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Podcast 🎤 #49 Boom4 Predictions – Part 1: Bitcoin

Boom1 marked the rise of Bitcoin in 2013. Boom2 in 2017 was centered around Ethereum and ICO mania. Boom3 brought us Ethereum Alternatives, DeFi and NFTs.  As we wander the depths of the 2023 bear market, we’re revisiting each crypto sector to see how it performed during Boom3 and formulating our plan of attack ahead the next bull market – Boom4.

In February 2020, Gerbz and his bro (CMGerbz) were set to launch a crypto fund to help friends and family get exposure to crypto. They called the fund Boom3. The thesis was simple, Bitcoin’s 4 year halving dictates the crypto market cycles and the next bull market was imminent. That is, until COVID struck.

They were confident in their thesis, but with no experience managing people’s money, let alone through a global pandemic, they decided to shut it down before it ever began. Sad too, because the Bitcoin price ran from ~$10k to ~$70k over the course of the next year. Boom3 was real, and now, in 2023, it’s time to start planning for Boom4.

Bear Market Portfolio Breakdown

In January 2023, Gerbz and his brother’s portfolios look similar:

  • 40-50% BTC
  • 20-30% ETH
  • 20-30% Cash & Alt coins

Gerbz has had a large cash position for almost a year while his bro recently moved into some alts in November. Both of them cut back to mostly “blue chips” like BTC & ETH when it was clear the bear market was upon us. The “blue chips” fall the least during the bear market, but still get crushed.

Everyone they talk to who’s been through past cycles has a similar strategy. Typically the majority of their portfolio stays in BTC & ETH. A 20-30% position in cash turns to alts, which can swell much bigger during the bull market, but should get sold for cash or more BTC/ETH as close to the top of the bull market as possible.

Boom1 – Bitcoin is Money

When Gerbz started in crypto in 2013, Bitcoin was the only cryptocurrency in town. The thesis at the time was simple. Bitcoin is the new decentralized, permissionless, digital money – and soon everyone will be using it. But that didn’t mean the price was going up…

From the peak in 2013 through all of 2014, the bitcoin price fell from $1,200 to $150. It was hard to remain confident. 2015 was mostly sideways, but momentum began to build as big companies like Microsoft XBox announced that they’d start accepting bitcoin as payment.Momentum built as Bitcoin head into it’s 2nd halving in Summer 2016.

Boom2 – Ethereum ICOs

Bitcoin’s momentum through 2016 aligned with the growth of Ethereum which launched in 2015. Tokens were all the rage, but these projects were little more than exciting ideas vs actual products you could use. But that didn’t matter. Anyone who bought Bitcoin through the bear market saw massive gains as the price of Bitcoin grew to almost $20,000 at its peak in December 2017.

The “crash” was hard, but familiar. 80-90% drops from peak to trough is common after an intense bull run. But buying during the bear market and hodling on tight, that’s where the money is made.

Boom3 – The Last Crypto Cycle

The bitcoin halving in 2020 came only months after COVID struck, and agin kicked off a bull market which drove the bitcoin price from ~$4k to $69k at it’s peak – an over 1,600% gain in only a single year.

While this represented yet another epic bull market, Gerbz isn’t thrilled with bitcoin’s performance. A primary narrative around bitcoin is it’s usage as an inflation hedge – and COVID kicked off the most inflationary moment in human history! Yet bitcoin performed no differently than past cycles.

While L2’s like The Lightning Network exist to help scale bitcoin, it really hasn’t caught on. Projects like Strike are building on lightning, but adoption is slow.

One explanation for bitcion’s lack luster performance is that the market has simply expanded – dramatically. There are literally thousands of altcoins and dozens of competitive layer one blockchains all taking a slice of bitcoin’s market share.

Boom4 – Bitcoin’s New Narrative

January 2023 has started off with a bang! Bitcoin price is up 40% from December and a nice rally appears to be in the works. It could mean the bottom is behind us, but Gerbz doesn’t necessarily think we’re ready for the bull market yet. That won’t come until around the time of the next Halving which is scheduled for February 2024.

The bitcoin narrative is still alive and well! With Ethereum migrating to Proof of Stake, Bitcoin remains as the only remaining Proof of Work blockchain at scale. And no other blockchain has a guaranteed finite supply in the way Bitcoin does.

Previously Gerbz wanted Bitcoin to innovate, but he’s gone full circle on that. It’s refreshing to know that Bitcoin won’t change. It’s digital gold, and it’s doing exactly what it was designed to do – be an safe, secure, digital, permissionless, decentralized store of value.

Is Ethereum Replacing Bitcoin?

As Ethereum evolves, will it come to replace Bitcoin? Gerbz doesn’t think so. They’re very different assets solving very different problems and there’s room for both.

Newcomers to crypto, including massive institutions and “big money” will start with Bitcoin. Bitcoin’s Lindy Effect is strong as it was the first cryptocurrency and always will be. Gerbz believes this bull market we’re experiencing in January 2023 was literally a while calling the bottom and buying up a ton of bitcoin – and that was just one whale. There are thousands more out there waiting to strike.

For newcomers, it sucks to only be able to afford a small sliver of a single bitcoin, but thats ok. 0.00001 BTC is still more than 1,000 of a worthless token.

Stock-To-Flow In 2023

PlanB is famous for his stock-to-flow model (S2F) which values bitcoin based on scarcity. Many crypto investors including Gerbz have used this model to predict the price, but how well did it hold up through Boom3? And are we still using it today?

Gerbz breaks S2F into two parts:

  1. The bitcoin halving creates a supply shock which kicks off a bull market
  2. You can use the bitcoin supply to predict the price at the top of each cycle

While part one is still in tact, Gerbz doesn’t think investors should read to deeply into the price predictions spit out by S2F. They’re a good guideline, but human emotion can’t be quantified or properly taken into account in any model.

In PlanB’s latest prediction, he doesn’t even bring up the S2F model until 3/4 of the way through his video – thats a telling sign. And his “predictions are much more generic:

  • Over ~32k at the time of the halving in 2024
  • Somewhere between $100k and $1M top in 2025

Bitcoin’s One Trillion Dollar Market Cap

Gerbz thinks Bitcoin reaching a $1T market cap is an important number to keep an eye on. With 19.2 million BTC in circulation, that puts the $1T market cap at $52k.

In Boom3, BTC grew larger than $1T for a short time, but couldn’t hodl onto it. It wasn’t ready. But Gerbz thinks next cycle, it will be.

Boom4 – Bitcoin Price Predictions

So what numbers are we keeping an eye on? First, that $1T market cap number at $52k. Second, the previous all time high at $69k. Third $100k – just cause it’s a psychological level everyone will be waiting for once we break the all time high.

While we’ll likely see some resistance at the $1T and $69k level, Gerbz thinks we’ll blow past $100k if we reach it. $100k is only ~30% gain over the previous top, and when Bitcoin sets a new all time high in a new cycle, it doubles, tripples, 10x’s it’s previous all time high!

If he had to make a guess, Gerbz is hoping for a $250k top in 2025.

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