Is anybody still here?
Judging from the growth in new bitcoin addresses, many of you aren’t.
For those who remain, you have a lot to look forward to. Ironically, far more now than you did in March and April. But it will probably take some time to get where you want to go.
This issue looks at my expectations for the crypto market in the coming months.
If the embedded audio narration isn’t working properly, tap this button to switch over to the podcast version.
Are you wondering about my thoughts on the fate of altcoins? I got a few emails.
I expect altcoins will continue to follow bitcoin, as they always have. Up after bitcoin goes up, down after bitcoin goes down.
Does that mean I will rebalance into altcoins because their trading charts look atrocious against bitcoin?
No. I don’t rebalance, I have a different portfolio strategy.
Premium subscribers know what I need to see before I sell bitcoin for altcoins, and we’re a long way off from seeing that. This issue has a section on altcoins but will focus on bitcoin because the market goes wherever bitcoin goes.
Think out of both sides of your head
YouTube, Twitter, and newsletters give you a lot of data. Some of it’s bearish, some of it’s bullish, some of it’s neutral.
Which do you choose to agree with?
Bitcoin’s Fear and Greed Index hit “10” a few times over the past few weeks. A “10” reading is extreme fear. People say that you should buy when this happens.
Look at all the times this metric has hit 10 or lower:
Sometimes, you’d buy and the price would have gone down further for months. Other times, you'd buy and the price would have gone up forever.
Is that bullish or bearish?
Also, the death cross, when bitcoin’s 50-day moving price average goes below its 200-day moving price average.
People say you should sell the death cross because it always leads to a bear market. Look at all the moves bitcoin made immediately after having a death cross:
Four times, bitcoin’s price went immediately lower. Three times, it went immediately higher. This time, it’s essentially flat.
Is that bullish or bearish?
Altseason ended. Depending on how you define the term, we’ve had at least six altseasons before this one, but only two came at the end of bull markets (2013 and 2017).
Is that bullish or bearish?
HODLers, whales, and OGs have started accumulating bitcoin en masse. We see this during consolidations—new buyers disappear while true believers and smart money buy their crypto at steep discounts.
Bullish because strong hands retake the market, or bearish because new money disappears?
Low gas fees, exchange flows, Wyckoff patterns, transaction volumes on OTC desks, pretty much every bit of data you can find—it all paints a bullish or bearish picture depending on how you choose to interpret it. There’s a fractal for every price move, a counterpoint to every point.
Even the trading charts show conflicting and contradictory signals.
Premium subscribers know only two prices matter for me at this moment: $29,000 and $51,000.
Anything in between?
Nothing to worry about or get excited about.
Choose your viewpoint
I often get accused often of analysis that says “could go up, could go down, we shall see” and presenting long-term, macro trends that don’t help you trade.
Guilty as charged.
Few people produce this type of content.
You can find many awesome content creators to help you trade or build bull and bear cases. This newsletter goes beyond the day-to-day to look at bigger trends that help you make the best of this bull market and the opportunity it presents.
To some, my analysis seems backward, nonsensical, and risky. “Unconvincing,” as one person said.
Buy when everybody says the market will go lower? Sell only at the most extreme of extremes—hopefully, never? Sit on your hands for almost seven months while the market explodes?
Yes.
Deeper trends play out behind the scenes, sometimes well before they show up in rising or falling prices. Unless you’re a competent trader, the only way to build wealth in this market comes from identifying those bigger shifts in the momentum of the market and acting before they play out.
We can get some insights from on-chain data and long-term trends that most people don’t write about. At any time, prices can go up or down, sometimes for longer than anybody could anticipate.
That gives us a chance to choose our viewpoints. We can buy into any story we want, any narrative that fits what we want to see. I’m guilty of that, too. Aren’t we all?
When it comes to making decisions in this market, I use analysis solely to build realistic expectations. It’s more about mindset than anything else. I make all of my decisions based on my plan for bitcoin’s bull market.
If you have followed my plan, you’re down as much as 30% or up as much as 600% depending on bitcoin’s exact price at the moment you bought it. Whether you’re bullish or bearish now, you’re ahead of the market.
Given the long-term growth trajectory of bitcoin and the massive opportunity it presents, that’s not a bad place to be.
Bull market? Mark, you’re delusional!
You may think it’s crazy to say we’re still in a bull market.
If this market already peaked, it was a peak unlike any other peak ever. We didn’t see any of the signals in the on-chain data and the only confirmation—Pi Cycle cross—has several permutations that did not cross.
While bitcoin’s price dropped 55% from April’s high to June’s low, that drop aligns with the .618 Fibonacci retracement level—the same level we see bitcoin’s price fall during bull market consolidations but never after the market cycle peaks.
Why does the Fibonacci retracement level matter?
Because it accounts for the size of each move up. Bigger move up, bigger move down.
With “Fib levels” we can see the size of the drop in relation to the rise that came before it. As a result, the Fibs allow you to more accurately compare one move to another.
Look at all the .618 Fib retracements during bull markets—drawn from “swing lows” to “swing highs” to the next “local bottom,” excluding moves that came during bear markets.
From April 2021 to today, this correction shares the same proportionality as bull market consolidations. After previous cycle peaks, bitcoin’s price fell to lower Fib levels.
Again—is that bullish or bearish? Should we expect bitcoin’s price to fall even lower, to match the drops of the previous peaks? Or assume that this drop is like the others of its kind—usually long, sometimes short, and back to previous the high within seven months?
We shall see. In bull markets, bitcoin’s price doesn’t always go up.
In fact, bitcoin’s price has gone down and sideways for 5-7 months at least twice in every bull market. Look at this chart, with those consolidations shaded.
(Note—while I consider the April 2013 top as a market cycle peak, most people consider it part of a bull market that ran from 2011 to December 2013. As such, I included it here.)
When prices go down for six months, I can understand why people would call that a bear market. Even two months seems sufficient for most people.
Does that mean we went into bear markets in 2012, 2013, 2015, and 2016?
Everybody else says it’s a bear market
Yes. They said the same thing in the second half of 2019, the year that ended with bitcoin’s price almost 2.5x higher than the beginning of the year.
They probably said the same thing in 2012, 2013, 2015, and 2016.
People say a lot of things.
At $65,000, people said we’d have $100,000 bitcoin by the end of this year. Now they’re pushing it out to sometime next year. If we don’t get it next year, they will push it out to sometime in the year after that.
Now, people say bitcoin’s price will drop to $20,000, maybe as low as $9,600, and put us in a bear market that will last at least one year. There’s a head-and-shoulders pattern that will send bitcoin’s price to -$5,000 if it plays out.
As an investor, it doesn’t matter. Opportunity and price are different things.
Even the clearest trading patterns have a 67% success rate, at best. Stock-to-Flow deviates as much as 70% below and 400% above its predicted price for months at a time. Four-year cycles can be left- or right-translated. Many advanced on-chain metrics show patterns that change quite often.
Opportunities don’t come after a 20% drop in the middle of a parabolic zoom, even if Twitter says “buy the dip.”
While it’s never a bad time to buy bitcoin—and you can certainly do well in parabolic zooms—the best opportunities come after the crashes. Buy now and you won’t have to buy later. HODL on the way up, not the way down.
Bulls get fed. Bears get fed. Pigs get slaughtered.
On altcoins
Altcoins go up and down 50% or more all the time.
Even in the middle of a raging altseason, many of them dropped up 70% or more at one point or another. That goes for the altcoins I recommend in my altcoin reports, too.
The difference is, during altseason, they go back up pretty soon and sometimes go even higher. Without altseason, they take months just to get back to even. Some never do.
Whenever the market recovers, some altcoins will far outpace the others. They always have.
At that point, you can abandon the losers or write them off on your taxes. You can let the winners run forever.
For my own portfolio, most of my altcoins are up roughly 200% or so, though some are closer to even.
Some are way, way down, far below the price I bought them at.
A few have gone up more than 10,000% since I bought them.
The winners make up for the losers many times over—and every “winner” went down at least 20% after I bought it. One went down 96% after I bought it but now sits among the top 10 in my portfolio.
Those top 10 altcoins make up about 53% of my altcoin portfolio. They’re all down at least 40% from their most recent peak. One’s down about 80%.
They all have lots of room to run.
Everybody wants to get hits but I try to hit home runs. If that means more strikeouts, I’m OK with that. This is a totally speculative market fraught with risks and victim to altseasons that render fundamental research irrelevant. I don’t see the point in playing for 500% returns. If I can get a few 50x moonshots, the rest can go to hell and I’ll still do far better than the overall market.
What’s the best way to get those moonshots?
Buy when the market’s down.
Miners be ded?
Chinese miners sold like crazy this month. We saw spikes in outflows from Poolin, Antpool, and Binance mining pools to exchanges and OTC desks.
Look at all miners outflow, which aggregates the data from all mining pools.
Do you see those spikes in May and June, to the bottom right of the chart? They coincide with big movements of bitcoin from various mining pools.
Do you also see the huge spikes in January, February, March, and April, in the middle of the chart? That’s from miners unloading a ton of bitcoin on the market—far more than they are now.
The transaction count tells a similar story.
While it’s factually correct to say Chinese miners are selling a lot, it’s not significant in terms of overall trends across all miners or the market as a whole.
In fact, overall outflows are lower than just one year ago—when bitcoin was clawing its way out of the March 2020 wipeout. Transaction count has almost fallen back to levels we saw at end of 2020.
Look at the Miner’s Position Index, a metric that imputes a lot of data into a trend projection. You can dig into lots of data or just look at the MPI for a simple representation of miners’ selling trends in aggregate. Here it is.
Uncharacteristically low since March 2021.
To be fair, miner outflows do matter. Between miners selling to raise cash and newcomers selling to buy lower, this puts short-term pressure on bitcoin’s price.
Just keep perspective.
Aspiring dictators to the rescue?
Then there’s El Salvador, which will soon force everybody to accept bitcoin as payment.
That sounds great, but what does it mean?
The government says it will let people convert bitcoins to dollars instantly. Assuming that works like everybody thinks it will, where will those bitcoins go? Will the government sell them? If not, how will they redeem those bitcoins for dollars? Where will the dollars come from? Will the government set a fixed redemption rate or redeem bitcoins at market value?
Will people even spend their bitcoins when they can spend dollars instead? If you think bitcoin’s “better” money than USD, you’re going to hoard or sell your bitcoin and use your dollars every chance you get. Especially now that there are no tax consequences.
Historically, when governments force people to use two types of money, they always use the less valuable currency and hoard or sell the more valuable currency. This phenomenon was first documented thousands of years ago and now goes by the term “Gresham’s Law.” Bad money chases good money out of circulation.
If that happens, El Salvador’s decision won’t matter. Its people will keep using US dollars. Although perhaps government officials will ask for their bribes in bitcoin now?
That is, if the law is even constitutional in the first place.
Not the cycle peak but very close
When bitcoin’s price went parabolic at the beginning of this year, the on-chain data looked really bad. Whales, OGs, miners, and institutions sold as retail money poured in. The market seemed destined to peak sooner and at a lower price than everybody expected.
At the end of February, I posted this video:
A few weeks later, I published my exit plan.
I also published several articles with the data and analysis about the direction of the market and the likely outcome if it continued its path (peak soon, bear market).
Fortunately, the market cooled off before it could get there. Whales, institutions, and OGs sold into strength and tamped down on prices. As long as bitcoin’s price stays above $29,000, it’s safe to conclude we did not reach the market cycle peak.
Maybe the rest of the year plays out as it did in 2012 or 2019, when bitcoin’s trading charts looked like shit and its price bled for months in the middle of a larger bull market?
Regardless, we need some time for the market to recover. Ideally, months.
Nobody could deny the opportunity to make fast money in this market from January to April. Not only did the opportunity exist, we saw it play out.
Some shitcoins went up 70x or more. Some of my dead altcoins—relics from bad decisions I made over time—pumped triple digits. A few of them went higher than the price I bought them for.
The crypto casino was raging.
Now, the casino is closed. Prices have fallen. They seem to keep going down without end, only brief occasional rallies.
The exact opposite of earlier this year, when they seemed to keep going up without end, only brief, occasional pullbacks.
Nobody can deny the risks of buying now. On-chain metrics haven’t yet shifted back to positive. Any breakdown below $29,000 will almost certainly send the entire market back to its fall 2020 levels.
Also consider the opportunity.
You know those people who bagged 3,000% gains earlier this year? Most of them bought a long time ago, probably in a situation just like this one. On-chain data suggests many people bought bitcoin below $10,000 and altcoins at prices way below today’s.
While you’re not likely to get 300% gains from a massive altcoin pump any time soon, you can get those 10, 20, 30x returns you’re dreaming about—as long as you have the courage and fortitude to buy now.
Likewise, bitcoin may or may not double in price next month, but you can guarantee it will do far better than that over the next few years. It’s still realistic to expect its price will double by the end of this year.
Can you say that about any other investment you can make at this moment?
Opportunity knocks
This market can drop 80% from any price at any time. The same altcoin that booms 20x over a few months can drop 95% a few months later. China can ban crypto at any time. Any country can ban crypto at any time.
Crypto savings platforms can fail at any time. DeFi protocols can get exploited at any time.
When prices go up, nobody cares. Twitter and YouTube algorithms only serve you that content when the market’s down and people are depressed.
But when you wait for prices to go up, you pay more for less upside and the same amount of risk.
Today, your potential upside is at least 2x higher than it was in April. Some altcoins will easily surpass their previous all-time highs. A $100,000 bitcoin brings back 3x gains compared to 67% gains at $60,000. Altcoins will do far better once we get our next altseason.
All you have to do is buy now and wait.
Better yet, low gas fees make staking and DEX transactions less expensive than at any time since the beginning of this year. Prices are the lowest they’ve been since January. History suggests the market is in a long consolidation before another leg up. On-chain data shows long-term bearish trends have turned neutral, not yet bullish, with clear accumulation by long-term HODLers and large entities.
I need to see more signs of strength before I get too excited. In the coming months, let’s hope we see the market rebuild the foundation it lost from November 2020 to April 2021. I’ll keep my eyes on the data.
Would you freak out if bitcoin’s price doesn’t get back to $65,000 until December? If you *only* doubled your investment in six months?
What if it takes until next spring? Would you feel bad about buying bitcoin down to $20,000 or lower and buying altcoins at 90% discounts, then waiting for everything to go back up? Why does a potential 200% return feel so bad?
If you’ve followed my plan since I published it last year, you're up as much as 600% plus whatever gains you have from altcoins. At worse, you started buying in mid-May and you’re down about 30% since then, plus any losses you have from altcoins.
Most likely, you’re somewhere in between.
My portfolio is up about 400% even after buying more bitcoin from $49,000 to $30,000 and watching some of my altcoins drop 70% or more from their most recent highs. Down a lot from the peak, up a lot on my investment, and still accumulating in preparation for the next leg up.
This market remains in a massive secular uptrend with strong tailwinds and infinite potential. Don’t wait to chase prices back up again. You might not catch them.
Up, down, or sideways, whenever bitcoin’s price falls into the buying zone of my plan, you can buy knowing the price is not likely to go much lower for much longer.
“Lower” meaning 50% and “longer” meaning months, which sounds crazy, but in this market, that’s not unusual.
I realize that’s a small consolation now, but we know the market will recover and go much higher. As odd as it must have felt to hear me talk down the market for the first four months of the year, when everybody said it has to go up, it must seem doubly odd to hear me talk about massive gains in the middle of a massive crash, when everybody says it has to go down and the overall trends have not yet shifted in our favor.
Such is the nature of the crypto market. On the way up, the opportunities get smaller and the risks get bigger. On the way down, the risks get smaller and the opportunities get bigger.
Consider the alternative
In the real world, cash is being devalued at an alarming rate. Safe investments are now guaranteed to lose money. High-yield investments don’t compensate you for the extra risks you take.
Meanwhile, the legacy financial system will happily sell you financial products and services that generate less cash flow than ever at higher prices than ever, often financed by debt obligations that seem impossible to cover without massive government intervention.
Dividends are at an all-time low and bond prices are near all-time highs.
The Dow Jones Industrial Average recently fell out of a rising wedge pattern after months of bearish divergence. In other words, there’s a 67% chance the US stock market will drop soon.
Meanwhile, the US central bank says inflation is “transitory” while accelerating its timeline for rate hikes from “maybe by 2023” to “two within the next two years.” If inflation is truly transitory, why change the timeframe at all?
Even if two rate hikes were enough to matter, nobody really believes they’ll do it. The Fed’s balance sheet keeps growing and it added another $100 billion in QE this month. It’s far short of its employment target, stacked with inflation doves, and working with a US Treasury Secretary who promised world leaders she’d keep USD weak in the face of recent buying pressure.
And you’re worried about crypto?
Worry about your family, your health, your business, your livelihood.
When it comes to crypto, volatility is the norm, the range of realistic outcomes is vast, the long-term trajectory is clear, and the opportunities are easy to capture if you have the courage to do so.
Whatever happens, we’re in this together.
Relax and enjoy the ride!
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