Bitcoin: Where I Went Wrong

Hey everyone and thanks for jumping back into the cryptoverse. Today we're going to talk about Bitcoin and I'm going to reflect some on on what has happened and and perhaps how that affects things moving forward. One of the things to always do when you do get something wrong is to go look to see what other people are talking about. Um because after all it is a market and it is the different opinions that make up that market and as I've said before we all represent the market and we're all going to get things wrong at times as I was as again as I've said before I I was wrong about Bitcoin uh not being able to get past the May high which it which it has right like it it has gone above it and one of the cool things about um you know we're doing this conference in November although you know right now obviously I know that's not probably the thing on everyone's mind uh but we do have a couple of new speakers um in line with the idea of making sure we hear all sorts of different opinions of people especially people who have been more so on the right side of of where things are uh we have Michael Sailor coming to the conference so that's pretty big And we also have Grant Cardone coming to the conference which is also really big news. So thanks to both of them for agreeing to speak at the conference. Let's go ahead and jump in. So Bitcoin is currently trading at $86,000. So what's interesting about this is I was trying to like put the pieces of the puzzle together, right? And the pieces of the puzzle were as such. I thought that going into the end of the year, right, like starting a couple of months ago, that we would likely see energy prices go up. So, I thought energy would go up from there. I thought that because energy prices were going up, I thought that yields would go up because the Fed would be initially unwilling to hike rates. So from there, I thought yields would likely go up. Now, because of that, because energy going up would lead to yields going up, I thought the dollar or sorry, I thought the Fed would then raise rates to combat higher yields. So, the Fed would then raise rates starting in September. And then I thought because the Fed would raise rates, the dollar would then go up. What's fascinating to me is I got all these things right, but none of those things really matter for a lot of people that watch this. I mean, obviously I'm I've been bullish on energy and I know some people own own the energy market as well. But a lot of this stuff I was using to understand what Bitcoin would do. And I said, "All right, well, if energy goes up and if yield which would cause yields to go up, which would make the Fed raise rates, which would cause the dollar to go up, therefore Bitcoin would go down, right? That didn't happen." Now, if you look at energy prices, right, if we go look at at XLE, for example, that's what I I mainly track here. Um, energy has has actually had a really good move over the last few months. And yields went up, right? If you look at at say like the 10-year yield, we talked a lot about the 10-year yield running to about 5%. Which it now has, the 30-year yield going and setting new highs, which it has. That forced the Fed to raise rates. If you look at at interest rates, um, so I think we're I need to figure out how to add that on here. But if you look at interest rates then um we saw that interest rates went up and then when the Fed raised rates the dollar of course started to show strength once again. Now, what's interesting about the dollar chart is I was thinking, all right, we're going to have we have a low, we've got a higher low, we're going to have another higher low, and upon that higher low, Bitcoin should start to show weakness. So, if you overlay Bitcoin, this is where I got it wrong, right? Like, this is this is where I got it wrong. I was looking at at this thinking, all right, the last time the dollar sort of put in that double bottom pattern. It corresponded to Bitcoin's local top. This time we got that double the double bottom pattern again, but instead of Bitcoin dropping like I thought it was going to do, instead Bitcoin went up with the dollar. Right? So you see there's like a divergence there. The dollar went up in May and then Bitcoin went down after the double bottom. This time the dollar went up like like it did back then, but then Bitcoin followed. So something changed, right? Like something clearly changed. Now if you ignore all that stuff, which is reasonable, right? I mean, I I don't really think you have to have a narrative to justify anything. If you ignore all that stuff and you just look at the Bitcoin chart, Bitcoin formed a low in February when it normally does, right? Like when it normally does, February of the midterm year. You can see that it's kind of done that time and time again. It also did it all the way over here in uh 2014 as well. So February, let me change this to a weekly chart. So you have your February lows and then following the February low, you have your summer low, right? Your summer 2018, summer of 2022, and then summer of 2026. So all of that lines up. And it was because of that I said, well, look, normally what happens in the second half of midterm years is Bitcoin rallies uh and then it comes back down and then once we get into the fourth quarter, we get a drop that no one ever anticipates and and then we'll be on our way, right? And normally you would expect about a 40% rally, right? If you look at 2018, it was a 40% rally off the lows, like 45%. 2022 it was about 40%. And so I said all right you know maybe we could go up 40% from the lows. I said this back in July thinking that we could have that but then it didn't happen in July right so I was thinking all right if we're going to follow 2018 you'll have that countertrend move in July and then you'll come back down. What what what happened is we got a barely anything and then it didn't break up until August. So that's kind of where I started to get offkilter a little bit because that's where things really started to diverge some um because Bitcoin from the low has now rallied all the way up 50%. Which is a bigger move up after a summer low than we saw in the last two midterm years. So something clearly changed. Furthermore, not only is it different in that sense, but also Bitcoin set a higher high, right? So in from the summer rally of 2018, it was a lower high and the summer rally from 2022, it was a lower high. So for me now, like I'm looking at this and thinking like, all right, well, something clearly changed in in, you know, in the markets because the dollar went up, Bitcoin went up with it. Now, in some ways, perhaps Bitcoin is a little bit more correlated to traditional markets now because of the ETFs and traditional markets and midterm years often can stay bullish uh even into late September. In fact, we actually saw that happen the last two midterm years, right? The last two midterm years. You look at September of 20, sorry, not last one, the last one was it was the drop started in August. If you look at September of 2018, um the stock market found a high on September 21st and then it had a 20% drop. And then in 2014, the stock market found a high on September 19th before a 10% drop. Right? So you have examples in the past where the stock market started that drop, but that doesn't mean it has to. Uh there are midterm years where the stock market does not top out in late September. I believe 2010 uh is an example where the stock market found or sorry where was it? 2010 the stock market found um a low in early July and then went up into the end of the year rather than getting that correction. So it it's not like there has to be a correction because it's happened in three of the last midterm years. If you go back to four midterm years ago in 2010, there wasn't a correction. Now, that was also coming off the back of the financial crisis where the market had already dropped like over 50%. But it does go to show you that you don't always get one. So, because of this move, right, like I I have to be a little bit more open-minded now uh to, you know, to where Bitcoin goes from here. The last time, arguably, the last time I was this wrong about something, right? I get I get things wrong all the time. Who are we kidding, right? But the last time I was this wrong about something was in 2023. So, in 2023, I I said that I I thought that Bitcoin would not exceed $35,000 for the rest of the year. I thought that 35K would would basically be as high as it would go and um we clearly broke through that and and that was like the last time where I really, you know, uh felt the wrath, right? Felt felt the internet's wrath was probably like late 2023 around October. So about 3 years ago, almost exactly 3 years ago is is where that happened. And perhaps the same thing is happening now, right? Where, you know, and by the way, in October of 2023 when Bitcoin broke through, I did the same thing that I did today. Like I made a video, I said I was wrong and I just moved on with my life and I I tried to regroup and and and reassess. as it stands right now, you know, Bitcoin has broken through and unless that changes, then I have to respect like the new structure of the market. I I cannot, you know, unwind this in my mind. The only thing that would change something is if this were completely retraced, which at the current time I don't really feel like I have any type of authority to suggest that something like that would happen because I didn't predict the breakout in the first place. Right? A lot of times it it it's convenient for people who were wrong about something to then try to figure out like well why uh you know why does it have to like why does it have to then come back or or do something that they initially thought and so I don't really feel like I have the authority at this point right like the credibility to to suggest that and so I think it would be more prudent to listen to other people's views about what's happening happening right now um rather than mine because I didn't predict this move in the first place. So if I didn't predict it in the first place, then I'm scrambling to figure out what's happening. Whereas there's other people uh that are not scrambling to figure out what's happening. Perhaps they were able to foresee this uh better than me. in which case it's better to to figure out what they're thinking and what they're saying than to, you know, listen to someone who was wrong. And that doesn't mean that like my opinion is never valid in the future. I'm not I'm not suggesting that. Um I I do think, you know, at times I can have good runs, but what it means is that when you find yourself on the wrong side of the market, uh there's there's usually something you're missing, right? and and I'm, you know, still trying to figure out what that is, right? So, that's what I would argue, you know, and I I've I've gone through and I I've looked at at what has Bitcoin done uh during past rate hikes because my thinking was this and and I think this is where I really really went wrong. Okay, I thought that when the Fed was forced to raise rates that Bitcoin would repric lower because I thought that Bitcoin would not like the rate hike, right? I I thought it would react negatively to that rate hike and the dollar going up, but that is actually not rooted in the data. And that is where I went wrong because if you look at what Bitcoin did after the other rate hikes that we had the f so if you look at like the rate hiking cycles if we go look at um interest rates the Fed funds rate what you'll notice is that there's since Bitcoin's been around there's been a couple of rate hiking cycles right one started in December of 2015 and then another one started in March of 2022. And when we had the first rate hike of a rate hiking cycle, Bitcoin did not go down immediately. And in one case, the bottom was already in. If you look at Bitcoin's ROI after the first rate hike of a rate hiking cycle, this is December 2015. This is March of 2022. So those were when we had the first rate hike of a rate hiking cycle. And I was thinking, all right, well, a rate hike in the short term is probably bearish, but over a longer period of time would be bullish because a rate hike just means the economy is fine. So that's what I thought would happen. I thought Bitcoin would repric and but it would actually be okay and it would just spook people in the short term. So from there I was looking at all right well what did what did Bitcoin do after the first rate hike in a rate hiking cycle and you have the December 2015 line Bitcoin went a little bit lower but the bottom was already in right like Bitcoin continued higher after that and you can even extend it out and then if you look at the other rate hiking cycle March 2022 Bitcoin actually went up initially So if I had been a little bit more rigorous in my thought process around this rate hike, perhaps I would not have come to the conclusion that Bitcoin would have to then repric. Okay. So from there, if you look at the current one, the current first rate hike of this rate hiking cycle, which is arguably is it even the first rate hike or is it just kind of a continuation from the past one? Bitcoin has also gone up, but that doesn't mean it has to follow either of these two other paths. What I'm showing you is that in one of these paths, the low was in already, and in the other one, it obviously wasn't. But, you know, it took about three more months for Bitcoin to to or not. No, I mean it didn't take three more months, but you can see that Bitcoin sort of fell off, but that was going into the uh into the summer low, right? Which Bitcoin already had that, right? Bitcoin already had that big drop into the summer low. So, looking at this, you can take the average of the last two. You can see that Bitcoin is clearly outperforming the average of the last two. And had I looked at March of 2022, uh, without a, you know, without the the the drop into the summer, I could have looked at that and known that there was a good chance that Bitcoin could in fact break out, especially if you couple that with the golden cross that Bitcoin had, right? I mean, it was kind of like the perfect storm for it to happen. You had the golden cross. We said after the golden cross, Bitcoin normally dumps and then it rallies again and then we wait to see if it's a higher high or a lower high. and in this case was a higher high. So you're coupling that with a rate hike and it it's doing almost the same thing it did after one of the other rate hikes that we had. And again in one of these cycles while we did go lower, the bottom was already in, right? because in in the 2015 cycle, Bitcoin did go back down um into about day 90, but it was only about 30% down from where the rate hike occurred, which would still not I mean, you know, if you're just kind of averaging that out, like that's still not necessarily a new low in the market. And then I thought, well, I don't really like comparing it to the first rate hike in the cycle because, you know, is this really the first rate hike? Maybe it is. I mean, by the techn by the technical definition, it is because we shouldn't assume that rates have to always go back down to zero before we start counting it to be the first rate hike in a cycle, right? I mean, there's plenty of times throughout history where they raise rates, it comes back down, but then they just raise rates again, and they don't go all the way back down to zero, if that makes sense. So, I was like, well, have there been any rate hikes in September of a midterm year? And what happened then? So, then I went and looked at that And I was like, okay, we've got an example here. September 2018, the Fed raised rates. Bitcoin didn't drop. I mean, it did later, but it but by then then it was putting in lower highs. They This is a higher high. It didn't immediately drop after a rate hike in September of 2018. And in September of 2022, it also did not immediately drop. In fact, in September of 2022, after the first after that, not the first rate hike, but after the rate hike in September 2022, Bitcoin went up, just like it has in September of 2026. September 2026, it's gone up more. even if Bitcoin experienced downside in say like month two or something because if you look at at history after rate hikes um in the midterm year or after the first rate hiking cycle, Bitcoin tends to do pretty well for like the first month or so after that. You can see that what happened in 2022 is we had the FTX collapse and Bitcoin then went down about 15% from where the rate hike occurred. Well, 15% from where the rate hike occurred, I don't even know exactly. It was somewhere over here, right? Would not even be a new low, right? Like that wouldn't even be a new low. So, because of all that, right, like I I have to reassess, right? Like I have to like look to see where we are now. And at this point in the short term, I don't think you defer to me. I I think you defer to to those that were calling for this and go see what they have to say. If Bitcoin were to show weakness in like a month or two, then you come back and you look at at some of these charts to try to get an idea of, okay, like if if we do go back down, you know, how much further could we go? Could it be a higher low? And certainly with a higher high, I have to be open-minded to the next drop whenever it occurs being a higher low. The other thing that I I sort of was looking at with the dollar and and kind of like trying to like figure out like what happened, I saw this pattern and and this pattern sort of reminds me of of USDT dominance. I'm sure everyone else um h you know is is familiar with USCD dominance but the dollar had a big drop consolidated and then had another drop down. And what's interesting is that the dollar is sort of like testing these prior highs and it's actually gone below these prior highs like you know where it sort of built out this base. it built out this massive base and then it it sort of broke through those prior highs and it formed a double bottom and now the dollar is actually heading back up. But what's interesting is if you look at that pattern, right? Like if you look at this pattern right here, it it's actually not that different from USDT dominance. So if you look at at USDT do it's kind of like the same pattern in a way um where you have sorry you have like your initial drop by USDT dominance and then you get another drop to kind of connect these dots and then let's suppose there is a brief correction in October maybe USD dominance goes back up But that doesn't mean it has to immediately continue up like perhaps it comes right back down. So the things to sort of look out for later this year and and again in the short term in terms of how high could Bitcoin go, I would encourage you to defer to other people who are on the right side of the move rather than to me because I don't know. I don't know. You know, I only the only time I bought Bitcoin uh I thought it was a good idea this year was back in July and below.3 risk and that's what I did but it only lasted for 5 days. So, you know, I got some but not a ton um because I thought we would spend more time below the.3 risk level. So from here in the short term I would defer to others who have a better handle on you know the current move that we're in. If we do see weakness later in the year I would not automatically assume that it has to be a lower low. It could resolve to a higher low like a macro higher low. Um and we'll see. And you know, I think one of the things with Bitcoin too is that the final weakness historically in midterm years has occurred after the midterms in fact, right? So looking at um you know the midterms in 2022 and in 2018 and in uh 2014, right? Like the the final weakness occurred after the midterms rather than before. So if you're looking for a macro higher low to print, then perhaps after the midterms is when it potentially could be kind of in line with what it's done previously. So we'll see what happens. Obviously, there's still the questions about things like, you know, the realized price. Will Bitcoin go below the realized price? Uh and and that sort of stuff. I have to be a student of the market and and just say, you know, unless you get a retrace here quickly, then I have to defer to the market that's showing me a higher high, right? So, you have the lower lows, higher high. I I can't I can't be as deterministic as I as I was. Um, so we'll see how this how this plays out. And again, like I I I think that my my mistake that I made was sort of putting the pieces of the puzzle together and being like, "Okay, well, all of this will lead to a rate hike, which will then be bearish for Bitcoin." But none of the data suggests that a rate hike has ever been immediately bearish for Bitcoin. In September of the last two midterm years, Bitcoin did fine for a month or two after the rate hike. In the first rate hike of a cycle, Bitcoin was okay at first in and at least one of those cases. In the other case that it wasn't okay at first, the low was already in. So, I think my mistake was assuming that a rate hike would cause Bitcoin to immediately repric when I shouldn't have assumed that, right? I shouldn't have assumed that. And historically, if there is weakness after rate hikes, it's not for a couple of months, right? A month or two before that were to to happen. So, I think in the short term, defer to those that that got this move right. We'll see how high it goes. If there is weakness that kind of comes up in, you know, later in Q4, then I would be a little bit more open-minded as to where that low, you know, has to be, right? like not not assuming that it has to be a a lower low and I mean if it is it is but not making that assumption right now uh but being more open-minded to you know a different potential outcome and by the way there was you know I've talked a little bit about some of the other markets that have showed some of these patterns before and you know one was gold right where and this was where I also went sort of ary because I was looking at this gold pattern as well and and saying, "All right, well, when gold had sort of this top and you had sort of a low and then a slightly lower low, I was kind of assuming that Bitcoin would kind of follow suit and that we would come back down into the 4-year cycle low and that this would be a lower high." And what's interesting back then though is that silver did put in a new high. Silver did put in a new high, but when it came back down later, it did not put in a new low, right? So, I mean, eventually it did, but that was because of of other things that were affecting the metals markets. The the stock market was trending back up by then, like risk assets were doing fine, but if you look at silver, you can see that it set a higher high, but it didn't go take out the prior low. So that's why I think people should be open-minded that if you do get if you do get any weakness, you know, later on in Q4, I would be a little bit more open-minded about like where that would would sort of land. Um, again, at the end of the day, I mean, historically, the right thing to do with Bitcoin is to just DCA it throughout the second half of the midterm year and and then just hope for the best, right? And you know, I did the same thing in 2018 and 2022, and I DCAD, felt like a genius, and then I got wrecked in 2018. Same thing in 2022. Got wrecked 20 and and by the way, in 2022, my mistake was just assuming it was going to go a little bit lower. Um, and then in 2026, I started to DCA below.3 risk and it lasted all of five days because after it started to move up, I was like, I'm not going to chase it. It's probably just going to come back down and then it just never did. Um, so we'll see what happens. I mean, as it stands right now, it the the the burden of proof has shifted to the bears rather than the bulls. the bulls have kind of proven a higher high and now it's the bears who have to prove anything if you know if there is going to be weakness at all uh in in the fourth quarter. So, we'll see, you know, and and by the way, if weakness were to show up, I I think it would have to correspond to a correction in stocks, because if you don't get a correction at all in the stock market, I I think it's unlikely that Bitcoin would go that much lower because it was always a correction in the stock market that caused Bitcoin to get that final selloff. And now if Bitcoin or if the S&P were to just have a 10% drop, I don't think that would be sufficient to take Bitcoin to a new low, I I think you'd have to have a much larger drop for the S&P uh to take Bitcoin further down. So, we'll see what you know, we'll see what the S&P does. because I mean as it as it stands right now um you know the NASDAQ if you look at the NASDAQ it is back up to a new high which is kind of in line with prior midterm years. I mean there's a lot of times in September uh or so of of the midterm year the NASDAQ is trading at new highs right in in September. So that's not like that unheard of right for uh you know for that to happen. But those are my thoughts. I'm just trying to sort of regroup here and acknowledge where I went wrong and where I went wrong. Like my thesis was that rising energy prices would cause the long end to go up, which would cause initially the Fed to not raise rates because they would think, "Oh, it's okay." Then they would raise rates in September. Then the dollar would go up and then Bitcoin would repric down because of the rate hike. But the rate hike causing Bitcoin to immediately go down arguably was not rooted in the data. And I think that was my mistake. And I hope that in the future I can learn from that mistake so as to not make that same mistake again. And now I will just more so defer to the market structure of Bitcoin rather than get so deterministic about it because as it stands now this is a a higher high and I have to I have to respect that. So that's the the content for today. If you guys like the content, subscribe, give the video a thumbs up, and if you want to come listen uh to other opinions as well. Uh we are having the first ITC conference in Miami. Uh the main conference day is November 21st and we have a lot of great speakers. We've got Michael Sailor coming. Grant Cardone, um, Sim, we got Mark Yusco, Allesio, James, Mike Mclo, Guy, Rob, Gareth, David Jason Leah Tom FA Randy Evan, uh, Dana, Matt Crosby, and Mauricio. So, we've already got a pretty good lineup of speakers, so I hope to see you guys there. And and hopefully, you know, by having other people in the room as well, you can listen to other opinions and then help form your own opinion as to where the markets are going to go. But that'll wrap it up. Thank you guys for tuning in. I will see you next time. Bye.