GM good morning welcome to the milk Road show The Daily crypto show that's as rewarding as finding a hidden $20 bill in your pocket I'm your host Jay Hamilton and back on the show today is everyone's favorite crypto investor Lark Davis Lark anyone that's been in crypto the last few Cycles will tell you that there's always this period before the banana Zone before things go crazy where conditions try to shake you out H it's often referred to as the boring Zone the question on everybody's mind right now is are we in the boring Zone and about to go in the banana zone or are we actually just at the start of the next bare Market what do you think well a lot of it depends on of course macroeconomic conditions crypto is going to broadly follow macro as a as some sort of again beta a beta of beta right right now we're seeing the big Banks even stepping back a bit from their initial crazy like oh my gosh recession coming Goldman Sachs I remember a few weeks ago we were talking about they raised their recession chances from 15% to 25% and this week they're saying actually we're going to pull up back to 20% and if you look at a a sort of two to threee chart of Goldman Sachs predicting recessions they've been calling for recession since basically late 2021 with these kind of odds so you know the banks are not the best reliable indicator for is the recession going to come or not but you can't fight the fact that right now Bitcoin ethereum Solana they're all in pretty rough situations right and if you take those three assets they make up almost what 68 probably 70 to 80% of the total crypto market cap so bitcoin's been in a downtrend since March ethereum's been in a downtrend ethereum ETFs have not made a significant difference yet so are we in a bare market for crypto specifically I don't really think we can call it a bare Market but we're definitely in a downtrend until proven otherwise for crypto and that's not great especially frustrating feeling when you see the equity markets just raging back with a wild ferocity the sp500 is now as Stones throw away from hit a new all high it's just like ah crypto what's going on man but but if macro conditions can keep holding up and for most intense imp purposes the US economy is just staying stubbornly resilient and if that keeps happening if there keeps not being a big re ession in the USA which again lot of fragile things out there in the system the 0.25% interest rate hike from the bank of Japan proved how fragile the markets are right now but but has not happened yet we've had some scares definitely had some scares but the markets keep trucking along so the banana Zone could be closer than we think it is and I think this is the kind of wild volatility that's just normal in the crypto markets as difficult as it can be to deal with sometimes I think that is probably the most true statement volatility like this is is normal everyone take a deep breath this is part of your daily now this is what you're here for you came for this you wanted this right okay for for just quickly for those who don't know the term boring Zone and banana Zone can you just explain and give us a little bit of a history lesson sure the boring Zone basically this is the time when nothing really happens and this is a great chart here to show and I think 2020 is so just exemplary of the boring Zone if you weren't here in 2020 it was it was like watching paint dry we literally had weeks on end for Bitcoin where the price barely moved daily close- wise more than a few hundred dollars in either direction it was just flat four months then sailor bought some Bitcoin and we had a pump and then we went flat for months then we dumped again then we went flat for months until things finally caught enough steam we were in that post Bitcoin having world where eventually the supply and demand mechanics caught up and then things start moving and here's the thing with crypto this is not your Granddaddy's sp500 index okay when things start moving they move really fast in crypto and Bitcoin Bitcoins it Bitcoins hard man and you will see markups you'll go from questioning your life choices to thinking you're a genius almost over overnight because prices start pumping so fast it's a wildly volatile market and we all love the upside volatility but nobody really likes the downside volatility but it's but it's the price that you pay for the outsized returns in this market so the banana zone is going to be when you see wild markups right across the board and to an extent we're still just basically on course for a 4year cycle as crazy as it seems the new highs before the Bitcoin having due to the Bitcoin ETF that was our Mirage in the desert the illusion that we all got a little too excited because wow look at what's happening and hey 17 billion dollars are coming from those ETF products but but for most intens and purposes it seems like unless the global macro scene totally has a meltdown we're pretty much on course for a four-year cycle at this point obviously there's indicators who want to watched if something pops earlier or later even but right now it's looking like maybe the in case is almost the fouryear cycle right now and that could be where we're going when we look at the boring Zone versus the banana Zone what are some indicators some signals to you that we are in the boring zone right now there's been so many um you can look at the absolute lack of volatility and I know what you're going to say but lar the last few week's been volatile they have been but we've basically been in a range between 50 and $70,000 since March if you look at a lot of indicators it's been a a time of relative lack of volatility minus that big selloff that we had the other day plus during this time what have you seen massive accumulation massive accumulation and this chart that you have up here is just wild now it includes the spot Bitcoin ETF number 17 billion plus dollars have flown into those um spot ETFs so huge numbers huge numbers here but that masks a bigger picture that we have all these Banks getting on board if everything sort of just cooking in the background it just hasn't had the price impact yet because we've had all these overhang issues and the wild thing about these overhang issues is that they're mostly taken care of right Mount goau is basically done they only have 30,000 Bitcoin left most of it's been distributed back to people Germany's largely done the um US Marshals selling off the Silk Road Bitcoin that's not even that big of a deal they sold 10,000 Bitcoin everybody lost their minds and always immediately absorbed by the market and 10,000 Bitcoins taking off exchanges basically the next day whales accumulated the Bitcoin ETFs have more than enough capability to absorb that kind of Bitcoin it's nonissue at this point so there's no other big overhang issues that can really dump markets maybe the UK sells their Bitcoin they think they have 60 61,000 Bitcoin something like that that could spook markets but again it'll be one of those the bark is worse than than the actual bite stories markets tend to overreact to these Supply entrances and then of course they're probably going to underreact to the fact that FTX investors are getting 13 billion dollar in cash back in probably three or four months time right at a time in Q4 when we're likely based on everything that we're seeing right now to have that potential breakout moment here for the markets when Bitcoin finally recovers 72k then we can start talking about major markup periods and at least maybe not the full banana Zone but we're going to have some bananas okay it'll get pretty nuts pretty fast but we go from 72k to 100K in a few weeks time then all the altcoins get marked up the FTX money comes in US elections come in we have to had two or three rate cuts by then stock markets are booming like this is the best case scenario right let's look at a couple of other charts uh which really uh tell us where we're at and headed where we're headed uh one is a chart that you've discussed on the show with us in the past which is the global liquidity index and you mentioned liquidity at the beginning where are we at right now and why does this indicate to you that we could be headed towards the banana Zone well this is the rising tide that lifts all boats essentially and we're bottoming out in a lot of things right now a lot of these economic indicators again we're either on the verge of a mega recession it's all going to go bad or we're actually just botom out on a lot of this stuff we're going to see an uptrend for potentially next year or so with 2026 probably finally when we get that recession at Le especially if you're you know counting on um Pig Farmers from 100 years ago to give you that uh give you that indication that 2026 is the year you want to be out of markets and the global liquidity index it's fascinating how it all works but the global liquidity index is showing a similar thing right now now maybe the central banks pump more money for longer etc etc but they generally are going to have some big injections lots of liquidity is going to come in and look the global liquidity index tracks different things right and those rate cuts are coming we starting to see rate Cuts in a lot of major economies around the world New Zealand just cut rates the other day uh the UK the ECB have cut rates recently banks are talking about putting lots of money in the market and I think the US treasuries buyback program started last week I'm pretty sure maybe was two weeks ago I think it might have been the sixth or the seventh of August so they're putting in about 15 billion this month about 30 billion next month and about 10 billion or so the month after and total it's a little over $50 billion around $50 billion so that's happening the three months leading up to the US election US Treasury is going to buy back $50 billion doar of bonds right so we're seeing the distortions in the market already starting to happen and this is going to pump up Global liquidity and when Global liquidity goes up risk assets go up another key indicator for where we are in terms of boring Zone versus banana zone is sentiment in the market and often during boring zone no surprise sentiment is not going so well if we pull up uh the sentiment chart here I've got the chart of the last year of sentiment uh what do you see where are we right now and what does that say to you what's crazy is that sentiment right now well bitcoin's hovering around $60,000 is basically a throwback last time we had this bad of sentiment Bitcoin was at like $30,000 it gives you some interesting perspective on how recency bias can affect the market markets and how people can look at the markets and see because price actions are bad recently I'm so much more afraid right everyone's thinking this is not a beginning this is an end and so it's very interesting to watch how the greed flows and the fear flows in the market and if you look at it different a lot of different indicators there's like the net unrealized profit loss and a few other different indicators you can look at and they basically all show a pretty big reset here in terms of what's happened with Market sentiment and showing that it's definitely at a low period right now so in terms of sentiment wise this is the exact kind of sentiment that you expect and I was talking about this earlier this year on the channel that you may actually have the max pain scenario play out which basically has played out and that is that Bitcoin is gonna range sideways for months and months on end after we hit that high and that's exactly what's happened and of course while bitcoin's ranging sideways everybody starts questioning all their decisions and that means that altcoin start going down and we keep having billions of dollars a month of inflows of new altcoins with very few buyers to pick them up so we've seen a lot of pain com in there specifically so this is that again that kind of very boring you know price trending down not that much happening price-wise but it's weird because the fundamentals for this Market have literally never been better the fundamentals today today have never been this good if you told me all this stuff was going to be happening four years ago or back in 2017 when I started investing making content I'd say you're crazy that's crazy black Rock's going to have Bitcoin ETFs get out of here all the big banks are going to be selling it get out of here come on it's absolutely nuts what's happening right now so let's just talk then when you say it's nuts but yet the prices aren't going there it it doesn't mean we're not the only asset Market out there it doesn't mean that there isn't good things happening which could lead you to believe that the banana zone is coming for the crypto markets uh you put out a tweet uh from your newsletter today talking about the price of gold what does this say to you this shows that investors are looking for safety in the markets right there has been a bit of paranoia we've seen gold go up now to new all-time highs what interesting is that there's a few great charts floating around on um crypto Twitter over there that show an interesting correlation between gold and Bitcoin coin that often um Bitcoin will follow a few months behind where gold markets go that Gold's almost a canary in the coal mine for us in terms of price movements that investors the traditional investors will start flocking to Gold when they sense whatever is going on in the market and then the alternative investors will catch up on that a few months later when Bitcoin starts making moves behind that as digital gold of course so it's very interesting to see that correlation playing out and I think as more and more people are looking at that liquidity index and realizing that holy crap the central banks are going to print all kinds of money again aren't they they're gonna have to print all kinds of money again they always do and it's coming the easing cycle is coming so based on that holding some gold not a terrible idea holding Bitcoin probably an even better idea okay I'm gonna ask you your favorite question uh when uh always the most difficult question to answer but if we are in the banana zone right now or sorry in the boring zone right now um when when can we expect the banana zone or any any indicators any things that you're going to be watching major events that you're going to be watching in these coming months that will that you think could tip the scales sure look here's the thing people like to say that the market is can remain irrational longer than you can remain solvent this is true but Marcus can also remain boring longer than you can stay saying oh my gosh the the problem for a lot of investors right now and I've even experienced some of this recently you just get you get bored you start looking oh go buy some meme coins that's fine say abouty all your money but anyway what are we looking for in terms of seeing things move towards a banana Zone situation well of course we have to break the range we have to break the downtrend until we get a decisive break really of $772,000 and people will get pretty excited I think if we get up to like 68 $69,000 because that could be breaking the downtrend that we're in for Bitcoin right and that Bitcoin is going to lead the rest of the markets I I think the reality is is that until Bitcoin breaks 72k with some kind of decisiveness that the rest of the Market's probably not going to do that much yeah there's going to be little narratives and different coins of pop off but until Bitcoin breaks 72k and starts going back into price Discovery don't expect that much from the markets now when does that happen we're getting closer to it happening than not happening right that's one thing I can say but we have a lot of big things coming up right we have rate Cuts coming which again a reminder when rate Cuts happen outside of a recession they are typically a bullish event that sends stock markets higher and if stock markets are going to go higher at some point investors from that World start looking going I want bigger returns so they start buying Bitcoin they start buying ethereum money starts flowing down through the rest of the market so that First Rate Cuts coming in September right unless we get some big surprise from the fed and they decide not to do a rate cut but I think everything that we've heard from them is that they're going to do a rate cut and the markets would be pretty surprised if they did if they don't hold on to your butts let's put it that way but assuming the rate cut comes and it's a 25 basis points one which basically is the Fed saying it's okay we're in control we knew all this was going to happen this is the soft Landing we're going to pull this off everything's going to be fine markets should like that in that situation then we have us elections coming up so we're looking at potentially could be as soon as September we could see big price movements but that almost feels a bit preemptive maybe October or November are when we're going to really start seeing things kick off in the market but again again you can just keep this as a simple indicator in your mind wait until Bitcoin breaks 72k until then it's basically an accumulation Zone it's a boring zone now you can you can wait to buy the breakout that's also fine you can wait till the markets actually show strength and there's there's a lot to be said for doing that right if you're just thinking long-term spot bags great accumulate don't think about it too much if you're waiting for the breakout moment then you got to wait for 72k for Bitcoin and then when that starts moving up into the higher 70s that's when things are really start moving for the crypto markets but until that break happens just we're in the boring Zone the banana zones in in sight but we have a lot of stormy seas to get across before we get there and when the banana Zone comes if we look at past Cycles how long does it typically last it can last generally a pretty short amount of time this is the Wild Thing with crypto markets man is that we wait years years for basically a few months of wild Market action right so if you look back at here's it's a good indicator you look back at 2020 and prices started to move in about October and we basically ran until April now I know we got a second Peak later on but that wasn't a given right we had already had the P Cycle top indicator flash off and all that kind of stuff it's this whole Salvador thing that really got everybody excited and ran the markets up the second time but basically that whole bull run if youd sold in April and the P Cycle top indicator had flashed and sold all your altcoins within the following two weeks you could have just sailed away and not worried about any of the rest of the crap that happened for a few years really it could have you would have been fine oh you sold your Bitcoin for 64 not $69,000 who cares who cares who cares man doesn't really matter right so you don't have a huge amount of time so let's say markets start taking off in October or November right then you're looking at a potential at least first Peak for the market coming in March or April uh next year so and it'll be a tough time for investors because everything's going to be telling you great markets are up bitcoin's either gone to the 1.618 FIB line which is around $100,000 maybe we've even pushed up to 150k at the 2.68 FIB line and that's when everybody new paradigm of money we're all Geniuses it's going to go up forever you know Now's the Time to bet more I need to remortgage my house buy some dog coins that is when yeah not the time to do it not the time to do it right now is now during the boring time is the time to accumulate if you have cash if you can right or just you know unpopular opinion sometimes the only thing you need to do is just wait you don't need to be buying bags you don't need to be selling anything right you don't need to be trading you can just sit and wait which is almost the hardest thing to do because you feel like you want to do something sometimes there's nothing to do except wait for the banana Zone to come and maybe it takes longer again nobody has a crystal ball right we just talk about models we talk about rhythms in the market all this kind of stuff things that might help us predict what could be coming in the markets but I don't have a crystal ball nobody does okay and you can see that from the banks right people whose literal jobs it is like suits whole office is full of people their literal job is to sit down and do this stuff and they're wrong the time right so what how are we as just regular investors out here supposed to really figure out what's going on but we know what things look like when they start happening right so how long it takes us to get there is an interesting question when it starts happening then we can recognize it's happening right and it then becomes very much beholden to us to keep ourselves sane and to remember the good times Never Last Forever in markets in fact they're often rather short-lived you might get six months of crazy Market action and then hits the fan so be ready for it so basically uh everybody you can go on vacation right now we're in the boring zone go enjoy the last couple weeks of August take some time off don't even look come back in September October and then you make sure you listen to us for the next six months straight so you don't miss it when we see that we're at somewhere towards the peak not that we're perfect not that we're going to predict it but we'll do our best to keep you guys in Med uh lar thanks so much for walking us through the boring Zone and the banana Zone today again I just want to remind all of our listeners we have a campaign going on right now to subscribe to the show in order to win a bunch of free prizes so make sure you subscribe on YouTube right now before you leave not only you going to stay up to date with Lark and everything on the team that we make sure you guys know where we are in the cycle but also you could win some awesome prizes our investing course or a subscription to milro Pro remember none of this is financial advice investing in crypto is risky you should only invest what you can afford to lose thanks so much for listening and everybody have a wicked awesome day