Bitcoin: Dubious Speculation

Hey everyone and thanks for jumping back Into the cryptoverse today we're going To talk about Bitcoin dubious Speculation if you guys like the content Make sure you subscribe to the channel Give the video a thumbs up and also Check out the sale on into the Cryptoverse premium at intothe Cryptoverse decom let's go ahead and Jump in now in this video I just want to Comment on bitcoin's price action look At it with respect to interest rates Look at it with respect to gold look at It maybe through the lens of of Bitcoin Dominance a few other things so we're Going to go through various Aspects of it so please bear with me the First thing I I wanted to take a look at Are interest rates and how that has Related to bitcoin price action this Year now this line here let me change This to a different color so it shows up A little bit better so the white line That you see on the screen are interest Rates um the you know the the the Federal funds rate and we spent a lot of Time talking about this this year now Unfortunately for Bitcoin it hasn't Really lived through many rate hiking Cycles in fact you could argue that this Is only the second rate hiking cycle That Bitcoin has ever experiened because It just hasn't been around long enough To to know anything else I mean we

Effectively at at you know quarter of a Percent for the FED funds rate for most Of bitcoin's Life over here we finally Saw a rate hiking cycle and then we saw Rate cuts and then this is our second You know our second cycle but one of the Things that we've been following this Year is the Fed funds rate and talking About expectations for the terminal rate And when the Federal Reserve could start Cutting rates now it was quite vocal in A long time ago that the federal funds Rate the terminal rate would likely be 5 And a Half% and we've been in a 5 and a half% For a while now and I I think that this Is the terminal rate I don't think they Will go any time any any higher than This in the current cycle that doesn't Mean that next cycle they can't go Higher but in the current cycle I do Think 55% is the terminal rate now the reason Why this is interesting again is and Just looking at the last cycle a Reminder it's just n equals one right we Have one data point just because it Played out in a certain way in a prior Cycle does not mean it has to play out In the same way in the current cycle We're just going to look at some of the Similarities and of course you can make Your own Decisions one of the things we pointed

Out before is that bitcoin's local high Was in again it wasn't you know a a Major high and it and it and it's not Like even after this 2019 High we didn't Even go put in a new low but this High Came before the FED started to cut rates Okay so that is is and we've talked About this for probably well over a year Now if we draw a line at the First Rate Cut that came in July of 2019 you can See that the Bitcoin actually topped out Just before the First Rate cut okay just Before it about one month before it now It's anyone's guess as to when the First Rate Cut's going to come some people say The FED will start cutting in January Others a lot of people think it'll be in March um of course a lot of that will Depend on on how the labor market Evolves between now and then if you were To go look at at probabilities for rate Cuts the market is fairly convinced that There's going to be a rate cut by March In fact only about 12% chance that will Still be at 5 and a Half% you can see that there's about a 75.6% chance that will be at 5 and a Quarter by March and there's even a 12% Chance according to the markets that Will will actually be back down to 5% so The market thinks that rate cuts are Coming in March and some Market Participants think they're coming as Early as

January so if we were to first start off With the idea of March then that would effectively be so If we if we were to draw that line on The screen looking at March of 24 and Let me go figure out the exact date so March 20th so if we were to draw a line Here right let's just draw at March 18th Because that's the start of that week That puts it right there okay now Remember Bitcoin at least last cycle found a Local high before a substantial cool off Period just before the FED started to Cut rates about a month before before Now This 75% chance really more than that Like 87% chance 87 88% chance of a rate Cut by March if it were to play out last Cycle then that means there could be a Local high for Bitcoin coming in early Part of q1 2024 if it doesn't come Before then Now how would that you know are there Other things that we can look at that That paint a similar picture or not Right and I I think that's something It's worthwhile to to discuss and one of Those things that is kind of an eerie Similarity is that if you look in 2019 Just before the final push to the upside Right so like just before the final 3 Weeks that Bitcoin made this move we had A red candle but then after that red

Candle after this red candle in June of 2019 the following candle was an Engulfing weekly candle meaning it Opened You know it opened and then closed that Week above where the prior week opened Despite it being a red candle right so Red candle down a an engulfing candle The following week what's Fascinating is from this low here in December of 2018 to this High right here around this Wick it's Hard to get an exact right but I mean It's about 189% rally and you know just For the sake of of of you know trying to Make this as accurate as possible let's Just line this Up so Around about 189% move before we got the Red Week from which we had a an engulfing Candle the following week that led us Into the final move before rate Cuts Began okay right we can see that pretty Clearly about 189% r Rally red candle engulfing candle the Following week final move before rate Cuts began now then if you go back if You look at it like this cycle right From this low here to the current Wick High about 188 189% move right so it's a Really similar type of move the main Difference though is that this move over Here took place over the span of about 6

Months whereas this move took place over The span of about 12 months right 12 to 13 months so I guess about 12 months You're talking about from November Because that Wick is already coming gone Right but about 12 to 13 months so while It's up about the same Amount this move took about twice as Long as that one okay now one of the Things we mentioned is that in this move We had we had an engulfing candle right So you had the red candle and then you Had your green candle candle the Following week and we're actually Potentially looking at a at a very Similar thing here right where you have A candle down and then you have an you Know a potentially engulfing candle the Following week now let me switch this Over to a different exchange because It's not really showing up that well There because it's showing the um the Opening price is higher than the closing From the previous week but you can kind Of see it right so what I think you you Look for is does this week close above Where the prior week opened at and we're Currently right around that price right Right around 43.8k you can see the Following week the the previous week Open up at around 43.8k so again the Question will be is can it get that Engulfing candle or not okay and if it Does if it does get it which again

There's no guarantee we still have you Know a little bit of time before we get The weekly close but if it does get that Engulfing candle where it completely Wipes away the losses from the prior Week and then we get a following move in The in the in you know sort of next week So the last week of December then it Would be setting up a very similar type Of move that we saw back in late or in Mid 2019 just before the First Rate cut Came in Okay right so I think that is something To think about right is is will it play Out in a similar manner or will it not The other thing that I mentioned before Is you can look at this also in in in Other ways besides just interest rates The other way to look at this is if you Were to Overlay gold onto the chart Right so if we were to Overlay gold onto The chart one of the things you'll Notice is that when Bitcoin had this Move just before interest rates began You know being cut you'll see there was This prior range on gold at which it was Really struggling to break above right You know you can see it had one test Right here a couple more tests over here Unable to break above it here it fell Short finally it broke Above This level That it was struggling to break Above in June right in June and it broke Above it right here right right here

After this red Candle by Bitcoin right The next week or two that was when gold Finally broke out and when gold finally Broke out right as as it finally broke Out that is what preceded the final Local high on bitcoin before a more Substantial pullback again I'm not Saying like I'm not trying to say that It has to be you know all doom and gloom I'm just saying look this was a local High before a more substantial pullback After gold broke out right so we had That move by gold Above This level right Above the level it had been struggling To break out from for a long time Starting in September 2017 this was June Of 2019 you're talking about almost two Years before gold finally broke out but Once it broke out Bitcoin then entered Its local top within the next week or Two right within the next couple of Weeks Bitcoin entered its local top Which again preceded interest rate cuts By about one Month then if you go look at where it is Today you can see the gold has had a Very similar structure right there's Been this level that has been struggling To break above and now seems like it's Finally starting to break above it not That dissimilar right from what we saw Back over Here right so gold had a very similar Move let me move this up now because I

Shifted the screen right but gold had a Very similar move right here right so You had this high this one was a little Bit lower still unable to break through It potentially breaking through it now Still remaines to be seen right you Still need to see gold continue to show Strength um and and and get into the 2070s the 2080s the 2090s so on and so Forth so it's interesting because I mean It's setting up in a similar manner Though the the move that it took Bitcoin To get here while it's up about the same Amount took about twice as long as it Did in the prior cycle to get to the Same point so we'll see if it if it Plays out in a in a similar manner or Not now one thing to think about too is Well what if interest rates don't get Cut in Mar right there's always a chance That they don't get cut until May and Then that means you know it could mean That there's there's a lot more runway On the other hand what happens if they Get caught in January then that means That that Bitcoin could be entering the Topping process within the next week or Two if it plays out like a PRI like the Prior cycle what's fascinating about This move is I mean I know a lot of People have been talking about the spot ETF this year and I don't know the exact Dates on when people are speculating That they're going to be approved or at

Least some news come out but I think It's around you know the the the first Second week of January which is interesting because After Bitcoin had this move right this Red candle it then had the engulfing Candle the following week and then one Two right you had two candles after that Where Bitcoin put in higher prices and Then that was it so two candles after That would actually put you not the so December 25th is the coming week it put You the week of January 1st right the Week of January 1st would be similar to Sort of this one but the main caveat Remember is that the entire move to get To the current Point took twice as long Right it took twice as long to get to The current point this time than it did Last time and so perhaps from this level You could argue that maybe the next move Takes twice as long as well so instead Of a two we move maybe it's I don't know A four-week move right could be and if It's a 4-we move that's still getting You about a month or so before Potentially interest rates are getting Cut in in March of of 2024 now there's Always a risk that inflation re Accelerates and that all these Cuts get Completely priced back out and and then The bond market would would then react Accordingly there's always a chance that Happens well I do think there's there is

A risk of a of a second wave of Inflation I think it's a little Premature to think that that wave is Here and so I would argue that the more Likely outcome at least in the short Term is to see continued disinflation Primarily because one of the main Reasons that inflation has been um you Know continues to come down is because The housing market is is very very Lagging and it's finally starting to Fill the effects of all these rate hikes So I still think inflation will come Down and that there there could be you Know there certainly could be a reason For the FED to sort of point to the you Know to why they need to to Pivot or to Cut rates in early 2024 and and the Reason they could say that is if you Have inflation sort of trending towards 2% but you have the unemployment rate Potentially trending higher then they're Going to point at that and say well guys We have a dual mandate it's not only Price stability but it's maximum Employment and therefore they could they Could start to cut rates so I I think That it's important to recog ize that That the cycle does not have to play out In the same way um you know a lot of People say this time is different and Look I've I've had my fair share of of Wrong calls so I I just wanted to at Least point this out and and you this is

Something we've pointed out before uh Throughout the year I think the hard Part about this sort of analysis when it Relates to interest rate Cuts is you Know you don't we don't actually know When interest rates cuts are going to Come I mean you know a year ago the Market thought that interest rates were Already going to be cut getting cut in Mid 2023 now I was not one of those People that thought that I mean I Thought we were going to go to 5 and a Half% I thought higher for longer but Now I think higher for longer has been Priced in when the bond market had it You know had that had that pretty Substantial move to the downside back in August September and October so I think Higher for longer has been priced in and And that was sort of the the way of the Market really getting to that extreme And now it's sort of going in the Other Extreme and saying well what happens if We go into into disinflation or contined Disinflation and the FED is so far Behind the curb on on on cutting rates That that's the next narrative that gets Chased but I did just want to point this Out um because this was this was Something that we saw last cycle was Sort of that final thrust and of course The other way to look at this is through The lens of Bitcoin dominance and a lot Of people have asked me my opinion on

Dominance normally what happens is that Sometime in the having year altcoins Start to durably outperform bitcoin Because we go to lose their monetary Policy now in the short term a lot of People could say well you know dominance Has come down from 55% only a few weeks Ago right and what's interesting for me Is that how how quickly opinions shift On Twitter right like so a few weeks ago You know it was like oh well the Bitcoin Dominance theory has been correct all Along and then you just fast forward two Weeks and it's like all right well no It's not but look guys you know Dominance has been above the 20we Estimate 21 EMA for basically the entire Year right it's been an uptrend for the Entire year and I I thought you know it Might be interesting to take a look at How this looked at around the same time During the last cycle as well and if we Were to pull up interest rates onto this Chart on on bitcoin dominance um one of The interesting things that you that you Might note is that just before rate Cuts Dominance also saw a PR pretty Substantial pullback last cycle as well Not to the point where you know I mean If you if you actually look at this Really closely there were a lot of Wicks To the downside here right so like it it Went all the way up to 63% and then came All the way back down to around

57% right so from 63 to 57 now the 63% Move when it hit 63% it did it in in Miday of 20 of 2019 You can see that Bitcoin dominance then Put in a new high a new yearly High a a Month later really about five or six Weeks later right because this occurred The week of May 13th and then it took Out that the week of June 24th so it was About five or six weeks later after a Fairly substantial pullback in Bitcoin Dominance from 63% down to 57% and then if you look at it today you Can see that there's been a pretty big Drop from 55% and if we go back to where This Wick was this was back at at around 51% which Coincidentally happens to be where the Bull market support band is going to Meet it right so the bull market support Band will come in right here and then The question is is does Bitcoin Dominance bounce off of that just like It did over here and again you know I Have really conflicting views if I'm Being completely honest I mean I think The lwh hanging fruit on the dominance Move from 38 39% up to 55% that's come And gone and you have sort of two Different ways that you look at it you Look at it Well normally Bitcoin Dominance in having years doesn't tend To do that well because of a shift to Looser monetary policy right normally

Speaking But it's also important to point out That last cycle dominance did not even Top right here until after interest rate Cuts began right so back in September I Had a lot of people telling me that Dominance had already topped because Right because um you know that's where It that's when it topped last cycle Right so like why would it be any Different this time you know why why Should it be and you can see that well Dominance continue to go up well after You know well after September so I I go Back to this idea of you know is it just A timing thing or was was it based on Monetary policy we know again we know if You go look at at let's just go look at The dominance chart here it topped in September this cycle you can see that it Put in a new high in October and then Put in another high in December so Clearly this move has been different Than this move over here that topped out In September and the reason why I think It topped out in September is because Interest rate Cuts had already began Right they already begun and therefore You know higher risk assets started to Do better against lower risk assets Durably and and it wasn't just sort of a One-off move that then got faded a few Months later so I I do wonder if if this Is sort of where dominance is right

Where it's had this pretty massive Pullback just at the same time that we Are going into sort of the last couple Of months before interest rate Cuts Began right so you can see that that Dominance had this pullback In May starting in May of 2019 and then A month later in June dominance was Putting in another new high this top Here came the first week of December so A month after that would put you the First week of January which which Coincidentally could be when all the Spot ETF hype finally comes to a a Crescendo right there's there's some Type of resolution to this idea and it Could be the first or second week of Jan January if it were to play out like it Played out over here now what's Interesting about this move over here by Dominance is that after it had this Break back up to the Upside in June it corresponded to that Final thrust by Bitcoin just before Interest rate Cuts began but dominance Continued to go up for another few Months right so that maybe a couple more Months or so two to three months Dominance continue to go up even after Even after that Um you know that that major move by Bitcoin was over with and after Cuts Began you can see that while the FED Started to cut in July dominance did not

Top out until September so we find Ourselves in an interesting position Because you know there's a lot of people That think that you know it'll behave The way it always does because of of Whatever reason um and there's other People that think it'll just it's more So based on on monetary policy the truth Is that there's really not enough data To be completely sure of anything I Think it's relevant to point out that Last cycle dominance topped in September Of the prehab year which was after rate Cuts began but this time we have not yet Had rate cuts and we just put in a new High on dominance in in December so I Mean I I would like to see where Dominance goes over the next two to Three weeks I mean if dominance is Unable to to take out the prior high at 55% you know within the next month or so Then then it could be it would be Relevant sort of think about well is it Going to play out like it normally does In in having years or is it more Dependent on monetary policy the truth Is I don't have the answer to that Question um you know we've been Following interest rates for a while and How dominance seems to to track it Pretty well especially late cycle and so Far that is panned out but there's also Simply no denying the you know the drop That dominance has had over the last

Couple of weeks and I guess the question Is will it hold these lows right so you Can see these Wicks over here will it Hold those lows just like it did or Sorry will it hold these lows right here Just like it did last cycle and and Again this cycle it would correspond to Going back to that bull market support Ban so I think that's what we you know That's what at least I'll be watching Over the next couple of weeks I'll also Be watching to see if Bitcoin USD you Know if it if it can get that in candle Above the prior week and if it does does It get this sort of this final move into The next month or two just before rate Cuts begin and if it were to play out Like that it would actually be very Similar to what happened last cycle the Other thing that we previously mentioned Was the short-term bubble risk for Bitcoin and sort of noting that there's Been some pretty consistent levels that It seems to to lose steam um one of Which over here was back in January this Extension for the 20we SMA same thing Right here that's is the extension from The 20we moving average same level that I got you sort of pushed down right There but then both of these had another Move this one came in March and then the Extension from the 20we was lower the Following you know the following month Even though it went to a higher price so

Here it went to the same extension that It did in March in December and then the Question is of course is is it going to Do something like in April or say late December early January just like it did Back over here where maybe the extension From the 20we is less than it was in December but perhaps it could be a at a At a higher valuation if that makes Sense um so that is what I I'm sort of Looking at right now with regards to Bitcoin um we've talked about this idea For a long time but you know again There's there's no way to know if it if It's a valid Theory or not like if if Interest rates start getting cut and and Bitcoin is still going higher then Clearly it's deviating from what it did Last cycle if on the other hand it it Puts in a local top before rate Cuts Began then we could argue all right well Now it's doing the same thing two cycles In a row there's not enough data Unfortunately I'm just trying to show You guys the similarities between Bitcoin interest rates uh looking at at Prior mov ments by gold and and and Looking at at dominance and saying look Guys I've been bullish on dominance for A long time I recognize that in having Years at some point in the having year This trend tends to change but it also Tends to change with looser monetary Policy it looks like looser monetary

Policy is coming but it's not here yet Right and so you know is the market Front running this potentially right so We'll see we'll see what happens um With with the fed you know with the with The FED coming into the next couple of Months my my guess is that unless the The only way they're going to cut in January would be if there's some massive You know some massive move up in the Unemployment rate like if the Unemployment rate you know shoots back Up to well over 4% or something in January then maybe they would cut by by Late January um but if the unemployment Rate comes in you know at 37 a or Something like that it's hard to imagine That that January would be when they Would cut um and it would be more likely To be like March or or or even may but Clearly you know March is a is a is a Pretty good candidate and I think it Makes sense I me I think the reason it Makes sense that they could cut in March Is because if it if the if the FED Believes that there's long and variable Lags to all these rate hikes then There's also going to be long and Variable lags to rate Cuts as well and So per perhaps they want to get ahead of That um rather than you know rather than Be getting too far behind the curb again Just like they did with with rate hikes A couple years ago so um that's more or

Less what I'm looking at with with Bitcoin right now uh I suppose we could Also go look at the the logarithmic Regression rainbow that we've sort of Looked at a a a few times um so let's go Look at that one of the things we've Noted before is that sort of that two And a half log line rule that we Previously pointed out I'm not going to Go through it just for the for the sake Of time and this video is going longer But two and a half log lines down puts You at this one right here which is Currently coming in at around just below 48k so around 48k or so uh is where That's coming in um and so potentially And you can see this is where it Actually came to uh back in in August 2022 as well but 48k is where this Regression band is currently remember Though this is a monotonically Increasing function so while it's 48k K Or just below 48k today a couple of Weeks from now it could be a little bit Above 48k so it all depends on on on if and When Bitcoin hits that regression band As to where it as to where it you know Ultimately corresponds to so that's more Or less where we are with Bitcoin um the Altcoin market has has clearly uh again We talked about this you know a few a Few weeks ago when when the altcoin Market took out this High over here I

Said all right guys you know this is Potentially a shift in the prior trend On total 3 total 3 has extended those Gains and because of that I mean because Of that that's the reason why dominance Has taken a big hit is because the Allcoin market has pretty aggressively Risen here in a relatively short period Of time while Bitcoin has mostly stayed Flat above its 20we moving average so The way that dominance moves up is if Bitcoin makes a volatile move especially You know within the next few weeks it Seems like there's a lot of narrative Atives and there's also the Bitcoin Having of course as well um that that is Coming up in in April right but that's Still you know still a little ways off But those are things I think we should Look at rate Cuts how it relates to Gold how it relates to the prior cycles And and just make sure you're managing Your risk accordingly um again you know I the way I navigate the market is I I Just DCA in when the risk is low and I DCA out when the risk is high so that's All I do I can give you my opinions as To where bitcoin price action is going In the short term but the truth is that It's nearly impossible to predict and I Certainly don't have a great track Record of predicting short-term Moves In In Bitcoin okay um if Bitcoin were to to

Fall back down let's say it doesn't get A bullish candle or an engulfing candle Here and it were to fall back down then You know then you have to start looking At at these prior highs right you know Can it hold 31k or not um and I mean I I'll be honest I mean I I do think Bitcoin will have a a a pullback within The next couple of months or so but it Again it might not come until you know Until mid January there's there's Typically some seasonal weakness in mid January so that's sort of I think when The next big area could sort of open up For a a more substantial Bitcoin Correction um at this point you know I Mean eight green weeks in a row one red And now we're potentially looking at Another green week so we'll see where it Ends UPS if you guys like the content Make sure you subscribe to the channel Give the video a thumbs up and again Check out the sale on intothe Cryptoverse premium at intothe Cryptoverse decom I'll see you guys next Time bye