July 18, 2025 • 28 mins
If you’ve ever wondered what really drives Bitcoin’s price there’s a formula for it. And it’s more accurate than most people realize. This isn’t a guess. It’s a framework built on data, global liquidity, leverage, and investor behavior — the same 3 forces that have quietly driven every Bitcoin boom… and bust. Once you understand this, you’ll stop reacting to price — and start positioning ahead of it. Because right now, the signals say we’re entering a new regime. In this video, I’ll walk you through the same system and signals we use to make decisions and how you can use them too.
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Episode Transcript
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Speaker 1 (00:00):
If you've ever wondered what really drives bitcoin's price, there's
a formula for it, and it's more accurate than most
people realize. Now, this isn't a guess.
Speaker 2 (00:08):
It's a framework built on data, global equity leverage, and
investor behavior, the same three forces that have quietly driven
every bitcoin boom and bus cycle. Now, once you understand this,
you're going to stop reacting to price and start positioning
ahead of it, because right now the signals say.
Speaker 1 (00:27):
We're entering a new regime real quick. On Mark Mawson's twenty.
Speaker 2 (00:30):
Sixteen, I've helped millions navigate bitcoin cycles using data, not hype.
I'm a partner at a leading bitcoin venture fund. I
advise companies building the future of finance on bitcoin, and
in this video, I'm going to walk you through the
same systems and the same signals that we use to
make decisions.
Speaker 1 (00:47):
How you can use them too. Let's go all right,
so we're going to dig into the data here. Now.
Speaker 2 (00:54):
In my companies with my team, I tell them always, look,
we're not in the guessing game, We're in the data game,
all right. Now, same with bitcoin. People ask me all
the time, should I buy now? Is there another dip coming.
I don't know. I'm not in the guessing game. Let's
look at the data and see what it says. Now,
what most people get wrong is they think there's this
(01:14):
illusion of chaos like either one. They look backwards to
the chart and go, wow, bitcoin looks very predictable. I
should just sell here and buy back here, so simple, right,
Or they think there's no way to know what's going on.
But what if it's something in the middle. Now, I
have this chart up right here. By the way, I'm
going to be using a lot of charts from Bitcoin
magazine Pro, i''ll be using a lot from Jamie Coutz
at Real Vision. I'm gonna be using a lot from
(01:36):
a lot of different places to show you that there's
a lot of places to get this data. I'll cover
that with you, okay, But we can look at the
history of bitcoin since twenty eleven and you can see
we have a high right here, and then it goes
all the way down low, and then it comes high
and goes low again, goes high and comes down low.
Speaker 1 (01:50):
Now, of course it always trends up.
Speaker 2 (01:52):
So if you just bought here and waited ten years,
but nobody can wait ten years.
Speaker 1 (01:55):
So they're trying to buy here, sell here, buy here,
sell here, etc. Right, So it looks very chaotic.
Speaker 2 (02:01):
So what some people do is they think, well, what
about if we use on chain data.
Speaker 1 (02:05):
So we're going to go through this.
Speaker 2 (02:07):
So there's some on chain indicators that we can look
at to help us understand the way bitcoin moves. We
look at technical analysis. A lot of people think technical
analysis is the way to go, and so you know, well,
we have to look at the five repeating patterns and
have to repeats then it consolidates. Here it right, So
there's like I call it reading the tea leaves. They
think they can do that. However, for most people this
(02:27):
is like technical analysis. More like this. Yeah, you can't
make sense of that, right. So maybe it's on chain indicators,
maybe it's technical analysis, maybe it's macro trends. Okay, all
of those are important. We want to be looking at
all of those. Of course I talk about macro topics
all the time. But what if the boom, the bitcoin
boom always begins with three different data points. And if
(02:50):
we understand these three data points and how to look
at them, then we can figure out how to navigate
the bitcoin cycles. Okay, well do you want to know
what those are? Let's break them down now. I call
this the hidden engine. Now, the hidden engine is what
I'm calling a formula, a formula of how to understand
this all right, Now, I'm just gonna stay real quick.
Disclaimer again, nobody knows the tops or the bottoms until
(03:13):
you're looking backwards.
Speaker 1 (03:15):
What we can figure out.
Speaker 2 (03:16):
Is when things get over bought, over sold. We do
know when they're expensive or when they're cheap, and that's
what we're going to look at here.
Speaker 1 (03:24):
Okay, So the.
Speaker 2 (03:24):
First thing is that the old sort of driven model
of sort of bitcoin's forecast its future was either network
effects from Metcalf's law SOT. Metcalf's law says that as
each node, as we continue to add nodes, we multiply
the power of the network. So like one phone's not
very valuable if no one else in the world has
a phone, but if everyone has a phone, the phone's
(03:45):
more viable. Read's law is very similar, except for now
it's not just the nodes, but it's then the multiplication
of those nodes down below, so it's more exponential. But
that's sort of the old model. The new models we
have are a little bit different. So we're going to
break it down to three.
Speaker 1 (03:59):
Fuel.
Speaker 2 (04:00):
This is the global liquidity, and there's two ways we
have to look at this, GLI and GRS.
Speaker 1 (04:06):
Okay, I'm gonna break those down. And this has about moves.
Speaker 2 (04:09):
About seventy five percent of bitcoins moves are driven by
these two things.
Speaker 1 (04:13):
Now, that's the fuel.
Speaker 2 (04:14):
Then we have the pedals, the gas and the brake,
and that's really the leverage that goes into the system.
And then we have the valves, the blow off valves,
the reliefs valves, and this is the profitability behavior. And
we can look at this through on chain data. All right,
we're gonna break all this down. Buckle up, turn off
all your distractions, get a notepad, write this down.
Speaker 1 (04:34):
Let's go. All right, So the first thing is the fuel.
This is what feeds the engine. All right, we're talking
about GLI and GLS. Now, a lot of people get
this wrong, so let me break it down for you.
Speaker 2 (04:47):
GLI stands for global liquidity, global equity. Now where a
lot of people get this wrong is they look at
USM two.
Speaker 1 (04:56):
But we're talking about global.
Speaker 2 (04:57):
Bitcoin is a commodity, it's a global asset, and we
want to look at the global liquity. Now, I believe
the absolute master in this game is Michael How. I
reference his work all the time. He writes a newsletter
called Capital Wars. It's a paid subscription. I'm gonna be
referencing a lot of stuff from paid subscriptions that I
have because I pay for data. You might want to
pay for data as well Capital Wars Michael How or
(05:17):
you can just continue to subscribe it to my channel
and I'll break it down for you. But he talks
about the impact of global liquidity. He says, the biggest
and most direct impact comes from global liquity. It seems
like we should be paying attention to it. Let me
let me tell you why. All right, So we don't
want money, We want goods and services. Goods and services
a wealth. So when the government prints more money sends
(05:39):
it out a stemmy, that doesn't make more wealth.
Speaker 1 (05:41):
They can't print wealth. So what we really have is
all the money.
Speaker 2 (05:44):
Of the world divided by all the goods and services
of the world. As they print more money, the value
or the price of those goods and services go up.
Speaker 1 (05:51):
So if we look at liquidity.
Speaker 2 (05:53):
As they increase it, then we know that it has
to go somewhere, and it's going to go into these assets.
Speaker 1 (05:57):
They're going to go up. That's why it's the driver. Okay,
this is the leading indicator, not a lagging indicator. Okay.
So he says it's the most important thing global equity.
Speaker 2 (06:06):
He says that bitcoin is not a substitute for global equity,
not a substitute.
Speaker 1 (06:11):
But rather it's a barometer.
Speaker 2 (06:12):
So it's a way to read it, a way to
gauge it right, way to tell us what's going on.
Speaker 1 (06:17):
What's more, is it is a truly global asset.
Speaker 2 (06:19):
Again, Bitcoin is a global asset, so we can see
what's going on with India and China and Japan, not
just the United States. Whether China prints money or the
US FED inject's liquidity. Either way, the price of bitcoin
should rise. It's the most sensitive asset to global liquidity,
all right. It's like a sponge, just soaks it up.
A little bit more from Michael Howe again the king
(06:40):
of global equity in my mind. In this article is
a two P series. He was writing Bitcoin and global liquidity.
He says that debt denominates wh're talking about global equity.
A lot of people want to know what is it
and where you go wrong is just looking at M two.
It's a very rough way to look at it. But
because we're in a debt based monetary system, all money
is created through debt issuance, debt creation, So we want
(07:03):
to be looking at debt. Okay, So we want to
look at the money, Yes, we want to look at
the availability of credit, the availability the ability.
Speaker 1 (07:10):
For central banks to create more money. Okay. So it's
that debt dominates.
Speaker 2 (07:15):
So what he's saying here is that currently in our system,
in this debt based monetary system, debt never gets paid,
it never gets extinguished, instead refinancing existing debts. So we
always refinance, if we kick the can down the road,
refinancing an existing debt. With about seventy five percent of
transactions now involving debt rollovers, this creates a dependency on collateral.
(07:38):
This is why we can have no deflation when debt
is issued. So money is created through debt issues. The
debt is the asset, The dollars are the liability, the debt.
Speaker 1 (07:50):
Is the asset.
Speaker 2 (07:51):
So the debt becomes the asset or collateral for more debt.
That's what he's saying right here. So we have to
roll the debt over. We can't pay the debt off
because it's collateral for more debt, so it has to
get rolled over. It creates a dependency on collateral. We
can't have a deflation, it says I e. Global liquidity.
The financial system is trapped in a debt refinancing loop.
Speaker 1 (08:13):
So we're trapped. We have to.
Speaker 2 (08:14):
Continue to roll it over. And in order to roll
it over, we have to create more of it. Right,
we're trapped in the system. There's two ways out. We
continue forward inflating the system in a debt based monetary system,
or we let the whole thing collapse and crash and
we start over. Now, there's no politician in the world,
or banker or elite or whoever that may have any controller, say,
(08:36):
is going to allow this system to crash and see
what happens next. It's always going to be continued. That's
why we're trapped in the system. Policy makers need to
continually expand liquidity.
Speaker 1 (08:48):
Right, so all those doomers.
Speaker 2 (08:50):
Out there that are calling for this market crash, they
don't understand the basics of the system that we're in. Okay,
let's go a little bit deeper and now Michael Hole
uses these charts.
Speaker 1 (08:59):
I use them all the time, so you probably recognize these.
Speaker 2 (09:02):
This is the global equity going back to twenty twenty one.
Speaker 1 (09:06):
So it went up and then.
Speaker 2 (09:07):
We had this big crash here in twenty twenty two.
October twenty two was when we were in like that
bear market. Everybody's saying the world's going to end, the markets,
we're all crashing down. I started making videos saying there's
no market crash coming. Here's why, And it was because
of this liquidity cycle starting now. You can see here
is just since this year, and we've had a big
run up in global equity this year as well. Again,
these charts are from Michael Howe. Okay, now here's another
(09:29):
chart on global equity. I mean, you can just go
Google searches and find any number of charts. I like
this one here because it kind of shows us a
couple different levels here. So in the green right here
is the global M two growth. The blue line is
the global M two supply, the money supply, and then
we're overlaying it with the orange of the red line,
which is the bitcoin price.
Speaker 1 (09:49):
And so what the green is is the year over
year change.
Speaker 2 (09:51):
So you can see We've had this massive print of
global equity.
Speaker 1 (09:55):
During the pandemic right twenty twenty twenty twenty one, and.
Speaker 2 (09:58):
So this pushed the p of these assets sky high.
Global equity went up, the bitcoin price went up because
of this massive volume here. Then we had this big
draw down both in global liquidity and in the bitcoin price,
coming down as the year over year month over month.
Speaker 1 (10:15):
Changed and liquidy drained out.
Speaker 2 (10:16):
And you can see here it's starting to pick back up,
and of course both of them are turning back up,
so you can start to see the correlation of this.
I've done a bunch of videos on this, and you
have to understand it's also important to realize it has
somewhere between like an eight to twelve week lag. Most
people just consider it three months or ninety days. Okay,
so that's the global liquidity. Here's the chart on Trading
View again. I just want to show you can get
(10:38):
these charts from anywhere. I like to pay for my information.
It's a much faster, easier way to get it.
Speaker 1 (10:42):
But this is just Trading View.
Speaker 2 (10:43):
This is my charting software, and you can see the
bitcoin price and global liquity, and you can.
Speaker 1 (10:48):
See how closely tied they are together. So these are
the leading indicators. Okay, global equity. Now the next thing
we have to understand.
Speaker 2 (10:56):
Remember the fuel is the Global Risk Score, call that GRS. Now,
this is where we start to get into some of
the predictive power of what these things tell us, because
again we're looking for leading data, not lagging tell us
what already happened. We want leading data tell us what's
going to happen. Okay, Now these charts are from Jamie
Counts over at Real Vision. He's an absolute master in these.
(11:19):
And this is the Global Liquidity Index GLI. And when
he's talking about the GRS or the Global Risk Score.
So the Global Riskcore attracts how far biquin's price deviates
from its liquidity. So if the liquid is driving it up,
the risk is when it starts to deviate away from
the liquidity.
Speaker 1 (11:35):
That's what this tracks.
Speaker 2 (11:36):
It's implied fair value based on a regression model regression
from the liquidy. It says here it shifts GLI Global
Liquidity from being just a macro backdrop to an actively
usable risk management tool.
Speaker 1 (11:51):
So for risk.
Speaker 2 (11:51):
Management, the most amateur investors just think about how much
money can I make? Tell me the hot crypto to
buy right, and they just want to buy it yolo
in hopefully you know, aross their fingers.
Speaker 1 (12:00):
They make money.
Speaker 2 (12:01):
But professional investors always want to think about the risk.
That's the name hedge funds, like hedge hedging, the positions.
It's always about risk, and so we want to use
this as a risk management tool. Even when I'm going
long to make money, I need to know how big
I should bet, how long I should go based off
of the risk of that cycle. And that's exactly what
this is going to break down for. So let me
(12:22):
show you what we're talking about. Okay, Now, the first
thing we have to understand is that liquidity, like most
things and moves in cycles. I talk about cycles all
the time, Okay, So what we can see, and in
this case we're calling them regimes, is we can see
that this liquidity moves up and then it consolidates in
a pattern. Why I've done a bunch of videos on this,
(12:43):
but it's because the debt has to get rolled over.
It's about an average of four year cycles of debt.
On year three, we start running out of liquidity until.
Speaker 1 (12:51):
The next tron just put in. Then we're off to
the races for the next four year.
Speaker 2 (12:54):
So we have this upcycle liquidity, we have a consolidation
pattern and.
Speaker 1 (12:58):
Here is the breakout.
Speaker 2 (13:00):
This breakout puts us into the next super Bowl cycle.
And now we take off, we go into a consolidation
right here, and then we break out consolidation right here.
Speaker 1 (13:10):
And the reason why I'm showing.
Speaker 2 (13:11):
You this is because we're sitting right here, right now
on the third breakout. Now, if you're an elementary kid
looking at patterns, we have a consolidation breakout, consolidation breakout. Here,
We've had a consolidation and we're breaking out. What do
you think happens next? Well, if you see this arrow
shooting up, you would be exactly right. But again we
(13:32):
want to understand one. We're in this breakout of this
regime shift, but we want to look at the risk.
Speaker 1 (13:38):
Okay, so how does this work? Again? This is from
Jamie Coutch.
Speaker 2 (13:42):
This is a global equity risk score and basically we
have five levels level one, level two, level three, level four.
Speaker 1 (13:50):
And level five. You can see that.
Speaker 2 (13:52):
And this is overlaid with the price of bitcoin going
back here to twenty seventeen, and of course this is
current right here. So what this shows us, right now
is that we are currently at level three.
Speaker 1 (14:05):
Which is basically neutral.
Speaker 2 (14:07):
Basically neutral, right, we're not at the bitcoin lows right
here where we're back here when we are.
Speaker 1 (14:12):
Only at one.
Speaker 2 (14:13):
We've come up a lot in the bitcoin price, but
we're only at level three, a neutral score.
Speaker 1 (14:18):
We're not at five yet.
Speaker 2 (14:20):
What does that tell us, Well, it tells us we're
sort of like a medium risk. We're not the lowest
risk ever, but we're nowhere near the top either. So
what this tells us is potentially bitcoin has a lot
of room to go up from this one hundred thousand
dollars price point that we're in before we start getting
into level four level five risk. Now, even when we
get into level five, we can keep going for a
(14:41):
long time.
Speaker 1 (14:42):
These do not predict absolute tops.
Speaker 2 (14:45):
They only know let us know when things are cheap
level one or expensive level five.
Speaker 1 (14:50):
That's it.
Speaker 2 (14:50):
So you can see here we hit level five, but
look how long I continue on to that pattern? So
this is one thing. But again in this risk score,
we're only at level three. Okay, there's a lot more
to go over, so let's keep going.
Speaker 1 (15:03):
All right. Now, we talked about the fuel for the engine.
Speaker 2 (15:06):
Now we want to talk about the accelerator and the
brake pedals. So now the fuel's in the cars going,
how do we control this, How do we speed it
up or how do we slow it down? Okay, this
is the leverage or the drs.
Speaker 1 (15:17):
Okay, this is the derivative market.
Speaker 2 (15:19):
This is all the bets, all the side bets that
are happening on bitcoin.
Speaker 1 (15:24):
So in the old days, we just looked at bitcoin,
look at the network effects, looked at the.
Speaker 2 (15:27):
On chain data, the number of addresses growing, the number
of walls holding one or more bitcoin, things like that.
But now we have derivatives. Now, derivatives are again where
I can bet on the side of where the price
is going. Leverage bets, leverage, longs, leverage, shorts.
Speaker 1 (15:41):
All those things.
Speaker 2 (15:42):
The derivatives make up three to five times the total
volume of bitcoin. So just looking at on chain data
alone today doesn't really give us the total picture. It's great,
we should definitely be holding bitcoin on chaining in your
cold storage, but if we really want to understand price action,
we have to go back and look at the derivative market. Now,
(16:03):
what we can see is that in March of twenty
twenty four, the derivative market was about seventy five percent
of the bitcoin price action. Now again this goes back
to about twenty twenty and it comes to current And
what this shows us is these derivatives bets going higher
and then the red is going lower, going higher, going lower.
And of course as the derivative action is going higher,
(16:26):
what happens to the price action goes up When the
derivative market is coming down, then of course we have
down action. We had this long consolidation period when there
wasn't a whole lot of derivative action going on. Here
we have the increased derivative action. You can see we're
heading back up. And is we want to be looking
at this because again most of the price action is
happening there. It's what's creating a lot of rallies and crashes.
Speaker 1 (16:49):
Why well, very.
Speaker 2 (16:50):
Simply, markets stop going up when there's normal buyers, they
stop going down those normal sellers. And what happens with
the derivative traders. They're adding all this leverage under the system.
In a bull market, they're piling on, piling on, piling on,
which pushes it up even faster than normally would. But
also when it's going down, not only are people exiting,
but they're also starting to pile on the shorts, which
(17:11):
pushes it down even further, so it creates a lot
more volatility. But basically, the DRS this score, it quantifies
the excess that we have in the system. Again, this
charts from Jamie Coowts over at Real Vision, and this
is giving us the same type of a score again
level one, level two, level three, level four, level five.
(17:31):
So where are we in the derivvorous score.
Speaker 1 (17:34):
Well, let's take a look.
Speaker 2 (17:36):
What we can see is right now we're sitting at
about a two, not a one, not the lowest, certainly
nowhere near a five.
Speaker 1 (17:45):
We're only at a level two.
Speaker 2 (17:47):
So what this means is that the bitcoin price can
run way further up before we start getting too a
risky situation, not predicting the top, but getting close to that.
And as you can see, at a level two, we
have a long way for the bitcoin price to run
up from this risk adjusted model.
Speaker 1 (18:04):
All right, that's two. We can keep going. Now we
have the valves. What are the blowoffs?
Speaker 2 (18:09):
How does the market move when we have these other things? Well,
this is the network profitability, So this is gauging how
many people on the bitcoin network are in profit or
at a loss, because depending on where they're at with profitability,
we can start to guess and gauge what they might
do next. It drives their decision making. If I'm sitting
(18:29):
in a massive profit, I might want to scoop a
little cream.
Speaker 1 (18:33):
Off the top right, I might want to sell a
little bit. If I'm sitting in a major loss, I
might try to hold until I get back into profitability.
Speaker 2 (18:39):
And so what this does is we can look at
this and here's a couple on chain indicators here. So
these are ones from Bitcoin magazine. I recently did a
video where I talked about the five on chain indicators
that I like to watch the most. We'll link to
that and then the show description down below if you
want to go watch that video. But this is the
MVRV score. You've probably heard about this. It's the market
(19:01):
value versus the realized value. And so what you can
see here is the black line is the price of
bitcoin and this gold line here is the Z score.
So what you can see is when it shoots really high,
that was a bitcoin top shot really high. That was
a bitcoin top shot really high. That was a bitcoin
top But as you.
Speaker 1 (19:19):
Can see we're nowhere near shooting all time high. We're
way down here.
Speaker 2 (19:24):
So we need to see this go way up to here,
and this would go way up to here before that happens.
So again the indicators are telling us we're nowhere near
that level. Here's another on chain indicator that we can
look at. This is the net unrealized profit and loss.
So again this is showing how much profit people are
sitting on unrealized right. And again when this gets high
(19:47):
or low, it starts to show. So this got high
here at this top. This got really high at this top.
But here we are way down here. So this price
needs to come up, and this needs to come back
up somewhere right around there. Hey, don't worry, I'm going
to show you some predictions of price if you stick
around with me.
Speaker 1 (20:02):
Okay, Another one we want to take a look at
is the spo R.
Speaker 2 (20:07):
Now, the spo R is basically the spent output profit ratio.
And again when we see a high volume, this sort
of marks the top of cycles.
Speaker 1 (20:17):
But again, look how low that volume is right now.
Speaker 2 (20:20):
Again, these don't predict where we're going, but they help
us to understand when things are expensive or cheap.
Speaker 1 (20:25):
Now, the NPRS is.
Speaker 2 (20:28):
Basically taking all of these signals and put them together
in a single source to make it much easier. And
again this is from my friend Jamie Couch over at
Real Vision.
Speaker 1 (20:37):
They do amazing work.
Speaker 2 (20:39):
And so what we can see is the network Profitability
risk Score, and again sort of same framework. We have
level one, level two, level three, level four, and level
five five being the most risky, one being least. Where
are we today on this risk score? Well, right now
we're sitting right around about a two and a half
two point seven percent risk, so just below neutral, a
(21:02):
little bit less risky the neutral, which again means this
needs to run way higher in order for this to
run way higher. And so again we're well below We're
not at the lowest price levels ever. Obviously we've come
off this bottom all the way up. We're obviously not
here anymore, but we're nowhere near the top. Based off
of these things, it looks like this market has a
(21:22):
long way to go. You're gonna think of this as
like an emotional heartbeat, because again, like if I'm sitting
on a lot of profit, I'm probably going to take
some profits. Maybe I'll pay off my house or buy
something new, right, or if I'm if I'm at a loss,
I want to hold this. It plays with my emotions
and so it sort of gives us that leading indicator
of what the market may do. Okay, So the question
is if we combine all these where are we now?
Speaker 1 (21:44):
And I've kind of already given that away.
Speaker 2 (21:45):
If we add the grs, the drs, and the nprs together.
Speaker 1 (21:51):
Where are we?
Speaker 2 (21:52):
But what I haven't given away is based off historical returns,
where do we go from here? If we look at
past market cycles that we've seen this, what could potentially
happen from here on out? Let's take a look, all right,
So if we go back and we put all these
together again and combine them, what we can see is
we're right here in about two point six two point seven,
(22:14):
So that means we need to go a lot higher
here for this to come up a lot higher. Here,
we're already up quite a bit off the bottom. Doesn't
mean we're at the top. You have to understand market cycles, right,
So we're above right, we're at new all time highs,
but at the midpoint of.
Speaker 1 (22:32):
The cycle, not at the top of the cycle like
we were last time.
Speaker 2 (22:34):
We were there, So based off of the combined score,
we can see we're in about a neutral market.
Speaker 1 (22:40):
Again, we're not anywhere near caution.
Speaker 2 (22:43):
We're not at four, we're not a five, and that
sort of tells us that we have a long way
to go now based off of past performance, which again
is no guarantee of future performance, but based off of
past performance when we've seen these levels before, what is
bigcoin done?
Speaker 1 (22:58):
Now?
Speaker 2 (22:58):
If we look at each of these indicators on it own,
they all have different data, but if we combine the
three we get something different.
Speaker 1 (23:05):
Okay.
Speaker 2 (23:05):
So Network Profitability Risk Score NPRS performance and basically right
now we're sort.
Speaker 1 (23:11):
Of in this neutral range. We're a little bit lower
than neutral, but let's just call it neutral for this
this exercise.
Speaker 2 (23:17):
Okay, So what this says about almost sixty percent of
the time this has worked in thirty days, we'll see
eleven percent ninety days of forty five percent, one hundred
and eighty days a ninety six percent return double. Okay,
it's not guaranteed sixty percent, so that means it's a
base case. So what we want to do is we're
(23:38):
always looking at the odds.
Speaker 1 (23:39):
Again. Poor mentality thinks about how much money can I
make and they go low end.
Speaker 2 (23:43):
But smart money always makes structured strategic bets. How much
should I allocate, Well, depends on what my odds are.
If I have a ninety percent chance of winning the bet,
I'm going to bet more.
Speaker 1 (23:55):
If I have a ten percent chance ten percent odds of.
Speaker 2 (23:58):
Winning the bet, I'm gonna bet a very bit obviously, right,
if we want to understand the odds and what the
probabilities are, and based off of where we're at right now,
we have a long way to go, right, We have
a long way to go now.
Speaker 1 (24:13):
Understanding this gives us new tools. But how do we
use all this? How do we use all this? Again?
Speaker 2 (24:19):
So the first thing is this is not a crystal ball.
This doesn't predict the future. This doesn't tell us exactly
what bitcoin's price is going to be on what date
and one's.
Speaker 1 (24:27):
Going to turn around. It doesn't tell us if there's
another big dip coming that you should wait to buy
the dip.
Speaker 2 (24:32):
What it does tell us is if it's expensive or
if it's cheap. It does tell us if we're starting
to get overbought or over sold. It does tell us
maybe when we should be pressing in harder. Because the
odds are with us, or we might want to pull
back a little bit because the odds are against us. Now,
I would strongly advise against trying to time this and
sell out and buy back in because what happens. Let's
(24:54):
take twenty seventeen for example. In twenty seventeen, bitcoin ran
from one thousand to twenty thousand in one.
Speaker 1 (25:01):
Year, okay, from twenty times. It's pretty amazing.
Speaker 2 (25:06):
But if you were looking at these indicators around I
don't know, it was around four to five thousand, it
started flashing that it was at the top of the market,
it was overbought, it had gone up four or five times.
It's amazing. If you're a traditional investor, this is the
best returns you've ever seen in your life. And so
the indicators were showing it was very expensive, and so
if you're following that and trying to time the market,
you would have sold out, you would have cashed it,
(25:28):
and you would have missed the run from four or
five grand up to twenty grand. Now what happened is,
of course it crashed all the way back down, and
you were going to try to time the bottom. But
of course nobody wants to catch a falling knife, So
you're waiting for something to turn, some sentiment to turn.
Speaker 1 (25:42):
The charts are turned to tell you when to start buying.
Speaker 2 (25:44):
But bitcoin moved so violently that really quickly it moved higher,
and now you're buying back in at six or seven K.
So if you tried to sell out at four or five,
you missed this, and then you bought it at six
or seven.
Speaker 1 (25:55):
You actually got behind.
Speaker 2 (25:57):
Now, if you're like you know, whatever your circumstances, maybe
you're older, you're on a fixed income, you don't have
a long timeframe.
Speaker 1 (26:02):
Maybe maybe the four or five times.
Speaker 2 (26:04):
On your money was amazing. It was the best praturny
you've ever had in congratulations. And if you're just trying
to get more US dollars, you can trade it from
one to four, you can trade it from six to
twenty again, and you can.
Speaker 1 (26:13):
Make that spread, and that's cool.
Speaker 2 (26:15):
But if you're a long term bitcoin hoddler like I am,
and you expected to hit one million dollars by twenty thirty,
like I do.
Speaker 1 (26:22):
Then I'm not trying to time this.
Speaker 2 (26:23):
What I'm going to do is I'm gonna start adding
aggressively here so when it gets here, I'm not as
adding as aggressively. So I'm buying super heavy. Right here
around here, I start slowing down. Maybe I'm not going
to put any in. Maybe I'll just kind of wait.
I'm not selling, but I wait. Then when it starts
coming down right around here, I start deploying again.
Speaker 1 (26:43):
I'm gonna buy all the.
Speaker 2 (26:44):
Way through this dip. When it gets here, I start
waiting again. That's how I use this Now. We also
that's positioning versus chasing.
Speaker 1 (26:52):
I'm not trying to predict. I'm not trying to time.
Speaker 2 (26:55):
I'm positioning myself correctly to take full advantage of this cycle.
Speaker 1 (27:00):
Again, we want to use tiered entries.
Speaker 2 (27:02):
So again I'm not going to exit, but I'm not
going to do massive entries at the top of the market.
I'm going to I'll pause these entries here we're nowhere
near that yet, and then I'll start tearing in my
entries over here. We do this based off of conviction
weighted allocations. Remember the percentages, so based off.
Speaker 1 (27:21):
Of where we're at.
Speaker 2 (27:21):
As we're starting to get more expensive here, as the
odds the percentages are coming down, it's less so it's
conviction weighted allocations. Another thing about to take talking about
in this video is the treasury stacking. So now there's
this new breed of treasury companies, Bitcoin Treasury companies. Micro
Strategy launched it, Metaplanet, all matatoral these other ones that
are blowing up, and you might want to consider stacking
(27:43):
into some of these as well. If you're going to
break down a whole video on that, let me know
down in the comments. Okay, so I do want to
just press on something here. This is not static, Okay,
these charts the change. This is dynamic.
Speaker 1 (27:58):
It's moving.
Speaker 2 (27:59):
So if you're looking at any type of indicator a
two hundred moving to average, for example, it's moving with
the price.
Speaker 1 (28:05):
So you can't go off of what we just said.
Speaker 2 (28:07):
That's why we can't predict the top or we can't
predict a time because these are moving. So what we're
doing is we're seeing the signs as it developed. Now
the cycles are not random. They happen in proper sequence,
but not to the exact time or date. But it's
always going to be the same thing. It's always going
to be liquidity that's the leading indicator. It's always going
to be leverage built up in this system. That's the
(28:28):
derivatives and it's always going to be the human emotion
because we drive humans. We're driven by pleasure, greed, and
fear pain.
Speaker 1 (28:37):
That's it.
Speaker 2 (28:38):
So we want to look at those three things and
again not trying to predict the top or the bottom,
but instead measuring the risk and the location of our
investments to the cycle. If you follow this, we're going
to have massive success. And if you want to know
the top five on chain indicators that I'm watching to
help me understand this, watch this video right here and
I'll see you over there.
If you've ever wondered what really drives bitcoin's price, there's
a formula for it, and it's more accurate than most
people realize. Now, this isn't a guess.
Speaker 2 (00:08):
It's a framework built on data, global equity leverage, and
investor behavior, the same three forces that have quietly driven
every bitcoin boom and bus cycle. Now, once you understand this,
you're going to stop reacting to price and start positioning
ahead of it, because right now the signals say.
Speaker 1 (00:27):
We're entering a new regime real quick. On Mark Mawson's twenty.
Speaker 2 (00:30):
Sixteen, I've helped millions navigate bitcoin cycles using data, not hype.
I'm a partner at a leading bitcoin venture fund. I
advise companies building the future of finance on bitcoin, and
in this video, I'm going to walk you through the
same systems and the same signals that we use to
make decisions.
Speaker 1 (00:47):
How you can use them too. Let's go all right,
so we're going to dig into the data here. Now.
Speaker 2 (00:54):
In my companies with my team, I tell them always, look,
we're not in the guessing game, We're in the data game,
all right. Now, same with bitcoin. People ask me all
the time, should I buy now? Is there another dip coming.
I don't know. I'm not in the guessing game. Let's
look at the data and see what it says. Now,
what most people get wrong is they think there's this
(01:14):
illusion of chaos like either one. They look backwards to
the chart and go, wow, bitcoin looks very predictable. I
should just sell here and buy back here, so simple, right,
Or they think there's no way to know what's going on.
But what if it's something in the middle. Now, I
have this chart up right here. By the way, I'm
going to be using a lot of charts from Bitcoin
magazine Pro, i''ll be using a lot from Jamie Coutz
at Real Vision. I'm gonna be using a lot from
(01:36):
a lot of different places to show you that there's
a lot of places to get this data. I'll cover
that with you, okay, But we can look at the
history of bitcoin since twenty eleven and you can see
we have a high right here, and then it goes
all the way down low, and then it comes high
and goes low again, goes high and comes down low.
Speaker 1 (01:50):
Now, of course it always trends up.
Speaker 2 (01:52):
So if you just bought here and waited ten years,
but nobody can wait ten years.
Speaker 1 (01:55):
So they're trying to buy here, sell here, buy here,
sell here, etc. Right, So it looks very chaotic.
Speaker 2 (02:01):
So what some people do is they think, well, what
about if we use on chain data.
Speaker 1 (02:05):
So we're going to go through this.
Speaker 2 (02:07):
So there's some on chain indicators that we can look
at to help us understand the way bitcoin moves. We
look at technical analysis. A lot of people think technical
analysis is the way to go, and so you know, well,
we have to look at the five repeating patterns and
have to repeats then it consolidates. Here it right, So
there's like I call it reading the tea leaves. They
think they can do that. However, for most people this
(02:27):
is like technical analysis. More like this. Yeah, you can't
make sense of that, right. So maybe it's on chain indicators,
maybe it's technical analysis, maybe it's macro trends. Okay, all
of those are important. We want to be looking at
all of those. Of course I talk about macro topics
all the time. But what if the boom, the bitcoin
boom always begins with three different data points. And if
(02:50):
we understand these three data points and how to look
at them, then we can figure out how to navigate
the bitcoin cycles. Okay, well do you want to know
what those are? Let's break them down now. I call
this the hidden engine. Now, the hidden engine is what
I'm calling a formula, a formula of how to understand
this all right, Now, I'm just gonna stay real quick.
Disclaimer again, nobody knows the tops or the bottoms until
(03:13):
you're looking backwards.
Speaker 1 (03:15):
What we can figure out.
Speaker 2 (03:16):
Is when things get over bought, over sold. We do
know when they're expensive or when they're cheap, and that's
what we're going to look at here.
Speaker 1 (03:24):
Okay, So the.
Speaker 2 (03:24):
First thing is that the old sort of driven model
of sort of bitcoin's forecast its future was either network
effects from Metcalf's law SOT. Metcalf's law says that as
each node, as we continue to add nodes, we multiply
the power of the network. So like one phone's not
very valuable if no one else in the world has
a phone, but if everyone has a phone, the phone's
(03:45):
more viable. Read's law is very similar, except for now
it's not just the nodes, but it's then the multiplication
of those nodes down below, so it's more exponential. But
that's sort of the old model. The new models we
have are a little bit different. So we're going to
break it down to three.
Speaker 1 (03:59):
Fuel.
Speaker 2 (04:00):
This is the global liquidity, and there's two ways we
have to look at this, GLI and GRS.
Speaker 1 (04:06):
Okay, I'm gonna break those down. And this has about moves.
Speaker 2 (04:09):
About seventy five percent of bitcoins moves are driven by
these two things.
Speaker 1 (04:13):
Now, that's the fuel.
Speaker 2 (04:14):
Then we have the pedals, the gas and the brake,
and that's really the leverage that goes into the system.
And then we have the valves, the blow off valves,
the reliefs valves, and this is the profitability behavior. And
we can look at this through on chain data. All right,
we're gonna break all this down. Buckle up, turn off
all your distractions, get a notepad, write this down.
Speaker 1 (04:34):
Let's go. All right, So the first thing is the fuel.
This is what feeds the engine. All right, we're talking
about GLI and GLS. Now, a lot of people get
this wrong, so let me break it down for you.
Speaker 2 (04:47):
GLI stands for global liquidity, global equity. Now where a
lot of people get this wrong is they look at
USM two.
Speaker 1 (04:56):
But we're talking about global.
Speaker 2 (04:57):
Bitcoin is a commodity, it's a global asset, and we
want to look at the global liquity. Now, I believe
the absolute master in this game is Michael How. I
reference his work all the time. He writes a newsletter
called Capital Wars. It's a paid subscription. I'm gonna be
referencing a lot of stuff from paid subscriptions that I
have because I pay for data. You might want to
pay for data as well Capital Wars Michael How or
(05:17):
you can just continue to subscribe it to my channel
and I'll break it down for you. But he talks
about the impact of global liquidity. He says, the biggest
and most direct impact comes from global liquity. It seems
like we should be paying attention to it. Let me
let me tell you why. All right, So we don't
want money, We want goods and services. Goods and services
a wealth. So when the government prints more money sends
(05:39):
it out a stemmy, that doesn't make more wealth.
Speaker 1 (05:41):
They can't print wealth. So what we really have is
all the money.
Speaker 2 (05:44):
Of the world divided by all the goods and services
of the world. As they print more money, the value
or the price of those goods and services go up.
Speaker 1 (05:51):
So if we look at liquidity.
Speaker 2 (05:53):
As they increase it, then we know that it has
to go somewhere, and it's going to go into these assets.
Speaker 1 (05:57):
They're going to go up. That's why it's the driver. Okay,
this is the leading indicator, not a lagging indicator. Okay.
So he says it's the most important thing global equity.
Speaker 2 (06:06):
He says that bitcoin is not a substitute for global equity,
not a substitute.
Speaker 1 (06:11):
But rather it's a barometer.
Speaker 2 (06:12):
So it's a way to read it, a way to
gauge it right, way to tell us what's going on.
Speaker 1 (06:17):
What's more, is it is a truly global asset.
Speaker 2 (06:19):
Again, Bitcoin is a global asset, so we can see
what's going on with India and China and Japan, not
just the United States. Whether China prints money or the
US FED inject's liquidity. Either way, the price of bitcoin
should rise. It's the most sensitive asset to global liquidity,
all right. It's like a sponge, just soaks it up.
A little bit more from Michael Howe again the king
(06:40):
of global equity in my mind. In this article is
a two P series. He was writing Bitcoin and global liquidity.
He says that debt denominates wh're talking about global equity.
A lot of people want to know what is it
and where you go wrong is just looking at M two.
It's a very rough way to look at it. But
because we're in a debt based monetary system, all money
is created through debt issuance, debt creation, So we want
(07:03):
to be looking at debt. Okay, So we want to
look at the money, Yes, we want to look at
the availability of credit, the availability the ability.
Speaker 1 (07:10):
For central banks to create more money. Okay. So it's
that debt dominates.
Speaker 2 (07:15):
So what he's saying here is that currently in our system,
in this debt based monetary system, debt never gets paid,
it never gets extinguished, instead refinancing existing debts. So we
always refinance, if we kick the can down the road,
refinancing an existing debt. With about seventy five percent of
transactions now involving debt rollovers, this creates a dependency on collateral.
(07:38):
This is why we can have no deflation when debt
is issued. So money is created through debt issues. The
debt is the asset, The dollars are the liability, the debt.
Speaker 1 (07:50):
Is the asset.
Speaker 2 (07:51):
So the debt becomes the asset or collateral for more debt.
That's what he's saying right here. So we have to
roll the debt over. We can't pay the debt off
because it's collateral for more debt, so it has to
get rolled over. It creates a dependency on collateral. We
can't have a deflation, it says I e. Global liquidity.
The financial system is trapped in a debt refinancing loop.
Speaker 1 (08:13):
So we're trapped. We have to.
Speaker 2 (08:14):
Continue to roll it over. And in order to roll
it over, we have to create more of it. Right,
we're trapped in the system. There's two ways out. We
continue forward inflating the system in a debt based monetary system,
or we let the whole thing collapse and crash and
we start over. Now, there's no politician in the world,
or banker or elite or whoever that may have any controller, say,
(08:36):
is going to allow this system to crash and see
what happens next. It's always going to be continued. That's
why we're trapped in the system. Policy makers need to
continually expand liquidity.
Speaker 1 (08:48):
Right, so all those doomers.
Speaker 2 (08:50):
Out there that are calling for this market crash, they
don't understand the basics of the system that we're in. Okay,
let's go a little bit deeper and now Michael Hole
uses these charts.
Speaker 1 (08:59):
I use them all the time, so you probably recognize these.
Speaker 2 (09:02):
This is the global equity going back to twenty twenty one.
Speaker 1 (09:06):
So it went up and then.
Speaker 2 (09:07):
We had this big crash here in twenty twenty two.
October twenty two was when we were in like that
bear market. Everybody's saying the world's going to end, the markets,
we're all crashing down. I started making videos saying there's
no market crash coming. Here's why, And it was because
of this liquidity cycle starting now. You can see here
is just since this year, and we've had a big
run up in global equity this year as well. Again,
these charts are from Michael Howe. Okay, now here's another
(09:29):
chart on global equity. I mean, you can just go
Google searches and find any number of charts. I like
this one here because it kind of shows us a
couple different levels here. So in the green right here
is the global M two growth. The blue line is
the global M two supply, the money supply, and then
we're overlaying it with the orange of the red line,
which is the bitcoin price.
Speaker 1 (09:49):
And so what the green is is the year over
year change.
Speaker 2 (09:51):
So you can see We've had this massive print of
global equity.
Speaker 1 (09:55):
During the pandemic right twenty twenty twenty twenty one, and.
Speaker 2 (09:58):
So this pushed the p of these assets sky high.
Global equity went up, the bitcoin price went up because
of this massive volume here. Then we had this big
draw down both in global liquidity and in the bitcoin price,
coming down as the year over year month over month.
Speaker 1 (10:15):
Changed and liquidy drained out.
Speaker 2 (10:16):
And you can see here it's starting to pick back up,
and of course both of them are turning back up,
so you can start to see the correlation of this.
I've done a bunch of videos on this, and you
have to understand it's also important to realize it has
somewhere between like an eight to twelve week lag. Most
people just consider it three months or ninety days. Okay,
so that's the global liquidity. Here's the chart on Trading
View again. I just want to show you can get
(10:38):
these charts from anywhere. I like to pay for my information.
It's a much faster, easier way to get it.
Speaker 1 (10:42):
But this is just Trading View.
Speaker 2 (10:43):
This is my charting software, and you can see the
bitcoin price and global liquity, and you can.
Speaker 1 (10:48):
See how closely tied they are together. So these are
the leading indicators. Okay, global equity. Now the next thing
we have to understand.
Speaker 2 (10:56):
Remember the fuel is the Global Risk Score, call that GRS. Now,
this is where we start to get into some of
the predictive power of what these things tell us, because
again we're looking for leading data, not lagging tell us
what already happened. We want leading data tell us what's
going to happen. Okay, Now these charts are from Jamie
Counts over at Real Vision. He's an absolute master in these.
(11:19):
And this is the Global Liquidity Index GLI. And when
he's talking about the GRS or the Global Risk Score.
So the Global Riskcore attracts how far biquin's price deviates
from its liquidity. So if the liquid is driving it up,
the risk is when it starts to deviate away from
the liquidity.
Speaker 1 (11:35):
That's what this tracks.
Speaker 2 (11:36):
It's implied fair value based on a regression model regression
from the liquidy. It says here it shifts GLI Global
Liquidity from being just a macro backdrop to an actively
usable risk management tool.
Speaker 1 (11:51):
So for risk.
Speaker 2 (11:51):
Management, the most amateur investors just think about how much
money can I make? Tell me the hot crypto to
buy right, and they just want to buy it yolo
in hopefully you know, aross their fingers.
Speaker 1 (12:00):
They make money.
Speaker 2 (12:01):
But professional investors always want to think about the risk.
That's the name hedge funds, like hedge hedging, the positions.
It's always about risk, and so we want to use
this as a risk management tool. Even when I'm going
long to make money, I need to know how big
I should bet, how long I should go based off
of the risk of that cycle. And that's exactly what
this is going to break down for. So let me
(12:22):
show you what we're talking about. Okay, Now, the first
thing we have to understand is that liquidity, like most
things and moves in cycles. I talk about cycles all
the time, Okay, So what we can see, and in
this case we're calling them regimes, is we can see
that this liquidity moves up and then it consolidates in
a pattern. Why I've done a bunch of videos on this,
(12:43):
but it's because the debt has to get rolled over.
It's about an average of four year cycles of debt.
On year three, we start running out of liquidity until.
Speaker 1 (12:51):
The next tron just put in. Then we're off to
the races for the next four year.
Speaker 2 (12:54):
So we have this upcycle liquidity, we have a consolidation
pattern and.
Speaker 1 (12:58):
Here is the breakout.
Speaker 2 (13:00):
This breakout puts us into the next super Bowl cycle.
And now we take off, we go into a consolidation
right here, and then we break out consolidation right here.
Speaker 1 (13:10):
And the reason why I'm showing.
Speaker 2 (13:11):
You this is because we're sitting right here, right now
on the third breakout. Now, if you're an elementary kid
looking at patterns, we have a consolidation breakout, consolidation breakout. Here,
We've had a consolidation and we're breaking out. What do
you think happens next? Well, if you see this arrow
shooting up, you would be exactly right. But again we
(13:32):
want to understand one. We're in this breakout of this
regime shift, but we want to look at the risk.
Speaker 1 (13:38):
Okay, so how does this work? Again? This is from
Jamie Coutch.
Speaker 2 (13:42):
This is a global equity risk score and basically we
have five levels level one, level two, level three, level four.
Speaker 1 (13:50):
And level five. You can see that.
Speaker 2 (13:52):
And this is overlaid with the price of bitcoin going
back here to twenty seventeen, and of course this is
current right here. So what this shows us, right now
is that we are currently at level three.
Speaker 1 (14:05):
Which is basically neutral.
Speaker 2 (14:07):
Basically neutral, right, we're not at the bitcoin lows right
here where we're back here when we are.
Speaker 1 (14:12):
Only at one.
Speaker 2 (14:13):
We've come up a lot in the bitcoin price, but
we're only at level three, a neutral score.
Speaker 1 (14:18):
We're not at five yet.
Speaker 2 (14:20):
What does that tell us, Well, it tells us we're
sort of like a medium risk. We're not the lowest
risk ever, but we're nowhere near the top either. So
what this tells us is potentially bitcoin has a lot
of room to go up from this one hundred thousand
dollars price point that we're in before we start getting
into level four level five risk. Now, even when we
get into level five, we can keep going for a
(14:41):
long time.
Speaker 1 (14:42):
These do not predict absolute tops.
Speaker 2 (14:45):
They only know let us know when things are cheap
level one or expensive level five.
Speaker 1 (14:50):
That's it.
Speaker 2 (14:50):
So you can see here we hit level five, but
look how long I continue on to that pattern? So
this is one thing. But again in this risk score,
we're only at level three. Okay, there's a lot more
to go over, so let's keep going.
Speaker 1 (15:03):
All right. Now, we talked about the fuel for the engine.
Speaker 2 (15:06):
Now we want to talk about the accelerator and the
brake pedals. So now the fuel's in the cars going,
how do we control this, How do we speed it
up or how do we slow it down? Okay, this
is the leverage or the drs.
Speaker 1 (15:17):
Okay, this is the derivative market.
Speaker 2 (15:19):
This is all the bets, all the side bets that
are happening on bitcoin.
Speaker 1 (15:24):
So in the old days, we just looked at bitcoin,
look at the network effects, looked at the.
Speaker 2 (15:27):
On chain data, the number of addresses growing, the number
of walls holding one or more bitcoin, things like that.
But now we have derivatives. Now, derivatives are again where
I can bet on the side of where the price
is going. Leverage bets, leverage, longs, leverage, shorts.
Speaker 1 (15:41):
All those things.
Speaker 2 (15:42):
The derivatives make up three to five times the total
volume of bitcoin. So just looking at on chain data
alone today doesn't really give us the total picture. It's great,
we should definitely be holding bitcoin on chaining in your
cold storage, but if we really want to understand price action,
we have to go back and look at the derivative market. Now,
(16:03):
what we can see is that in March of twenty
twenty four, the derivative market was about seventy five percent
of the bitcoin price action. Now again this goes back
to about twenty twenty and it comes to current And
what this shows us is these derivatives bets going higher
and then the red is going lower, going higher, going lower.
And of course as the derivative action is going higher,
(16:26):
what happens to the price action goes up When the
derivative market is coming down, then of course we have
down action. We had this long consolidation period when there
wasn't a whole lot of derivative action going on. Here
we have the increased derivative action. You can see we're
heading back up. And is we want to be looking
at this because again most of the price action is
happening there. It's what's creating a lot of rallies and crashes.
Speaker 1 (16:49):
Why well, very.
Speaker 2 (16:50):
Simply, markets stop going up when there's normal buyers, they
stop going down those normal sellers. And what happens with
the derivative traders. They're adding all this leverage under the system.
In a bull market, they're piling on, piling on, piling on,
which pushes it up even faster than normally would. But
also when it's going down, not only are people exiting,
but they're also starting to pile on the shorts, which
(17:11):
pushes it down even further, so it creates a lot
more volatility. But basically, the DRS this score, it quantifies
the excess that we have in the system. Again, this
charts from Jamie Coowts over at Real Vision, and this
is giving us the same type of a score again
level one, level two, level three, level four, level five.
(17:31):
So where are we in the derivvorous score.
Speaker 1 (17:34):
Well, let's take a look.
Speaker 2 (17:36):
What we can see is right now we're sitting at
about a two, not a one, not the lowest, certainly
nowhere near a five.
Speaker 1 (17:45):
We're only at a level two.
Speaker 2 (17:47):
So what this means is that the bitcoin price can
run way further up before we start getting too a
risky situation, not predicting the top, but getting close to that.
And as you can see, at a level two, we
have a long way for the bitcoin price to run
up from this risk adjusted model.
Speaker 1 (18:04):
All right, that's two. We can keep going. Now we
have the valves. What are the blowoffs?
Speaker 2 (18:09):
How does the market move when we have these other things? Well,
this is the network profitability, So this is gauging how
many people on the bitcoin network are in profit or
at a loss, because depending on where they're at with profitability,
we can start to guess and gauge what they might
do next. It drives their decision making. If I'm sitting
(18:29):
in a massive profit, I might want to scoop a
little cream.
Speaker 1 (18:33):
Off the top right, I might want to sell a
little bit. If I'm sitting in a major loss, I
might try to hold until I get back into profitability.
Speaker 2 (18:39):
And so what this does is we can look at
this and here's a couple on chain indicators here. So
these are ones from Bitcoin magazine. I recently did a
video where I talked about the five on chain indicators
that I like to watch the most. We'll link to
that and then the show description down below if you
want to go watch that video. But this is the
MVRV score. You've probably heard about this. It's the market
(19:01):
value versus the realized value. And so what you can
see here is the black line is the price of
bitcoin and this gold line here is the Z score.
So what you can see is when it shoots really high,
that was a bitcoin top shot really high. That was
a bitcoin top shot really high. That was a bitcoin
top But as you.
Speaker 1 (19:19):
Can see we're nowhere near shooting all time high. We're
way down here.
Speaker 2 (19:24):
So we need to see this go way up to here,
and this would go way up to here before that happens.
So again the indicators are telling us we're nowhere near
that level. Here's another on chain indicator that we can
look at. This is the net unrealized profit and loss.
So again this is showing how much profit people are
sitting on unrealized right. And again when this gets high
(19:47):
or low, it starts to show. So this got high
here at this top. This got really high at this top.
But here we are way down here. So this price
needs to come up, and this needs to come back
up somewhere right around there. Hey, don't worry, I'm going
to show you some predictions of price if you stick
around with me.
Speaker 1 (20:02):
Okay, Another one we want to take a look at
is the spo R.
Speaker 2 (20:07):
Now, the spo R is basically the spent output profit ratio.
And again when we see a high volume, this sort
of marks the top of cycles.
Speaker 1 (20:17):
But again, look how low that volume is right now.
Speaker 2 (20:20):
Again, these don't predict where we're going, but they help
us to understand when things are expensive or cheap.
Speaker 1 (20:25):
Now, the NPRS is.
Speaker 2 (20:28):
Basically taking all of these signals and put them together
in a single source to make it much easier. And
again this is from my friend Jamie Couch over at
Real Vision.
Speaker 1 (20:37):
They do amazing work.
Speaker 2 (20:39):
And so what we can see is the network Profitability
risk Score, and again sort of same framework. We have
level one, level two, level three, level four, and level
five five being the most risky, one being least. Where
are we today on this risk score? Well, right now
we're sitting right around about a two and a half
two point seven percent risk, so just below neutral, a
(21:02):
little bit less risky the neutral, which again means this
needs to run way higher in order for this to
run way higher. And so again we're well below We're
not at the lowest price levels ever. Obviously we've come
off this bottom all the way up. We're obviously not
here anymore, but we're nowhere near the top. Based off
of these things, it looks like this market has a
(21:22):
long way to go. You're gonna think of this as
like an emotional heartbeat, because again, like if I'm sitting
on a lot of profit, I'm probably going to take
some profits. Maybe I'll pay off my house or buy
something new, right, or if I'm if I'm at a loss,
I want to hold this. It plays with my emotions
and so it sort of gives us that leading indicator
of what the market may do. Okay, So the question
is if we combine all these where are we now?
Speaker 1 (21:44):
And I've kind of already given that away.
Speaker 2 (21:45):
If we add the grs, the drs, and the nprs together.
Speaker 1 (21:51):
Where are we?
Speaker 2 (21:52):
But what I haven't given away is based off historical returns,
where do we go from here? If we look at
past market cycles that we've seen this, what could potentially
happen from here on out? Let's take a look, all right,
So if we go back and we put all these
together again and combine them, what we can see is
we're right here in about two point six two point seven,
(22:14):
So that means we need to go a lot higher
here for this to come up a lot higher. Here,
we're already up quite a bit off the bottom. Doesn't
mean we're at the top. You have to understand market cycles, right,
So we're above right, we're at new all time highs,
but at the midpoint of.
Speaker 1 (22:32):
The cycle, not at the top of the cycle like
we were last time.
Speaker 2 (22:34):
We were there, So based off of the combined score,
we can see we're in about a neutral market.
Speaker 1 (22:40):
Again, we're not anywhere near caution.
Speaker 2 (22:43):
We're not at four, we're not a five, and that
sort of tells us that we have a long way
to go now based off of past performance, which again
is no guarantee of future performance, but based off of
past performance when we've seen these levels before, what is
bigcoin done?
Speaker 1 (22:58):
Now?
Speaker 2 (22:58):
If we look at each of these indicators on it own,
they all have different data, but if we combine the
three we get something different.
Speaker 1 (23:05):
Okay.
Speaker 2 (23:05):
So Network Profitability Risk Score NPRS performance and basically right
now we're sort.
Speaker 1 (23:11):
Of in this neutral range. We're a little bit lower
than neutral, but let's just call it neutral for this
this exercise.
Speaker 2 (23:17):
Okay, So what this says about almost sixty percent of
the time this has worked in thirty days, we'll see
eleven percent ninety days of forty five percent, one hundred
and eighty days a ninety six percent return double. Okay,
it's not guaranteed sixty percent, so that means it's a
base case. So what we want to do is we're
(23:38):
always looking at the odds.
Speaker 1 (23:39):
Again. Poor mentality thinks about how much money can I
make and they go low end.
Speaker 2 (23:43):
But smart money always makes structured strategic bets. How much
should I allocate, Well, depends on what my odds are.
If I have a ninety percent chance of winning the bet,
I'm going to bet more.
Speaker 1 (23:55):
If I have a ten percent chance ten percent odds of.
Speaker 2 (23:58):
Winning the bet, I'm gonna bet a very bit obviously, right,
if we want to understand the odds and what the
probabilities are, and based off of where we're at right now,
we have a long way to go, right, We have
a long way to go now.
Speaker 1 (24:13):
Understanding this gives us new tools. But how do we
use all this? How do we use all this? Again?
Speaker 2 (24:19):
So the first thing is this is not a crystal ball.
This doesn't predict the future. This doesn't tell us exactly
what bitcoin's price is going to be on what date
and one's.
Speaker 1 (24:27):
Going to turn around. It doesn't tell us if there's
another big dip coming that you should wait to buy
the dip.
Speaker 2 (24:32):
What it does tell us is if it's expensive or
if it's cheap. It does tell us if we're starting
to get overbought or over sold. It does tell us
maybe when we should be pressing in harder. Because the
odds are with us, or we might want to pull
back a little bit because the odds are against us. Now,
I would strongly advise against trying to time this and
sell out and buy back in because what happens. Let's
(24:54):
take twenty seventeen for example. In twenty seventeen, bitcoin ran
from one thousand to twenty thousand in one.
Speaker 1 (25:01):
Year, okay, from twenty times. It's pretty amazing.
Speaker 2 (25:06):
But if you were looking at these indicators around I
don't know, it was around four to five thousand, it
started flashing that it was at the top of the market,
it was overbought, it had gone up four or five times.
It's amazing. If you're a traditional investor, this is the
best returns you've ever seen in your life. And so
the indicators were showing it was very expensive, and so
if you're following that and trying to time the market,
you would have sold out, you would have cashed it,
(25:28):
and you would have missed the run from four or
five grand up to twenty grand. Now what happened is,
of course it crashed all the way back down, and
you were going to try to time the bottom. But
of course nobody wants to catch a falling knife, So
you're waiting for something to turn, some sentiment to turn.
Speaker 1 (25:42):
The charts are turned to tell you when to start buying.
Speaker 2 (25:44):
But bitcoin moved so violently that really quickly it moved higher,
and now you're buying back in at six or seven K.
So if you tried to sell out at four or five,
you missed this, and then you bought it at six
or seven.
Speaker 1 (25:55):
You actually got behind.
Speaker 2 (25:57):
Now, if you're like you know, whatever your circumstances, maybe
you're older, you're on a fixed income, you don't have
a long timeframe.
Speaker 1 (26:02):
Maybe maybe the four or five times.
Speaker 2 (26:04):
On your money was amazing. It was the best praturny
you've ever had in congratulations. And if you're just trying
to get more US dollars, you can trade it from
one to four, you can trade it from six to
twenty again, and you can.
Speaker 1 (26:13):
Make that spread, and that's cool.
Speaker 2 (26:15):
But if you're a long term bitcoin hoddler like I am,
and you expected to hit one million dollars by twenty thirty,
like I do.
Speaker 1 (26:22):
Then I'm not trying to time this.
Speaker 2 (26:23):
What I'm going to do is I'm gonna start adding
aggressively here so when it gets here, I'm not as
adding as aggressively. So I'm buying super heavy. Right here
around here, I start slowing down. Maybe I'm not going
to put any in. Maybe I'll just kind of wait.
I'm not selling, but I wait. Then when it starts
coming down right around here, I start deploying again.
Speaker 1 (26:43):
I'm gonna buy all the.
Speaker 2 (26:44):
Way through this dip. When it gets here, I start
waiting again. That's how I use this Now. We also
that's positioning versus chasing.
Speaker 1 (26:52):
I'm not trying to predict. I'm not trying to time.
Speaker 2 (26:55):
I'm positioning myself correctly to take full advantage of this cycle.
Speaker 1 (27:00):
Again, we want to use tiered entries.
Speaker 2 (27:02):
So again I'm not going to exit, but I'm not
going to do massive entries at the top of the market.
I'm going to I'll pause these entries here we're nowhere
near that yet, and then I'll start tearing in my
entries over here. We do this based off of conviction
weighted allocations. Remember the percentages, so based off.
Speaker 1 (27:21):
Of where we're at.
Speaker 2 (27:21):
As we're starting to get more expensive here, as the
odds the percentages are coming down, it's less so it's
conviction weighted allocations. Another thing about to take talking about
in this video is the treasury stacking. So now there's
this new breed of treasury companies, Bitcoin Treasury companies. Micro
Strategy launched it, Metaplanet, all matatoral these other ones that
are blowing up, and you might want to consider stacking
(27:43):
into some of these as well. If you're going to
break down a whole video on that, let me know
down in the comments. Okay, so I do want to
just press on something here. This is not static, Okay,
these charts the change. This is dynamic.
Speaker 1 (27:58):
It's moving.
Speaker 2 (27:59):
So if you're looking at any type of indicator a
two hundred moving to average, for example, it's moving with
the price.
Speaker 1 (28:05):
So you can't go off of what we just said.
Speaker 2 (28:07):
That's why we can't predict the top or we can't
predict a time because these are moving. So what we're
doing is we're seeing the signs as it developed. Now
the cycles are not random. They happen in proper sequence,
but not to the exact time or date. But it's
always going to be the same thing. It's always going
to be liquidity that's the leading indicator. It's always going
to be leverage built up in this system. That's the
(28:28):
derivatives and it's always going to be the human emotion
because we drive humans. We're driven by pleasure, greed, and
fear pain.
Speaker 1 (28:37):
That's it.
Speaker 2 (28:38):
So we want to look at those three things and
again not trying to predict the top or the bottom,
but instead measuring the risk and the location of our
investments to the cycle. If you follow this, we're going
to have massive success. And if you want to know
the top five on chain indicators that I'm watching to
help me understand this, watch this video right here and
I'll see you over there.
Host
Mark Moss
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