Bitcoin: The Beauty of Mathematics (Part 39)

Hey everyone and thanks for jumping back Into the cryptoverse today we're going To talk about Bitcoin the beauty of Mathematics part 39. 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 Crypto various premium at into the let's go ahead and jump In again I know that it's called Bitcoin To be a mathematics but as a reminder This is of the entire cryptocurrency Market capitalization and the purpose of This video is to take a step back from The day-to-day price action and try to Understand more so where the entire Cryptocurrency asset class is in its Overall Journey now the fundamental idea Of these videos is that the fair value Of the cryptocurrency asset class is Increasing per a a monotonic function Therefore the idea is that as a function Of time the the asset class should Trend Higher now on any given day or any given Year you know obviously that will be Debatable But as you can see when you zoom out the Uh the asset class as a whole tends to Trend up with time if we go through Periods of overvaluation and Undervaluation as you can see where we Go through pure Euphoria and greed and Then we go into sort of the fear and and Depression phases and one of the things

That I've mentioned before is that I Believe that we are in the midst of a Secondary scare now we've talked about This before it tends to occur within the Cryptocurrency asset class we get our Bear Market year we get our pre having Year rally then we fade it for the Second half of the Year ultimately Ending in some type of secondary scare That can last cycle it actually ended in A recession uh this cyclic couldn't Intercession the cycle before that it Ended in a recession scare not a Recession as of and I know I normally do These videos on the first of the month But Um and I'm actually making this on the First of the month you will not see it Until the second of the month because we Had to do our Wake Me Up When September Ends video first uh but as of September 1st 2023 the fair value of the entire Asset class has a modest 1.043 trillion Whereas the fair value is coming in at 2.11 trillion this represents an Undervaluation of approximately 50.57 percent now that might sound like A lot and arguably it is but history Shows us that we could theoretically go Lower on these undervaluation territory One of the things you'll note is that in In 2015 we had a double we had a double Bottom within the cryptocurrency asset Class and you can see that we didn't

Really kick off the real bull market Until we hit that lower logarithmic Regression trend line just like in in The last cycle we didn't really kick off The bull market that took us to new Highs until we hit the lower logarithmic Regression trend line you might say well It didn't hit it but this is only Looking at Daily closes if you were to Look at the the full candle the full Quick We actually did go all the way back down To this level so that is something to Keep in mind and arguably I think that It will likely happen once again you Know if if you if I mean if we if we Want to talk about how we get there we Either go sideways until we hit it or we Go down until we hit it right if we were To go sideways until we hit it you know You're still talking about it taking Until the summer of 2024 before we could Even tag the lower green logger in the Congression trend line at this rate if We go down right I mean obviously we Could hit it a lot sooner the lower band Is still several hundred billion below Where we currently are and it's just a Humble reminder that the secondary scare Is is more about the time-based Capitulation component more than Anything else because prices in Prehabbing years for Bitcoin are Normally relatively static it might not

Feel that way because if you spend half The year going up then everyone gets Excited but then you spend half the year Going down everyone gets depressed but At the end of the year oftentimes price Might not really be that different from What we saw at the beginning of the year Okay So do keep in mind that prehabbing years For Bitcoin are a way for both the Bulls And the Bears to get sufficiently Wrecked you go you go up long enough to Give the Bulls a false sense of security And to have them call for new all-time Highs before the actual having and Before we get to more importantly Quantitative easing only for us to fade In the secondary in the second half of The year thanks to a seasonal correction In the S P 500 that tends to occur in August or September of the pre-election Year and remember that even though we Got a correction in the S P 500 the s p Likes to climb the wall of worry until We go into a a recession or until There's some other uh weakening in the Labor market now we did get the Unemployment rate coming in at 3.8 Percent and that might sound like a Pretty big move up but until we start Printing in the fours and fives I don't I it would be somewhat premature to Assume that the market is priced in a Recession recessions only get priced in

Once labor market really starts to move Up and and there has not been any clear Indication of that yet especially with Initial claims still printing well below The 300 000 level and in fact this last Couple of weeks it's actually been going Back down do note though that in 2022 uh Initial claims bottomed out in September So there might be some seasonality Coming in here we could see initial Claims go back up into the end of the Year and that could usher in a recession Sometime late this year or or in early 2024 just like we had one in early 2020. Just like we had a recession scare in Early 2016. so Remember that undervaluation is not just About the the the the price or the Market cap it's also about the reference Point if if you look at this today You'll notice that the total market cap Is actually basically the same as it was You know over a year ago but we're more Undervalued today than we were back then If you're to look at the percent Difference between the market cap and The red trend line the red fair value Trend line You'll see that we're more Undervalued today than we have been for The entire cycle Since March of 2020 right the last time We were this undervalued you'd have to Go back Pretty far and then in 2015 as well you

Have to go back pretty far in 2020 we Only spent a very brief period of time At and and we still haven't reached it Right we still need to see this drop you Know from around 50 under valuation To more so like Um you know more so like 65 Undervaluation Um and we haven't seen that yet but it Is getting there and and you can see the Cycle before that we actually spent a Lot of time there I think it's more Likely that we'll spend more time at These undervaluation levels than a quick Move out of it like we saw in March of 2020. the reason for that is because Arguably the reason that that we we Rebounded so quickly in March of 2020 Was because we got about six trillion Dollars printed uh very quickly by the Federal Reserve unfortunately with Inflation as high as it is uh we're even Watching the price of oil go up today Um and I and I believe putting in new Yearly highs that that is going to to Continue to put pressure on on the Consumer and and therefore uh the FED Will be forced to stay higher for longer In their interest rates Um I know I I and then I think it'll lead To to sort of a a period like this which Would be akin to the depression phase of The market cycle and I think we're

Heading into that in the back half of This year Um as sort of the month slowly press on It doesn't mean that every day has to be Read or even every month but I would not Be surprised if three of the next four Months were just red months for Bitcoin Um you know we could have a red September and then a green October and Then a red November December we could Have a red September a red October or Red November and then a green December Right but the point is is we are likely To spend some time at these lower Undervaluation levels just like we did Over here in 2015 and 2016. and if you Look at it you know arguably From this perspective it it looks a lot More similar to this over here than Perhaps this one over here where we went Overvalued for a couple of months Remember back in 2019 Bitcoin went up About 4X or so from at least the 2018 Bottom or is this cycle Bitcoin only Went up 2X and remember in 2015 it Rallied about 90 percent and then it Ended up finding a double bottom and so You could have this example where you Know the asset class goes back down and And and and Bitcoin you know goes back Down to where it previously was but the Altcoin market is just completely a Shell of its former self because it got Wrecked

Um in the bear market and then it then Usually is not able to keep up with Bitcoin in a rally in the prehabbing Year and then it just gets wrecked again When Bitcoin comes back down and that Should lead to the finalization of the Altcoin Reckoning sometime later this Year or early next year is my guess if If we do go into a recession and and People capitulate their alts because They finally think okay the recession's Finally here that means that the ought Clean Market is is um It's going to keep going down do note That that might be a false Um sort of reasoning because oftentimes As we've said the the altcoin market is More so a function of excess liquidity Than anything else and if we do go into A recession then the Federal Reserve Will likely be forced to start some form Of QE and therefore the altcoin market Could bottom out early on in the Reception remember the stock market Tends to bottom out Um you know in the recession not after The recession because the market the Market is often forward-looking so my Expectation is that the s p climbs the Wall of worry until we start really Going into recessionary territory uh Crypto is likely in a downtrend for the Rest of the year and and will likely Revisit the lower logarithmic regression

Trend line at some point and and after We do then perhaps we can talk about Going into a more sustainable run That'll take us to overvaluation Territory in 2024 and 2025. 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 into The cryptographers premium at into the remember the view of These of these videos the the general The the the the theme is that Cryptocurrency the asset class as a Whole is in fact is is in fact heading To 10 trillion which is this line right Up here so it's this this horizontal Line right I I do believe it's going to 10 trillion here in the coming years Whether we hit it this cycle or not you Know will obviously remain Up For Debate But I do believe we are going to 10 Trillion plus or minus a few trillion as We go to sleep at night we cannot help But wonder what's a few trillion dollars Among friends I'll see you guys next Time bye


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