Episode Links
- TradingView for all your charting needs
- Ultrasound.money to see ETH’s supply in real time
- Chart showing decelerating growth of crypto cycles
- Charting/Technical Analysis Book Recommendations
Show Notes
Gerbz: We're live! What's up guys? Welcome to the BitLift Podcast. I'm here with Brian today. What's up buddy?
Brian: What's up, man? That's a beautiful looking chart you have pulled up.
Gerbz: Oh yeah. It's my favorite chart of all time. That's how we do it. We always have these epic conversations on different types of analyzing the markets. A lot of times we're talking fundamental. Sometimes we're talking narratives.
Last time we hung out, we were busting out our phones. We were at a meetup, there was 50 people around us, but the two of us were at the edge of a table zooming around on our phones on tradingview.com, analyzing some technical analysis, analyzing the charts. And I thought, man, this would be so much better on a big screen.
And it would be so much better if people could see what we're up to and what we're talking about. It was such a great conversation. So I figured I'd just have you on here today and we'd zoom around a little bit, talk about our philosophy of charting, and how we use it, why we use it, and then maybe dive into a few charts that we enjoy.
Brian: Beautiful, man. Let's do it.
[00:01:07] Analyzing the Markets: The Power of Charts
Gerbz: Yeah. So I think, I mean, I think the most important first place to start, I think people probably know what technical analysis means - sort of this art of doodling on the charts as I like to say. But obviously there's other ways of analyzing the markets, right?
You can analyze the fundamentals of a crypto - that might be like how the price and the supply work, or maybe it's like a revenue - that's more like fundamentally how we feel about the project and how it's going. And then there's the technical side, which is much more price related as the way I see it.
How do you think about technical analysis, and how does it fit into how you analyze a project?
Brian: So, interestingly, the fundamentals you mentioned, also the market sentiment, the psychology and the behavioral psychology, I think actually all gets captured in the chart. So the chart is this beautiful...it's historical, right? It's backwards looking, but it's giving us a beautiful, illustrative view of what's happened in the past and then what the setup looks like today.
And what's particularly useful about that is that certain patterns, certain types of charting give us the ability to make very specific price predictions. So if I was to distill down the biggest use of technical analysis, I think it's that it allows us to forecast the future - to have a good sense for what and where the market's been - and where we think it might be going.
And that's super useful for trading, right? I mean, both in terms of a risk management perspective, where you set a stop, when do you get long, and also when do you profit take, right? Which is something we should all be thinking about as we potentially kick off a new bull market here.
Gerbz: Exactly. We don't know exactly what's going to happen. You never know exactly what's going to happen, but you have to have a plan. What's your plan, man? And it's got to base it on something. Unfortunately, all we have to base it on is the historical pricing and the historical movements that have happened in the past.
The past isn't guaranteed to repeat, but we always say that it rhymes, right? So what are those rhymes telling us? And where are we going to, where do we want plan to maybe pull the trigger at? Where would we plan to maybe buy? And like when a price reaches a certain zone, how does that zone now change our plan moving forward?
I think it sounds like we use it in very similar ways. We've talked about how we use this stuff in very similar ways. And we do. So when we're talking technical analysis, we're talking charts. I'm using tradingview.com, it's my go to. I think for a long time, there was a few others that sort of were maybe in the mix. But in the last, I don't know, man, like five years plus, I think trading view is the go to. It's embedded in most exchanges now. That's what I use for all my charting. Do you use that? And, or anything else?
Brian: That's, yeah, it's become all I use over time. Yeah, it's, incredibly user friendly, very easy to draw on. They've got just about every type of pattern you could dream of drawing. And then on top of it, they've got these, indicators. It's like a crowdsource indicator model, right? Where you can build an indicator and make it publicly available.
You can also publish your charts and people can upvote them or downvote them. So yeah, super useful tool. It's like social media plus charting. I love it.
[00:04:30] Tradingview.com 101
Gerbz: Yeah, I do too. And I mean, I think it has a million features that I've never even had a second to figure out yet. I would love to someday do like a mega deep dive on it, but just the basics is all I've ever needed. So, I think we'll start there.
Let's start with basics, right? I think it's a bit intimidating for a lot of people. They see all of these buttons and features and things. And I, like I said, I use maybe like 5% of the features.
So, when I set up my chart, it's very basic. I use candle indicators, which shows the open and close as well as the high and low for the day. And then I only put a 50 day and a 200 day moving average, and volume.
And those are the only, indicators, so to speak, that I have defaulted on my charts. Do you have any other defaults that you like to pop up?
Brian: No, I actually use it almost exactly the same way. I will sometimes use a panel for RSI, the relative strength index, which is a momentum indicator that is essentially looking. It's an indicator looking at the price performance of a specific asset relative to itself, actually. And it can give you some good readings on consistent bull or bear market trend. Overbought, underbought. So I sometimes use that, and I would also say like the best way to figure out tradingview.com is just to, it's totally free to get a free account, sign up, click around, mess around. if you start using it, you'll learn it in no time.
Gerbz: I agree. And I mean, once you draw a line on there, and then you come back a month later and the line is still there, it all clicks. It's like, oh, I see. It's, I see how this works. Okay, cool.
[00:06:07] Linear vs Logarithmic View
Gerbz: So we're using that similarly. And I just, I also wanted to touch on a logarithmic view. I've always just like, since the beginning of investing in crypto, I've always used a logarithmic view, but I know it doesn't always apply to every market. When do you use it and when do you not use it?
Brian: I'm actually really glad you brought that up. It is like charting 101 to me, but it has some complexity for people to think about. So, like looking at the chart...
Gerbz: Yeah, I can toggle it over here.
Brian: Yep. Yep. Perfect. So, essentially when you talk about linear charts versus logarithmic, you're talking about the interval that defines the spacing on the Y axis.
Gerbz: The Yeah, the scale, the price scale, so to speak.
Brian: Exactly, yeah. And so a linear chart would have the same dollar spacing, let's say between...
Gerbz: Linear right here. You can see that the spacing on here, it looks like $4,000 between each price print on there.
Brian: Exactly, now if you toggle back to logarithmic... now here, on a log chart, the hash marks on the y axis are actually percentages, which is in my opinion, that's the correct way to look at every chart. I actually don't look at any chart on a linear basis. I look at everything on a logarithmic basis because if you think about it, like the price movement, go back to when Bitcoin was, a hundred bucks.
Gerbz: Yeah, it's flat. It shows nothing.
Brian: Right, right. And the price movement from a $100 to $200 was massive. I mean, that was a doubling, right? But if you look at today's price, BTC at $36,000, if it goes to $36,100, that is almost insignificant in percentage terms versus a doubling back when it was only a hundred bucks.
So it gives you a really relative look at price performance through time. What you want to see is what percentage gains is the asset showing you over time, rather than just a fixed dollar amount. And that's especially true for something like Bitcoin or Ether, any cryptocurrency that's had massive price gains, where those early days along the Y axis just aren't relevant anymore.
Gerbz: Got it. Yeah, the way I had thought about it before, and I like your view better, but I'd thought about it before. Like, something that is going through like an exponential growth chapter, the only way to really see that is in a logarithmic view.
And then I thought maybe, I don't know, some dividend paying stock, maybe like Coca Cola or something. It's just so flat that...why would you view it that way? So I would always look at that without logarithmic turned on. But I guess even on a chart like Coke, with logarithmic on, you can still see a bit more of the context of what's going on in this view, I would say.
Brian: Yeah, 100%. yeah, I use log for everything. I like thinking in exponential terms. That's why I'm in this asset class. And it's funny, like if you ever see anyone trying to, push a FUD bubble chart in the cryptocurrency space, they always use a linear chart because it always looks funny.
Gerbz: Because it's so extreme. Yeah, I mean, look at this Bitcoin chart. It's the friggin wildest thing ever. And it's so weird you look over here 2013, which doesn't look like part of the cycle at all. It looks like nothing, but, if you zoom all the way over and then zoom all the way in, it starts to look just like the cycle we just went through.
And then you can navigate back to the last cycle, and it's the same.
This log view is really, it's the only way to view this. And especially it does look a hell of a lot prettier. That's for sure. But we're not necessarily going for pretty, we're going for helpful. And I think helpful logarithmic is much more helpful. All right. So that's, definitely, how, we're talking there.
[00:09:56] Chart Viewing Tips
Gerbz: Yeah, and then how about time frame zooming around? I see a lot of people get caught up in like the hourly charts and they're not even day trading, or like, high frequency trading or any of that. But they always look in the minute view because it defaults to that, sometimes.
I bookmark a trading view and I bookmark the monthly view because it forces me to have to start with the monthly view, and sometimes I need a little reminder to zoom out, right? We always need a little reminder to zoom out. So I don't know, do you have a default starting point when you're analyzing something?
Brian: Yeah, it's funny. You're hitting on all the rookie charting mistakes. Yeah. I mean, anytime I'm looking at like an hourly chart, there's one, there's always one good piece of information in that, which is that my position size is way too big!
Gerbz: You're looking at it that granularly because you're freaking out a little bit?
Brian: Yeah, but I'm exactly like you. I mean, the longer term time horizon charts are always the best place to start, and you can zoom in from there. I actually love, I love, when we get into technical patterns, I love patterns that break out across multiple time horizons. So sometimes that's something I'll look for where you might have a daily breakout, that the target from that move is a breakout on a weekly or monthly chart, and that can really signal a huge setup for you. But I love like, yeah, just like you've got, is that a monthly view you've got pulled up there?
Gerbz: This is monthly.
Brian: Yeah, that's like, to me, zoom out, start there. you can see the dominant trend. You can see the significance of that 200 month moving average blue line, I think that you've got drawn in there. I don't know if that's 200 or 50?
Gerbz: That's 50, right? Yeah. Yep. I don't think there's 200 months in existence yet I think we're getting there.
Brian: Yeah. Yeah, that's right. So yeah, I always start with the zoomed out view and then zoom in from there. So you start with the longer term picture, the secular theme, the longer term theme. Again, remember going back to that, the fundamentals are represented in the chart. Look, if I go back to the history, like on this beautiful bitstamp chart you've got pulled up, you can clearly see the dominant long term decade-plus long trend up into the right. And then if I zoom in on on a daily chart, just to the last 12, 18, 24 months, that's going to give me some information about what the market's doing today. But I always want to be mindful of that long term secular trend as the dominant trend. So that's why I love starting with that monthly chart.
[00:12:19] Support & Resistance Lines
Gerbz: Like for years and years of my early charting, the only thing I ever did was draw very basic support and resistance lines.
By support, I'm talking about the floor, right? For whatever reason, the price tends to respect this floor line that you can easily draw by connecting either the bottoms across years or the bottoms across the last cycle that we've been through.
And then the resistance would be like the ceiling. You just connect some tops and you'll notice that the price tends to just respect these lines. Let's talk about - we talk about fit - you and I have talked about fit a little bit before here. Let me pull up this chart here.
I've got one simple, very long term line that I drew that goes like across all the segments on Bitcoin. This is this line. Actually, all it does is it connects the bottom of the last two cycles. So in 2015, this was like the bottom after the third cycle, after the 2013 top, it connects this bottom here. It just connects those two bottoms. This to me is an important floor line.
And I was actually really surprised that this cycle, we broke below it. And we're sort of like, when I'm talking fit, this idea that the price respects your line, you don't know that it's going to necessarily respect your line in the future. You can always fit the line to be perfect historically, but then you don't know - is it going to continue to respect the line that you drew? And there's nothing better than coming back, like two years after you drew a line and just noticing that it's still respecting that line that you drew.
So talk to me a little bit about fit - I feel like it's a little controversial. Like, if you just make the line fit, then of course it's doing what you think it's going to do. But it's also, you want it to fit. Like, if it's not fitting, then what's the point of it in the first place? So let's talk fit a little bit.
Brian: So, yeah, so I don't use horizontal lines for entry and exit or technical analysis. But I do think, let's say you're just think about basic statistics, like stats 101, where you might have a dot plot. And you're trying to draw, you're trying to show the trend, right? Is there correlation? Is there not correlation? And you might just take a straight line that represents the median intersection of the X and Y axis and draw it through that dot plot. And it gives you a general view of...is it correlated? Is it not correlated? And it's useful in that sense for sure.
I think with something like Bitcoin, like this is a particularly interesting chart. I mean, you could have connected, let's say the bear market low in...I don't know, if that was 2011 or 2012. It was right as it was getting a trading point. Yep. You could have connected that to the low in, 2014, right? And then you would have said that by 2018-2019, we're trading below it, right? And now you have to flatten that line to connect the last two bear markets as you had done as your starting point.
So to me it's like, especially on a logarithmic basis over time with Bitcoin, it just it's not possible for it to continue to produce the same types of returns that it's produced historically, because at some point it would just eclipse the total amount of dollars in the entire system. Or, if it grew at that rate after a very short period of time.
So it's natural that the the uptrend is going to lose its steepness. It's going to flatten out over time, and I think that's why you're seeing it trade below that trend line you drew. But at the same time, it's a great, useful exercise, especially as you suggested. Where you draw it, you might come back to the chart a few years later, and just see where it's at. It gives you some perspective.
Gerbz: What about this Idea that like, all of the technical analysis, everyone that's using technical analysis out there, is drawing the same lines and plotting and scheming their future trades based on, "I think I have this unique insight based on this line that I drew." But really, every person looking at this chart is drawing the exact same line.
If you and I both pull up our charts, we're going to have very similar lines. Do you think that is playing a role in like the future of the price? Is this like, a self fulfilling prophecy a thing going on, or are we just like respecting the lines? I don't know.
Brian: Yeah, it's a good question, a little meta. Of course, we can't know for sure. I think, look, it's like, I go back to the beginning of our conversation - the technicals capture the full picture in my mind. So the fundamentals are in there somewhere. The sentiment is in there somewhere. The chart itself, the technicals are obviously clearly well represented.
And of course, the traders are trading that. We're all looking at it, right? And so you can have instances where positioning gets offsides with the pattern, simply because everybody's looking at the same thing. They get positioned for a move and then the move doesn't happen, right? And then they have to take their risk down, right? We've seen that before. So that's why, I mean, if you're trading on a short time horizon, you want to use tight stops, where you can, or at least protect, your downside.
But I think there's also something to be said for trading the traders, right? I mean, and as we get into some charts here, I'll talk about that. But if you think that traders are going to buy a breakout of a certain threshold, you can actually time your entry and front run them, and then you can take some risk off the table before that move even gets started. So you can, to go one layer deeper, you can try to anticipate the technical traders and get in front of their moves as well. So there's just, yeah, it's complex. A lot of ways, a lot of different ways to think about it.
Gerbz: It's the ultimate game. We're all trying to play each other in this thing. Okay, so and one last thing I wanted to hit on here because I know it's something that I'd brought up like a couple weeks ago with you, and we disagreed on a little bit. Which is that I always connect when I'm drawing support and resistance lines - I always connect the highs and lows, as opposed to the opens and closes. So an open and close on a monthly basis would be like, January 1st and January 30th. That would be the open and closing price.
But I would connect the highest price in January and the lowest price on the other side of my line. And, that's actually, I think where we started talking about fit. It was just like, well, I mean, which one just seems like it fits better? Maybe we just use that. I use highs and lows. It sounds like you use open and close. Does it matter, or how do you think about it?
Brian: So I use classical charting principles. It's funny, you talked about horizontal support and resistance. And I have probably 2000 hours of technical study across a variety of different, technical programs and different ways of looking at TA. And ultimately, I have defaulted all the way back to the "developed in the early 20th century," like basic, geometric patterns, which is called classical charting.
And the most dependable lines out of those, out of that print, out of that technical philosophy, are horizontal support and resistance. So it's just interesting to me, going back to your last comment, that you came onto that very easily. I wasted a bunch of time before I realized that's the best indicator out there.
But when it comes to classical charting, the principle around fit is the default is closing is actually closing price. Now where you're in my debate on this, crossed over is that, "Well, where is the closing price for crypto trades 24/7, right?"
Gerbz: Right. Exactly.
Brian: But it does have a closing price that everyone agrees to. And going back to that, trading the traders, we know people are looking at closing price bars as of a certain time. And so I will default to that. However, I will always override based on best fit. And that's what classical charting suggests, is that sometimes you're connecting the ultimate highs and the ultimate lows.
Sometimes you're connecting the closing points. You just look for what the chart is suggesting to you, and then you draw the line based on the market's representation of supply and demand at a specific price point. So you'll sometimes see me connect the wicks, and you'll sometimes see me connect the closing bars.
And I think that's the right way to think about it. I mean, if you were drawing patterns on charts, let's say with multiple time horizons, the closing bar for a weekly and a daily is going to look different. And maybe that's why you default to ultimate high and low, but there could be a trade that happens on a wick, like way out of whack, way out of line with the market. And you wouldn't want to use that to draw your chart. So you got to use a little bit of discretion. It's a little bit more of an art than a science on that piece.
Gerbz: Yeah. While you were saying that, I was even just noticing my chart is set to UTC time. I wonder what time is your chart set to? Do you have it set to New York time? I would assume that would be a more global standard in some way. Maybe it's not? I don't know.
Brian: Yeah, mine's UTC as well. And I think that's the agreed upon like global standard for crypto closing prices.
Gerbz: All right. Well, there we go. I'm going to leave it on that then, even though I connect wicks.
[00:21:22] Halvings & BTC Market Caps
Gerbz: So, all right, good. Okay. So that covers some of the basics here. I think something that you'll see on my chart, I've got the halvings on here. I've also got the highs from each cycle on here.
This is just my default of Bitcoin chart, whenever I start a Bitcoin chart. It gives me perspective on where we are in the overall cyclical life span of Bitcoin. So I always start there, but I've got another fun one here that I just want to throw up while I've got it here to show you.
This is...these lines are the market, the Bitcoin market caps: the Bitcoin, $100 billion dollar market cap, and the $1 trillion market cap. And what I find interesting about it is, first you look in this last cycle how much we respected this $1 trillion number. To me, what this says is: the entire the narrative of this cycle was, "Is Bitcoin a trillion dollar asset or not?" it is like what we were deciding on over the last two years, and it looks like we landed on "It's not." Like, it wants to be, but it's just not. And that's what the price says.
But what's interesting about the cycle before was it almost seemed like we were trying to decide is Bitcoin $100 billion dollar asset or not. And then we got this blow off top, which we've talked about a million times, how in the 2018 cycle we got this crazy blow off top. But in this last 2021 cycle, we didn't have it, and it almost feels like that's the difference. This is something I'm going to keep an eye on coming into this next cycle.
It's like, the blow off top... it's going to happen from ~$1 trillion to $10 trillion, or maybe $10 trillion to a $100 trillion. Or, I don't know how many trillions exist in the world at this point, but I just find it interesting how there's some fit with this market cap number. And I want to show you that.
Brian: Super interesting. Yeah, I love those lines. That's a neat perspective. To me, that makes so much more sense than you had everyone just dialed in on BTC going to 100k last cycle. And that's not really that meaningful. I mean, yeah, sure. There's round number, magnet and resistance, but, $100K times 19 million. That's the significant number. I like thinking about it in terms of market cap. I mean, it's not a perfect fit looking at your chart, but it is interesting to see those lines. And, yeah, it's a super neat way of looking at it. I really liked that.
[00:23:50] BTC Dominance & Industry Market Caps
Gerbz: So, yeah, I always start with Bitcoin. In my mind, like, it's the market. It's almost like the index of the crypto market in a lot of ways for me. There are, however, indexes of the crypto market. And I wanted to ask you about that. Do you ever look at Bitcoin dominance, for example? It's another one of these charts that we can pull up that shows, what percentage of the entire crypto market Bitcoin represents. Do you ever pull that guy up and take a look?
Brian: 100 percent, yeah. Actually, that's one of my favorite charts and indicators right now- just super interesting. There's a lot of information in that chart. We could dive into it, if you'd like. But yeah, I do look at that. I actually didn't know that ETH dominance existed. I see that on your crypto watch list there. That's neat.
Gerbz: Let's see, ETH dominance is at 18%. Let's go weekly.
Brian: Yeah, a ton of information in these charts from my perspective.
[00:24:41] Classic Chart Patterns
Gerbz: I mean, man, look at how ETH is just consolidating for years here. In the 18-20 percent range, it's pinned. That is super interesting.
How about total market cap? Total crypto market cap?
Brian: Yeah, I look at that as well. And that to me is very bullish looking chart, right? Because you had, you've got this clear bottoming pattern that's happened in the bear market over the last, 18-24 months of breakout, and now it's holding above that breakout level.
There's a lot of wood to chop up here. Just thinking about all the price history from that 2020, 2021 bull market. But to me, that's a very clear chart that's suggesting that this space is not, as the bears would say, it's not dying. It's not going away. That there's something here that still has people's attention. There's still money flowing into the space. And so yeah, that's a great one. It's kind of like - start with your monthly chart, right? Start with that broad perspective. Take a look at the whole market.
Gerbz: Yep, I agree. And I mean, I'd say if you flip between them, like the Bitcoin chart and the total crypto chart, they look the same. Or, they look very similar rather.
Because I mean, this Bitcoin dominance is 53% at some points along this. I mean, obviously you see it pinned here at 98%. That was pre-Ethereum days, right?
Then we had the Ethereum ICO which, like that got an extra 5% - but then we really got ICO mania, which was all the alts come in. Peaked it. I don't know. What's the reverse of a peak? It troughed at 35%. That means at one point Bitcoin was only 35 percent of the market. That happened. So in one year we went from 95% to 35%, and that is a volatile swing, man. That shows the power of that ICO cycle that we went through, right?
Brian: Yeah. Yeah. A hundred percent. And actually if, while we're on it, of the most interesting things about the crypto market to me right now is the resilience of Bitcoin as a dominant asset in the space. I mean, you've mentioned right now it's 53% of the market. And what's particularly interesting, and here's where technicals can be interesting and giving you some information that doesn't feel correct to me, but actually is. Which is like, if you go back to that low in 2018 after the ICO bull market and into the bear market, you've got Bitcoin representing 35% of the total market.
And just making sure people understand what this is. This is Bitcoin divided by the market cap of all cryptocurrencies, including Bitcoin. And so it's 35% of the total market value. Then you get a bear phase, right? Where it climbs its way back to probably about 75% by 2020, 2021. And then in the next bull market, which was, what did we have?
We had stable coins, we had DeFi, we had NFTs, we had so much stuff, right? And then look at Bitcoin's low in that bull market. It actually comes down only to 40%. So from a technical lens, it makes a higher low than it did in early 2018. And think about all this stuff, all the money that's floated into the space.
Stablecoins really didn't exist in a meaningful way back in 2018. And yet, Bitcoin today at 53% represents more of the market than it did going back, five, six years ago. So even though it feels like Bitcoin's not the big thing some days, right? And people want to chase alts and DeFi and whatever the next shiny thing is. Bitcoin has been, and just continues to be, this really resilient asset. And I think this chart does a nice job of just showing in one clean view how significant Bitcoin continues to be with respect to the entire value of the cryptocurrency space.
Gerbz: Interesting. Yeah. And just to put a, button on that. When Bitcoin dominance sort of crashed, so to speak, to 35% in the first during ICO cycle, and then when it crashed this last cycle, it only crashed to 40% instead of 35%. And you think that 5% difference, that's important in your mind?
Brian: Yeah, exactly. Just like if you were looking at like an ascending pattern, right? I mean, one of the basic tenants of technical analysis is higher highs, or higher lows, right? So higher highs is just a momentum driven trend where you keep making new all time highs, right? Like the monthly chart of Bitcoin demonstrates that every cycle we get a new high.
So that's the dominant trend. But, lower highs is also a really interesting piece of information where it tells you that over time, and in this case from 2018 to 2023, this asset has actually become more significant for the space, not less significant.
Gerbz: Interesting. And talking classic patterns, I wanted to fire this up real quick. This is like, if you Google "basic charting patterns"...like, this is what you get.
And some of them are pretty basic, like an ascent, a triangle, or a down channel. And some of them you've probably heard of, like head and shoulders or double tops.
Do you study these, do these, are these in your subconscious while you're looking at a chart? Do you think they're all a bunch of bullshit? What do you think about these really simple, oversimplified patterns?
Brian: Yeah, this is actually what I think works best in crypto. I like distilling down to just the most simple, indicators. And frankly, these have been consistently reliable. If you go back to classical charting patterns, Richard Schaubacher wrote a book in the early 1900s called Technical Analysis of Stock Market Trends.
That was one of the first books on technical analysis that I read. McGee wrote a follow up to that a decade or two later. That is also a fantastic read. And in this book, he describes exactly these patterns. And it's and to my point earlier about the technicals capturing the full picture.
He also goes, I mean, these books are 500 to 1000 pages each, so they're pretty in depth. If anyone wants to read them, they're out there. I think they're Creative Commons now, so they're free. You can just Google PDFs. He goes through the explanation of what the behavioral psychology is that's creating these patterns, actually.
So it really helps you. And if you think about crypto, like the fundamentals aren't...I mean, there's some fundamentals, but the valuation and the fundamentals aren't as clearly connected as they might be in like, public equity land, right? So you really got to look closely at sentiment, and what's everybody's mood. Are we greedy? Are we fearful? Are we bullish? Are we bearish? Right? And so if you can have a technical picture that captures that sentiment, it's a really useful tool. So I actually think these are, this is, the correct way to think about TA for the crypto market. These are the most useful, reliable patterns historically, and so far they've continued to function in that way.
Gerbz: Yeah, I agree. These are the things that I just sort of notice, and a lot of times I don't even really know like the name of it, like a pennant or something like that. Like you can just, you can catch the vibe that like, in that particular pattern, that's a breakout, right? And a breakout is when this price just, you get good, like strong volume above one of your resistance lines, and boom. That's what you're looking for in almost every scenario. and yeah, they're, basic, but I like to think of them somewhat in my subconscious. Like, I'm not looking for a particular pattern to emerge or something. But you just know it when you see it, and who cares what the name of it is, right? And it is that simple in a lot of ways.
[00:32:33] Wyckoff Accumulation/Distribution Phases
Gerbz: But not all technical analysis can be simple. I wanted to pull this up just cause I heard about it so much in the last cycle, is this Wyckoff accumulation and distribution thing. And I didn't let I was even pulling this up, but I'm curious if you stumbled on this, if you've studied it at all, or if you and if you think there's anything to it.
Brian: I am familiar with it, but I haven't, I don't have any deep study on it. But if you have, I'm super curious now that you've pulled it up. I'd love to hear about it.
Gerbz: I went down some rabbit holes on it. What people were saying was that if there's whales in a market and - man, this, particular image doesn't really give you enough detail on what exactly is going on. So this is the accumulation method. And if there's a whale in a market that wants to accumulate, like let's talk percentages of the Bitcoin market, then how do they do it in a way to maximize their average price?
And you hear about whales manipulating markets and whatnot. It's like, if there was really a whale big enough to manipulate the entire Bitcoin market, apparently the Wyckoff accumulation method is the best way for them to do it. And so, the reverse is also true.
If a whale was looking to exit a market, how might they manipulate a market in such a way in order to get the best exit price over the course of a cycle? So to speak.
That's the way I understand it. There's like multiple phases to this where they long and they short, and then they are able to average in and sort of convince the market that there's this fake momentum going on so that they can sell into it. It's like a big boy strategy that I would never need to really know how to accomplish myself. But, is it playing a role in these markets? Where everyone knows that crypto markets the bitcoin market in particular is the hot new space, and that we all know the banks are coming. The institutions are coming. Are they actually doing this? That was the question that kept popping up last cycle.
Brian: Super interesting. Yeah. I mean, so the classical charting patterns give you actually good representation of oftentimes the same thing. Where if you do have a horizontal area of support and resistance - if it's support, that tells you that a whale or a combination of whales maybe buying at that level. I mean, they're supporting the market at that level, right? And then if you've got resistance, that means you may have a whale at a horizontal threshold that is profit taking every time the market comes up to a certain price point. And you want to keep a clear eye on how price is behaving around those horizontal levels.
And then that Wyclef analysis seems to go even deeper into how someone might actually execute on that strategy. I hadn't studied that, but I'll take a closer look at it. That's really interesting.
[00:35:27] DOGE Chart
Gerbz: Yeah, it seems cool. When you were just talking about, like, whales supporting a particular price level, it just reminded me of the Doge chart. That it just seems like, it's so flat, and so pinned above five cents that no one could possibly get it below five cents. I don't know who or what is supporting it here, but it just feels that way when I look at it. It's so flat. It's, like, freakishly flat.
Brian: But it's also a confusing chart because it made the same pattern. It made the same pattern in the last bear market, right? Yeah, almost - that is a descending triangle actually, where you can see it's got a horizontal boundary at the base and then it's making lower highs.
Yeah, exactly. So, that's typically a bearish pattern, but it already broke out once from that pattern into the last bull market. So, who knows? Yeah. The, Doge chart just confounds me, frankly.
Gerbz: It's a strange one.
Brian: A weird one.
Gerbz: Everything about Doge is strange though. Right? I mean, it's sort of its thing.
[00:36:28] Brian's BTC Chart
Gerbz: Cool. All right. So that was good. That was like really high level charting stuff.
I'd love to, I know you put a couple of charts together. Let's flip over to yours and see if we can't get some other charts going up on the screen here.
Brian: Okay, so this is a look at BTC, going back to...really the chart starts in the last bull market, at the ultimate top of the last bull market. So that's November 2021. BTC made a high around $69K.
Gerbz: Not around, hold on! Not around. 69k and zero pennies. Weird.
Brian: The poor person who bought that top wick. Hopefully you're still holding on if you're out there. So what I did, the first line that I would say, and I know I mentioned I don't put a whole lot of weight into horizontal lines. But I thought it was particularly interesting if we connect the top of the bull market to this could, if you go back to March of '22.
You could interpret this as a bear market trap, where you trap people into thinking that the bull market's going to resume, but then it fails. And if you just connect those two points, you can draw this orange line, which to me represented the downtrend line of the bear market.
So I was watching that, starting back in ...between March and summer of '22. And what you can see is, BTC really started it. You can see it if you just ignore all the lines on my chart. What's happening is it's in this clear downtrend channel, and then all of a sudden, starting in June of '22, it starts actually moving sideways.
So that's the first thing that I observe when I look at this chart is that it's in a downtrend, and then it starts moving sideways. And along that sideways move, it actually forms a bottoming pattern I'll come back to.
But what's particularly interesting is that when it breaks above this downtrend line in January of '23, it has a beautiful back test here. I never redrew this line. This was the original downtrend line I drew, and it back tested perfectly to it in March of '23 and formed the right shoulder going back to those classical patterns - which was the final build of that bottoming pattern that date that dated back 12 plus months.
And I have got that 200 day moving average toggled off here, but if I turn it on, you can also see that back channel grabbed right at the 200 day moving average as well.
So it was a really interesting spot. Then you see, as you would want to see, a huge thrust. And it's at this point in March of '23, was challenging what's considered to be the neckline of that head and shoulders pattern.
So a head and shoulders can be a topping pattern. It can also be a bottoming pattern, and it can also be a continuation pattern. So it's really tricky. Maybe we'll talk about a few. But here, basically what the market is showing you with a head and shoulders, is this red line here is a key point of resistance.
So we broke down on it in June of '22 and then we retested it - so this is the first breakdown, one, retested at two, retested at three. And now we're revisiting that line for the fourth time in March of '23 after that successful back channel test of the downslope. And we break above it. And to me, that moment, March of '23, is when I called for a bottom in the bear market. Because to me, you went from a downtrend to a sideways movement, and then a clear breakout.
You've got this wedge pattern, so it was a declining volume retest of that neckline, started to break back out, retested that neckline yet again in September, and is now broken clearly above all that noise.
So to me, this is an extremely constructive pattern. You've got a clear bottoming pattern. You've got two successful retests of it, and now you've got the price action breaking above the consolidation area on expanding volume. So to me, the risk of the BTC market is not having a big enough position, frankly. I think we've confirmed that the bottom of the bear market's in. And it to me, it looks like a new uptrend has clearly begun just based on the technicals.
Gerbz: I love it. And man, that, that bounce off that resistance line there, which is also happens to coincide with the moving average, that is just such a strong bounce too. It's just like, "No, we're testing this, but we're only testing this. We're going bye-bye." I like that.
Cool. Yeah, that's a great chart. And it's a great example of a head and shoulder, a reverse head and shoulders pattern it would be, right? Because it's happening underneath as opposed to the top.
Brian: Exactly. Yeah. They can be really powerful bottoming patterns. They're really consistent, reliable, and it gives you a measured move, right? So the measured move here would be the distance from the bottom of the head to the neck line, the projection is from the neck line, the same distance above. On a logarithmic scale, that took us to a prediction point of $35K.
And it's not surprising to me that here, BTC is $35K right about here -it is consolidating along this level. You've got some people that probably took that trade, the profit taking. It's obviously got a lot of resistance if you look back to the 2021 bull market as well.
Gerbz: Cool. And so I actually, I want to do a whole episode on this next topic, but just to throw it out there, since you've got the chart in front of you...what if someone wants to build their first BTC position right now. And they've got this chart, you've got this chart right here, that shows how this reversal is happening. If they wanted to start buying Bitcoin now, let's say, I don't know, $100K, and they wanted to break it into three chunks maybe and start buying some Bitcoin. How would you, based on what you've got in front of you, where would you maybe place some orders in and how would you execute on that?
[00:42:19] How To Buy Bitcoin Using Technical Analysis
Brian: Yeah. So, tough question because the chart isn't giving me a clear entry point right here, right now. But what I've noticed is, just to try and give you a more of a clear answer - we've got the sloping downtrend through the whole bear market, the sideways move. And now let me just draw the new, I'm just going to draw a mid point - you can see this new upslope that we've got that's begun, right?
So to me, if you want to look at a good entry point, I would be looking at that, probably connecting the lows along that new trend that's starting to develop. Let me stretch this out a bit. Yep. So, draw a line, something like this.
And look, I mean, my philosophy is if you're going to buy in three chunks, maybe buy a third of it right here, right now. Because who knows? And this thing may not retest, and you certainly wouldn't want the market to run away without you.
But buy a third of it now and then keep an eye on it. And, if it does come back, and let's say it does a backchannel retest of $30K, which is definitely possible, and that happens in January timeframe, you can buy another chunk. Or, you could perhaps buy the other two thirds there.
I mean, I think we've got what appears to be a new upsloping channel here. So, that's how I would think about it. There's no perfect science on that. And again, I don't love these horizontal lines, but just one way to think about it for entry point. I think Ethereum, once we get there, has a much more clear entry point if you're not in right here.
[00:43:44] Brian’s ETH Chart
Brian: All right. So I'm going to stick with daily bars. I have to fit this in the screen a little bit better. So, this is the Ethereum chart.
And this captures really the full 2020-2021 bull market, which is this whole messy phase that you see here on the left hand side. And then on the right hand side, I have drawn in the pattern that I think is just a beautiful pattern.
Going back to classical charting, that is an ascending triangle. Extremely reliable pattern. And what you see here with ETH is, we look at the horizontal red line. It's a clear demarcation of support and resistance. This was resistance before, in the early days of '21 right before the bull market. It really took off.
So February '21 was resistance. We had a big correction, right? Then we challenged it again here in April '21. Broke above it. You had a massive move from $2000 up to $4300. I mean over 100% move pretty much instantly. And then it's a messy retest here through the bull market, but it did actually hold, even though it's not a perfect hold. It did hold along that $2100 level, made a second high, as we all know, in November. And then here you can see another successful retest, lower high as the bear market's starting to develop, and then a massive breakdown to kick off the bear market in earnest in May of 2022.
Since then, we had the ultimate low, which June of '22 was right after the Luna debacle, right? And then, what's fascinating about the Ethereum chart is if you go to the FTX collapse, which was early November, so right about here. First, second week in November. Look at that volume. And also, BTC made a new low on the FTX collapse, Ethereum made a higher low.
So again, going back to that technical theory of higher lows and their significance. To me, this was the point where you could make the call that, on an event like FTX with Ethereum making a higher low and then starting to continue back up, higher in price, that the bottom of the market was in. And then the pattern that's developed since is you can see a very clear ascending triangle where it's produced a series of one, two, three higher lows, and it has now retested this breakdown level at $2100. One, two, and now we're back at that same point of support and resistance for the third time.
This is an extremely reliable pattern. You've got an ascending triangle at a key point of support and resistance. And the target, if this one breaks out, is $3400. So that's about a 50% plus move. Now, when I mentioned a clear entry point, what I'm looking for with ETH is potentially one more buying opportunity where you see the price on declining volume trickle back down to $1700, $1750, which we know was a really key point.
I mean, look at how many times $1700 held here. Five times, it's been a really significant price level. So if you're looking to get long ETH, I think if it touches this upsloping line, that's where you could get massively long, even with a tight stop.
And then the last thing I wanted to point out, I'm going to bring us back to the last cycle, and just the fractal that's developed here. Let me see if actually I can get both in the same view. I might have to switch to a weekly. Let's take a look at this first. What I wanted to point out here is that going into the 2017 bull market, you had an ascending triangle that actually kicked off that bull market.
ETH went from $350 all the way up to $1400 in basically a single move, some volume.
But it looks very similar to today, and let me switch to a weekly view. And there you can start to see, how like you said earlier in the pod, history doesn't repeat, but it often rhymes, right?
It's a little bit of a different setup, but to me, you can see a beautiful fractal here and also just the historical reliability of an ascending triangle in the price of Ethereum. So to me this is, when I look at the space, this is the most bullish and exciting chart that's out there. And again, it targets $3400 on ETH, which would be a massive move.
Gerbz: Yeah, and it's interesting in most of your examples too. So when we go through these manic bull phases, you can divide that big uptrend into a couple of chunks. There's always like some sort of like mini blow off tops along the way. And it looks like in both cases, you're sort of... resistance, which then becomes support, those main red lines that you have there - they both start at one of those halfway points through the cycle.
And I noticed that repeat across a couple, a bunch of different charts, actually. We don't put a lot of credit to it because we usually, like, blow past it. And then the real cycle begins. But later on, it comes back to become an important, support line later on.
Brian: Yeah, 100%. It's like you're getting one solid support and resistance line that travels all the way through each bull and bear market. And we've seen it twice consistently now. And if we've got time for it, I got one more chart that I wanted to show, and then I want to kick it back to you and see what else you've got.
Gerbz: We'd love to.
[00:49:04] Brian’s Coinbase Chart
Brian: Cool. This is a... I guess we can call it an altcoin. But it's actually the chart of Coinbase, the equity chart of Coinbase. And I know this is one that you and I have been talking about for a little bit. Let me swing down to a daily view. And in fact, a conversation you and I had over drinks, got me pretty bulled up on Coinbase, fortunately. So I got long, Coinbase.
Gerbz: And our conversation happened to happen at a great fricking time.
Brian: Yes. Yep. It was right after a sell off, so it's had quite the move since then. And yeah, I just want to point out, it's really the same pattern. You had the Coinbase - if I can fit this all on the screen on a daily, cause I like this daily view - you had the Coinbase IPO. Interestingly enough, at the top of the bull market. This is April, I believe of '21. Yep. April of '21, IPO at over $400 a share. And then it subsequently lost over 90% of its value. Ultimate low in January of '23 at about $30 a share. So, just got completely annihilated from the day it listed.
Gerbz: Less than 10 percent of it's where it started at.
Brian: And we can do the same thing that we did when we were looking at the Bitcoin chart. I can just simply draw. Look at this downtrend. Clear. I'm just drawing the center point of it. Just a clear downtrend, right? But then, if we zoom out, clearly we can see that going back to May of '22, it's really gone from a downtrend to a sideways move.
So the chart's giving you so much information here. It's the same exact trend we were looking at with BTC. And on top of it, it has formed yet again, our favorite inverse head and shoulders pattern. And it is making its way back up to the neckline at $115.
This is a massive head and shoulders on a logarithmic scale. This, to me, suggests that Coinbase in the next bull market could go all the way back to its all time highs of $400 bucks. That's a 400% move relative to the roughly $100 dollars that it's trading at today. So, a huge thank you to you for pointing that one out to me and a opportunity to get long before this all started.
Gerbz: Yeah, it just happened to be good timing. I've just been thinking about it as like, an index for crypto. Like, it's so hard for traditional investors to get access to the crypto markets in their Etrade account. And I feel like, obviously they know that there's - some people know they can buy Micro Strategy or something, but that's a sophisticated lens on how to trade the markets, I think.
But buying Coinbase, I feel like that's the app that all the crypto noobs have on their phone. I feel like that's the first thought. It is that it might just be that simple, and that's why I liked it.
[00:51:36] Patience & Zooming Out
Gerbz: But man, I wanted to stress too on that chart you were just showing, you were talking, this was a multi year. We were zooming around across multiple years, and this being so zoomed out thing is so important. Because you put on a position, and then you're paying so much attention to it that you're paying too much attention to it in almost every. Every case, right? You're watching the day to day price.
Maybe you're like, over the course of weeks you're watching it. But that pattern that you are watching emerge, that was a two or three year pattern forming, which means you're looking for a two or three year move to come from that. And it's really important to just be so frickin patient. It's the hardest thing on earth.
Like, it's not gonna do exactly what you want it to do, but you got to build that conviction to be long. And that's what we were seeing there, was maybe the beginnings of a long conviction trade.
Brian: Yeah, that's so well said, and it's just connected a few things that you've said in our combo today. And frankly, it's like the reason you want to zoom out and start from that starting point is: what is the secular trend? What is the long term trend? And I want to be, if the long term trend is up, I want to have a bias to be long. If the long term trend is down, I want to be out of the way or a bias to be short if you trade the markets both ways.
And It's totally fine if you want to trade the intermediate cycles, right? I mean, there's cyclical periods that happen within a secular trend. And I think that's totally fine. I mean, I certainly do that. So when, sentiment stretched and crypto is ripping to new all time highs, I'm dollar cost averaging out a little bit.
And then when it's in its sideways consolidation bear market phase, producing these beautiful inverse head and shoulders bottoming patterns, I'm dollar cost averaging in. I'm buying those, I'm contributing to the support that's being built underneath the market. But again, always with a bias to want to be long.
Cause if I zoom out, and you can do this with any altcoin. Like, if you're interested in buying an altcoin and it's been around for a few years, go exactly back to your advice. Start with a monthly chart, start with a weekly chart, go all the way back to the beginning and ask yourself, "If I drew a line through the center of this chart, is the trend up and to the right or down and to the right?" And depending on your answer. that's how your bias should affect your positioning.
Gerbz: Yeah, it's basic trend following. And Michael Covell is a big trend following guy. He's got a pod where he talks about that a lot and brings on a lot of investors. And a lot of these funds and indexes and stuff, they just are strictly long term trend following strategies. That's all they're doing. So there's so much like, it's not momentum I'd say, but it's so hard to move the trend. It takes years to reverse a trend in many cases. So, and since that's where most of the money is, that's why it's a bit slow.
And since crypto is so early in its evolution as a market at all, maybe those trends reverse a bit quicker. We've also got this cycle thing going on. And I have an episode you can go back on. It's something about like, invest for the longterm, but trade the cycle. That's the way I've always thought about it. At some point you got to take some profits, or you got to enter. And like, how are you going to? You can be long and put on a few trades a year or a few trades every few years and trade that cycle, along with being long term. As in like, decade long positions. Which as of, two weeks ago, I had my decade long position hit. So that, that was fun.
Brian: Yeah, actually, I listened to it. Was that your brother?
Gerbz: Yeah, yep.
Brian: I listened to that on my drive back to Boulder today, and I love that conversation. I think I had you beat by like, four or five days.
Gerbz: I know.
Brian: November 1st was my first. There's a whole story around that, but I'll skip it for today.
Gerbz: Well, congrats on your 10 year anniversary as well!
Brian: Yeah, thank you. That's a fun combo for anyone who hasn't gone back and listened to that one. Or two episodes ago as well, I would I recommend for people like myself who weren't as familiar with the BitLift history and the relaunch. Go back to #57 and take a listen. I found that to be super interesting, I really enjoyed it.
Gerbz: Cool. I'm glad you did. We're just kicking things back into gear here, and so those were fun ways to warm things up a little bit.
[00:55:48] Can ETH Be A $1T Asset?
Gerbz: So yeah, I just pulled another chart up here.
I pulled up the ETH chart again. I just wanted to show you this, I'm the only person. I've never seen anyone talk about putting the market caps on the price charts. And I just find it interesting. Like this, last cycle for ETH was, "Is ETH a $500 billion asset or not?" We, made the decision. It's not, it just isn't. It wanted to be, and it's not.
This is the $500, the first. The first attempt we had this weird double top last cycle. The first attempt, we just like, gave $500 billion a go. It didn't like it. And then we retested it. It decided it wasn't comfortable being a $500 billion asset, and the cycle's over. That was it. So here we are, the trillion dollar cycle. We can call it. Yeah, the trillion dollar cycle. A trillion dollar market cap would be $8,300. So does ETH want to be a trillion dollar asset next cycle?
It feels like a number that I could get behind. And I mean, from here, where are we? $1600 to $8300? It's a beautiful move and it seems very possible to me.
Brian: It's a great way to think about I also, People get caught up in looking at the price of a particular token and thinking that it's cheap or expensive, right? Like, Bitcoin is expensive at $36,000 and maybe Solana is cheap at $50 bucks. But you actually, you really need to look at it on a market cap basis. It's the price of the token multiplied by the number of tokens that either in circulation or can ultimately be created. So, I love the way you're looking at that. It's a much cleaner view.
Gerbz: Yeah, I actually adjust these market caps every few months or so based on what supply has come out since just to keep it, like, I know it's not going to be like hyper accurate, but it's pretty accurate. It's in the right range. And so I try to move them based on supply. Bitcoin supply is a lot easier to guess! And I always go to Ultra Sound Money - a great spot to see what's going on right now with the Ethereum supply.
And so as of right now, it looks like we're burning ETH. About 1,000 ETH per year, at the current rate that we're at. And so yeah, who knows what's going to happen with ETH supply? We should do an episode on that at some point for sure.
Bitcoin supply is up and to the right, and slowly tapping out until we get to 21 million. And it's going to happen. All right, cool. So that's my ETH chart.
[00:58:12] How Gerbz Chooses Investments
Gerbz: Let's see what else I got for you. So, I always start with fundamentals. Like, I invest in a project because I like the project. I like the narrative. I like what they're working on. And then, my first step is I always use the damn thing. Try and get a sense for like how it's being used. Can I even use it? Is anyone going to be able to figure this out? Those types of things.
And then I hop into the charts, typically cause I'm like ready to build a position, and I'm trying to gauge where to buy in at. Where to set my stops at, where a few of these different things that only the chart can tell you.
So let's see. I've been, one of the narratives I've been following, is the real world assets narrative. This idea of stocks and bonds and stablecoins and all these things coming on to blockchains.
[00:58:55] Gerbz’s AVAX Chart
Gerbz: And on some of the projects, Avalanche, I think is one of the projects that I think is adopted. Whether they were invented for this reason or not, or they're just adopting the narrative or not, I don't really care. Because they're adopting it now.
It's just had this awesome run here. And I feel like everything's had this run, but the volume that it experienced on this run was really strong. It's testing now this trend line that, I think, it's at the top end of its current trend line.
So I've got some orders in a bit lower. But it's in this wedge here that I feel like could become another consolidation zone going into the next cycle. And I really like it's at $20 bucks, and I'm only looking at things that I think can 10x this cycle. If it can't 10x, I got other stuff to dig through. I think this is one of the potential 10x options. It's just a very basic chart, but this is the one that I've been keeping an eye on.
Brian: Yeah, I love the expression of the RWA view with Avalanche because, yeah, for those who don't know it, they actually have - unique for L1s - programmable side chains. And that's why it's being adopted for tokenization projects for RWA is because if you've got regulatory parameters or distribution parameters, you can actually program that into a secure side chain that adopts the security of the Avalanche protocol.
And actually there was an article, I don't remember the name of the fund, there's an article in CoinDesk yesterday, if people want to go back. Or we can drop it in the show notes. That there was a VC fund that actually launched their fund on Avalanche for that exact reason. It's a pretty sizable fund.
So yeah, I think you're going to see more and more of that trend and that chart doesn't look too bad as well.
Gerbz: I do too. they call them subchains on Avalanche. The one tricky thing about it is if you launch a subchain, apparently one of the parameters you can set is that you don't need to use AVAX as the fee token. You can use whatever token. The native token of your subchain, you can use that for the fees.
So I don't see how that then accumulates value to the AVAX token. It's just an interesting thing to keep an eye on. The token doesn't always need a revenue model in order to work in crypto, which we've learned over time, but I would like to see demand for AVAX come from all of these chains popping up.
Brian: Yeah, that's something I'm looking for this bull market actually, is will the market be more discerning? I think that's the right question to ask is do you use the token? What do you use it for? What is the use? What's TVL, TBD, if the market will care or if we're still just trading narratives. I think we're still just trading narratives, but maybe the market will be a bit more discerning than it was last cycle.
Gerbz: I agree. TBD, that's for sure.
Brian: Oh, I see you've got gold on there.
Gerbz: It's the only, I have Coinbase and gold are the only non crypto things I keep on here. Just cause I like to see a little green on a down day. And so that's why I keep gold there.
[01:02:07] Gerbz’s LINK Chart
Gerbz: This next one here is Chainlink. I've been buying some Chainlink. I accumulated quite a bit here between five and six bucks, which just happened to be an epic time before this wild run. It just tripled overnight, it felt like. But, it also tripled almost exactly to where I had one of these resistance lines that was just already there. And I love when that happens.
It just is a good sign to me that like, that my doodles are working in some weird way. But yeah, this is what Chainlink looks like now. I think I don't see us going back to the support line anytime soon here, but I'm keeping an eye on it. This is clearly being treated as resistance, and then maybe we can use this other resistance line, like this downtrend resistance line. Maybe this might be a zone here, in the $10 range, to hopefully pick up some more if I wanted to add on. It also correlates with this waypoint we had in the last cycle, over here.
So I've been thinking about, I actually have some orders in, I think at like $10.10, $11.11, and $12.12. That's how I staggered my buys. They're sitting there waiting. I assume at one point I'll wake up one morning and some or all of that will trigger and I'll have more link, but, that's what I've been keeping an eye on.
Brian: Yeah, that's a good, that's a good looking chart. This is another one where fundamentally, I think you've got a good thesis around CCIP and what they're trying to build. It's an interesting project for this cycle. And, it triggered something else I wanted to share.
You can't see it here with link, but if you go back to another like Dogecoin, for example, which you brought up earlier. For coins that traded through multiple cycles now, one of the things I always look for is: did it make a new high in the last bull market, right? Because then it's either working towards network effect, or it's being distributed for profit.
And here with Doge, you can clearly see it's made a much higher high each cycle. And it's, to me, that's becoming a network effect type of asset. So, love it or hate it, I think the chart speaks for itself that this thing is being adopted. Chainlink, we don't have that history, but it will be interesting to see if it can ultimately eclipse the high from the last bull market.
[01:04:30] Is Bitcoin Growth Decelerating?
Gerbz: I have this Bitcoin chart where I crunch how much...Bitcoin's obviously had fresh all times highs each cycle, right?
The 2013 was like $1100, then we had $20K, and then we had $69K. And those are the last three cycles. And I crunched the numbers on, "How, much is the growth decelerating over time, right?"
Cause it's 2013 cycle. We went from $2 to $1100. I mean, that's the most explosive growth that you can possibly get. Like, exponential growth. And then from $11 to $20, it's still an epic run, but it's not $2 to $1000. It's just different. It's decelerating. And so, I have a chart somewhere. I'll have to pull it up.
Maybe I'll put it in the show notes, where I crunch how much we're decelerating over the course of the previous cycles. And based on the current deceleration, it points at a $96K top for this next cycle for Bitcoin.
Anything can happen obviously, all this institutional money and ETFs might just make that irrelevant at this point. Or, maybe we are still decelerating and..$100K? I mean, hey, $100K is a lot better than, is much higher high than $70K, but it's not that exponential growth that we've experienced over the last 10 years.
Brian: Really interesting. Yeah, that would still be a 5x off the bear market lows. But yeah, and it would catch, I think for everyone looking for $100K next cycle, it would catch a lot of people in a poor position if it topped just below that. So yeah, that's an interesting number. We shall see.
[01:06:07] Gerbz's RUNE Chart
Gerbz: The last one I'll pull up here, it's just something I've been keeping an eye on because there's just a lot of drama around it and a lot of news. This was it, and it just smacked my resistance line so perfectly. I just love when that happens so much. This is RUNE. This is like, a decentralized exchange that allows you to swap natively between chains.
So you can literally swap native ETH for native Bitcoin within your wallet, the whole chain is designed around it. I have some episodes back, with my buddy Sam, we dug into it. He's like a community ambassador for Thorchain, and RUNE is the token of Thorchain. We dove deep into the RUNE.
It's growing, maybe for some reasons that some people might not like, but it's being used for a lot of activities that people couldn't find other places to execute on, let's say. But it really is a truly decentralized exchange. Like, who cares what people are using it for? There's demand. And there's going to be, I think, more demand for these types of things moving forward as regulation crunches our space really hard and makes things difficult. And just this run, it just went on from 80 cents to $5. Pretty epic.
I like to see where we are at our stage in the cycle. We're coming into the next big chapter of this cycle. I want to see everything participate. Everything that I'm. I have a list of tokens that I'm like, debating whether to maybe put into my token basket. And if they're not participating at all, like right now, I don't know if they're going to ever participate. Which means that's maybe not something I want to stick in my basket.
So this was one of the ones in my maybe basket. The fact that it's finding a lot of strong volume right now and some new use cases, that's exciting for me. Whereas it's $5 bucks and it's all time high is $20, that's a 3x, but it doesn't mean that $20 is the all time high. So if it's going to set some new highs here and find some new demand, it's just something I've been keeping an eye on.
Brian: Yeah, I really liked the RUNE thesis. First of all, to your point, a lot of people are using it.
Gerbz: Yeah.
Brian: And with the way these dynamic liquidity pools work, like, you actually have to convert to RUNE and use it in the pools. So it has an underpinning of demand. If you want to use Thorchain, you need RUNE.
Even if you just want to contribute a single asset to a pool, it's going to create demand for RUNE just through your contribution. I like that a lot.
And then also, one of the core clear tenants of this asset class is permissionlessness. Disintermediation. And we see - like I think just this week the SEC is now coming after Kraken. They just took CZ out of Binance and fined them $4.3 billion dollars. We know they're in litigation with Coinbase. It's like the government is trying to kill this thing, and the decentralized exchanges, or mechanisms for that - like Thorchain - are incredibly valuable, and I think had this underpinning of reflecting the value that is in permissionless technology. It really can't be stopped.
And so I think, yeah, regardless of how people are using it, it has a fundamental use case. People need it, and look at that chart. That chart to me is, yeah, nice buying opportunity here. But overall, I'd like to see it get up above those 2022 late '22 highs. I guess early 2022 highs, but nonetheless, it looks like it's well on its way.
Gerbz: Yeah. If I was putting orders in here, I'd probably put them here around like the $4 range, somewhere above this support level. I think it had quite an epic run here. It's going to have to cool off a little bit. I mean, it didn't cool off in 2021, right? It just kept fricking going, but 2021 was mania.
So let's see what it can do here in the thawing, in the spring. Let's see what it can do in the spring. And then when summer comes around, maybe it's game on. So that's just something, another one I'm keeping an eye on.
[01:10:15] Conclusion
Gerbz: And that's the charts I've got for now. Just some pretty basic stuff. For the most part, I'm 90% of the time I'm looking at Bitcoin and ETH to be honest. And then when I'm eyeing an alt to build a position, that's where I'm going to draw some lines and come up with some ideas.
But yeah, cool. Brian, man, this was really epic. I appreciate you coming on. Like you said, I know you've been studying this stuff for a long time, so I've never dug anywhere near as deep as you have. And it was so cool when we met to discover that, like, I'm on the right track. I was like, oh wow, like he's been doing this forever, like, professionally. I'm just dicking around in my basement, and it seems like I came to a lot of the same conclusions as you. So that was a really helpful for me to learn. And it seems like we're on the same page and up into the right man.
Brian: Yeah, likewise. And I would just say, like, I might be good at fundamental view, I've been in the space a long time, I've studied TA and other aspects of the market...but I'm not really a great idea guy. Whereas you are, and in our conversations over the last couple of months, you've thrown out a ton of ideas.
And if I just look at the charts, a lot of the ideas you've had are being confirmed by the charts. So it's paid for me to listen to you. I suggest other people, take a listen when you're bullish on something, and why. And like I always say, I never tell anyone "jump in and buy anything" in this space. Like, nothing we've said here is investment advice, clearly. But, go study it, go do the work.
I've already benefited from hopping on the BitLift train, for a couple of your really creative ideas the last few months. So thanks for that.
Gerbz: Epic, man. Well, this has been fun. We'll have you back on again. Maybe we'll have some new charts to display or we'll talk where we are in the cycle at certain points. That's always fun to try to gauge. Maybe we'll throw out some predictions at some point. I think it might be maybe too soon for some of those, but we're getting there, man. And it's going to be a wild ride.
Brian: Beautiful. Thanks for having me on the pod, man. I appreciate it.
[01:12:11] Outro