#63 Crypto & Coffee | Boom4 Update w/ GΞR₿Z & Brian Russ

Special in person episode covering: Where we’re at in the cycle, ETH ETF Predictions, BTC all time highs, The Halving, sector rotations, bank failures, systemic risks, top indicators price predictions and more!

Episode Links

Show Notes

Gerbz: What is up BitLift crew? I just got back from recording an epic in person conversation with my buddy Brian Russ. Every time I hang out with Brian, we have such good crypto conversations and I just want to bottle them up and publish them for the pod.

But I didn't have the tools needed, so I just got some Rode wireless mics. We clipped them on, met for coffee, talked shop, talked crypto. It went exactly as I knew it would. We covered so much ground, everything you guys want to know about.

We covered where we're at in the cycle, ETF predictions, obviously the Bitcoin all time high, the having sector rotations, bank failures, systemic risks that we're not looking forward to this cycle, top indicators, price predictions, and literally even more than that, we covered a lot of ground.

So I know you're going to like this episode. If you want us to do more episodes like this, go on YouTube, hop in the comments, let us know. Maybe we'll meet once a week. Maybe we'll meet once a day. I don't know. It was a lot of fun. We'll definitely do it again. Enjoy my conversation with Brian Russ.

ETH ETF Concerns

Gerbz: So I have a theory I've been noodling on and you're the perfect person for it. And I'm going to blindside you with it.

Brian: Okay.

Gerbz: I have this hunch, and I don't have the data to back it up. In fact, I see the articles stating the opposite. But I have this hunch that an ETH ETF could get denied. And I have a lot of reasons for this. Let's, think them through, right? Because obviously we saw this big run up with Bitcoin leading into its ETF, and there was a lot of news about it, and it got denied three times, and there was a lot of media around it.

I'm not seeing that with ETH, but I am still seeing the run up. The other thing is with Ethereum, an Ethereum ETF opens the floodgates for crypto ETFs in a way that the Bitcoin ETF actually didn't.

We just talked about how Bitcoin is the only one in its sector. It's the money, it's the hard money. There's no app layers, and there's no foundations behind it, running them. There's no figure heads of Bitcoin. Every other project in crypto has all of those things. I'm afraid that this green lighting Ethereum green lights so much stuff that is in such a gray area that I could just see it getting straight denied.

And I keep hearing May 9th is some deadline, which happens just after the halving. And the halving, in my opinion, is also going to be a sell the news event because anyone who's new to crypto doesn't realize that the halving is just a non event. Like, we've been through a bunch of halvings, it's fun, but nothing happens.

Brian: Yeah, very anti-climactic.

Gerbz: It's very anti-climactic. We watch a countdown, and then it hits zero, and then we're like...

Brian: Where are the fireworks?

Gerbz: Was that it? Yeah. So, that's gonna happen. And then, I could see ETH getting denied. What do you think of that?

Brian: Yeah, I think it's a matter of time horizon.

Gerbz: Yeah.

Brian: Right? So we got to be clear about that. I agree with you. My default base case expectation is that the first pass of the ETF gets...

Gerbz: Is that gonna be the first pass, the May one?

Brian: I'm not as sharp on the dates of the specifics, I haven't followed it that closely. But if you look, if you compare where the SEC and the applications are now compared to where the Bitcoin ETFs were prior to their approval.

Gerbz: Yep.

Brian: The Ethereum applications are way behind. The SEC had already provided specific comments, all the signs were there that the Bitcoin one was going to get approved. With Ethereum, they haven't provided any comment.

Gerbz: There hasn't been talk about it.

Brian: There's been no talk about it. I think the chances are high that it gets denied.

Now, this is just the initial pass, and I agree with you there'll probably be a sell off in response to that. It could be significant. And that's, and then my opinion is, first of all we're in a bull market. That's a buy the dip opportunity.

Gerbz: Yeah, I love it.

Brian: I would be confident on that. So, yeah, so if you're looking for a bigger ETH position yeah, maybe that's a catalyst to kind of pile in on the denial. You might even want to have some limit buy orders set just because you never know how low and how fast that'll be bought, right?

But then I think, remember I said time horizon, so as I look out a little bit further I think it does get approved actually. And the primary reason I think that is because ultimately it was the judicial system that drove the Bitcoin ETF approval, if you think about it. And it was because the court said, well, the SEC provided a green light for the Bitcoin futures, right? And we already have Ethereum futures.

Gerbz: And then stuff started moving, like within a week it was...

Brian: The court said, you know? I mean, that's how we've got, we still have, you know, rule of law in the US, fortunately, for now.

Gerbz: Yeah, it's not only Gary deciding what happens.

Brian: Correct, yeah, he doesn't have all the power. So, because there's ETH futures Chicago Mercantile Exchange, CME futures contract on Ethereum.

Gerbz: I think they'll pull another rabbit out of the hat, though. Another reason, so that, that case was all about, "Oh, there's futures, so there has to be an ETF, like legally, let's do it."

They're going to come up with something, some other reason. And who knows if it's even going to be legal or need to be at this time.

Brian: Well, I think the court proceedings will be faster though, because there's precedent for it now. There's a very clear precedent. So I think you'll get a very quick, I don't think it goes to any kind of trial or anything like that. You'll get a very quick process, a judge will make a, have an opinion on this, they'll review the precedent set from the Bitcoin futures to ETF approval, and I think you'll see the same thing.

So I actually think it'll take some time, but the SEC really isn't in a position where they can fight it because the law is the law, and once the courts make that decision, they'll provide a pathway for it to get approved.

Gerbz: You mentioned something interesting about how we were like, the judicial system is what finally green lit us into this next chapter, right?

Brian: Unfortunately, yeah.

Gerbz: And this is something I've been thinking about with Ethereum as well. I've been bearish at ETH lately, I really have. And all of sort of general purpose, especially I think of it as DeFi really. Because that's the main use case that everyone's kind of doing with smart contract platforms.

But this idea that like, there was so much building for so long, and regulatory reasons weren't getting in the way, right? We were able to keep building tech and building this infrastructure, Bitcoin got to the point where it was at. It didn't need to jump over any regulatory hurdles to become the Bitcoin that we use today. In order for Bitcoin to reach that next level of adoption though it needed to have an ETF. I mean, at least it seems like that's what...

Brian: For sure. It needed an on-ramp for institutional flows.

Gerbz: Yeah, it needed that.

Brian: It needed a regulated wrapper.

Gerbz: And so, in some ways that's like, the end of a chapter and the beginning of a new one for all of crypto. And I feel like Ethereum, what's happening is the regulatory pressures of DeFi, I think are going to be much heavier than even what we've seen with Bitcoin. Competing with banks on lending, that's strong words.

And this idea that Ethereum might be all these weird L2 things and all this new tech that we're hearing about that we don't even understand why it's needed, I feel like the Ethereum ecosystem is spinning because it's waiting for regulatory approval stuff to occur. And like, everything's already been built, right?

Like we have lending, we have swaps, we have all the DeFi stuff has been built, we have synthetics. We can tokenize, we've already been able to tokenize securities forever. We're waiting for regulatory approval for it, not the tech. So I feel like I never, I didn't get into crypto to invest in a technology that's waiting for regulatory approval. I invested in something to disrupt all of that.

And Bitcoin is sort of able to do that already. I'm not sure that any of these new chains are going to be able to get over that or that they will get the green lights that they're waiting for.

Brian: Yeah, I'd probably come at it from a different lens. I think it's a reasonable concern, and pushback for the space and for the L1s in particular.

But first of all, if the regulators were going to kill this industry, it was a year, two years ago, right? Operation Choke Point.

Gerbz: Yeah.

Brian: They came after the sector hard. We had one of the biggest frauds, not just in the history of crypto, but in the history of literally the world that occurred right underneath our nose.

Gerbz: History of the world.

Brian: You know.

Gerbz: And it happened to be in crypto.

Brian: And it happened to be in crypto, yeah. So if they were going to shut, if they were really going to try to figure out a way to shut the space down, it would have happened then. They tried, right? And they failed.

Look, I think it was George Soros who said the market climbs a wall of worry.

Gerbz: Ah.

Brian: Right, and so I think the more that you see that these concerns are out there and they're valid concerns, but the price continues to grind higher in the face of them, the more it's just further confirmation that bad news doesn't really matter right now. And you're, you know, so look at Ethereum is up what, 50 percent in 60 days or something, you know, whatever the number is.

And then lastly, it's funny, I'm bringing up Uber again, but I think it's a great analogy for this. I look at how Uber moved fast and broke things.

Gerbz: They did.

Brian: Right? They came into markets, they were, they didn't have tax cab medallions, they didn't have regulatory approval. They just came in with their product, they gave everybody a free 20 bucks. Spread like wildfire.

The first time I sat in the back of someone's car in an UberX, it was so weird, right? Now we do it without thinking, right? And what happened was by the time the regulators started to catch up, people liked UberX better than they liked taxis.

Gerbz: I'm smiling because there's no way you're riding X. You're getting the Lux Ubers, aren't you?

Brian: Maybe not, but not that many. So what happened is, you know, the regulators tried to come in and regulate Uber, but it was too late. And the people said, the people pushed back. No, we want this, right?

Gerbz: And that's what Coinbase is doing with their whole like, what do they call that, the... stand up for crypto. Yeah. It's a big deal. Yeah.

Brian: And so look at the success of the ETF, the Bitcoin ETF, the American people want this asset, they want this product. MicroStrategy, by the way is in short order going to be part of the S&P 500.

So do you know what Saylor's doing there? He's forcing, you know everyone who owns an S&P 500 ETF or index fund through their retirement account, he's forcing basically every American to take some exposure to Bitcoin. So this is fascinating.

Gerbz: That is cool. So you think that's Trojan horse?

Brian: That's Trojan horse, and everyone's making money on this. People like it for different, they've all got their reasons for liking it. And so I think, just to go back to your original point, Ethereum is building a parallel financial system, and the regulators are going to come in and try to block everything they can and protect the old guard.

But you see, you know, BlackRocks of the world are now adopting it because they have no choice. And by the way, it's going to be their most profitable ETF ever. So yeah, can't beat them, join them, right?

So I think you'll see the pressures kind of ease because the people want it, the big firms are going to want it, and what's being built on the side will have some utility. It will have some benefits relative to the way that things are done through TradFi, and so people are going to say, no, I want this, right?

And yeah, to your point about Coinbase and their Super PAC or whatever it is that they've sponsored, or just generally people putting candidates in office that support crypto. I mean, we had RFK as a headline speaker at ETH Denver this year. That's a pretty big statement, you know?

So that's, I think that's, I think the Uber is kind of the case, for me that's the path. It's a good case study for how this might evolve.

Gerbz: It made me think Coinbase and Uber probably have a lot of the same investors and they probably had a playbook.

Brian: Yep.

Gerbz: And they just ran it. Maybe they did run them, because it does feel very similar the way that Coinbase is, I mean it's interesting because Coinbase didn't have a physical, geographically spread business the way that Uber did.

But they are kind of going at it very grassroots in the same way that Uber did. So it's kind of cool to see.

Reflecting on Bitcoin's Rise to Power

Gerbz: You're reminding me of in my early Bitcoin days, I wasn't afraid of, I was like the governments are coming, like come on, come at us, right? And like, cause we're going to beat it.

And I don't know that I have the same confidence with Ethereum as I did with Bitcoin, because it's just such a, and it's just such a different world now than it was in 2014, 2015, when I was just , it didn't matter how low it went, every dollar it ticked down, I was more bullish because I could buy more lower.

And I haven't been feeling that same way. But you're right, we're gonna have, climbing that wall of worry, that does make sense. We're gonna have a lot of very bearish headlines over the next few years. Maybe it's gonna, they're gonna all be Ethereum focused, which I'm fine with that.

Because yeah, most of my stack is Bitcoin anyway. And, oh, maybe that'll be more tricky for you, but we've been through this actually, is kind of where I'm going.

Brian: I'm like 50-50 between the two.

Gerbz: Okay.

Brian: For that reason.

Gerbz: And we've, yeah, we've survived this before, and it was scary, but also you're right, that fear, it was fuel on the fire of what was happening.

Brian: Yeah, I mean dude, go back, like China banning Bitcoin how many times?

Gerbz: So many.

Brian: Mt. Gox, the ICO frenzy in 2017, which was pure madness...

Gerbz: China banning it again...

Brian: China banning it again, the centralized lenders blowing up, FTX fraud, Luna collapsing, the regulation, Operation Choke Point, it's one thing after the next, you cannot kill this thing, you know?

And I think it's a reasonable pushback that you could see more reasons to be bearish on ETH. And it's also like, what is the use case? And it's so abstract and we don't really know, whereas Bitcoin that's well defined, we already talked about that. But I think the use cases, the potential utility, and the value capture of Ethereum is so much bigger than Bitcoin, or L1s, let's just say, whether it's whoever wins that race, or if there are multiple winners, the aggregated value I think, and even today actually, it'd be interesting to look at the aggregated value to kind of track the aggregated value of all L1s relative to Bitcoin.

Bitcoin's certainly still more, because it's 54 percent of the dominance ratio, so we know it's still more, but I'd be curious to see how that has been changing over time. So I think you get an offset there is all I'm saying, because the opportunity's set so big and there's more potential for value capture that offsets some of the regulatory issues and the challenges that Ethereum will have unique to Bitcoin.

Gerbz: Yeah, interesting. Yeah, because it's a different...is it a different beast? Like, Bitcoin was going up against the fed and the government and the dollar

Brian: You think that's a bigger...

Going Up Against the Banks

Gerbz: You'd think that's bigger, but it also is like the government doesn't really fight the same way that the banks do, and I feel like going after lending, going after exchanges there's real people there that are...

The government is just such like this strange facade, like no one knows who's running anything, but Jamie Dimon is bearish, right? Like at least he pretends to be, and... but he knows how to he knows how to fight. And so it's gonna be, it's gonna be a fight. It's gonna be interesting.

Brian: Yeah, I do think, from the inside, I'll tell you my personal perspective.

Gerbz: Yeah, let's hear the banker insight.

Brian: I think the banks are asleep at the wheel here.

Gerbz: Aw....

Brian: Yeah, I really do. But what I think you, what I think you'll get is more parallelization than you know, true direct competition. Like, you know, it's very Trojan horse. You'll see these parallel ecosystems start to pop up and they're taking share from the banks.

Gerbz: Are they going to acquire?

Brian: Who knows? Hard to say. But I think the banks will be, it's hard to when market share is being taken from a product that's constructed different from your traditional product, it's kind of hard to line those up and say, oh, that's what's cannibalizing my business.

So I think the banks are really asleep at the wheel here. And Jamie Dimon may be outright, you know, speaking against Bitcoin. I mean, Larry Fink changed his mind. A lot of big players have changed their mind, so....

Gerbz: Yeah, we've seen that over, big investors have been doing it for the last few years, but then bankers too now.

Brian: Yeah, JP Morgan's offering Bitcoin ETFs to their wealth management clients. JP Morgan Chase led Coinbase's IPO, right? I mean you could, there's a whole slew of things that JP Morgan is doing to benefit from this industry. They now have equity research on a number of publicly traded companies like Riot and Marathon and Coinbase, I believe.

So, yeah. So they're actually, you know, they're benefiting from the fee opportunities here. He may be publicly out against it cause it's not to his benefit to, you know, promote Bitcoin. He's probably the guy, Jamie Dimon is probably the guy who's benefited the most from the traditional system, from TradFi and from the tight relationship between the United States federal government and the banking sector.

So you got to think about the world in terms of people's constraints. And he's, if he's benefiting that much from TradFi, he's probably the last guy in the world that's going to come out and say rah-rah Bitcoin, what a cool opportunity, you know?

Gerbz: Yeah, no, it's true.

Brian: Look, the banks are either going to integrate with this technology and both sides will benefit or crypto is going to keep going in its own lane on its own rails, and I think either way blockchain will be successful.

The Current Cycle

Gerbz: Let's talk cycle. All time highs every day. Like, is this it? Are we back?

Brian: Well, yes, we're back. I mean it's a bull market. I called the bull several months ago. I think, I mean you and I actually had a great conversation where we were clicking through some charts.

Gerbz: Yeah, When was that? A couple episodes ago.

Brian: Yeah, a couple episodes ago. It was several months ago and we were mega bullish. I mean, I think the conversation came up of, I think I said I think the risk is not having enough exposure, right? And we're, we just went vertical since then. All time high, however you define a bull market, all time high territory certainly fits every single one of those definitions.

Gerbz: Are we in price discovery though? Because from a technical standpoint we have, we're hitting new highs. We're not, are we breaking out though?

Brian: Well, I think historically it's been very uncommon with all assets to see like a warm knife through butter.

Gerbz: It just goes straight up and then keeps, that's...

Brian: Through the prior, yeah. So I would expect some volume around here. I think it's reasonable to expect.

Gerbz: Do you see this retest yesterday?

Brian: Yeah, we've had a few of them.

Gerbz: I mean, that was the 2021 all time high right here. And then yesterday, and it broke out. I mean we were, we hit new highs here, which those don't count for me, those are just deciding whether it wants to hit a new high or not.

That feels like a breakout. That feels like a retest, really one day. It's too fast, almost. Maybe we got to go to weekly and wait a little bit to see if it's a real retest. But then today up again, that's nice, that's a nice looking chart right there.

Brian: My technical view, yeah that's a good point, looking at that wick. New candle today, and I haven't looked at the charts this morning. My core view is at some point we're gonna come back and test around these levels.

Gerbz: So, retest $70k. Is $70k the new bottom? Is that what we're saying?

Brian: Yeah. Yeah, exactly. Well, I think $70k is a floor.

Gerbz: So you think the trillion's done, $53k. I mean, look at that run.

Brian: I could see us retesting into the fifties, but it would be a wick that would get bought.

Gerbz: Yeah. That's a limit, that's having limit orders in for that.

Brian: Yeah.

Gerbz: This is the 50 week moving average right there. So the 50 week is at, that's at $35k, that's way too low. I usually have the 200 also, that would be higher up.

Brian: But what's your what's a trillion dollar market cap, $53k-ish?

Gerbz: Yeah $53k.

Brian: So to me you've got, if you're underexposed Bitcoin, you want to have limits set between $53k and $60k, you know all the way, right? And you want your full position on if it taps $53k, that's kind of I think, if you missed, you weren't exposed enough prior to this bull run. So, that's probably good when I think about it.

Gerbz: When I talk to people who are new to crypto and they're asking me about the cycle I always just, I start just like you. You and I always do, we start throwing out Bitcoin numbers.

Brian: Yeah.

Gerbz: And we just, in our minds Bitcoin is crypto in so many ways. I know we look at so many other charts, but it seems like you're still in the camp of Bitcoin leads, in a lot of ways. Whether Ethereum is what actually ends up driving the mania of a bull market is, I mean, it's starting to become clear that is what's happening in a lot of ways.

But it seems like Bitcoin kicks it off. ETH, then, is what drives sort of that user adoption and all those use cases and all the weird staking yield opportunities that we end up seeing that drive a lot of bullishness.

But I always talk about how Bitcoin leads, Ethereum kind of follows, and then alts, like bigger altchains kind of follow that. And then it trickles into meme coins, low market cap coins, and then it reverses back. Do you see that or do you have another lens on how that goes?

Brian: I totally agree with you, and I'm glad you brought this up actually because it's something I've been meaning to share with you.

Yeah, so I've got kind of a thesis for how these sort of rotations might play out.

Gerbz: The rotations, that's what, it happens how many times, it's going to happen 30 times over the next year or two, these rotations, right?

Brian: Yeah, but I think we're actually close to the first key rotation. and you and I have talked a little bit about this, but I wanted to bring it back up with you.

Peter Brandt, I want to give him some credit, he's a legendary, shout out Peter Brandt. Most people should know who he is, he's a legendary classical chartist. Factor LLC I think is his company, he's been in space for a long time.

He went back and looked at the last four cycles through an interesting lens, I thought. He looked at it through a midpoint lens.

Gerbz: Last four traditional market cycles?

Brian: No, crypto.

Gerbz: Crypto? Oh, cool.

Brian: Yeah, well including this one I should say, this being the fourth. So, he went 2013, you know, 2013 to 2017 to 2021.

Gerbz: Boom 4. That's why I got it on the chart here somewhere. Boom, it's so high up there, because it's where the top should be. Oh, it's not there! It's supposed to be right around here at Boom 4.

Brian: His work is typically behind a paywall, but he happened to make this piece public, so I don't know, maybe we could drop it in the show notes, I'll send it to you.

But what he did is he went back and looked at it from a midpoint perspective, so the traditional length of a bull market and where was the midpoint, and what was interesting is that the midpoint has kind of, it's been in different spots, slightly different spots, with each bull.

But if we were to follow the historical pattern, the midpoint for this bull actually looks like it's coming a touch earlier, and kind of right at the halving.

And then I sort of overlaid his work with my own, and my own is really just, I've been really, really dialed in on the ETH / Bitcoin cross. I think that chart is super interesting right now.

Gerbz: ETH, Bitcoin cross.

Brian: So it's been in a pretty steady downtrend for 18 months. You know typically if we're looking at the price of Bitcoin, it's Bitcoin relative to dollars, or if we're looking at the price of Ethereum, it's Ethereum relative to dollars. But here we're looking at the price of Ethereum relative to Bitcoin.

Gerbz: So when it's going down, that means Bitcoin is outperforming ETH in dollars.

Brian: Exactly.

Gerbz: Which is confusing, but yes.

Brian: But that's the right way to think about it. And when it's going up, that means ETH is not performing. So going back to your original question about these rotations and also Peter Brant's work about midpoint, and midpoint coming kind of right about the halving. So call it 30 days from now.

Gerbz: This idea of ETH all of a sudden taking over every cycle?

Brian: Exactly. So I put it all together and I'm looking at the ETH/BTC cross, and if you look at that chart it sort of looks like it's gone from a downtrend to a sideways. And we had the same technical conversation when we looked at some of the charts last time we recorded a pod, it was Bitcoin, Ethereum, Coinbase, even. We watched the downtrend go from downwards to sideways. And that was the signal.

Gerbz: Consolidating.

Brian: That the trend had the potential to change. You can also look at moving averages, you can see the change in the shape of the slope of the moving average, that's another signal.

Gerbz: And it's kind of using it as resistance a little bit.

Brian: A little bit, yep. And if you just draw a downtrend line, you know like across the Ethereum BTC, when you see Ethereum breaking its downtrend definitively, relative to Bitcoin, to me that's the signal that you're probably mid bull, and you're probably gonna get the rotation into ETH. It's gonna start to outperform, and then alts are gonna follow on that, people are gonna

Gerbz: Which could line up with an ETH ETF approval, or denial.

Brian: Or denial, right? I mean who knows, right? It's hard to say. But I think that to me, this is the most important chart. This is the one I wake up every day and I open this one up and I look at it and see where it is.

Gerbz: This is when you're wearing your ETH hat.

Brian: Yeah, well, I mean...

Gerbz: That's fair, we don't we can't wear our Bitcoin hat every day. But I tend to, but that's an important point because I do tend to wear my Bitcoin hat every day and I do just look at the whole crypto market through the lens of Bitcoin, and this is, I like that you have this other angle on it. This is what you use to put that Bitcoin hat in check a little bit because it is unusual for Bitcoin to just be dominating the way it is right now, it has been.

Brian: Well, early bull it's common.

Gerbz: Sure.

Brian: Actually, it usually does outperform in the early bull.

Gerbz: Yeah, and we've been giving credit to the ETF, but you're right. Bitcoin does go up a lot, all the time.

Brian: Bitcoin was first to move, you go back to 2020, Bitcoin was the first to break out. It broke to new all time highs long before Ethereum, before alts even really started to move all that much. Yeah, Bitcoin historically has led the breakout, and then people get a little bit bored with the Bitcoin returns because they're not enough. And so they start to chase, you know, some of the alts, so they rotate into ETH and then ETH will start to outperform.

Gerbz: This is the ETH chart on top of the Bitcoin chart. So you can see this, it's so orange would be ETH, right?

Brian: Lagging.

Gerbz: Yeah. So here's, that's the 2018 cycle. Let's look at this. I mean, they look pretty correlated, here's the halving. Yeah, that's that's kind of wildly correlated. We got more of a little blow off here in the first hump.

That's another thing too. I was, when I crunch all of my, you know how I like to calculate how much time has passed. It's like, calculate when the cycle, where we are in the cycle. When I calculated that, maybe Q4 of this year is when we break all time high, I was using the second hump because this is when the actual all time high was hit. But I think if I pushed it forward, it would be right around now.

Brian: Yeah.

Gerbz: So I like to justify my charts, you know, after the fact, and that's an easy way to do it. Just push everything six months back. I remember you've mentioned before that you thought the second hump was a fake out anyway.

Brian: Correct.

Gerbz: That this was the bull market, and it for whatever reason, died. Just, it's so weird that it didn't crash, it flatlined. It was just such a weird thing.

Brian: Even just look at the volume on your chart. Look at the difference in volumes. At the first high versus the second high, you know, and so that was a topping pattern. I mean, to me, that was like the head of a head and shoulders, even though it's sloppy.

Gerbz: This is Bitstamp, which doesn't get a lot of volume these days, let's see if I can...

Brian: Yeah, if you look at a lot of the technical metrics, like the on chain metrics of the on chain analyst track, they all suggested top in March of 2021, not the November top, even though the price was slightly higher.

When Will the Bull Market End?

Brian: And that's the thing that actually made me bearish, and this goes back to like, when you're starting to think about end of a bull market and sort of the, some of the technical signals.

Gerbz: What are you going to look for?

Brian: In fact I'm just starting to construct a model around this. I'm going to build a model that will give us kind of a heat map to the end.

Gerbz: I mean, that's what PlanB's got, right? With his color coded dots.

Brian: Yeah, but this is not just going to look at stock-to-flow. This is going to look at metrics across fundamentals, sentiment, market structure and positioning, liquidity, and technical analysis. So I'm going to look at all my buckets, and I'm going to use a weighted average model and come up with a heat map that we can use to kind of position out for some profit taking, as opposed to being kind of, I've done a lot of finger to the wind, you know. "Oh, it feels like everyone's really greedy. I should take some profits." you know, like that works, but I want to be more quantitative about it.

But going back to this bull market, the reason I took some nice profits in November, late November and early December. I was in Thailand, I'll never forget 2021, and the reason that I was bearish was because we made a new high in price. And when you do that, like what's happening right now in the market, when you make a new high you want to see those levels.

Yeah, sometimes they get retested, but you should really start to see some acceleration, you know, some momentum. And so what happens is we just poked above the March highs and then we rolled over and we didn't roll over and retest the March highs We started going below and to me it was a feeling.

Gerbz: Or retest negatively.

Brian: Correct, which can happen.

Gerbz: Yeah, get rejected, exactly.

Brian: Yeah, and so to me that was like I felt the loss of momentum, I felt it so strong.

Gerbz: You're saying even though you saw this new high, and it was a new high, very similar to how this is a new high, it hasn't gotten that momentum you're looking for.

Brian: Yeah, it failed.

Gerbz: I mean, it might be happening right here. That looks fuckin A. That looks like momentum, right? That's parabolic.

Brian: Yeah, I mean, you can feel the momentum in the market right now.

Gerbz: That looks like this.

Brian: Exactly, exactly. Yeah, and you can go back and look at when Bitcoin broke $20,000. That would have been late 2020, I believe.

When it broke the prior all time high, or maybe early 2021. It was probably early 2021.

Gerbz: Yep, oh this is the Coinbase chart here, hold on.

Brian: Yeah, so you're probably right around here where you broke the prior high, little bit of a retest there, but the market, confirm the breakout, right? So in November of 2021, we kind of poked our head above the March highs and we rolled over hard, you know, and it was like, that's the end. You know, and that was the time to take profits or protect yourself.

Gerbz: Yeah, I love that. So we're right here in this November, December.

Brian: That's my view.

Gerbz: 2020, I mean, and it's, we're breaking all time highs. Like it's not, this is a, it makes perfect sense. And it makes sense for us to hesitate here.

Brian: Yep.

Gerbz: Are we doing this? Again?

Brian: Are we doing this?

Gerbz: Fuck, I think we are. Yeah.

Brian: How about you? I'd actually be curious, some of your perspectives on some of the signals that you'd be watching for end of the bull. I know it's a weird time to be having that conversation, but I think it's the appropriate time to be having that conversation.

Gerbz: No, I'm telling you I switch the second we get into this stage of the cycle, I flip into like, when am I going to sell? Where am I going to sell? How much am I going to sell? Totally.

Brian: And one thing I want to bring up that maybe you can touch on this, but I want to hear your other thoughts on signals you're watching. You brought this up to me maybe six months ago, and it was so smart and I absolutely love this, so I want to resurface it.

You said that one of the things you're watching, this will be part of my model, it was your idea. The Ethereum validator exit queue.

Gerbz: Yes.

Brian: And I think that is such a good leading indicator, because when you see that queue, that line start to lengthen, you know the sellers are coming.

Gerbz: It's pre selling. Yeah, it's perfect.

Brian: Can you talk about that a little bit?

Gerbz: Yeah, I forget, they've actually changed the amount of validators that can enter and exit per day. I think it was 900 per day. When withdrawals first opened, the Shanghai fork happened on Ethereum, they were allowing 900 validators in per day. And then there was 20,000 maybe that were in this queue, new validators that wanted to come online.

Which meant If you wanted to spin up a new validator, you had to wait weeks, a month basically. And a month of no yield on your ETH, which was interesting too, because you could, you know, instantly swap to staked ETH or something and start collecting really quickly.

Or if you wanted to set up your own validators, which is what I was doing, you had to wait a long time. And I waited a long time, and it sucked. And then the first day my validator came online, I proposed a block, which was really cool. So it sort of made up for it.

But what I think is going to happen, the entrance queue was huge because everyone wanted to start staking ETH now that you could withdraw your ETH from the validator. At some point, people are going to want to start selling their ETH and the queue right now, you can go to BeaconChain.

Oh, look at this, it's nothing. The queue is, it's empty to come online and there's only 23 that are trying to exit today so they'll all exit in the next couple hours. So, this is where I check it. There is another good link that I dropped in the Discord that has a lot more stats around the validator queue.

But yeah, this queue I think is going to start getting into the thousands, this exit queue is going to get into the thousands. This is actually really interesting though, no one's fucking with validators today. I haven't seen it this empty on either side for a long time.

Brian: Everyone's bullish.

Gerbz: But what does it mean?

Brian: This is a great technical signal. Is that charting it?

Gerbz: This is the network history. This is how much ETH is staked and how many active validators there are. So there's been a lot of exits. This is only in the last, March 11th. Oh, this is only in the last day or two.

Brian: Okay, but there's definitely some technical analysis that you can do on this data. You know, I thought sort of the same thing with technical analysis on fear and greed index.

Gerbz: You know, this is it reminds me a lot of people track the exchange inflows and outflows.

Brian: Yeah, exactly.

Gerbz: This is just like that.

Brian: Yes it is a great leading indicator.

Gerbz: Especially because last cycle that all got fucked on ETH because people weren't sending their ETH to an exchange, they were just swapping it on Uniswap. So the exchange indicator, I think it was busted anyway.

Brian: The signal, yeah, the signal was busted.

Gerbz: This though, if you were to build a model on this right now, how would you even think about it? How many days maybe?

Brian: I would look at, I think when you don't, when you have a new technical indicator, what you want to do is, the cleanest way to look at any trend change is to look at it compared to itself.

So I would do a simple moving average. What you want to do is you pick a moving average of number of validators exiting or queue length, right? And then whenever, you gotta kind of play around with what's the right moving average, but when it changes trend, when the number breaks out above its moving average.

Gerbz: Yeah, when this zero, zero kind of crosses.

Brian: I think that's the cleanest way.

Gerbz: Which it looks like it just did. I mean, today, like in real time, we watched the cross. Yeah. maybe, it was like this yesterday. But, huh, I like that a lot. And then overlay, if we can get that data, we can overlay it on price.

Brian: Yeah, exactly.

Gerbz: We've got six months of it, ish? I mean, I don't think anyone's been selling their ETH. If they have been, they fucked up.

Brian: But, you know, I don't think you have enough history for the price overlay to be that great of a signal. I think you should still look at it, but instead I think if you look at the validator trend relative to itself, the Q trend, it's going to be a great signal. And to me, it's definitively a leading indicator, which is what you want to find.

Gerbz: And it's also, it's going to screw over everyone in the exit queue.

Brian: Exactly. So it's going to grow to two months and you're going to be waiting. And then by the way, you know after prices rolled over and there's people that were stuck for two months, you know as soon as they get unlocked they're going to sell.

Gerbz: Once it's even just a couple of days. I mean, that's already, that's the indicator. I don't want to wait until it's 20 days because it's those 20 days where the people are fucked.

Restaking

Brian: Well, and it brings up another point that I want to ask you about, I don't know if you have a perspective on restaking, but to me...

Gerbz: I don't, unfortunately.

Brian: Yeah, okay, I've almost started to think about, just to throw this out there, and I'm surprising you for the first time by suggesting this, but I think it's just interesting to think about. Last cycle, there was a ton of leverage that was built up in the space.

Gerbz: This is replacing that this cycle, that is my, that's my take.

Brian: That's all I want, that's my thought.

Gerbz: That's what it is.

Brian: It's implicit leverage. It's not explicit leverage like, BlockFi and Celsius were creating, right? They were lending directly to Three Arrows who were going out and YOLOing into Luna, right? So that was what blew up last.

Now it's implied leverage, because retaking is, you're rehypothecating, and that is, you know, you're essentially taking assets and you're levering them, even though it's not a traditional explicit loan, it is implied leverage.

And so, yeah, I think that's the right way to think about it. I haven't quite formulated, I mean, EigenLayer is like brand new, it's it's hard to.

Gerbz: They don't, people don't even, they haven't even put out all their documentation on it yet. People are, how many billions does it have in TVL already? So that's weird.

But yeah, every cycle has a blow up and it's usually around some particular thing that everyone was sold on. And we were just ignoring the risks for whatever reason, like Mt Gox or Luna. We just didn't want to see it.

These things, especially when these things come out of nowhere and are huge, when I hear about it and it's already huge something weird is going on. That's a signal for me I have a lot of signals like that where i'm like

Brian: How many billions are stored here already?

Gerbz: I've never even, how do you say it? Eigen?

Brian: Yeah, I'm not even sure how to pronounce it right now.

Gerbz: Exactly. So that's a freaking signal. And, but you know, it'll also last a lot longer than I think it will. I'll be bearish and trying to short it tomorrow, but it's gonna go through, it's gonna last this whole cycle, it's gonna do amazing things for a minute. Until something that they haven't anticipated, maybe it's this exit queue thing, maybe the way that correlates with restaking.

Brian: I'll tell you, I'll tell you right now from the TradFi perspective, and this is why I never got involved with Terra-Luna, because I've seen there's a huge difference between collateralized and uncollateralized pegs.

I've seen so many, you can look at countries that have tried to peg their local currency to the US dollar and it always fails, right? Because they don't have enough money in their treasury to defend the peg, right? And so I've seen this, whether it's at the state level or, and there are many private examples of this as well, collateralized versus uncollateralized, very different things.

Like, USDC is a completely different, you know, stablecoin than Terra-Luna was. Now that was one that was easy for me to look at and say, I've seen this fail so many times in TradFi that I know it won't work here.

And restaking is another one that unfortunately I'm going to call it now. Asset rehypothecation, which means you use an asset for one purpose and then you reuse it for another purpose and you reuse it for another purpose, always ends with issues because you get liquidity mismatches, right?

And so to your point about whether it's linked to the theory of exit queue or otherwise, you're going to see a scenario where there's not enough liquidity to satisfy exit demands somewhere where people were promised liquidity.

Gerbz: And you're talking bank runs, crypto bank runs.

Brian: And then that's just the cascade, you know, where you get one run.

Gerbz: Protocol bank runs.

Brian: Exactly. Protocol runs.

Gerbz: What are we calling this?

Brian: And if you think about, in my opinion, that was the catalyst for the last bear market. We had, I think an inverted triangle is the right way to think about the market structure in 2021.

You had this tiny little bit of collateral at the bottom, and then you had all this leverage and application on top, and so when Luna blew up, it was $60 billion of collateral. Now that we had a $2 trillion market cap or whatever, $60 billion doesn't feel like that much.

But when there's that much leverage built on top, the cascade, right? And so that collateral was what was used for, you know, Three Arrows, for their loans, and then the CeFi lenders blew up and then they locked. And then people, you know, sentiment shifted and the whole thing, it's reflexive in one direction, and then you get that catalyst, goes so fast and it flexes it in the other direction.

Gerbz: Yeah. Not to dig up dead bodies, but when Luna collapsed, they were working, their entire vision at that moment, was to back the asset with Bitcoin.

Brian: They had bought billions of Bitcoin already, I know.

Gerbz: And then there was all that weird, I don't, I can't even remember what's happening because I've blocked it out so much. But yeah, they were trying that, but to your point, that was clearly the reason. They were trying to fix it way too late.

Event Horizon Signals

Gerbz: So yeah, I could see restaking going that way, which is interesting because now this is another signal. This isn't a dollar number signal, this is like an event horizon signal. Is there something that we're looking for that's not price in the market? It's not something you can put on a chart. Like, restaking blowing up, that's not a charitable situation.

But it's also the end of the cycle if that becomes a thing. So it's just another interesting thing. You can't set an alarm for it, you can't put it on the chart. We got to keep an eye on crypto to know that's going to happen.

Brian: Yeah. And my other, I think I mentioned it a few moments ago, but my other, like the number, the one that will weigh most heavily in my model is sentiment. Because sentiment is the perfect counter.

Gerbz: Fear greed index?

Brian: Yeah. I think, is is alternative.me, has it?

Gerbz: I always go to, they, they have it on CoinMarketCap it's the same one.

Brian: Yeah, right there.

Gerbz: Oh, yeah, boom. Let's see what they've got. Here we go. Do they chart it?

Brian: They do, they do chart it. It doesn't go back that far, it only goes back less than a year, I think.

Gerbz: Oh, here it is, all time, yeah. So this is the fear and greed index over here on the right. CMC crypto fear and greed index.

Brian: Yeah, but the all time one only goes back...

Gerbz: I mean, it's at the all time high of ever right now.

Brian: No, it got it into the upper 90s, 2021.

Gerbz: Yeah, they only started tracking it mid 2020,

Brian: But if you go to, I think it's alternative.me, I believe. And then you can actually, they have a chart, that will go back really far. So go to the max, goes back to 2018.

Gerbz: And you can load this on, I actually used to have this indicator on TradingView.

Brian: That's what I was going to ask for your help with.

Gerbz: Yeah, it's there, but this one for example, if I line up, this is the top of Boom 2. It was, this is the all time high.

Brian: Yeah, got in the upper 90s, I thought, at one point.

Gerbz: Yeah, here it is, 95. It was this dump right here. So, a little late, but I mean, if you're keeping it, see how it lines up there? It's a little late.

Brian: Yeah.

Gerbz: But it is interesting.

Brian: So to me, this is the best leading indicator.

Gerbz: God, it got down to 10. That is...

Brian: Should have been buying then.

Gerbz: That is just fucking doom and gloom, jeeze.

Brian: Yeah. So to me, this is the most important indicator.

Gerbz: It's got to 7, 6, and where is this? Check that out, should've bought right?

Brian: March of 2020, yeah.

Gerbz: It's the lowest that I ever got, it was the best buy of all time, especially for that cycle. So, obviously we missed it this cycle. 2022 it got to 8, interesting it wasn't as low here, which was the bottom of, this process.

Brian: The absolute bottom, yeah.

Gerbz: Okay, yeah, so sentiment. That's something you're keeping an eye on. You can put it on the chart. Something we can put on the chart.

Brian: What I would like to do is go back and look at some of the technical patterns or moving average breaks in sentiment. That signal, I think moving average is probably the right way to look at it as opposed to some sort of charting, you know, it would be too cute to put it on a classical charting pattern, I think that's going to lag too much. So what I think you want to do is moving average.

Gerbz: Yeah, you're seeing here, this is the 50 week moving average here, and it's it likes the 50. I always make sure that whatever I'm looking at, that it likes the average first. Because some, for whatever reason, some assets just don't care about the moving average. It just doesn't, it doesn't care. This one cares, you can see it's using it as support, then it breaks it hard, and then it uses it as support before it breaks through, or as resistance before it breaks through, and then it retests.

So I want to see that really, that it likes the moving average. And then I see, so you want to overlay that, moving averages, so here would be, for example, a breakout. This happened around, not the first spike, but one of the early spikes from the bottom.

Brian: That would have been a great buy signal.

Gerbz: But even just breaking the moving average would have been a great buy signal.

Brian: Yeah. Yeah, so I think what you want to do is look at fear and greed relative to itself. That's the cleanest way to look at it for, to map a change in momentum or change in trend.

Gerbz: Yep. Looks like we're topping out right here.

Brian: It does, but also, you know, it's a bad signal.

Gerbz: It does kind of just go, oh, top of the market here. It just kind of goes sideways for a year.

Brian: And that's what I was going to say is it's actually a really bad indicator for early/mid bull market, and it's a great indicator for later in the bull market. So it's really useful at the extremes, and you really don't want to overweight it at the midpoints. So what you want is when you kind of feel like, okay, we're long in the tooth, market's a little exhausted, I think then you want to weight that indicator more heavily in your process.

Gerbz: It's so funny, I just had this thought of like, "I don't need this to know." I feel it in my soul. Like it is, it hurts when this thing turns over.

Brian: Yeah. Well, and then the other thing, of course, to think about is, there's the game theory of markets, like everybody knows that everybody knows, right?

And so that's another thing where we're all preparing for this cycle to map around the way that former cycles did. Now because we're all prepared for that, does that change positioning in such a way that the cycle evolves a little bit differently? I mean, we saw the cycle actually start six-ish months earlier than what has historically been common.

Gerbz: Yep. Pre-halving.

Brian: The biggest pushback to that is that the 2020-2021 cycle unfolded like, exactly according to plan.

Gerbz: I mean look, it's halving six months after, it went vertical.

Brian: Insane, right?

Gerbz: How long did this last? I mean, that was just a couple months.

Brian: It was quick. You went from, it was December to March. It was like four months, yeah.

Gerbz: It looks just like what we're seeing here.

Brian: Right now, I know. That's why people need to be thinking that like, that's why I said I feel, it feels to me mid here, mid bull. Peter Brandt's work suggests mid bull, and that's kind of my default.

Gerbz: And I think PlanB just put out one of his charts where he got his first red dot.

Brian: Exactly, yeah.

Gerbz: Okay, so we're mid bull. I mean, and Ethereum may be about to turn over, which all the frickin' wild chains and the degen stuff starts coming out. It's not happening in NFTs, I can tell you that NFTs are just, it's kind of boring over in NFT land right now, but maybe that'll come back.

But mid cycle, and I mean if it went only from November to March, that's four, five months. It's almost like we don't have a lot of time.

But I want to go back to that fear and greed thing, because this thing of how everyone knows that everyone knows. That's why I have this, I have a post on BitLift about, I call it the selling feeling. And what I've tried, I call euphoria, when you feel euphoria, when you're feeling that euphoric moment, which we're kind of having almost right now, I've tried to map that in my mind with "it's time to sell."

Not because it is time to sell, but I want my, I want to train myself to think that way. Because when the greed index starts to take over, fear is going to lag. The doom and gloom, the reason everyone goes, gets scared, is because the bottom just fell out.

That's why they get scared. And when the bottom falls, I want to be ahead of that. So the only way to be ahead of that is to take action when that greed is at its high and when, and you feel it, man. It feels early, especially because we're just getting into new highs, but how are we going to feel it if the fear and greed index just starts going horizontal right now? That's not going to help us call the top, it'll help us know when we're late.

Brian: Yeah, I think you're exactly right. It's so funny because, as many cycles as I've been involved, as much experience as I have trading TradFi assets, I still internally experience the same swings of feelings we all do. As much as I should be like, oh I should be thinking about it differently.

Now the through all this experience, aka losing money, I have all this knowledge inside of when I feel those things, something different happens. Where I actually will think about that feeling and what are the implications of it, as opposed to just feeling it and acting on it. And I think you're right, the best leading indicator will be your own sentiment.

Gerbz: Yes.

Brian: You know, and to the extent that you, and you should pay attention to your level of greed relative to yesterday and relative to the day before. You can kind of feel the momentum shifting yourself.

Gerbz: You feel it, it's the only way. Here's an indicator I got for you.

Brian: Yeah.

Gerbz: Are you or are you not searching for vacation houses right now?

Brian: Well, that may not apply to everybody, but yes, that's fair. When you start to make big life...

Gerbz: It's that delusional, that delusions of grandeur, right?

Brian: Yeah, those are great signals.

Gerbz: Exactly.

Brian: Those are great signals because when you start to restructure your life because of, you know, what the markets done. And yeah, you're looking for vacation homes, and these are all peripheral signals that are our representations of your greed, and they should be paid attention to.

Gerbz: Yeah, have you hired a full time chef yet? Do you got your Lambo on order?

Brian: We're only part-time.

Gerbz: Yeah, when they start living in or when you start building them a house on your property, that's the top. That's the top. Oh man, that's so interesting, and, I mean we joke and laugh about that, but I've seen that every cycle. It's real.

Hungry Startups

Gerbz: It also reminded me of this idea of hungry startups, right? Like when you have these founders that are first time founders, they're trying to raise some money, but they're just focused on product and they're building their first big thing. The amount of energy that they put into their startup is through the roof.

Because we've been through so many cycles now, are we these repeat founders that are getting a little content? We're just like, I've got some Bitcoin, you know? I don't know, where are people looking for meme coins? I don't even know anymore. I worry about that a little bit, I do spend a lot of time on this and I'm so focused on it, but even still, I worry for myself that, is my finger on the pulse enough?

And maybe that's just a feeling that everyone has, that's the FOMO feeling, right? What am I missing, and am I putting enough energy into this as I should?

Brian: I mean, I think there's so many pockets of the market where you can be successful, right? For me, it's always been about, it's got to line up with where you really draw energy.

And I think we draw energy in similar places. We like ecosystems. We're in this technology cause we want to see it spread, we want to see it be adopted, we want to see distributed consensus become something that's widely used, whether it be for storing your wealth, payments, all the L1, you know, transactional stuff.

I think that technology is really valuable and I draw a ton of energy in seeing the evolution of it. So that's just the pocket of the market where I am. Will I buy a little bit of a meme coin for a trade? Sure, but it's a sliver of a sliver of a sliver of my portfolio. It's not a distraction and it's purely just so I can keep a pulse on some of that stuff that's going on in the periphery.

But I think for us, it's pick your pocket where you really do draw energy and then get your training strategy right around that and you'll be fine. There's plenty of spots that you can make money, and I think having been through so many cycles, that we're actually in a good spot where we've seen so much stuff. You learn from that experience and it's actually really useful for you.

Avoiding Distractions

Brian: I mean, one of my own core conclusions is, we talked about it a touch earlier, you just want to kind of own the winners in the primary use case categories. If you just take a pool of your money, percentage of your portfolio, just set it and forget it, buy and hold, you know.

Gerbz: Put it at the top, spread it across the top of CoinMarketCap.

Brian: Exactly, exactly. And then maybe trade around the edges and that's fine. And then actually something else I do is I go back every year and I look at how did my trading book compare, how did my trading book perform, relative to my buy and hold book. And I don't know, 7 or 8 out of 10 years my buy and hold book has destroyed my trading book.

And my trading book has taken more of my attention and energy, you know? So I think that's the other thing is zoom out, you know, realize that we're in the midst of a long term adoption trend here. There are major use cases. There are major assets with still a ton of upside left. Don't get too distracted by the stuff.

Gerbz: Distracted. Such an important word and such an important thing to focus on. Focus on distraction, right? Or focus on the lack thereof. And try to stay humble. I think that's also why that comes up in Bitcoin a lot, stay humble. It's because it's so easy to get distracted by these things and think that they're this magical thing that, really, it's taking your eye off the ball is what it's doing. And it's weird how the market is sort of designed to take your eye off the ball in so many ways.

Brian: Yeah, also you got to think about where can you compete. In TradFi for me, I started learning options trading and delta hedging and I was trading options, and I was just getting killed. I was losing money left and right, and I realized at a certain point that I was the sucker at the poker table. Like, these guys I'm trading against, you know, the smartest traders in the world who are experts at these products, and no matter how sophisticated I think I am it's not a pool that I want to be competing in.

I think it's the same thing here. Like, pick the spots where you, like I said, where do you draw energy? If I go trade against the Wall Street bets and Reddit crowd on memecoins, they're going to kill me. They're going to take all my money. I'm the sucker at the poker table, you know?

So pick your pocket where you really draw energy, where you're really dialed in, where you can really become an expert and have a longterm plan, and I think you'll be better off.

Gerbz: Yeah, it's so hard to remember that during the bull market, but it's the same strategy as during the bear market. It's buy, hold, be patient, very patient, and keep your eye on the charts and on those headlines. The big ones, right? Not all the noise, but I am looking for big things, right? What's the first bank that's gonna integrate some Chainlink thing? That would be a Chainlink event. But even in Bitcoin, like Saylor getting into the S&P, that's a big fucking deal for all of crypto.

Brian: Huge.

Gerbz: Like this is, that's the only headline I need that day, don't give me any more. I only want to see that. Like maybe there should just be a site if it's, has it happened yet? You know, have you seen those? Or it's like, yeah, and I'll just check that every day and I'll be good. Those are the kinds of things to keep an eye on as this thing progresses.

Brian: And the last thing I want to say on this, because I really don't want to spend a lot of time on memecoins, but because I can feel it in myself. When you watch, I looked at the market cap of some of them yesterday, Pepe is like $2.5 billion, right? Shib is top 10. Doge is top 10, right?

So and then, you know, things like Whiff have 15x'd or whatever, and so when I look at this, I'm like, oh, you know, my first thought is I don't want to miss this and I should allocate a little bit to these memes, I should play this meme. But by the time it's coming on my radar, after these projects are in the bill, not only have you missed it, but you're buying the top, you're handing money over to people, you know, and maybe they keep going, but these guys are, the money's already been made. You should be looking in the pockets of the market that are going to do that next.

Gerbz: Yes, so important. That's such a good point. I love when a chart is just, hasn't moved, especially in crypto. Because it's going to move.

Brian: Yeah, if there's real use there.

Gerbz: Exactly, and during the bull market especially. Man, so I like buying things way ahead of any sort of news, no one else is talking about them. Go to their Twitter and there's nothing, but then go into their Discord and there's a ton of activity. Or check their GitHub, and there's a ton of commits happening. There's this stuff that kind of brews under the hood. If you can find that signal, that's huge.

Brian: Yeah.

Gerbz: But yeah, I agree, I think don't buy the top of these fucking things, cause they're gonna, they're gonna dump.

Brian: Don't chase anything. By the time it's coming on your radar, and it's a big news story, it's too late. The news is a great lagging indicator. So price is a great lagging indicator. You know, I remember with you back in, I can't remember, we went to a Chainlink event together, maybe October or November or something, and you were starting to build your altcoin positions, and then they ripped right after you allocated. And so the beauty of being in that position is like, now you've got this huge foundation of profit. So much addition, so much padding.

So when the vol takes, starts happening, you're like, yeah but I'm already up 200 percent, I can handle that, I can keep my mind clear to get my exit right at the right time.

Gerbz: Exactly, that's all I've thought multiple times on adding on and I'm just like maybe I just missed my chance to add on and that's okay. But it also, it might be early.

Market Conditions Today

Gerbz: So let's finish on this, right? Let's finish on market conditions today. Here's the Bitcoin chart, here's the weekly, or what chart would we look at? Let's talk about, we're breaking all time highs the last few days, every day. We're in $70k zone, we're at $73k right now. This is Bitstamp, shows all time high at $73,600. What happens next? We got the halving coming maybe on 4/20?

Brian: Yeah.

Gerbz: Maybe 4/21.

Brian: Yeah, 4/19 to 4/21.

Gerbz: But it would be so much better if it's 4/20, because at least Elon will tweet about it and that'll help get us that momentum we're looking for. So, what happens next?

Brian: I mean, I hate to just reiterate something I've already said, but to me it's that Ethereum/Bitcoin cross, is the most important signal right now.

Gerbz: That's what you're looking for.

Brian: I'm looking for Ethereum's breakout relative to Bitcoin. To me it's probably about 30 days out, and that kind of lines up with the halving. I'm looking for a shift in momentum from Bitcoin into, whether it's Ethereum or all the other projects. And the other chart you could look after that is Bitcoin dominance, probably continues to climb for a bit here, or maybe just goes sideways.

Gerbz: It's sort of topping out here, look at that.

Brian: Yeah, you see a little bit of momentum.

Gerbz: It's fizzling, or it's consolidating.

Brian: Yeah, so to me it's watching Ethereum. I would have thought Ethereum would have paused at $3,400, $3,500, and it just kind of ripped through those levels, which to me is like, okay, well...

Gerbz: Yeah, let's pull up ETH.

Brian: Yeah, to me you had an ascending triangle that targeted $3400, $3500. That was also, like if you look at the failed, this last little bump right here, that level was also about $3500.

Gerbz: Was this the second hump, or was that the second hump?

Brian: That was the second hump, but this was the failed, that was kind of the right shoulder of the head and shoulder topping pattern.

Gerbz: And then this is Luna right here.

Brian: Yep, yeah, exactly. So I would have thought it would have paused there and it just ripped through those levels, you know? So I actually, despite the reasons to be cautious and despite the reasons why I agree with you I think the initial ETF application gets denied, I think Ethereum's kind of starting to suggest that it may take the torch and grab the momentum here.

Gerbz: Whoa.

Brian: So that's kind of what I'm looking for. I think we're probably still about 30 days out from that.

Gerbz: And then let's say ETH just starts ripping here. Are we still early cycle? Are we planning our exit in the next couple months here?

Brian: Yeah, I mean, I think we're mid, right? I mean if you go back to the last cycle, when did Ethereum break $1,400 or whatever was the prior high?

Gerbz: Last cycle as in 2018?

Brian: No, as in 2020.

Gerbz: Oh, that's...

Brian: The 2020 break.

Gerbz: So yeah, 2018.

Brian: What date would that have been?

Gerbz: So that, that was here? February 2021.

Brian: So go from the bottom in March of 2020 to November of 2021. And February is, you know, kind of midpoint. So basically in terms of time sequence, Ethereum broke its prior all time highs sometime around mid bull market. And Ethereum right now is $4,000 relative to it, what was the prior all time high? $4,700, $4,800.

Gerbz: It's just on deck.

Brian: And it just looks like now that it's surpassed that $3,400, $3,500 number without a ton of resistance, to me there's not a whole lot of resistance in the way of Ethereum retesting it's all time high.

Gerbz: There's no support either though. I don't know, it's going to have to create it on itself. It's going to have to, it's going to have to use the last cycle as its support if it's going to break above it. Yeah, maybe that's what happens.

Brian: Yeah, so those are the things I'm looking for. And then the last thing I'll say is I think I am a little cautious here. With some of my alt positions that have, you know, 50 percent to 2x'd on me in 60, 90 days. I've taken profits there. I've raised cash in a lot of pockets.

My Bitcoin and Ethereum positions I haven't touched, I think we're still too early for that, but I do think it's a time to, you want to have a little bit of firepower here.

You know, we've had a huge move, right? RSI, momentum, way, way overbought. We're in way overbought territories, and Bitcoin we know is at some important point of technical resistance around its prior all time highs. Ethereum, maybe it'll come back to that $3400, $3500 number and we'll see what the meaning of that...

Gerbz: Do you have a short list for firepower though? Or are you still, because that's another thing that I've been, this cycle I don't have that deep conviction in any of these alts that I've had in previous cycles. I don't have a thesis that goes beyond kind of the traditional stuff that we've already had the last couple cycles.

Brian: Yeah, there's a few that I really like. I mean, we've talked, there's a few that I really like. One I'll throw out there just because it's fun to throw out a name is Rune. It's had a big move, but on the thesis of permissionlessness and seeing all the, automated market maker volume that's going into Bitcoin trading.

I mean, there is no ERC-20 swap for Bitcoin and you can wrap it, but otherwise that's not, if you want a permissionless way of trading Bitcoin, it's happening on ThorChain. And if you fund those liquidity pools, if you're a staker or a pool funder, you have to put Rune in for 50 percent of the pool.

Gerbz: It buys it for you, yeah.

Brian: So to me, there's an underlying demand for that token. It's ripping right now. You know, so I'd probably continue to add there if we get a sell off, but I agree with you that I don't see anything that I'm, like, jumping up and down, really eager to buy.

For me, right now, just given the point that we've talked a lot about being kind of mid bull market, I actually think what I want to do is I want to get in the process of, I want to get in the pattern of selling.

Gerbz: Yep. I talk about that all the time, we gotta train those muscles.

Brian: I want to train those muscles.

Gerbz: I want to be strong at selling when the time comes.

Brian: Exactly, yeah. So that's more of the, when I say be cautious here, it's a good time to practice the art of taking a little bit of profits, raising a little bit of cash, and being okay that you're not immediately going to dump that back in the market, that maybe you're just going to keep that in dollars until the next cycle.

Gerbz: That's fair. All right, cool. Well, that's where we're at. We are taking some profits just to flex, just as training, especially in the alts and stuff that we bought for a trade in the first place and they just happened to go up 200%, that was nice. But we're starting to think about where we're at in the cycle, how close we are, how far we are from the top and planning our exit.

This is exactly what I say is breaking into new all time highs, I think some people who are building small stacks, slowly dollar cost averaging over long periods, like for savings reasons, I think they can still keep putting their monthly allocation to Bitcoin here. But if you have a trade that you plan on putting on, it's time to be really thinking about that and reminding yourself of that plan and what your strategy is for it.

Brian: Yeah. A hundred percent. It also makes it easier when that inevitable sell off comes. If you raise a little bit of cash, it actually feels okay. It feels like, cushions that blow a little bit.

Gerbz: Do you put in limit orders for sells? Do you have a number?

Brian: Limits? Yeah. I have cascading limits, yeah.

Gerbz: And are they at just...?

Brian: Technical levels,

Gerbz: Technical levels?

Brian: Yeah, so right now with all, especially you've got prior price history dating back to the 2020, 2021 highs. And so I'll look at those kind of key points of resistance and I'll set my limit sells below those levels, because I try to trade in front of the traders.

Gerbz: Of course. What about weird things? I hear the Chinese Yuan, one Bitcoin will equal one million Chinese Yuan at like, $175k.

Brian: Yeah, that's kind of like, an interesting round number.

Gerbz: How do you feel about round numbers?

Brian: The way I feel about round numbers is, there is round number resistance. Right? So like Bitcoin at ten thousand, you can, you know, every...

Gerbz: Like 2013, $1000 was a round number, but it got to $1200. The next cycle, $20k was a round number and it hit $23k. What did we do last?

Brian: $69k. So we're at under $70k.

Gerbz: 69 was actually the round number we were looking for last cycle, so yeah. Cause it's 69.

Brian: 69 in the fourth one. For me, round number, there is something. There's a real resistance to round numbers, but it's very short term. So I'd never trade around it.

Gerbz: So we go above it though.

Brian: Well, I just mean, sometimes there'll be some resistance there, sometimes you get a little bit of a rejection, sometimes it'll blow through it. It's not really, it's not a great signal. So I don't pay too much attention to round numbers. Instead I look at if there's market history there, this is what I keep talking about. $69K, 2021 top. If there's market history there, that's a key point.

Because some people will just say, I just want to get back to even. Or others, the traders will look at those key technical levels. So to me, where there's market history that's useful, and you have that in a lot of the alts here. So you can use that for Bitcoin once you get into blue sky territory here, it's like, I start to wait sentiment more.

I look at some of these peripheral things like Ethereum validator exit queue and some of this stuff because you could use Fib extensions, but they haven't worked great in the past. You could use DeMARK, 913s, you know, but they, it just doesn't line up that well.

So I think it's like technical analysis you deweight it in your model as you get into blue sky territory and you start to, you know, add some weight to the sentiment and the flows.

Gerbz: And it's timing and how many sort of dumps we have too? Because so we haven't dumped once yet, and that's gonna happen a few times. It always, I mean, do you agree with that actually?

Brian: Yeah, well like a week ago. We had a dump that was bought same day.

Gerbz: So fast, if you weren't if you didn't look at the market you didn't even know.

Brian: And you know why I think that's happening? I think you might have originally brought this point up to me and I totally agree, if you think about the bull market starting six months ahead of schedule, I think people caught were caught under position. You know, you thought you had another six months to build your position, right? But then the market started without you. And so now you feel under positioned and so you're going to chase or you're going to buy every dip.

So I think the dips, even if we see the big dips, I think they'll be short lived. I think they'll be quickly bought. And if we get, certainly if we get one on news, remember, the market climbs a wall of worry. So if we get a catalyst, like a news driven sell off, those ones are going to quickly get bought.

And you also want to pay close attention to how does the market respond to news. If it continues to get bought, those dips are bought and it rallies in the face of bad news. You know, you're still in a bull market.

Gerbz: So it's, always still buy the rumor, sell the news, but it's buy the rumor, sell the news and buy the dip.

Brian: Yeah. Buy the dip, yeah. In a bull market, buy the dip.

Outro

Gerbz: All right, cool. That's what we'll do, man. All right, man. Boom. That's the pod.

Beautiful.