Bitcoin: The Beauty of Mathematics (Part 45)

[Music] [Music] Of approximately 8% now we have followed This for a long time and we've said Previously that the general idea is Going through undervaluation phases and Overvaluation phases now not All Undervaluation Phases and overvaluation Phases are the same there are more Durable periods where we are undervalued And more durable periods where we were Overvalued there were there was a period In 2019 where we went over valued for a Few months and then came back down to The undervaluation territory until the End of the having Year in 2012 we went overvalued and then we Actually came back down until the end or At least until the the beginning of the Post having year so currently we are Slightly overvalued now when we talk About overvalued that doesn't mean you Know that the market has to immediately Drop to the fair value As you can see we can spend months if Not years in the overvaluation territory So it's important to recognize that you Go from undervaluation to Overvaluation and the general idea is to Scale in at undervaluation and to scale Out at Overvaluation understanding that Undervaluation and overvaluation can Take years to ultimately play out now

Currently we have just gone above the Fair value logarithmic aggression trend Line last time we did that was late 2020 And you can see that we had a more Durable overvaluation period the time Before that was just before you know February 2020 we had a a pretty bad Crash after that and the time before That was November or sorry April of 2019 Where it stayed overvalued uh basically Until the end of the year right until About Q4 or so of that year so Definitely uh different times um in the Cryptoverse will will sort of lead to More dur moves above the overvaluation Above the fair value log than the Congression trend line and other periods Only get you slightly above it either Way I think it makes sense to have a Plan and I just wanted to sort of Present that hey we are now technically Overvalued um after being undervalued Essentially since um June of 2022 right Undervaluation starting June 2022 and Now we find ourselves back to being over What's interesting and we talked about This before is that there has been a Large rotation of capital um into Bitcoin and a way from the altcoin Market alts are still doing okay on Their USD pairs but a lot of that Capital has gone into Bitcoin and you Can find evidence for that in the in the Reality that Bitcoin is currently

Sitting in new highs uh well it is while I'm making this video maybe by the time That um this video comes out the the Price of Bitcoin will be different right Now it's at at around 70k 70.5k just Sort of pull it up 70.5k U by the time you watch this video Of course it it could be different could Be lower could be higher I don't know um But while while Bitcoin is at a new high A lot of altcoins are not right and we Know that ethereum is not and basically Most of the top 10 if not I mean if not Basically all of them um I'm not sure if There's one but I mean a lot of them are Just not at highs and a lot of them are Even nowhere close to being at highs and That's kind of why we focused so much And we continue to focus on on the Dominance of Bitcoin and why it makes Sense you know through you know during QT and and and rate hikes Uh late rate hi late late rate late rate Hiking cycle to be heavy Bitcoin as Opposed to um heavy eth or something Like that and then after rate Cuts occur Then some of those higher risk stuff can Then start to to catch back up but we Haven't reached that stage yet I mean I Know it's a long wait and I I know a lot Of people keep front running the Theoretical offseason that they want but The reality is that you know Bitcoin Continues to take more and more market

Share as the Bitcoin dominance goes Higher And as we've gone from being undervalued To being overvalued okay and again Sometimes I just look at the chart and Just kind of stare at it and say you Know what we can over complicate things By looking at the nitty-gritty details And you know we sort of do that we look At what's happening on the lower time Frames a lot but at the end of the day You know for everyone sanity just Sometimes take a step back and look at The General market trend there are going To be good times in the future there are Going to be bad times in the future the General market Trend is up over a long enough period of Time you can have some pretty scary Phases March 2020 basically all of 2022 a lot of 2018 a lot of 2014 right I Mean even even in in late 2015 we had Another scare right so I mean those Phases can of course happen and when They do just remember the General market Trend right go back to that and you know I tried to couple this With sort of dominance and and Bitcoin Dominance and then monetary Theory or Monetary policy and and and just kind of Trying to understand which Cryptocurrencies are going to outperform And through a lot of these prior phases Right this whole bull market right here

In 2019 Bitcoin dominance went up and I Went well into overvaluation territory Um and guess what during this whole Rally Bitcoin dominance has mostly gone Up right and again during late rate Hiking cycle uh very very familiar in Fact so again this is a more General View if you take the percent difference From the market cap and the fair value Log the congression trend line you get Something looks like this Um so you can see we've gone again above The fair value and the last time that Occurred U you can see the different Times that it occurred and sometimes we Go overvalued for a long time and then Other times it is much more shorter Lived and so you know whether it's going To be shorter lived or not I think will Ultimately depend on the reaction of Bitcoin as we go into rate Cuts right There have been a lot of instances where Bitcoin finds a local top in April that Doesn't mean that it has to this time Time in 2019 in fact it rallied until June right and we know the First Rate Cut might not occur until June maybe It'll even get pushed out further than That or maybe it'll be may but a lot of Times there's reason to think that the Market could cool off and sort of after The having you can see it cooled off After the H or after April in 2013 it Cooled off after April in 2021 and even

Last year you know we did sweep the high In June but it still more or less cooled Off with the exception of that one week Where we back up it was still a fair Fairly boring summer and and not until Q4 arrived did the market get back into Gear same thing in 2013 it wasn't until Q4 arrived really that the market really Got back into gear so you know whether It is a brief overvaluation period or Not I think is going to be dependent on On what Bitcoin does going into those Rate Cuts because you know last cycle we Saw it we saw Bitcoin Fade Into rate Cuts um I mean you can see that fairly clearly Right here as the rate Cuts arrived we Saw Bitcoin sort of fade into it and if That repeats itself then you could get a Shorter period of overvaluation kind of Like 2019 or you know late 2011 or even February 2020 and then you go back to Being undervalued and then you get done Another move later on right we've seen That happen a lot Counterpoint though in 2017 once we went overvalued we didn't Really look back for another 6 months so Definitely a lot of things to consider But that is you know what the chart Looks like right now technically Slightly overvalued based on the data That's fit to all data right the the Logarithmic regression trend line is fit To all data um so it's not what I think

It's just hey this is the fit to all Data and currently we are slightly above It business as usual Right nothing has changed so those are The general that's the general Trend Here of the cryptoverse and of course I Mean I've said before I think the Ultimate um the ultimate goal is is 10 Trillion uh plus or minus a few Trillion and as we go to sleep at night We cannot help a wonder what's a few Trillion dollars among friends thank you Guys for tuning in I'll see you next Time bye