Phil, how are you doing? I'm doing good, thanks. How are you? Very well, thank you. Very well.
So I know you've been slightly reluctant, I guess, for a little while to do a collaborative effort such as this one. But before we get into maybe why you're a little bit hesitant, can you just give us a brief introduction into who Philip Swift Positive Crypto is? Sure.
So I am Philip Swift, founder... and CEO of Trendstorm, which is the business behind Bitcoin Magazine Pro, which is a Bitcoin data analytics platform. So we help people understand Bitcoin better through data. People might also know me as, yeah, at Positive Crypto on Twitter, though I don't tweet that often, really. And also maybe from some indicators that I've created over the years.
So Pi Cycle Top Indicator, which became very popular. last cycle, to say the least. I'm sure we'll talk about that later, as well as some on-chain metrics like realized HODL ratio and other metrics like that. So basically, I'm a data geek, Bitcoin data geek, who I think works in what is the most exciting industry in the world right now. Very nice.
I can definitely say the same. So just a quick thing. You've been anonymous up until this point. You've just had a little bird as your icon and everything. Why is now the time to reveal yourself to the world and join me on a lovely little discussion?
Well, partly because you kept on asking me and I started to feel bad. That's part of the reason. But I think, if anything, it's because I've never done it previously, because I always wanted the website to be judged on its own merit rather than whoever I am.
And I think that's sort of quite a... uh sort of bitcoin ethos right it doesn't matter about the people behind it it's about the the proof of work right and i wanted it to be about proof of work so that was the main reason why i never really have done anything like this but i guess i am increasingly frustrated with the poor quality commentary we see on crypto twitter right and given that we're at what i think is quite a pivotal point in the market uh with bull run coming now i thought you know what let's have a decent discussion and see what's really happening and yeah hopefully people will be able to take something from this that they don't get from some of the nonsense influencers they see on twitter fair enough well that works for me and before we get into i know you said that we might be on the cusp of a reignition of the bull market and everything so we'll save those questions for a little bit later first how did you actually get into bitcoin data and on-chain analysis and that type of thing uh So my background is in economics, so I studied economics at uni, which is useful from a, I guess, for doing Bitcoin analysis from a technical competency point of view. But it was also useful in me realizing that traditional economics is in no way useful for the real world.
And it's really an exercise of mathematicians failing to connect with real people. I think if anyone who studied economics probably kind of knows what I'm talking about. So I studied that, realized that.
traditional economics wasn't going to be my thing. It's more behavioral economics. And so then career wise, that's where I focus.
So helping companies understanding what's happening in their market, and then getting their CEOs, board members to change strategy based on that. It's called consumer insight strategy, but it's basically behavioral economics. Did that for a few years, which was good. And that also helped inform, I guess, getting into Bitcoin. But really how I got into Bitcoin was just...
I was looking for something else that was probably had a greater purpose than the drinks industry, which is where I was working at the time, helping brands like Jack Daniels, Grey Goose, whatever. And I thought, this isn't making me feel particularly passionate. I want to do something else. And yeah, I came across Bitcoin and I just realized straight away, I guess two things. One was massive asymmetric risk reward opportunity from an investment point of view.
I was like, wow, this is... still so early here it was 2017 um and then also just realizing that bitcoin's probably like the most important innovation of the 21st century and i still believe that today so um yeah that's that's kind of i just kind of came across it but then as soon as i came across it i like poured over it and and sort of fell in love with it very quickly nice and then you became a somewhat influential name in the space founding a data an analytics platform previously known as look into bitcoin how did that start did you just see a gap in the market and not really people providing the data that you wanted to see or did you have your own metrics that you wanted to provide to the world how did that come about Well, I certainly didn't wake up one day and think I need to create a Bitcoin data analytics platform because in 2017 they just didn't exist. And it's quite hard, I think, for you to imagine how things were back then.
But when I first got into Bitcoin, there were plenty of opinions, right? There's loads of opinions, right? I could see what people were saying about Bitcoin, but you couldn't really find any data anywhere beyond. just price data and given my background i'm you know used to making data driven decisions i was like well okay i need to look at some data uh but i couldn't find any and i was like hi this is really weird actually so there's loads of people talking about this thing i can see the price and i know there's a blockchain right so i know there's some data there somewhere right because that blockchain is recording those transactions um but there was nowhere to like take insight from it and actually look at analysis around it um so i thought that's really weird i came across a website called blockchain.com which still exists today don't know if you know it it's like a i think it's like a wallet and a bitcoin explorer i'm not not too sure what their core business is but i think that's is that right it's actually founded in the city that i'm in currently which is a little weird tidbit it doesn't seem like the type of place but there you go there you go there you go so anyway so yeah thank thankfully that i came across that website after a lot of searching for data and on a couple of pages that i think probably like only a handful of people ever looked at was like tucked away in their website they did actually have some pretty basic transaction data from the blockchain and i was like okay that's interesting so i i took that started started overlaying price data that i got from somewhere else on top of it and just started trying to analyze it really and i started noticing a few trends which i thought was interesting and i thought well if i'm interested in this there might be some other people who are interested too i posted about it on twitter uh at that point i probably had like 400 followers right like i just i was just posting stuff and a few people were interested and then one day i posted a piece uh and willy woo replied and at the time i was like what the hell you know like willy woo It was one of the few people at the time who I looked up to who was like, this guy kind of gets this idea about looking at data around Bitcoin. And I was like, what is he doing?
Replying to me. And then he DM'd me and said, hey, great idea that that thing you just tweeted about, you should write a paper about it. And I was like, mind blown. Right.
Willy Woo is like in my DM's saying I should write a paper. And I was like, right. I think I better write this paper then. So.
So then, so it's like a number of steps, right, that led up to the platform. So I wrote the paper and then David Puel, who now runs, who works at Cathie Wood's Ark Invest, and Murad, who is obviously the main character in crypto right now, right, with his meme feed, who is, by the way, an absolute giga chad. He really is.
And so is David. They're great guys. They...
saw the paper and said hey we're starting this telegram group would you like to join we love what you wrote come in and join and i was like yeah sure brilliant right i get to talk about bitcoin and data all the time i'm in um and then that telegram group was really the hotbed for most of the on-chain metrics that we know today or derivatives of them right so for example MVRVZ score was created in that group in like this glorious nine-month window where we're all just sharing ideas with each other It was brilliant. It's like my favorite time in Bitcoin We were all just bouncing ideas off each other like no one was there's no egos or anything It was brilliant and we came up with our MVRVZ score, Puell multiple R-Hodl ratio Delta top like a whole bunch of metrics whole bunch of on chain metrics and like I say most the metrics today are derivatives of what came out of that group. So yeah, so then I started talking to David one day, he came to visit me in London, I said, Look, this is brilliant.
But there's two problems with this group at the moment. Like one is that a lot of the ideas we're sharing just static, right? So someone would just share literally like a chart in Excel or something like that.
It was just a static chart, or maybe even just a formula. And the second problem was that I was worried that a lot of these metrics we were building, and there was some evidence emerging of it, were starting to be sort of siphoned off and used by hedge funds or go behind paywalls and stuff like that. And for me...
I always, the reason why I love Bitcoin is that it's open source, right? It's a complete leveler in terms of opportunity. It doesn't matter who you are, where you're from. You can access Bitcoin. You can benefit from Bitcoin.
That's why I love it. And I wanted the same for these analytics we were building. And so I said to David, look, I want to build a website where all these ideas are in chart form with an explanation underneath. And those charts just update automatically every day. and there's no paywall.
You don't even need to enter your email. Anyone can just go to the website and access it. And that way, in the same way that Bitcoin is open source, these metrics will be open and available for anyone. And he said, yeah, bro, sounds good. And I don't know, I sort of feel like I needed his seal of approval.
And then I went off and created the website. Amazing. That's kind of the journey of how I went there.
So I certainly didn't just come up with the idea. It was really a... a process um but i suppose the one thing i would say is that it it taught me that if you're new to a space the best thing to do is rather than like consume information and just go and ask someone for like a job or something just try and make something just try and add some value somewhere and and for me it worked out it it really obviously worked out very well in the end so um yeah so you were in the the secret inner circle of on-chain nerds and managed to make all of that information public yeah like a robin hood of bitcoin data it was it was uh it was a brilliant time it wasn't that secretive it was just that it was a group of us i mean we were eventually the group kind of got too big and then i think it sort of lost its its essence and its alpha um but there was that glory period of the say like about nine months where it was just great it was just great um And then, yeah, and then look into Bitcoin was born and had no idea if it's going to be successful or not. But people seem to really connect with that idea of us, you know, helping people through data and it being available for free.
And within a couple of months, we had to upgrade the servers and stuff because it was it was getting so many views each month. It was crazy. Yeah.
So apart from obviously providing all this data freely and potentially being the first one to actually provide this data to. the public was there anything different you did with looking to bitcoin that really made look into bitcoin stand out against any potential new and upcoming competitors or any pre-existing platforms and of course you said you're providing them freely but what else did you do to help make look into bitcoin uniquely stand out uh i mean i think we were always trying to be like first with a lot of the metrics that would come through um but really i think it was we we tried to we were in the fortunate position we didn't have any vcs to answer to or anything like that it was it was really just me and a couple of other guys and 100 owned by me and so i could make all the decisions right and uh i think we set the industry standard for making on-chain analytics largely accessible to all so for example I think if it wasn't for looking to Bitcoin, in fact, I know if it wasn't for looking to Bitcoin, a chart like MVRVZ School would not be available to view for free today. It would be behind the paywall. And so, yeah, I think if it all ended tomorrow, that's hopefully one thing we're pleased about is we've been able to help people in that way get access to Bitcoin data in the way that I think is right for Bitcoin, right?
Everyone should have access to that data. Yeah, very good. And I'm going to ask, why just Bitcoin? did you ever consider making a look into ethereum for example look into crypto why was it always just bitcoin you know i've had so many people dm me saying hey i'll sell you the look into ethereum dot com uh you know url for five thousand dollars i'm like bro i'm not interested um listen uh i mean there is no second best right as as the as the mighty michael saylor says but he he says it from a crypto point of view he's trying to make the comparison between bitcoin and other crypto but i i just think of it more as in bitcoin really is the most important innovation right of our generation in terms of us living in a period where we have government overreach corporations overreaching as well and bitcoin really gives us uh way out in terms of a parallel system where you can control your assets you can protect your Financial freedom for you and your family in your community, and I think that's really really important I think people certainly in developed countries are still coming to realize that and a lot of them still on there yet But they'll get there So for me, I just wanted to focus on Bitcoin. I you know Nothing against any other crypto.
I just wanted to focus on Bitcoin. But also, so that's the first thing. Second thing, Bitcoin is really the bellwether of the ecosystem, right?
So Bitcoin is going up. Decent chance that the rest of crypto is going to go up. Bitcoin is going down and you're not paying attention to what's happening with Bitcoin. Good luck with what you're investing in the rest of crypto. So that's always been the case.
It continues to be the case. I kind of figure whether you're into Bitcoin or not, you need to pay attention to what Bitcoin's doing because it is really that bellwether for what's happening in the wider ecosystem. Yeah, 100%.
Probably one more reason as well. Startups are really hard, right? So that 80% plus fail. I would say in our industry, it's probably even higher because the bear market's so tough. So therefore, trying to spread yourself too thin not a good idea and in fact you know there's been a lot of other analytics platforms that have been and gone uh because for that very reason i think they tried to spread themselves too thin they didn't have a clear point of view um so yeah more you know just as much as the other two reasons is just focus right you got to focus in a startup and as someone that's been within the bitcoin space and industry for over seven years now has the industry changed a lot as bitcoin as an asset as its narrative as how it's perceived changed obviously with the etfs this year and institutional potentially sovereign state adoption it's obviously growing in maturity but how does it feel having worked in the industry the any potential insights that may be as obvious uh i actually think up until last year the industry was almost like willing itself to change but it was still sort of within itself and so it it didn't really change that much not really and i i do believe and we'll come on probably to talk about this in a little while when we're talking about future projections i think we are now in a transition period uh where we've moved we're moving through from our adoption phase which is the first 15 years of bitcoin's life we're now transitioning into the institutional phase and we're in this sort of fuzzy period right now in between uh so really it was a year ago i would say where there was that genuine step change and it was in the lead up to etfs and you could see that institutions were coming online and so i think it's really just in terms of proper change real change it has been the last 12 months and there's no denying it now it is different um and i think that's going to continue uh and hey look you know it's just bitcoins part of bitcoin's journey right uh in a way i'm gonna miss the part of the i guess there's a corporate sheen to it now i've noticed you know when i look at a lot of the industry there's that corporate sheen um that you get with large brands and things and institutional clients and all that um which is fine but i kind of miss the edginess of the old days and i hope that we'll retain the decentralized nature of bitcoin right because that's the most important thing in all of this if we lose that in this transition to institutional uh then that's going to be really this is going to be really really sad uh so we've got to actually do our part i think to sort of welcoming the institutions but also making sure self-custody is still available and all that sort of good stuff of course yeah and also on the topic of more substantial changes in the past 12 months or so We cease to be looking to Bitcoin within the last 12 months and we have rebranded to Bitcoin Magazine Pro.
Can you give us a little bit of insight into how that came about and what that means going forward? Yeah, sure. So earlier this year, Q2 probably, the Bitcoin Magazine team got in touch. For anyone who doesn't know, Bitcoin Magazine actually run the biggest conferences in the world for Bitcoin. So, for example...
If you heard Trump speaking about his Bitcoin plans, that was at Nashville. That is run by the Bitcoin Magazine team. Bitcoin Magazine also ran the Amsterdam conference last week, which you spoke at, Matt. It was good.
Yeah. Yeah. You seem to do a great job.
So we'll have to chat about that on another session. That was a great job. So, yeah, they run these huge conferences.
They also have the physical print magazine and their website, news website. And they've been around for years, right? So they are well established in the ecosystem.
And they said, look, we have this analytics arm called Bitcoin Magazine Pro, which is underperforming relative to its potential. So at the time, Bitcoin Magazine Pro was just a opinion based articles. format so pretty simple and they felt it was under delivering versus its potential and they said look you know how can you help us can you come on board and help out and after a while i said yes and you know fast forward a few months you know bitcoin magazine pro is now a fully fledged data analytics platform thousands of subscribers gets millions of views each month so it's been so far touch wood very successful and uh yeah the future is looking bright with the back bitcoin magazine guys who are great really good guys to work with yeah i i conquer everyone i met at the the conference was was lovely and very optimistic about the future and talking about bullishness on the brand the company we'll have a transition into bullishness on bitcoin you mentioned earlier on that you think we could be on the cusp of the bull cycle kicking back into gear what gives you that kind of thesis are there any on-chain metrics in particular that you're currently watching if you'd like i can share some so we can kind of discuss them on screen as well yeah for sure so so listen like i said right at the start i think we are at a critical point here in uh the latest market cycle um i do think we are still going to have a four-year cycle uh so there's been lots of people I've noticed dodging that question.
It's a tricky question. Are we going to have four-year cycle? Loads of people dodging it. I'll stand in front of the question.
We are going to have another four-year cycle. But I do think this is probably the last one. Reason being, as I mentioned, we're moving, transitioning from that adoption phase of Bitcoin into this institutional phase.
But I think we're still going to get one more run of the beautiful, clean four-year cycles. So yes, we get another four-year cycle. And yeah, we can look at what is going to be the fuel for the fire now and how we're going to know when things are looking a bit hot, because this is a critical time, I think, to pay attention in the market. Not sure when this video is going to go out, but literally in about five hours time. All right.
So, yeah, this is a critical time to pay attention. So, yeah, let's look at some charts. uh we're gonna look at a technical chart first just to give some context and then we'll look at some global macro before then getting into on-chain stuff sounds great so just a technical chart of price action yeah if you just get up a standard chart of bitcoin um if you can oh here we go look how does that look like a true professional there you go bitcoin price action where's that going back to yay zoom in a little bit more um so we can see what's going on recently perfect perfect yeah yeah that's good yeah back out a bit back out of it yeah great so uh exactly yeah that'll do um so look it people are sort of flip-flopping about where we are in the cycle right but it just is a little bit different to last cycle But broadly speaking, we're in pretty much the place where we would expect to be right now for the amount of time we've gone through the cycle. So about two years in now, I think, from the bottom, roughly speaking. And if you compare that to last cycle, we're in pretty much the same place.
Right. The only thing that is significantly different is, I think, the inputs to some of the price action that has led us here from the bottom. OK, so classic. Bitcoin bottom was in, what was it, December 22, was it?
FTX implosion. And sure enough, everyone's screaming, it's over. The whole space is a scam.
Just like they said the previous cycle, it's over. Bitcoin's going to zero, right? We've heard it all before. And if you listen to people on Twitter too much, that's where you get caught out.
Obviously, there's lots of data, like the metrics we show that show that actually that was the best. buying opportunity right there um you know look at mvr vz score look at investor tool loads of tools like this we're saying well multiple we're saying you know that is the best time to be accumulating your bitcoin sure enough bitcoin then rallies hard off the bottom as we saw last cycle as well the only difference last cycle and if you're kind of new ish to bitcoin as in like this recent cycle past four years you might not know what that big run-up to 14k was in when was that 2019 was it yeah yeah june july 2019 yeah so that was not only the fact that bitcoin was way undervalued and you get this reflexive move to the upside also there's this thing called the plus token ponzi scam right so the scam that came out china uh some ponzi scheme and they were using bitcoin and that was pushing bitcoin price artificially up up up up and so you got this mega pump up like way higher than most people were expecting all the way up there and then you got the hangover from that right and you got that selling that sell-off which then led also into that we're not connected in any way but then we also had the coveted crash right was that mega crash. Everyone on leverage on BitMEX got wiped out. And yeah, then obviously we rallied off those lows. So you had those two things last cycle, which make that chart look like that.
But if you recognize that they were two very sort of, I guess, specific, almost like black swan freakish events, you take them out and you look at this cycle, it's pretty much the same trajectory, right? You kind of basically got it moving up from the lows. Now, what happened this cycle, which was different. was of course the ETF announcements, right?
So that was what pushed up. It happened a little bit later than the plus token Ponzi and was obviously sort of positive, net positive for the industry. That's what pushed us all the way up to 70K.
Now, if you'd have been listening to a lot of people on Twitter around that top around 70K, they'd have been telling you that Bitcoin was gonna go to, you know, 100K next week, half a million dollars the following month, right? If you look at the data, for example, funding rates was a great thing to look at then. We talked about it a lot, BM Pro.
You could see funding rates were way too high, right? People were way levered to the long side on derivatives. What happens then? They're going to get flushed out. And that's pretty much what we've had now the past seven or eight months is that flush out period.
So we've really just had the hangover of that. And so whilst people have been panicking, there was no reason to panic. It's just because we got drunk on people saying Bitcoin is going to go to 250k next week when we were topping out 70k.
Right. So, again, use the data and you can actually get a much clearer picture what's happening, because the recent lows still using funding rates, we were getting negative funding rates. And what do we know in a Bitcoin bull market when you get negative funding rates consistently? That's a pretty good buy the fucking dip opportunity. Right.
So sure enough, what's happened? Since those negative funding rates, prices rallied to the upside in the past few weeks. All right. So that's really like a bit of a run through of where we're at in the cycle.
And if you ask me, that's pretty good going. Like, you know, we basically had a really nice run up from the lows. People got overexcited by the ETF.
So we threw that euphoria and now we're kind of reset. We've had seven or eight months of just hangover that has cleansed the market. we've had negative funding rates and when we look at some of the other charts coming now you can see that actually you know the scene is set to really take that next big move up that i think is probably going to send us you know comfortably above 100k as we go into 2025. so you'd imagine we're probably i don't know if you can see the chart somewhere in this area if we were to compare previous cycle to current cycle once we've had the COVID recovery, but prior to the big run up where again, we're having this choppy consolidationary price action before hopefully we kind of kick off the latter stages of the cycle? I'd say we're probably close to that, but a touch higher up.
So if you zoom out, if you just zoom out on that chart a little bit, and you look at the previous all time high, you can see it was about 20k, right? And I would say we're about 20k on the way up. You see, we had that consolidation just after the... period where you yeah if you zoom in a bit now to that i think we're about there right because we're at the previous all-time high and when we look at some of the on-chain data later we're going to see that that is where some long-term holders tend to realize a bit of profit right and so that's been bringing extra supply onto the market during this hangover period that's why we've had this consolidation or one one of the reason why i've had that consolidation but once that's done and i think it's pretty much done now that's when we go higher. Are there any other charts you have to kind of reflect this theory to kind of reassure your basis on this?
Make sure I'm not just talking nonsense. So, yeah, let's look at so let's start with macro because you've always got to start with a zoomed-out view and then we'll zoom in, right? If anyone takes you to, like, low timeframes or just straight into on-chain, you've got to be questioning why they're doing that.
So let's go and look. at global liquidity, which I think is probably the most important chart for Bitcoin, right? So global liquidity people might have heard people chat about it on twitter at the moment it is a bit of a buzzword or buzz term at the moment uh it is essentially uh government controlling how much money is in the financial system right so whether it's just pure cash or convertible assets to cash um it is how central banks kind of turning the tap on and off at different times influencing how much money is going in and out of the global financial system.
And that has an impact on assets around the world, right? Not just Bitcoin, but it impacts all assets. Because if there's a lot of money in the system, that money's got to go somewhere. And a lot of people say, well, hey, I'm going to invest that money, and they'll put it into risky assets to try and get a higher yield on it, right? It's a very sort of crude way of explaining it, but it's kind of what happens.
And Is it relevant for Bitcoin? This chart kind of shows you that it is relevant for Bitcoin. So this is looking at global M2. So M2 is the money supply or global liquidity. It's the same thing.
That is the blue line on the chart. And Bitcoin price year on year is the black line on the chart. OK, so they're both showing year on year of their own data. And what you see is when one goes up, the other one goes up.
as well, right? So when global liquidity is going up, Bitcoin price year on year tends to go up as well. Yeah, so year on year global liquidity trending up, Bitcoin year on year going up.
I guess there's clearly a relationship there. And why might that relationship be there? You could probably spin on to the next chart now, just pure global liquidity. If you think about it, Bitcoin benefits from global liquidity going up. for two reasons first reason is that as i mentioned there's just more money in the in the global economy right and people are saying right i want to put that money somewhere to use somewhere where i'm going to get a good return on it and it finds its way into the stock market it finds its way into property and it finds its way into assets like bitcoin bitcoin is perceived as a risk asset with a high return historically so you know it makes sense that a lot of that is going to go into Bitcoin.
But Bitcoin also benefits because it is a hard asset, right? So this is the bit that I'm not sure everyone always talks about. Bitcoin is really hard.
It is the hardest asset, right? It's got a fixed supply schedule. It can't get inflated away. And so in a period where central banks are just printing more money and essentially creating inflation, making currencies work like... not worthless, but devaluing their currencies, people are going to hunt out harder assets, right?
And Bitcoin's about as hard as it can get. So it's like Bitcoin gets this double kill benefit from global liquidity increasing. So that is why global liquidity is important for Bitcoin.
What is happening right now is on this chart. So at the moment, global liquidity is making new all time highs, right? So the blue line, you can see is just in the past few months whilst bitcoin's been in this post-etf hangover period has been making new all-time highs now you might say well why is bitcoin not suddenly rallied off well a couple of reasons one these things take time right we're talking about global liquidity right it takes time to work through markets but also bitcoin has been in this hangover right it's been in this period where long-term holders are selling, right?
Where derivatives traders have had to get wiped out. So you've kind of had that going on as well. And I think that's why even though global liquidity has gone up, we're not yet seeing Bitcoin price follow. But if you look at previous cycles, Bitcoin price does eventually follow, right? And starts to move into a bull run, which I think we're going to see now as we go into Q4 and into Q1 2025. very bullish very nice so you said that macroeconomics and this kind of broader perspective is the basis of how you analyze bitcoin but then going a little bit deeper than that are there any on-chain metrics that you're specifically watching for where we may be in the cycle yep so i think uh there's probably two or three we can look at right there's always a temptation to look at too much on-chain data derivatives of different things similar things and so we'll just try and look at a couple of key charts before we move on from global macro.
The other thing I would say is we have Fed rates coming down as well, and the anticipation that more Fed rate cuts are coming as well. That's the important part. So Fed cut rates by 50 basis points last month. You can see that on the chart there, that drop down there.
First time since 2020, since the COVID crash. So that is the first time in four years. And people are anticipating more rate cuts coming plus global liquidity making new all-time highs from a global macro point of view that is like chef's kiss in terms of like the backdrop right so macro is looking great um obviously it doesn't mean guaranteed that bitcoin's going to rally up but it certainly sets a very favorable backdrop right when we're looking at what's what are the external inputs into this bull run It makes it easier for Bitcoin to run when everything else is supporting a bullish thesis.
That's right. That's right. So it gives Bitcoin a bit more fuel to the fire, you could say.
But yeah, let's take a look at some on-chain stuff. Let's start with thinking about long-term holders. Right.
What do they do? And let's think about the smarter money in the system. And the best...
metric I think to look at for this is the one-year hodl wave okay and I'll explain why one year not like five year or seven year or something like that so the one-year hodl wave is looking at the percentage of Bitcoin that has not moved on chain for at least a year right so it's just that sat there in someone's address or someone's wallet hasn't moved right And that means they're not selling it. Right. So if it's just stayed in the wallet, it's not been sold. And what we tend to see with the one year huddle wave is that this is like a proxy for smarter money in the system who are playing Bitcoin's market cycles. Right.
So you get to see when they're accumulating and then when they start selling. as retail new money FOMO in late in the cycle. These guys are kind of selling to them because they're like, great, I accumulated this Bitcoin on the cheap in the bear market lows. I'm going to realize some profit. Doesn't mean they're selling all their Bitcoin, right?
They might have a long-term 10-year huddle wave stash, right? But they're starting to cash in now. And yeah, exactly.
As you've shown on the chart here, if you look at, say, the 2016-17 cycle, this particularly clear one. the one-year huddle wave goes up in the bear markets as these guys are accumulating bitcoin and they're holding it waiting for the bull run to kick in later and then they'll sell at a higher price okay so the one-year huddle wave is like an inverse relationship to price all right so as price goes down in the bear market the one-year huddle wave goes up as the percentage of bitcoin that hasn't moved on chain increases right as these guys are holding right Then as Bitcoin runs up to a new all time high, that one year HODL wave starts to come down. And we've seen this a little bit with the recent run up to 70K. Right. If you look at the recent data earlier this year, you can see we did get that little sell off as the one year or the longer term holders started to realize some profit.
Right. New all time high. I'm going to realize some profit.
However, what we know historically is that. most of the selling happens later in the bull run right and i think we're gonna really start to see this metric come down once bitcoin breaks above 100k okay that's when i think a lot of long-term holders are waiting for that to then start realizing more profit so at the moment we've had this hangover period where it's just sort of been flat but yeah my expectation is as we go into 2025 like we saw in previous cycles um you're going to see it come down if we get a parabolic run like we did in 2017 you're going to see a pretty steep consistent drop down so yeah this is this is definitely the chart to watch to understand what other i guess you could call them the smarter money what are they doing with their bitcoin and how quickly are they offloading onto the fresh retail coming in so is this a big basis of your strategy do you try and accumulate a lot during the end of bear cycles and distribute at the top of bull cycles are you playing the market a little bit more frequently than that with some intra-cycle trading how are you viewing the market and how's your personal approach to this uh so um first thing is everyone should make their own strategy right so do not follow anyone else do not copy anyone else sort of educate yourself and then get your own strategy that is like the most important things in this space personally for me i have like a never touch stash and i have a i understand the volatility of Bitcoin's market cycle. So I have another amount which I operate a bit more in the way that we're discussing here, right?
So accumulate in the lows, sell some and manage risk as we head towards the cycle highs. So that's my personal strategy, but everyone needs to work out what they want to do, what works for them. Keeping it simple.
I like how you marked your buys and sells on the chart with the little shaded areas. I wish, I wish, no, certainly not a sniper when it comes to identifying the tops and bottoms. And you know what, I think it's really important, actually, that you don't try to.
I think seeing a lot of people really get muddled up in previous cycles when they've tried to pick the picot top and the picot bottom. It's a fool's game. And as long as you're broadly right, you know, broadly, you know, somewhere around the bottom, broadly somewhere around the top, you're managing your risk. broadly somewhere around the bottom accumulating, then you're going to do just great because Bitcoin is such a strong asset that is still going through that adoption phase that you're still going to benefit very well with a simple strategy like that. 100% scaling in and out not only reduces the stress and anxiety with timing the market, but just so much easier and simpler.
And then almost not guarantees, of course, this is investing. but gives you a much higher probability of scaling in heavily at the bottom and the top, rather than letting your emotions kick in and getting a little bit carried away with FOMO either side of the market. So I know you said, oh, go on, sorry. No, I mean, you're dead right on the emotions.
And I think that is that's the biggest thing in this market where people really sort of lost their minds, literally, but unfortunately lost the shirt on their back sometimes, because if you only listen to the influencers on Twitter. when price is topping out and they're screaming that price is going to go like, you know, 10x higher next week, that's when unfortunately people start taking risks that are too big, right? Start taking out an overdraft, you know, remortgage things.
And that's when you can really, really get into trouble. So have some basic strategy, have some basic tools that help you ignore all that garbage noise that's going on out there when the market is screaming at you, because it will, it will scream, you know. when we're at those highs if we get a parabolic run like 2017 people will be losing their minds are there any metrics you're looking to in particular to try and help you see in a data driven approach when we're maybe reaching the highs i know obviously you can see the sentiment of greed and everything on social media but is there any on-chain points that you're saying right when this reaches a certain point we're very overheated yeah it's uh there's quite a few that you can look at um I'll just try and show one or two, but certainly if you sort of explore more, there's others that you can look at. But just be careful if you do look at others, that they are using metrics that are separate from the other thing that you're looking at. I see a lot of people saying, oh, this chart's showing this, this chart's showing this.
But actually, all three of the derivatives of the same underlying metric. Anyway, let's look at a chart called. cycle capital flows and if one year hodl wave is really looking at the supply that's going to come onto the market by the long-term holders selling as retail comes in this chart is showing us the demand influx that is going to be buying those coins off the smarter money right this cycle so these two charts side by side are actually you could argue kind of you know you don't need much else But in terms of understanding that sort of supply demand dynamic that's going to happen as we move further into the bull run.
All right. So this chart is looking at the realized huddle wave of addresses that have held Bitcoin for less than a month. Now, I know that sounds like a mouthful, right?
And you're like, what the hell is that? So if you if you just focus on on that one. Yeah, exactly. So leave it like that.
the way this is like realized value right so this is the cost basis the entry level different participants in the market and at the moment we're looking at the realized value for addresses that have held Bitcoin for less than a month okay so it's kind of like how much wealth is being held by these guys in proportion to the rest of the market and what you see is in the bull runs so look at 2017 you've got this massive spike up right to over 50 or over 60 i think at one point is it on the chart the high what was the top out 6.4 there you go 67 yeah around there so that like that is how much like of the cost basis value was being held by what addresses that had only held it for less than a month right so that shows you the pure fomo this is like think of this as like the fomo chart and it's showing you how much fomo how much people are racing in who don't know much about bitcoin they're diving in just to try and accumulate it because they've seen it on the news they've seen influencers saying it's going to go to a million dollars next week and they're fomoing in and so when this gets too high that's like a real sort of red flag right you want to be watching out at that point and we saw the same or similar last cycle where it actually peaked out at about four in that run up to was it 40k and then it lowered down a little bit but basically This chart is not trying to be an exact science. It's just trying to show you when is like hot money coming in and when do you want to start thinking about managing risk. And I would say once this gets towards 50%, you want to be paying attention, right?
And if you compare it with the one-year HODL wave, you're probably going to see, you know, the one-year HODL wave going down steeply as this is shooting up because those guys are offloading onto these guys. One other thing I would say on this chart, you've got the little spike there where the ETF launch happened, right? When we ran up to 70K, that's pretty comparable to the plus token Ponzi we spoke about.
That run up to, what was it, 14K back in the previous cycle. It went a little bit higher, but not for long. So I sort of feel like we've had this same sort of initial test pump, if you want to call it that. But I don't think we've had, I don't know if you've got a sense of this, but I don't feel like we've had fresh retail coming in at scale yet this cycle.
So I think this is similar to what we've seen in, well, every cycle where we have this initial run up off the lows when people first start hearing about Bitcoin. Oh, it didn't die. That's interesting. I'll start looking into it again.
And then you do have this first kind of FOMO phase. But then you usually have this reset period, which we're in now, where Bitcoin usually cools off. historically this is also aligned with halving events as well and then it's only afterwards again once we start breaking new all-time highs once more that you see the second run of that not only did it not die but now it's once again reaching values it never has before why didn't i buy the first time i saw this and that's when you get the second running of flows that again you see in every single cycle exactly exactly now i don't i don't really see a reason why it would be different this cycle.
Obviously, there's always unknowns in the same way that the COVID crash was an unknown, like Black Swan event. Something like that could happen. But, you know, given that we can't see into the future, with ETFs now, institutions coming online, I just think you're going to have boomers this wave as well.
It's just as well as standard retail coming in, you're just going to get that influx. And I think it might actually surprise people. because we've had this seven or eight month period of Bitcoin not doing much.
Yeah. So next, I'd like to discuss a metric that you yourself are famous for making, and one you mentioned earlier, which is the Pi Cycle Top Indicator. Can you give us a little bit of background into how on earth you managed to figure this out? And what are your kind of insights into how it may work or not work this cycle? oh okay uh i wish i had a bitcoin for every time someone asked me to explain this i've not explained it because it takes a bit of there's a few steps to how i got to create this indicator um so i will try and summarize it briefly it was 2018 i think when i created this it was around that time i was in that telegram group with murad david well willy woo and others and Bitcoin obviously has these four-year cycles.
We've been talking about them. kind of undeniable in this adoption phase of Bitcoin. They won't last forever. But the past 15 years, we've had these nice, clean four-year cycles, which got me thinking, okay, from a cycle theory point of view, maybe mathematical pi could be something interesting to play around with.
We also noticed that Bitcoin's one-year moving average was very important for Bitcoin. So when Bitcoin breaks above its one-year moving average, it kicks into a bull market, breaks below it, it's in a bear market, okay? And Murad had been doing some charts at the time, really clean charts, I remember, where he was using sort of like round numbers.
And so instead of the yearly moving average, he used the 350-day moving average, just sort of nice and clean. And he'd have like the 500-day, the 600-day, stuff like that. So that was the second thing. So Pi, yearly moving average or the 350-day moving average. And then I'd created the Bitcoin investor tool, which takes the two-year moving average to kind of chop off the...
bottom of Bitcoin's bear market lows. Yeah, that green line there, two year moving average, brilliant time for accumulating because everyone else is panicking saying, oh my God, Bitcoin's over. Actually, when Bitcoin went below its two year moving average, great time to start accumulating. And I thought, well, okay, if I can use that to identify when it's great to accumulate, if I have multiples of that value, then that might identify a good time to manage your risk towards the tops, right?
Hence created. the Bitcoin investor tool using a multiple of that two-year moving average. So those are kind of the three inputs to Pi Cycle top, right? If you go back to that chart now.
So we've got Pi, the 350-day moving average, and this idea of multiples, right, to help you manage risk, okay? And so I was just playing around thinking, if I put these together, what happens? And I had this idea. of if you have a multiple of a high timeframe moving average like we just spoke about, and then a lower timeframe moving average catching up with it, that's going to tell you that Bitcoin's price is going parabolic, right? Because that's how moving averages work, right?
One catches up with another one because price is going up like that if you've got a multiple of a higher value one. And I thought, well, that's kind of a cool tool to be able to manage risk, right? Which I hadn't seen before.
And... I then thought, well, okay, what number gets you to pi if you divide in 350, right? And the closest whole number you can get to pi is 111, right? So 350 divided by 111, I think, is 3.153. 153 reoccurring, I think.
Yes. Thereabouts. Yeah, okay, good. Oh, well, okay, spot on. So I thought, let's try those two moving averages, see what happens.
And I charted it. I can actually still remember the moment I charted it because it was just pure disbelief. I did not create this indicator to try and pick out the tops.
I was creating it just as a risk management tool to tell you broadly when the market's getting overheated. And yeah, I remember staring at the chart and I looked at the 2017 top first because this was in 2018, remember? And it picked it to within a day.
And then I looked further down the chart and I saw, again, like pretty much bang on, pretty much bang on, you know, very close to being bang on. And, yeah, I just I was in disbelief. And then that's that. So it was almost like an accident, really, how I created it. But then we put it on the site and last cycle, it was by far, by far and away the most popular chart.
It was getting like tens of millions of views. it was on loads of other sites as well because it's uh you know people can obviously just replicate it and yeah everyone was saying is it isn't it going to work in 2021 and of course it worked so that's it of course it worked i wonder how many people saw this cross and actually took action or if people went oh wow what a funny coincidence but we are going to 100k yeah right and you know people always ask me like is it gonna work next cycle and I have no idea, right? You've got to remember, people who make metrics like this, they make it, but they can't see into the future, right?
So do I think it's going to work this cycle? I think it might because this is the last four-year cycle, but it might not because we are in that crossover period with institutions coming on board. So what I would say is don't just rely on one metric.
You can use tools like this to generally manage your risk as those two moving averages are coming close together, but I wouldn't rely on any. single metric including this one. You think that's the biggest?
mistake people make just focusing on single points of data because obviously well the first mistake people are going to be relying on emotion and twitter gurus to give them their analysis and tell them when to buy and sell and that almost never works second point maybe people are too hyper focused on one or two metrics and maybe miss the forest for the trees waiting for one moving average crossover or one zed score reaching the top zone do you think that is the biggest mistake people should be taking into consideration more data points or do you think there there is a point in which there's another complexity and people do need to kind of keep it simple yeah it's definitely a balance right i think you you hit the nail on the head there you can either go too extreme one way or the other i see a lot of analysis which is way too complicated for like plus 90 of people and also unnecessary um but then you can also yeah just just say i'm only gonna sell everything when it gets to this point and i i just that's just not a great way to think about it right don't try and profit maximize like realize that this is a process it's one thing in life and probably scaling in and scaling out is a is a smarter way to approach it long term and you'll still do very well you'll still do very well but so yeah i i think scaling in and out is probably the way to avoid um getting hung up on single bits of data as we get another pi cycle crosstalk this cycle Yeah, I'll wait for the cost and then sell everything. So you've mentioned a few times that you foresee this to be the last four year cycle. And you can see, especially due to the institutional influence, Bitcoin may be changing in terms of its corporate shininess.
How do you think on-chain data is going to change to maybe reflect all of that? Do you still think it's going to be as useful as it has been historically? Or do you think we maybe need to analyze on-chain data slightly differently? I think that people are realizing, particularly our institutional clients we speak to, I think people are realizing that on-chain analysis is great. It is fantastic, but it's just one piece of the puzzle.
So people are recognizing that as Bitcoin grows, it no longer operates in isolation. It is part of the global economic system now. It is part of the wider financial system. And so you have to be looking at other data sources like global macro.
But not only that, you also need to look at what's happening in the derivatives market, what's happening with ETF flows. And you need that to have the complete picture. And I think, you know, last cycle there was on chain became a very exciting thing because it was new. It was a new form of economics, really, I believe.
But VC, a lot of VCs invested in analytics firms and that. i think almost artificially inflated the importance of on-chain analytics and whilst it is crucial it's it's just one piece of the puzzle so i think i think that's how people are sort of learning how to work with on-chain data is not just hang your hat purely on that and i think that's definitely the right thing to do to look at all the pieces of the puzzle um i would say yeah people are also realizing this is like a secondary point that uh low time frame on chain analytics is pretty much ineffective. It's kind of garbage. But there are platforms that will try and sell you that for a lot of money.
If you want to look at low timeframe stuff, you're much better off looking at things like derivatives data, right? Because that's where a lot of the trading is actually happening, right? So yeah, on-chain data is really effective when it's high timeframe stuff. So just be careful if someone's trying to sell you anything different to that low timeframes. So do you foresee Bitcoin cycles becoming more aligned with, say, global equity markets on an eight year cycle?
Or do you think that we're going to maybe decouple and become a hedge asset like gold? Or how do you see Bitcoin being an asset in the next cycle? I think that we I think we're going to lose the four year cycles. and it's going to take people a bit of time to figure out uh because this is uncharted territory we're in now so i think um it will operate like a commodity like gold i think um but one that probably is in sync to an extent to an extent with equities um but i think there is always this risk of some really extreme government regulation around Bitcoin, which could just knock it out of sync. for a period of time uh unfortunately potentially you know there's a possibility that might not be a good thing we could enter a sustained bear market longer than the ones we're used to um you just have to think through all the possibilities i know that's not what anyone wants to hear uh but it is possible so something that people might want to hear which i know you're not going to be over the moon to give a price prediction for a cycle peak but is why everyone likes to hear do you have some price range that you're kind of anticipating bitcoin could top out at in this cycle assuming you're going by the four-year cycle theory again maybe sometime in about a year's time late 2025 do you foresee uh 100 200 500k bitcoin uh okay uh let's start with mvrvz score i can see you got that chart up here yeah um yeah it's a great chart to show actually because i think you know If there's one chart you're going to focus on that's on-chain based, this is a pretty good one, right?
If you're trying to play the cycle. So this is looking at the market cap of Bitcoin relative to the realized cap, right? So which is the cost basis, the average cost basis, the average price at which everyone bought their Bitcoin.
OK, that's the blue line on the chart versus the market cap, which is like the price, the black line you can see. And. What MVRVZ score shows us is when the market price moves really far away from the realized price. So the people's entry level, when does market price move really far away from that entry price?
Basically saying, when is everyone feeling really flipping rich going, mom, dad, I'm going to be a billionaire. You know, it's amazing. All that stuff.
That's what this chart shows us. it shows us when people are getting overexcited um that z score which is a statistical technique basically to separate the extremes in the data between uh realized price and uh market price we get that orange line moving up into the pink zone at the top of bull market highs right so that is when market price is too high relative to people's cost basis market's getting too frothy need to start managing your risk and then inverse right with the green zone that's when it's great to accumulate. All right, so that's MVRV's Z-score.
Really important to watch this cycle. You can see currently, right now, to start answering your question, we've gone from a score of about three and we've retraced back down to below two, right? And this has been that hangover period I've been talking about. I think we're through that hangover period now and we're going to start moving up.
And look, you can look at previous cycles, right, to get a sense of how much higher we've got to go. I think... whilst we not necessarily going to enter the red band who knows if we will or not we don't know how extreme this cycle is going to be i think there's a very good probability with fresh retail coming in and then long-term holders seven to those guys we're gonna get a score of plus five six so what i would say is i want to be checking back in having a conversation about where we're going to top this cycle when mvr vz score is around a five or a six right because that's gonna by that point let's see where price is at then is it over 100k i think it's probably going to be over 100k so i don't want to give a specific price target we'll look at the metrics at the time but because i know you're going to be disappointed if that's all i say what i will say is i think a range of between based on various metrics we're looking at a range of anywhere between 150k and 250k I think it's quite realistic for this bull run. One other thing I would add to that. So that is like my sort of like base case, if you like, I think that's reasonable probability that somewhere within there, we're going to go this cycle.
What I would say, and I think this might catch a lot people out this cycle, is that last cycle, we had a rounded top, right? And I think a lot of people still have a bit of PTSD from that, because everyone thought we were going to go to... 100k last cycle and we didn't we just had this this casual round off as mvlvz score just tapped seven rounded off and that was it whereas the cycle before that and i remember because i was fairly new in bitcoin then we went right up like a fucking rocket we went from 10k to 20k most people forget this in less than two weeks, right? So we doubled the price of Bitcoin in less than two weeks.
And that's why it's not impossible, right, to try and call a top, especially if we do get another blow off top like that this cycle, that could send us way beyond my base case. So do I think it's feasible that we get into 300Ks? Yeah, it is.
If we get a proper blow off top, that is possible, as crazy as it sounds around here, at these levels of whatever, 65K right now. Interesting. Just one way, I guess, we can almost quantify what a 5 or a 6 on the MVRV would look like. at the minute the realized price is probably around 32 33 000 so roughly multiplying that by five or six would be between 160 and 200k but then you have to take into consideration during the latter stages of bull cycles this realized cap starts increasing exponentially as well therefore that multiple of five or six won't be a 32k might be a 40 50 60k exactly exactly because you've got that new money coming in buying at higher prices buying higher prices and i don't think we're we've seen any of that frenzy really we saw that frenzy for like a week or two around etfs but uh yeah if we get it like it was in 2017 things could get pretty pretty wild um but so it's important to manage risk and look at the data when that happens because everyone will be losing their minds if that does happen if that does happen if that does happen okay so i know we've been chatting for uh probably an hour or so now do you have any closing thoughts do you have any Other metrics you'd like to quickly mention before we call it a day or anything else you'd like to include?
No, I mean, I'd just say to anyone who's fairly new in the space, look, shut out the garbage noise that you get from influencers on Twitter. Invest in yourself, educate yourself and make some data driven decisions. Right. Whether that's on.
Bitcoin Magazine Pro or any other platform, right? It doesn't matter. Just educate yourself so that when the time comes, when things are getting noisy, you're able to control your emotions. If you can do that, then you'll do really well this cycle. Perfect.
And can I be cheeky and ask if there's any discount we can offer people that made it to the end of this video? Yeah, sure. If you made it to the end of this video, we'll give you a 35% discount.
Wow, generous 35% Amazing discount and we'll sort out the QR code or whatever when you do the final edit of this video amazing Well, thank you very much for your time. I'll go one more thing. Yeah one more thing I've ever obviously it's the first time I've done a video like this Was it useful?
Was it helpful? Was it in any way interesting? Let us know in the comments below And yeah, what do you think is gonna happen this cycle?
Let us know in the comments you've just done my ultra for me so great thanks for that yeah hopefully people enjoy it maybe we can do it again in the future so great thanks phil thanks for joining me and thank you all very much for watching and we'll see you in the next one bye bye nice one cheers matt