold's investment market cap. (gold fell a little since the peak, and no one knows the actual perfect market cap of gold, so this is not exact). But the point is not precision, it's the general idea of this fact.
Phrase it this way. That was the moon. We landed on the moon. "To the moon". No. Listen carefully.
We've already reached the moon.
When Shiba Inu flipped Dogecoin in market cap briefly, it landed on the moon. What happened next? You tell me.
Every space trip is two ways. One trip to the moon, and one trip back to earth. Living on the moon is not yet possible. So stop trying.
If you had to pick any price for the joke that is Bitcoin to reach its final peak at, what would you pick? I would pick $69,000.00. The Binance market manipulators clearly have a good sense of humor, since they figured the same thing. Crypto market makers f--ing retail 69 style and making that message obvious in the charts, just as God intended.
Our wave count is just one idea of what might happen, but overall the idea that crypto is finished from here on is based on logic. How many people have ever bought crypto, out of all the people who might buy it? That's a useful metric for determining how much further a Ponzi can scale before it goes bust since we all know infinite growth is objectively impossible within a finite world. The amount of fools, although constantly growing, is finite. Near the peak, nearly 9 out of 10 Americans had at least heard about crypto, and 16% of them had "invested" in it. Depending on how stupid you think the majority of people actually are (only half can be below the average IQ!), there may be a little bit more growth potential, but ultimately the lemon doesn't have much juice left, and its difficult to argue for another huge wave upwards -- how much impact would introducing the other 1 in 10 Americans who don't know about crypto really have?
Regardless of all this, the short-term echo bubble thesis is also logical. It makes sense to have a bounce that will serve one main purpose: For those that sold, make them feel pressured to buy again, so the market manipulators can harvest more liquidity to short crypto heavily. After that, they let it rip to the downside again. We think Bitcoin is unlikely to go below $8,000, and would say it can bottom even in the high 11-thousands based on the volume profile which shows a strong support cliff around that area.
During the huge leg down, we expect much of the similar drama that occurred the first time. Plenty of bankruptcy, massive amounts of fraud and scamming, and stablecoins going under left and right. If USDT finally gives way this time for good, or any number of other black swans occur, that will tend to mark the bottom, just like the FTX bankruptcy showed us the bottom for crypto by taking away the ability of many crypto traders to hold, and forcing them to basically sell the bottom for zero.
Our trading idea is to long GBTC, until the echo bubble likely ends much later this year, and then, after the peak short the heck out of Bitcoin miners (many more will likely go bankrupt), Coinbase stock (Coinbase is likely to go bankrupt in my opinion), and various scam coins with high token unlock rates.
Comment:
We think the echo bubble is over now. We have 2025 puts on RIOT
Comment:
Another Bitcoin wave up to fully finish the Echo Bubble is possible, even likely from here.
Comment:
This is it! We've purchased a starter position in BITI, which we will use to short Bitcoin all the way to $8,000. To the Earth!!