This week Gerbz & Brian Russ dove into dozens of charts spanning everything from high level global finance to new altcoins you never knew existed. In Part 1 we explored Global Macro conditions. Part 2 was all BTC & ETH. Now in Part 3 we go sector by sector diving into dozens of altcoin charts in search of this cycle’s new narratives.
Show Notes
Gerbz: What is up crew, and welcome to part three of the BitLift breakdown here on the BitLift Podcast. My name's Gerbz. This week I've been here with my buddy, Brian Russ. We've been talking global finance, which now includes crypto. We're talking every single ticker, every sector, every narrative, everything that's going on in crypto. So I broke it into three parts.
In the first part, Brian broke down global macro. He's been a trader, he's been deep in tradfi, and he's been in crypto for over 20 years now. So he's got a lot to offer when it comes to macro. We talked to global liquidity and the dollar. That's part one. How is liquidity and the dollar going to impact the inevitable bull market in crypto that I see on deck right now?
In part two, we talked only Bitcoin and ETH cause there's so much to go over there. We talked about the cycle. We talked, we broke out the charts once again. Talked about our previous all time highs, how and when we're about to break out, and how it could look and how it could go down. That's all in part two, is just Bitcoin, ETH, and ETH and Bitcoin dominance. How that's looking, how that's shaking out.
Now today is part three. We're going sector by sector into every narrative, every alt coin we can think of, to find the hidden gems that we want to bring you guys. And of course, again, we're looking at charts.
If you're only listening on audio, you'll definitely get the gist of all this, but if you want to see the charts, see exactly what we're talking about, see exactly where the support and resistance areas are, build charts for your own, hop over to YouTube, drop some comments there if you got any questions about what we're talking about on the charts.
But let's talk alts, let's talk narratives. We're going to start with web3. We're going to talk Filecoin, ENS. We'll even break into web3 social, things like Telegram's TON chain. Is social media coming onto blockchains? Is it going to happen this cycle? Is it going to be a narrative this cycle? We'll get into that.
We're going to talk DeFi, things like Frax, Curve, Uniswap. We'll even talk DeFi on Bitcoin, and Bitcoin L2s, things like Thorchain and Stacks. We'll also get into L1s, Avalanche, Solana, Tron. Why is Tron on this list now? All of a sudden out of nowhere. We'll talk about that a little bit.
We'll talk Ethereum L2s and the splitting and the fracturing of Ethereum into this L2 ecosystem. Things like Optimism and Arbitrum, we'll check out those charts. We'll talk DePIN, I know Brian likes Helium, we'll talk about that. We talk infrastructure. We talk Link, Chainlink, a lot of people like Chainlink.
We'll even talk crypto AI. We'll talk about my favorite ideas, my favorite tokens, my favorite angle right now on AI. It's a new narrative I'm exploring, a rabbit hole I'm going down and learning about as we speak. And we'll talk about one of the charts I like in there. So let's get to it, I think we kick it off with web3. Let's look at the charts.
Gerbz: So I figured we could just pop through a couple of narratives and see if anything jumps out at us. And also because some of these narratives are things that I'm pretty bullish on and they've been extremely difficult to watch, get just, pummeled through the previous bear market. So I'm curious to hear what you think about some of these Brian.
[00:02:55] Narrative: Web3
Gerbz: Let's start with web3. Web3 being, the future of the internet being built on blockchains, right? In order to do that, we need things like decentralized domains, and we need things like decentralized file storage. So that brings me to ENS, and that brings me to Filecoin. So let's throw ENS up here.
[00:03:12] ENS - Ethereum Name Service
Gerbz: Something I had noticed for a while was, every time we dumped, ENS would rip back really strong. I've just been noticing that throughout the whole bear market, it puts on, it puts these really big candles up. Sometimes after we dump. And it's definitely trending up and to the right as you've said a few times. Higher lows, it just keeps printing higher lows.
In my mind, ENS is like a cornerstone of web3. So does that mean web3 is like, on deck to be a sector that's going to perform really well this cycle? Possibly. In my mind, ENS is a really useful, which is hard to find in crypto, a useful tool that we're seeing proliferate across all the different chains.
Even L2s are launching their own versions of ENS. We saw PayPal launch ENS integration last week. Coinbase has had ENS integration for a while. Does this chart speak to you at all? And do you have any thoughts on ENS?
Brian: Interesting. I mean, yeah. To your point, the, those big green bars. jump off the page. For me, it's not enough of a look back, like going back to only a couple of years.
Gerbz: Yeah.
Brian: And maybe because you've got weekly bars, maybe if you went to daily, might be a little bit of an easier look for me. But yeah, I'd like to see a little bit more time on this one.
But if I go back, the mid 2022 congestion area right as we got into the bear market, I would like to see the bullish action on this take us completely out of that congestion zone and maybe back up towards $40 and then see how it behaves up there towards $40 bucks. That would be, that'd be interesting.
Gerbz: Yeah. When I started here, ENS had a big airdrop to people who had bought ENS domains, like that's how it found its pricing in the early days, was a big airdrop. I don't think it was like an ICO kind of model. They'd already had a product for a long time. People have been using it for a while, and they airdropped ENS tokens to everyone. One of the few airdrops I've been holding since the beginning for some reason too. Which, looking at this chart, I wish I hadn't. But here we are. So anyway, that's ENS.
[00:05:11] FIL - Filecoin
Gerbz: Let's throw Filecoin up too, because Filecoin represents another one of these web3 coins. And you can see Filecoin had this moment last cycle that was just wild. It ripped from $4 to $170. I don't know what the hell was going on there. But yeah, that's like a meteoric rise, and then obviously a meteoric fall. And to the point where we're just like riding out this kind of $3 area, this horizontal line that you see here, this is like very, very bottomed out and we're not far off it here. We're at four. So I feel like with this chart, the risk reward here is pretty sensational. Can we dump to pennies, fractions of pennies? Yeah, it happens in crypto. So I don't want to say it's not possible, but considering just last cycle we had this much action and this much volume. And this much volume early 2024, I think Filecoin is even starting to play into the AI narrative a bit.
I think we're going to start hearing more and more AI stuff come out of them. Which I think could be a good thing. We'll get to some AI coins in a bit. What do you think about, and I'm going to throw up some other opportunities where they're just bottoming out, man, or they could be bottoming out here. How do you predict a bottom when it comes to these alts?
Brian: Yeah, first of all, Filecoin, fascinating chart. We're talking technicals today. Okay. So, I want to try to stay on technicals, but look, that one of the big challenges that Filecoin has is the tokenomics are just terrible. And so I think that's why you've got so much supply. You've got such an overhang of supply. So that's why it just can't get off the ground here.
But that said, if we are going to get an alt season, we talked about loosening financial conditions. That was kind of the broad theme going into our conversation. To me, that's an environment where narratives take over and fundamentals and tokenomics don't matter at all.
So I think you can play it. And in fact, I have, like I've bought a small, what I would call a call option like position on Filecoin. Playing for, you know, 4x, 10x kind of move. I think that's a good way to, at such a size as a percentage of my portfolio that if it just goes to zero breaks down I won't even notice. So I think that's, to me, that's the right way to play it, if we're going into story time, you know, alt season, it could do, it could do really well.
Gerbz: We are going into story time. Yeah, I like that.
Brian: And if it goes, and if it goes to zero, it won't hurt me.
Gerbz: Yeah, I mean, even just this channel that I just threw up here. It's at least a double, one and a half. And it can happen so fast, we just saw it happen last year. It can just double, and things are gonna just start doubling out of nowhere. It's a great dopamine hit, but man does it mess with you in so many ways.
So that's Filecoin kind of bottoming out. I'm gonna go along the same lines, let's jump. So those are my two kind of web3 projects. Does anything jump out to you when you think web3? Any other? Tickers or coins jump out of you and you're like, oh, this has to be part of web3?
Brian: No, I think that's good, that's good. Like those are good. Look, you could do a hundred charts on web3, but I think you pick some pretty good ones.
Gerbz: Yeah, here's Arweave, which would be Filecoin's direct competitor and it's maybe just because of the vastly different tokenomics, the chart looks vastly different. But I know that they're competing for the same users.
Brian: Yeah, that looks better.
Gerbz: Yeah, it does. Trending down obviously, for about a year, but if it finds some bottom here and it could.
[00:08:19] Narrative: DeFi[00:08:19] FXS - Frax
Gerbz: Talking about bottom feeding, one of my favorites that's just been hurting so bad is Frax Now we're getting into the DeFi sector. Frax is one of these guys. The way I think about them is. They just, they suck at marketing. They're not marketing guys. These guys are finance guys. They're tech guys and they're heads down builders. They just keep launching new shit and they barely, they tweet about it and then they move on to the next thing. That's what they do.
The other projects, they have like a hundred million dollar marketing budgets for every launch that they do. Frax just like moves on to the next thing and they've built so much. But they've done a pretty poor job, when it comes to their marketing and their messaging and their positioning and their user experience for sure.
And it gets quite complicated as you move deeper and deeper down the DeFi rabbit hole. Like, these guys are playing the DeFi game at the highest level. All of these really complicated VE tokenomics where you like, you lock up your tokens for voting rights to issue rewards. You can decide where you want the Frax rewards to go based on how you vote.
Lots of very complicated things that they've been building, but they're kind of like foundations of what DeFi is going to be in the future. And you've mentioned this a ton before, Brian, I know you love that Olaf quote somewhere along the lines of, "You're looking for things that you can only do in crypto that can't be done in TradFi or in other markets."
And I think that some of the stuff that Frax builds might fall into that category for you. Just no one knows it exists or can figure out how to use it. So is that, does that just mean no one will ever figure it out? Or does that mean we're just not there yet? And lastly, I'll throw to you, Are we seeing a bottom here on this chart?
Brian: This chart's a tough one. Let's try it. This is the first time.
Gerbz: I like Frax and I want you to say yes.
Brian: Yeah. Well, I mean, look, you've got a higher low than call it May, summer of '21. Which is interesting. So I think, if you like it how I would trade it, just looking at the setup, is you could just put a stop beneath that summer of '21 low and just say, hey, look, I'm going to risk manage around that level.
But we're not so far off that level that you couldn't take a big, like you could take a big position and just have that stop and be willing to risk 20 percent or so and if it just rips to the upside, you'll capture that. You know, that's one way to play it.
I think if it's about stories, then marketing does matter, if I'm putting my fundamentals hat on as we're going into kind of what are going to be the big drivers, you know, that's tough, right? You've got to have good, storytellers if we're going into kind of a story driven market.
And I don't know anything about the project, but if they haven't been good at that, I'd be cautious. So yeah, it's probably one that I would trade with a stop, frankly, and I think you've got a pretty easy technical level to, to place that.
Gerbz: I think to trade with a stop, I'd have to use some sort of CeFi. I never looked at stops on a DeFi stop. I'm sure it exists out there. I've just never really seen it. I'm going to poke around for that.
But yeah, so this is Frax. They have an AMM, they have a lending, they have a stablecoin. All of the things in DeFi, they've got it. And a lot of times they invented it. They've got a liquid staking token. FraxETH is one of the biggest LSTs out there. So they're doing it all. They have an L2, Fraxtal is like their L2 that all of this now runs on.
I mean, they're cranking over there and they're building an entire ecosystem. And maybe that's a question that we're going to see is that, are we going to see this like consolidation of projects? Like right now, if you want to swap, you go to Uniswap. If you want to borrow, you go to Compound. Like there's all these other apps that do all these little things.
Or are we going to see like a super app that does it all? And maybe if Frax can get a good usability guy on deck where they can like package it all together really nicely and be a winner there. That's maybe one of the narratives, like a way of thinking about playing this. I like it. Do I want to put a lot of money into it? Not with a chart like that. That's for sure.
Brian: Yeah. Yeah, but I think you've got a, you know, there's enough of a setup there that I think you could trade it. I mean that gap at six and a half bucks from May or April or so of '24 is an interesting spot to take some profits if you can catch a move to the upside. But yeah, there's gotta be something driving it. So, trade with caution.
Gerbz: I mean, look at this bottom it made in 2021 and then, from where it is right now, it ripped to 50 bucks over the course of less than one year. So it's capable of big things, whether it will do it again is the question.
[00:12:45] RSR - Reserve Protocol
Gerbz: I just wanted to throw this out there. I don't think you've ever seen this.
This is Reserve Protocol and they build a platform for any sort of, I wanted to say company, but it's not a company. Anybody can build stablecoins on reserve assets. So it's like a platform for launching stablecoins on reserve assets. Your reserve assets could be T bills. Your reserve assets could be tokenized real estate. It could be gold. It could be a number of things, whatever you bring to the table. It's a platform for you to be able to enable that.
And I can just see a lot of TradFi needing something like that coming into the next cycle. So it's a project I don't know that you've dug into. Maybe you have, but it's something I've had on my chart and it's been coiling up and having these really nice moves this year. So I could see, I don't know, it looks like it has some potential.
Brian: That's a good looking chart, that looks like a pretty durable bottom. You can see the downtrend broke retested that downtrend and now we're starting to move higher. I have played around with Preserve actually, quite a bit. So there's things to like, there's things to not like.
I think principally to like, stablecoins. You and I've talked about, I think are gonna be a huge theme for a while. Maybe even beyond this cycle. So the ability to have this kind of composable stable coin is super interesting. And then what not to like, as I played around with it, it's actually pretty restrictive. So there's a really like limited number of assets and ways that you can kind of spin these up today.
Now maybe they'll build some more flexibility into it, but you can, there's only certain assets that you can really use today to do this and to attract any real liquidity to your stable. But again, it's early days for the project and the chart looks good. So, super interesting project. I like the setup. Could totally see getting along this thing.
[00:14:23] Narrative: L2s
Gerbz: Very quickly, because, man, there's just so many sectors things keep coming to mind. I'm going to throw up L2 just because I want to just throw the charts up. I'm going to throw them up quick. I know you love it when my lines probably crisscross like this. I'm sure that makes so much sense.
[00:14:36] OP - Optimism
Gerbz: But this is Optimism, this is our Optimism chart, a weekly chart. It's basically like consolidated around where it launched at, and it's not finding much. Maybe it's finding some support here, but the upside is maybe a double. So that's not super exciting. But even though there's so much talk about Optimism, all these L2s that are online, right?
Worldcoin is built on Optimism. Fraxtal I just talked about on Optimism. Base, which is Coinbase's chain is built on Optimism. Everyone's using it, but why the hell do we want OP token? No one knows the answer to that yet. So that's the Optimism. I'm just gonna, I'm just gonna blaze past it.
[00:15:13] ARB - Arbitrum
Gerbz: Then here's Arbitrum. It's just another way to do L2s, and here's the Arbitrum chart which just looks pretty bad. And this is how I feel about the entire Ethereum space right now is like this chart.
This is me. This is like a chart of my emotions and feelings and thoughts around Ethereum lately. And I think, I feel like it's reflected in both of the L2 charts. Do you have any thoughts on those?
Brian: Look, I think I've had this view for awhile. I think governance only tokens are going to be really challenged this cycle unless there's some quantifiable benefit to governance. Which I don't understand what that would be for these L2s. Sure, the voting, there's some benefit to it, but I don't think it's enough.
So I think ultimately alts are going to moon for two reasons, in my opinion. One, the principal reason will be narrative, a good story. And right now L2s do not have a good story. And then number two, they'll moon on actual use case. So whether it's TVL, or transaction fees, or people actually using them.
So if it's just strictly a governance token and it doesn't have a great narrative, to me, that's not a great setup. And I, yeah, when I look at L2s, I feel the same way that this chart looks as well. It's not a good picture.
Gerbz: So here's the bull case, which is that seeing into the future all of these governance only tokens will turn on a fee switch. And all of a sudden, they go from being a voting token to an ownership and a profit share in these, what could be trillion dollar companies in the future. You have to bet that that's going to happen. You have to like, you always say, see in the dark on this one. And are we seeing in the dark, or is that going to happen?
[00:16:48] UNI - Uniswap
Gerbz: We've heard it with Uniswap, we know they've been talking about a fee switch. They've got a massive legal team on deck, working on turning Uniswap into not just a governance token.
And right here, I just pulled up Uniswap, this massive volume that we saw here in early 2024 and this big spike, all of this was fee switch discussion. We've fallen since, I'd actually don't, I think, did they turn it on? I don't even know what the hell happened. But if these things start paying you, do you start thinking differently about them?
Brian: Yeah. So I'm going to take the other side on that one. So yeah, no, because there's an alignment of interests with the Ethereum protocol. I think if those governance tokens flip to gas tokens, you get competition essentially, between the L1 and the L2. I think it kind of flies in the face of what Ethereum is trying to accomplish with the L2s.
And principally, I have this view because switching costs, which is, there's something called Porter's Five Forces, which you'd study in Econ 101 or Accounting 101, you might learn it. And one of the fundamental forces is switching costs. If they're high or if they're low, it has a really different, competing dynamic on asset prices and the success of a company or a project.
And so in the case of crypto, switching costs are basically zero. Like, I could switch from Arbitrum to Optimism to whatever. Now if I'm a dev and I've only built on one, yeah, maybe the switching costs are a bit higher, but it's really the users, right? So if there's this perception that an L2 came in and drove a ton of activity off of the success of Ethereum and the security model of Ethereum, and then kind of stabs them in the back by converting a governance token into a gas token, which wouldn't be good for ETH, I think you'll see a lot of people who are part of the ETH ecosystem kind of abandon that project.
So I think, I don't think you have an alignment of interest there. I think the qualitative reasons are substantial enough that I don't think those fee switches will get turned on. I think there's enough value accrual that can happen in Optimism and Arbitrum, as you can already see, without needing to use those tokens as a gas switch.
They're extracting, more in fees and aggregate, I think the L2s than the L1 is today. So to me, it doesn't check out. I think there's, it would just be a conflict of interest between those different layers. And the switching costs are too low for the users that I think you would just, you'd get people just moving away from those projects.
Because a lot of people who are using ETH, instead of using something that's cheaper and faster like Sol, are doing it because they care about, a different set of values. Like they care about things like decentralization, et cetera. And if there's a perception that you've got a parasitic L2, I think the users might pivot away from it. And so it might hurt the L2 more than it helps you. And you might see the token actually sell off if that happens. Maybe not initially, but in time as the users kind of move off of it.
Gerbz: Alright, so even if the L2 starts paying you, you don't care. Sell it.
[00:19:33] Narrative: Alt L1s
Gerbz: Let's, hop to, alt, we went to L2s, but we, let's go back to alt L1s. I got two ideas for that.
[00:19:41] AVAX - Avalanche
Gerbz: The first being Avalanche By the way, when I draw these boxes on my chart, I just consider these ranges.
Sometimes it's a horizontal line, it's a very similar thing, but I feel like Avalanche has these kind of three areas that it ranges within. And right now we're ranging in this middle range. So that's what my, boxes represent on here.
Avalanche had a really nice pump early this year. Or end of last year, early this year. And it's been kind of cooling off. Maybe it's finding a bottom here and it still wants to hang out in this kind of middle range, waiting for the rest of the bull market to come so that it can drive into the top range. $30 bucks here, $150 previous top. That's a nice 5x from here. I always would love to see a project reached into blue sky as well.
And because, once you're in blue sky, meaning breaking out of the previous all time high, sky's the limit. I think Avalanche has the potential to do that if some of the narratives that it's chasing work out. I don't think everything is designed to be built on Ethereum, and I think Avalanche plays a role in, there's some gaming projects that I'm seeing Avalanche cornering.
And I've even heard projects in the banking sector and in TradFi that they want to build. Like, if a bunch of different banks use Avalanche subnets, which are actually, they changed the name of subnets because no one liked being called a "sub." This is what I heard. I forget what they call it now, but it's not a subnet anymore, but it's still a subnet.
There's some interesting use cases for these subnets that are different than the way L2s work. So, here's the Avalanche chart. Do you follow Avalanche much or have any theories on it?
Brian: I do, yeah. Yeah, I know, it's a super interesting project. I think I totally agree with you, it's got to carve out a niche for itself. So to the extent that it does that, and it gets some narrative behind that, whether it's RWAs or TradFi or subnets or whatever that evolves into, there could be some upside here.
I think there's, I agree with the multi coin guys, Kyle Samani and those guys on "it's going to be a multi chain future." It's not a winner take all, I think you get winner take most frankly. So the most dominant L1 will get most of the value, but there could be a tremendous amount of value in competing L1s.
And Avalanche is one that just seems to be well constructed, have a good community, have a good ethos behind it, and have some specific kind of niche use cases. Chart looks okay, but, uh...
Gerbz: It's just okay.
Brian: Yeah, but no, this is definitely one that I think there's a reason to own it.
[00:21:59] TRX - Tron
Gerbz: This is Tron. I've never until the last couple of months even pulled up a Tron chart. I didn't even have it on my watch list. And I started hearing more and more chatter about Tron or USDT, Tether, being used for payments on Tron. And my background into crypto was all payments driven and I've been waiting and hoping and dreaming.
Maybe from an ideological standpoint that payments would finally come to crypto and be a strong use case. I think it's the point of money. It's one of the major points of money aside from store of value is medium of exchange. Let's use this damn thing. Why aren't people using it? Well, I hear they're using it on Tron in a big way, and then I pulled up the chart.
And it just had this beautiful uptrend, and it wasn't as volatile as I expected it to be. I was expecting to see more of a memecoin kind of a vibe. And instead I just saw this beautiful uptrend. And what have you been holding since 2023, that's gone up 240%? Like, nothing on my list has done that.
So I just, I couldn't believe that. Obviously, is this a good time to buy Tron based on the chart? My hunch says there's plenty of room to cool down here, unless we break out into blue sky. That's how I'd play this. What does this say to you?
Brian: I'm all in on this theme of permissionlessness. And especially as it relates to stables, like we talked about what's a use case that's not possible without blockchain infra. And to me, USDT on Tron is actually one of the few things that checks that box, right? There's so many frictions in the traditional banking system, especially for emerging markets and places like China.
And if there's use case for stables on Tron where there's less friction or it's frictionless, that's a whole ecosystem that can accrue a lot of value. And it has, I mean, that's a really good, looking chart. I think Justin Sun also, love him or hate him, he's got kind of like a cult following of people that really look to this guy.
And as much as, we'd all like to believe that every project can have this Satoshi Nakamoto, truly decentralized story, like, the reality is a lot of these L1s have someone who's at the helm. Like Vitalik for Ethereum, or Charles Hoskinson for Cardano, or Justin Sun for Tron.
So, for whatever reason it seems to be helpful to have someone who's leading the project. So yeah, I think there's, Tron is super interesting. It's not been one that I've ever really well understood, but it doesn't surprise me to see it making new highs. And frankly, it's leading the market.
So that's got to catch your eye, like anything that's leading. You know, you should own a little bit of it because you'll watch it more closely. And if it's leading, sometimes it can be a good leading indicator of what's coming for the majors like Bitcoin and ETH.
Gerbz: Yeah, I tend to agree. All of this kind of usage that's happening, I know it's happening like in Asia and in the Middle East.
[00:24:39] CELO - Celo
Gerbz: You know, I'm going to pull up too, just this week Vitalik was tweeting about Celo. Celo? Do you know? Celo? think Celo. So you see this, beautiful pump that it just had right here. That's because Vitalik tweeted about it. He's a pretty powerful dude at this point. But I hear, so they're taking like the Africa side of the medium of exchange stablecoin game, as to where Tron is taking like the Asia side of it. And I think they also have their own stablecoin, Celo.
So I need to look into how their stable coin works. I'm always looking for certain dynamics to a stablecoin that I would like to see, that I'm looking for out there. If Celo has it, I'd be interested to see. But here it is at 60 cents and it topped out at six bucks last cycle.
So there's a 10x if we just perform as well as we did last cycle. I got a lot of research to do on Cello though, if I'm going to be putting any money here.
Brian: I don't know a ton about the project either, other than I do know about the Africa tilt. They've got stables in Africa, which is unique. I think they were the first ones to do that. I think they've got some pretty sharp devs, they've raised a ton of money, so they're spending a lot to basically bring devs into the ecosystem, which is interesting.
Obviously Vitalik tweeting about it is helpful. I mean, the chart looks okay. But it's early, there's only a couple of years of history on this thing, so yeah, probably one I'd put on the watch list, but maybe not one that I'm buying today.
Gerbz: Same.
[00:26:00] Narrative: Web3 Social
Gerbz: A narrative I really like is Web3 social, and the only one that I really see at the forefront of that, well, we have Farcaster, but Farcaster doesn't have a coin. I can throw Degen up on here because the Degen coin is like a memecoin used on Farcaster, but it's not Farcaster.
[00:26:16] TON - The Open Network
Gerbz: But TON, which is The Open Network, TON, is Telegram's blockchain. They've woven it pretty nicely into Telegram and they're slowly like promoting it to their 900 million, I think maybe a billion now, users. While all of that action was pumping, the CEO got arrested recently because of his stances on data sharing and privacy.
And so he's been released since then. I threw on the chart here, just when he was arrested recently, just so that we could see kind of like how that impacted the price, and what's happened since I bought Ton here. I know the tokenomics are a bit tricky with it, but I just, I've been waiting to see this beautiful combo of a social network and a token really take off.
And I just think that they're the closest ones to having that happen. So I want to be along for the ride on that. Does this chart or anything I said, jump out at you?
Brian: Yeah, I mean I think of Telegram as more of a messaging app than a social network. But of course it can, and probably will, evolve. I know a lot of the users are really big proponents of it, which is interesting.
To me, what I struggle with is it's such a high market cap. It's like already into the top 10. So it's going to take a lot to move it.
I can also tell you there's, without getting into specifics, there's a lot of VC money that came into Ton, massive kind of discount. So just pay attention to those unlocks. I know you talked about that a few episodes ago, I think it was your solo episode on what boxes you check before investing in an alt. But just keep an eye on the unlocks with this one.
Cause there's some pretty big, steep discount unlocks that are coming in the next, call it 12 ish months.
Gerbz: I agree. Let's pull up Coin Market Cap briefly. Ton is the ninth largest crypto of them all, which I hate this number because it includes Tether and USDC.
Brian: Yeah, so it's really #7.
Gerbz: Strip those out, it's the seventh biggest. It's currently a 15 billion dollar market cap, which is a big number. That doesn't include, I think that's not fully diluted, right? That's just like current circulating supply, right? So I don't know what the fully diluted is. I've looked at it before.
15 billion. The way that I think about this though, is I look at 15 billion and I look at something like Solana, let's call it 75. What is that, like a five or a six? Like, Solana is five or six times bigger than Ton. Can Ton be as big as Solana? I don't see any reason why it couldn't, to be honest. I know they're very, very different. They're not, you wouldn't necessarily run those as comps. But at a quick glance, I'm like, I feel like even though Ton has a massive market cap, it's got room to run.
And also when we look at this 75 billion that Solana is at now, it could be 400 billion by the time this cycle's over. And so what does that mean for Ton as far as a multiple? So that's kind of the way I think about how much room it could have.
I don't love that it's in the top 10. I would I love to put like, somewhere in this like 30 to 50 range on Coin Market Cap, that's the area that I like to put my alt action into. I like to find like, Filecoin's here in the 40th biggest. It's at 2 billion. I've noticed 2 billion lately is kind of like a number, 2 and 4 billion. That's where some of the projects I've been eyeing are kind of landing lately. And last cycle it was a billion or less. So like, the whole market has just grown exponentially. But, if you want something that has a lot of room to run, you can't necessarily pick from the top of the leaderboard.
Let Bitcoin and ETH kind of do that for you. And then when you're ready for your like, smaller basket of higher risk, higher reward options, you got to scroll quite a bit deeper to find those.
Brian: I like it. And no, it's a good point. I mean, just because something's in the top 10, doesn't mean, that's not a reason not to Invest in it. Certainly could have a ton of upside left. Just kind of depends on what happens with the cycle overall and with the project more specifically. Of course, it just takes a lot more dollars to move it.
And when you know there's some VC money in there, that's going to put pressure on it the other direction. So, those are my reasons for just being cautious, but wouldn't surprise me at all to see this one get to some kind of silly valuation by the time the cycles over.
[00:30:06] Narrative: Infastructure[00:30:06] LINK - ChainLink
Gerbz: Here's Link, it was on both of our lists. I'd consider Link like an infrastructure play in some way. This sort of connecting TradFi to DeFi, connecting TradFi into the crypto economy, it's going to be like the rails for that. Let me clean that up a little, just makes it look slightly nicer, we don't need that.
My theory on kind of the price action is that I think it's going to break out into blue skies this cycle and it could double or triple where it was previous cycle. I don't see why it couldn't be like 150 bucks for some Link, and we're sitting at like $12 here. So I just see a lot of upside potential. I love the positioning and the messaging, and I don't see a lot of competitors. I think they're building a big moat here becoming like, the experts in this area. And I would love to see it succeed so that my bags get pumped along with everyone else's. It was on your list, too. What were you thinking about Chainlink?
Brian: First of all, I'm completely aligned with you. I think there's real use here, they don't have competition for oracles in particular. There's a real use for it. It's getting plugged into a lot of stuff. Really well run project. I totally agree, I think we'll see blue sky territory on this thing.
I was looking at, I'll show you when we switch back on charts, but I was looking at that kind of little intermediate head and shoulders that you can see there on the recent congestion zone. Go back a touch further. Yep, right there. That pattern broke down, reached its downside target, and now is rechallenging the neckline. I'll show you, I have a drawn out in my chart, but to me it's one of those kind of leading indicators. If we can get back above that neckline, it's probably going to be an indicator that the market, broadly speaking, has room to run higher. So there's two or three charts that, to me, are leading.
And their patterns that have broken down that are now recovering back into the congestion zone. Or in some cases, false breakdowns. And so I think there's some good leading indicator information in some of that stuff. So yeah, that was what I was going to talk about on, Link specifically.
[00:31:52] Narrative: Crypto and AI
Gerbz: But okay, I'm going to throw up one last chart. This is the only one I follow. I know people are so much deeper down this rabbit hole than I am. I'm just beginning to start it, which is the intersection of crypto and AI.
[00:32:04] TAO - Bittensor
Gerbz: I've listened to some interviews with the guys from TAO, and I just think it's interesting what's happening with this intersection of crypto and AI, I think there's, so many use cases. We talk about it at the Boulder blockchain meetup all the time, about how. AI and crypto are intersecting. I know a lot of people who got burned in the last cycle, a lot of the tech people who got burned in crypto, they've all jumped to AI and this just happens like every four or five years.
Like people just jump from the hot new trend to hot new trend. That's very common in tech, let alone in crypto. But I do see AI is just booming so hard and, man, I don't want to be this luddite that says AI is just like, a fad. Because I don't, think it's a fad. I do think it's a bubble.
I think it's a bubble, and I think we might bubble our way all the way to hundreds of trillions of dollars. So like, that's okay. That's the way some of these bubbles I think work. I got lucky. In fact, I got unlucky before I got lucky. I bought TAO right here in August at $320, and then it dumped to $220 that week.
And just, I was like, this is what I get for trying to trade something I don't understand and don't follow, right? And then in this last two weeks, it's just ripped all the way to $550, almost $600. So that's just been ridiculous. I'm probably going to sell some here. It has this massive topside wick, which usually to me is an indication that we could be topping out a little bit.
I might sell it and try and buy it back lower, but I have a little, as we've said. I bought some cause I want to follow it, and cause I want to be along for the ride and I want to learn more. I also like that TAO is priced where it's priced. It's silly, but a lot of people who are coming into crypto for the first time and maybe aren't investing as much capital, they see something that's $500 and they just dismiss it because they're like, I don't want to invest in something that's $500.
I don't want to own 0.01 of one share of TAO, so they just dismiss it. As to where this thing could go from $500 to $5000. Like, the price doesn't matter. What matters is the market cap. And when we talk market cap, it is in this kind of sweet spot that I like. Let's see, TAO, 28th on the market cap.
It's in the 4 billion range. It was two when I looked at it frickin' two weeks ago, it was 2 billion. So it's almost doubled in market cap, but it's in the sweet spot area. I've heard recently that like, Open AI is somewhere in the a hundred billion dollar this is private market investment, but it's in the somewhere around the a hundred billion dollar valuation range. If Bittensor becomes the aggregator of all AIs, and if we like, use this as our interface for tapping into various AI's that do different things, this thing could easily be a hundred billion.
And my last part of my thesis around this is if the traditional markets, I feel like even TradFi is going to start talking AI, all these public companies are going to start having an AI angle here pretty soon. But if there's not enough room in the NVIDIAs of the world to invest in TradFi, maybe some of these TradFi guys will overflow into crypto and want to put some of that capital towards some of these crypto AI things. And, there's not a ton of them, so TAO's kind of like the leader in it. Or it's at least the name that I think crypto AI people think of. So I got a little, I'm along for the ride and it's already been a wild ride.
Brian: Yeah. For narrative driven stuff, this has got to be towards the top of the list. It's got a great narrative, and I think that's reason enough right there. I've got a friend who absolutely loves this project, he's got the vast majority of his portfolio in it. I think he's done pretty well, yeah, shout out Alan.
And yeah, I think the chart looks interesting. It looks almost, like a busted head and shoulders. So oftentimes you can get a target on that. That would be, kind of the same target as the head and shoulders, but to the upside. And there's an old saying in technical analysis, from failed moves come fast moves. So looking at that wick maybe July, August timeframe, where it kind of had a false breakdown on that, what looked like a top. And then it reversed and now it's kind of invalidated.
Gerbz: Yep.
Brian: Now it's invalidated that head and shoulders. It wouldn't surprise me at all to see it retest the highs.
Gerbz: Retest these highs here in the $ 670, $700 area?
Brian: Yep, and then if it breaks out from there it should give you the measured move target that the head and shoulders was going to produce to the downside, but to the upside. Which would be a massive move, that could get it up towards a thousand bucks.
Gerbz: The measured move of this to here?
Brian: Yep. Yep, exactly. And you've got a log chart. Yeah, so if you take that, measure it up, it's probably gonna get you over a thousand is my guess.
Gerbz: If we take that on here?
Brian: Yeah, exactly.
Gerbz: Whoa Nelly, three thousand.
Brian: $3,000. Yeah, so I mean, yeah, that seems kind of silly but it also would not surprise me. I'm not gonna say that's gonna happen tomorrow, but I think that's possible. I mean, you had a failed topping pattern. I'd like to see it retest the highs first, maybe take a little profit there if I owned it, and then see if we can get some momentum to the upside.
Gerbz: All right. This is the, coin that I'm trading that I've followed the least. And I think we've all got some of those where we just kind of like, what is the George Soros thing? Like, invest first and research later. Something like that. Why not? Sometimes you just got to ape in, that's where that comes from.
But don't be afraid to like, once you do your research and you find that maybe it wasn't all you thought it was bent out to be, you can dump it. That's okay. That's what this is about, trading these narratives, that's what it's about. The Bitcoin and ETH kind of plays, these are like, long, long term plays.
These are things that you, even though I've been in it for 10 years, I'm still reading books about how Bitcoin works and how money works. And that's a rabbit hole that never ends. Some of these newer narratives and trading them just within this one cycle, don't be afraid to change your mind. Don't get married to these positions. There's so many other opportunities out there. Find another one that you like, there's no problem with that.
Even if you told all your friends that you think this is the hot new shit, it's okay to change your mind. Do it. You'll thank me.
[00:37:45] Brian's Take: BTC and ETH
Gerbz: Cool. Brian, let's jump over. I know you've got a couple alts on your list. We just went through a ton of sectors. Maybe let's see what sectors you've got on your list.
Brian: I've only got three alts really that I want to talk about and they all kind of follow the same theme. They're a little bit of different sectors, but they all follow the same, sort of general comment that I want to make. It's just one point that I'd like to make, and I'm using alts to make that point.
But before we do that, I just wanted to go backwards for a moment and relook at Bitcoin and ETH because I'm looking at a couple things that weren't, maybe weren't, on your radar. Maybe were, maybe weren't, but I just want to make sure that we're shining some light on them.
[00:38:17] BTC - Bitcoin
Brian: So, this is the chart of Bitcoin and it's basically just a zoomed in daily bars look of this entire congestion zone from March until today. And you can see this congestion zone has taken shape as a channel that's moving downwards. And oftentimes, what that can signal, I think it's signaling, is there are profit takers here.
It doesn't surprise me. I mean, if I zoom out a bit, that green horizontal line that I have is right at $69K. So that is the prior 2021 all time high. So there you can see it, and so of course there's a lot of market memory at that level. So we've got some profit takers there and we've got new market entrants coming in and that kind of interchange of coins can often take the shape of a down channel.
Sometimes you'll see it called a bull flag or a pennant. And even though they can be downward sloping, oftentimes they're indicating a petering out actually of supply relative to demand. And once demand starts to overtake supply, you can get a change in trend.
And I think that's kind of what we're starting to see right now. So zooming back in, the first thing I want to point out is you can see this little red line that I drew right here. That red line actually is capturing an inverted head and shoulders. It's an intermediate inverted head and shoulders within this channel.
And to me, that suggests that we've got a bottom there. And if you take the measured move on that bottom, it actually takes you to about $69,000. So it takes you right back to that green line, which is super interesting. So it will be once again, if we get that measured move, you'll be once again tapping this white kind of down trending upper boundary of the channel.
And so that would be tap number one. Two, three, four, five, is it six times is the charm, right? I'm getting through that level. I don't know, but it wouldn't surprise me. And so the other interesting thing is if I look at this kind of bounce and congestion zone around August before the Japanese Yen carry trade macro sell off, we're actually re challenging that level as well.
So it looks like it's breaking out to me in terms of re challenging what was a lower high, but now I'm potentially going to put in a higher high. With a measured move back to that $69K level. Again, sixth tap, and maybe it's six times the charm before we get a breakout here.
I think there's been a lot of leverage that's been flushed. There's been a lot of positioning, mega longs that have been flushed out of this market. And then sentiment's been flipped. We saw fear and greed go all the way down to like 20. So to me, it's like a lot of boxes are checked for the sixth time to get out of this zone. We talked about financial conditions and the macro setup.
So I'm pretty bullish on Bitcoin here. so I just wanted to show that look.
Gerbz: I want to throw out too, this is Thursday, September 26th. We'll probably put this episode out next week. As we speak, Bitcoin's up two and a half percent today. That's not a very common thing, that's a nice little move today. It looks like it printed a higher, it's wicking anyway, higher than the previous wicks over there at this level. So it looks like we might be able to hold this and head towards 69, could even be there by the time this comes out.
Brian: Yeah, I wouldn't be surprised. And the other thing that I didn't point out that I should is this blue upsloping line is the 200 day moving average. So we lost the 200 day, we recovered it, we lost it. It's been kind of a sloppy chop. It's been really hard trading zone. And here we're once again, recovering the 200 day on today's candle. Can we hold, break above the August congestion zone? I think if we do, we got a clear shot to retest that $69K level. And then let's see how we behave from there. But to me, I'm feeling pretty optimistic.
One other Bitcoin look that I wanted to show. This is again, shout out Peter Brandt, going back to the parabola. So we've had now our four parabolic advances with Bitcoin going back to the bull market of 2013. You can see them drawn in with the green upsloping line. A parabola is essentially when price is appreciating at an increasing clip. So it's an upward sloping line, and that's why we call a parabola.
And here you can see we've had one, two, three, now we're in the midst of our fourth parabolic advance. Now they've shallowed out a bit, which you would expect as Bitcoin's now a trillion dollar asset, it's common to expect that. But you can see the consistency of that pattern, breaking the parabola has triggered a bear market in each of the 1, 2, 3 prior bowls.
And here we just held on the parabola within this market environment. So what I want to do is I want to leave this chart. This is another one that I'm gonna keep an eye on. And if we break this parabola kind of later on in the bull market, flashing yellow, red warning signs on that, we might be entering into a bear.
So I really want to watch this upsloping channel cause it's been a good, it's been a good indicator in the past. So I want to throw that up there as well.
Gerbz: Throw your cursor at October 2025. Where do we overlap there? Would you say if you had to predict a top, is this kind of the range you're looking at? If you were to start lightening your Bitcoin load, would that be somewhere here in this 150 ish range, 130, 150?
Brian: Yeah, I mean, I think that if you haven't taken profits before that, if you go back to the prior parabolas they were somewhat unique. We did get kind of off the parabola, right? So there were opportunities to take profits before we broke it to the downtrend.
So like, for example, in 2013 you could have sold it like roughly $1200. By the time we broke, we were already down to 800 bucks. We were kind of 50 percent off, right? Or a third off. So yes, I think you should be taking profits prior to that, but yes, it's interesting. I kind of stopped this. I could draw it further, but it stops exactly at like end of September of '25.
Gerbz: Oh, I see. You did do that.
Brian: Right at, you know, $150K. So that's super interesting, kind of a 2.5x, from here.
Gerbz: Your parabola is becoming just like, a horizontal line here pretty soon. I don't like that.
Brian: Well, look, let's see if we get a breakout here from this congestion zone and let's see if we can get a, kind of a launch off of that. And just another thing to keep an eye on, right? I don't think that any one of these metrics, like the ones that you've shown or I've shown are going to give you the whole story. But if you look at them all in combination, you might get a confluence of signals overlapping. So that's usually what I'm looking for.
Gerbz: That's what I'm looking for too. I want to look at every chart possibility that makes sense to me and then let my subconscious figure it out.
Brian: Yep, I love it. Okay.
[00:44:29] ETH - Ethereum
Brian: Staying in macro land, I did just want to pull up the chart of ETH. I mean, this is like one of the most beautiful charts I think. I've shown this before on the BitLift Podcast. What we've got here is kind of like a fractal. A fractal is like a repeat of a pattern from the past.
And so you can see we had this kind of ascending pattern in 2017, and we broke out when the bull market started to get crazy in late '17. Ultimate top in kind of January of '18. Descending pattern, breakdown, and you've got this really clear horizontal demarcation of support and resistance.
Within the bear market, we actually had this ascending triangle form, which we broke out of in July of '20. Retested it around kind of October of '20, and then the market just was kind of one way until May of '21. We did make a slightly higher high after that. So we've seen actually almost the exact same pattern.
I'd pointed this out before, but here you've got kind of an ascending congestion zone dating back to the last bull market underneath about the $2000 level. And then we had a breakout, kind of a double move, and then we came back down, held for a second around that $2000 level, and then broke down.
But then again, through the bear form, this ascending pattern represented by the green triangle. So it's almost like the exact same pattern. You can see how many times this red line in both the 2017 to call it 2020 period that I have drawn on here. How many times that was resistance, resistance, resistance, support, breakdown, resistance, breakout, retest, and then launch the bull market.
You see almost the same thing here, where it's just this really clear demarcation of support and resistance, represented by the red line, between February of '21 and today. And what's super interesting, so I'm just going to zoom in on today. What's super interesting is that we had this massive sell off in August.
Again, that was the Japanese carry trade unwind. Big wick down, wicked below the 200 week. Got all the way back almost to that red horizontal line of support, but didn't quite get there. Then we wicked down again on some of these Ethereum narrative issues in September, just this month. But we did make a slightly higher low there, which was interesting. And then a week later, we barely held the 200 week. And then last week, we held the 200 week and had this big candle off of it. And now there's some momentum to the upside. So to me, it's super interesting, like a lot of boxes are checked for me.
Here we've got a very similar pattern that we've seen before. We've got a huge sell off, which flushed positioning sentiment, retest higher low, held at the 200 week, and now we're turning the corner with all the macro kind of set up that we've seen. So I really liked the Ethereum chart here. This is something that I'm keeping an eye on. So I did want to just flash this look up there for you.
Gerbz: Of course, I like it too. That looks like a very solid support spot, and then obviously all time high is resistance, but this is a new cycle. This isn't the last cycle, so I think blue skies are in order.
Brian: Yeah. I like your $8,000, trillion dollar metric. That's a good, I think that's an interesting number.
Gerbz: Yeah, maybe it'll, like, have stretch goals of 10. For one hour it'll just go bonkers and try and wick up to 10 or something, and then that'll be it. That'll be it, guys. Party's over.
[00:47:42] DePIN - Decentralized Physical Infrastructure Network
Brian: All right, I'm going to pull up three altcoin charts real quickly. And then I think that I'll just round out my comments.
Gerbz: And they're sort of sector based. I see here, Helium. This is, this would be like your DePIN sector play maybe.
[00:47:52] HNT - Helium
Brian: Exactly, exactly right. Yeah. Which is a big narrative here. So I want to use these three charts to all make the same point, which is that sometimes in altcoin land we see alts as leading indicators for the market, for whatever reason. Sometimes they lag, sometimes they lead, but sometimes you'll find a chart that's been leading, DePIN is a big narrative right now, and Helium is one of those leaders. And especially if you can pull a pattern off of a leading indicator, there can be a lot of information in that. So when I see that, I like to look for clues. And so what I want to use these three altcoin charts for was just to show you some of the clues that I'm seeing in the leading indicators. And so to do that, I'm going to look at Helium, Link, and Rune.
So first, Helium, this is the all time chart. DePIN, obviously DePIN Mobile Network, super interesting project, had this massive bear market, really crappy tokenomics. All the way through the bear, but then it ripped coming out of the bear market into the end of '23 and then has been consolidating, moving lower since. And now it's got some momentum back to the upside. But what I noticed is that over the last few weeks here, it's building what could be interpreted as an intermediate topping pattern.
So this looks like a head and shoulders, right? I've got the red line drawn here at the neckline. Let me thicken this up a touch. So you can see left shoulder head, and then potentially we're building the right shoulder right now. So what I want to look for is if Helium's leading, and DePIN is leading narrative, what happens with this little pattern right here?
It's not a big pattern. Even if it's sold off, it would only really take us down to five bucks or so, it's not, from seven to five, it's not a huge move, right? But there's a lot of information in this. So if it does break down, I can expect that maybe we'll have a little bit more chop and a little bit more corrective action in the market overall, including Bitcoin and ETH.
But if it reverses and makes a new high here and takes out the head, it's kind of that same pattern that we were looking at with BitTensor, with TAO, where it invalidates the pattern. And if it does that before Bitcoin breaks out of that $69K level, to me, that might be a good time to buy some call options on Bitcoin because it's indicating that the market's going to have some momentum to the upside.
So I'm watching this. Helium is a good leading indicator, really like the DePIN narrative. I don't know if you have any thoughts on that.
Gerbz: No, that's interesting. I've never thought of looking at alts as an indicator for what could happen with Bitcoin. I'm always looking at the reverse. Even Ethereum seems to follow Bitcoin in my like subconscious memory. It's hard to remember all these cycles, but like, usually Ethereum follows. And then Ethereum starts just driving the train. Like it just takes over the train, but Bitcoin always leads it. So it's interesting to think about maybe some of these alts playing into the way you're looking at the the big guys.
[00:50:32] LINK - Chainlink
Brian: Exactly. And so let's do, let's make point number two on that same exact logic. So here's Link, Chainlink obviously had this huge move. Just like major adoption from 2018 through '21. Sold off into the bear, had this really choppy bottom, this channel, right? I put the kind of breakout zone by this red line here. When we broke out in October of '23, we got ourselves into a new congestion zone, but unfortunately there was a breakdown from there as well. Where did we find support? I don't have this red line drawn all the way across, but I can extend it. So where did we?
Gerbz: No, it's $950.
Brian: We wicked, but we found support kind of right there at the prior resistance. Shocking, right? The red line was resistance, resistance, resistance, breakout. Then we formed another consolidation and topping pattern here, broke down, wicked, but then ultimately found support at that same red line. So it's just interesting kind of market memory around horizontal demarcations of support and resistance. That's why I like them, that's why I use them so often. And then what I want to zoom in on is this head and shoulders pattern, the breakdown, and this kind of gave you an early signal.
I was watching Link as a leading indicator then as well, we had some choppy, really hard to trade, right? Because we broke down here. And then if you had set a stop on the other side of the neckline, you would have gotten stopped out right before the actual move happened. So, just markets are really hard to trade.
That's just the reality of it. Especially alts, because you don't get these perfectly formed head and shoulders patterns. Oftentimes they're choppy and messy as is the case here. But if you zoom out a little bit and you look at this thing, it's clear left shoulder head, right shoulder kind of messy consolidation. But ultimately broke down, achieved its downside target here at about eight bucks, and now twice has come back up at this. For the second time now we're retesting the underside of that neckline from the head and shoulders topping pattern.
And it's right there right now. So if I see this chart, Link, break back into that congestion zone, to me that suggests that the sell off is over. Now we may chop around in that congestion zone for a bit. It wouldn't surprise me, but to me that suggests that the sell off is over for now. And so that's another kind of, would be another bullish indicator, for the market. And we're right at that level right now. So this level is being tested now ahead of Bitcoin testing $69K, which is its major point of resistance.
So again, I want to watch Link as a leading indicator. I know you're, you've followed this project for a long time, so I don't know if you have any thoughts. But same logic, just looking at it as a leading technical indicator.
Gerbz: Yeah, no, I love it. You're coming at it from a totally different perspective, you're looking straight at the chart and at the technical side. And I don't trade these things, when I hear you talking about super hard to trade this, super hard to trade that. I'm like, man, I just buy and I pray. That's my strategy.
No, I have a thesis, right? And I buy in, but I don't, I'm very inactive. Once I've decided to go in, the only thing I'm going to do is add on. And be along for the ride through that chop. And it is chop, and it is hard to hang on through a lot of that, especially as new projects come into my sphere. I'm like, man, but I've got this Link position that I really like. Like, what am I supposed to do? How am I supposed to trade AI? I got no money left. So that's more of the way I'm thinking about it. You're just like, you're in there trading this. And I love that, cause it brings a totally different perspective.
One thing that jumped out at me on the chart here, and I'm curious your thoughts on this, having been in TradFi for a long time. I theorize that these big projects that have been around for a long time, they work with these market makers to keep their token alive. Like some of, like you saw the Frax, I would theorize that Frax just doesn't have anyone out there on their side, like helping make the Frax market, and helping keep certain levels.
What I see on this chart here is that like, someone had a meeting and said, all right, guys, I'll pay you to keep Link above $5. And then look at, that just for like over a year, maybe two years. We're just like, every time we came anywhere near five, it got bought.
And then I feel like now we're like, all right, we broke out of that chop. The new cycle is here. Their contract is over. They got a new contract to keep it above $10. That's what I'm seeing here. I know that I'm, playing around a little bit. I'm kind of joking, but like, those kinds of things exist, right? Like I'm not too far out there to believe that.
Brian: Okay, so market makers will not stay in business very long if they don't run a hedge and basically market neutral books. So market makers are providing liquidity into the market, but their profit is basically the difference between the bid and the ask. So a market maker is not going to take a directional bet or take some sort of compensation for holding the market at a certain threshold because if they accumulate too much and then ultimately that level breaks down, they're going to go out of business.
Gerbz: Whoa, wait, what if Chainlink can pay for it?
Brian: So you're saying Chainlink is buying their own project?
Gerbz: Why wouldn't they?
Brian: So, it can happen. Like even publicly traded equities do this, called stock buybacks, right? And they might buy at a certain level. So yes, it's totally possible that if there's a treasury, maybe Chainlink's treasury, I'm just making this up, has some Bitcoin, some ETH, some dollars in it, who knows, and they're using it to support the market at a certain level. That's totally possible. I think zooming out though, what I would tell you is if you study classical charting what you learn is that all these patterns and I can draw like here, let's just draw the channel here. All these patterns really tell you there's actual information in terms of market participants.
Now, could it be the project itself? Sure. But oftentimes it's whales, frankly. So you have large traders who are either profit taking at a certain level, or they're accumulating at a certain level, and that's why these horizontal demarcations of support and resistance are so powerful.
So what you get is someone who wants to own Link in the bear market, they may have just a resting infinite buy order set at five bucks. So every time the market taps that level, they're supporting it. They're buying a little bit, they're buying a little bit, they're buying a little bit. And so that's why you see this support. Now, others may follow their lead or certainly, at some point technical traders notice the pattern and they'll start to trade the channel, etcetera.
You can see the same thing on the upside of a channel where you might have profit taking at that level, right? We could pull up some charts that have that as well. So usually it's just big market participants that are accumulating or distributing at certain levels. And that's really like the behavioral representation of those classical charting patterns.
Gerbz: Makes sense. Yeah. So maybe market maker was the wrong term, but maybe there are participants there who are causing this channeling that I'm seeing. Like, it's not random.
[00:56:53] RUNE - Thorchain
Brian: Yep. All right. Let's look at one last chart. It's almost the exact same kind of setup as Link, but I think it's a little bit more of an interesting chart. But again, same theme of leading indicator. And that's what I'm looking at here.
So this is Rune. We've talked about Rune previously, Thorchain. You had this huge up move into the '21 bull and we broke the uptrend and had this big, long corrective period through the bear. We bounced off of that. So it looks like we're going into a bull phase here, but what kind of pattern did we create?
It's like my favorite pattern that I feel like I'm always showing, but it's the head and shoulders pattern. It's just such a clear, reliable topping or bottoming formation. And so here you have it. We started forming the left shoulder way back in November of '23. Ultimate top was March of '24. So we've got shoulder, head, right shoulder.
This one would have been easier to trade, right? There was no overlapping, no congestion, had a clear neckline, right? And after the breakdown here in June, we retested the neckline, didn't even quite make it back up, right? Whether it was risk management or profit taking occurred here, broke down further.
We've got one of these kind of "w" looking patterns that I mentioned before, which looks kind of bottom-ey to me. And then we've gotten now this huge bounce after the sell off. So we achieved the downside target here at about $2.50 from the head and shoulders topping pattern. And now we've recovered all the way back above the 200 day moving average, which is the blue line. And not only are we retesting the neckline here or close to retesting the neckline real time at about $5.80, but we've already overtaken this congestion zone from the summer. We're already above that.
So to me, again, I want to look at Rune as a leading indicator. I want to see us get back above that neckline into this congestion zone. I want to see how it behaves from there. But if it does, again, it's the same thing as Link. To me, that's suggesting that we are looking at the end of a correction.
And when I think about the setup for the space overall, that's bullish. And so again, I'm using all three of these alts as just a leading indicator for whether you're trading Bitcoin, ETH, or you're just looking for where the market move is going to come. I think these are great leading indicators and give you a lot of useful clues about what might come next.
Gerbz: Cool. I like to think I know what's coming next and, it's breakouts all over the damn place. But it's cool to think that these could lead the way in that. Like, if one of these, I'm going to note these down, if one of these all starts breaking out of these patterns before Bitcoin, then you called it man. Cause that's a pretty fun way of analyzing these markets I've never really thought of before.
Also to note, I'd threw Rune in the Bitcoin DeFi bucket. Like, Thorchain does a lot more than Bitcoin. It allows you to do swaps cross all the chains, many chains anyway. Which includes Bitcoin, which is a very rare thing to find in crypto and DeFi.
So I've kind of, I have it bucketed into my like, Bitcoin DeFi bucket, along with Stacks, which is another kind of Bitcoin DeFi project.
[00:59:50] Final Thoughts: Merging Sectors
Gerbz: How do you think about these sectors like moving together? And do you ever like overlay, we've never done this together, but I play with it a little bit, but I'm not sure I'm able to really gleam anything out of it.
Do you ever overlay something on another chart? Would you ever overlay Bitcoin on here or overlay Stacks on here and kind of see if there's correlation and kind of to try to get a sense of how to trade it.
Brian: Sometimes I like to. So usually I will just stick to price and a single chart as kind of like the most direct indicator of what I think a market's going to do. Once I get into kind of overlays or other indicators like RSI, or we could look at a bunch of other stuff. You're getting into kind of second, third derivative stuff, and you're just getting further away from price, which is really like the truth as I think about it.
So yeah, I think those can be useful, but I don't spend as much time on it as I do. Just like, I'm just such a simple, I use such a simple process, right? I love to just look at the price action, draw a simple pattern. Like, I've talked about dozens of charts on the BitLift Podcast and I feel like the head and shoulders pattern has come up so many times and it's such a reliable indicator. Like, I just end up using that. And it can be reliable, by the way, if the pattern completes, and it can also be reliable if the pattern doesn't complete. So like, as soon as you see something like that forming, there's a lot of technical information.
Gerbz: And how they could play a role in the overall cycle. I've never even thought that like, I always just feel like alts are last in line to make their moves. Like that's, I wait for Bitcoin to break out. I Ethereum is going to do it soon, and then Ethereum mania is going to drive alts to do whatever they're going to do.
Which is going to drive new narratives, which is going to drive new alts, which is going to drive the media, which is going to drive the price, which is going to drive new breakouts. And the cycle happens that way. And it's, I'm almost not looking forward to it in some weird way.
Obviously we all want like the NGU technology to take over and a price to go nuts. But man, it's so hard on my, on my mental space. And it's hard to maintain clarity around some of these big picture moves that we've been talking about for a long time. So I'm going to do my best to do that.
I think part of my job almost with the BitLift Podcast is to help keep all of us like, in reality check a little bit. Let's always start with the zoomed out Bitcoin chart, and then let's obviously we'll be talking about like a head and shoulders on the hourly chart, on Helium, at the end of the, at the end of the episode, right?
But let's start with a little bit of reality. We'll end up with the fun stuff too. It's always going to be there though, and you can kind of figure out where on that spectrum you are. How much risk do you want to go? How deep into these charts? How much time do you want to spend in front of them? That's up to you. We all have a different amount of time and energy we can spend on this. And so, make sure to do something that feels right for you because that feeling is going to start changing as this cycle progresses.
If all you do is hold Bitcoin and if that's stressing you out, like, first of all, that's normal, by the way. That's okay. You're a normal, it's okay for you to feel that way. I think all of us feel that way. But it gets worse with the deeper down that rabbit hole you go. So. don't beat yourself up over this stuff.
I think the charts are a really fun way to get a gut check on some of the things that you think are happening. The charts can either validate or invalidate them. But the price is the leading indicator. Price is really all that matters in all of this. It's the reason we're here is because we want to buy low, sell high. Or, short high, sell low, for those of you who are deeper down the rabbit hole.
So Brian, dude, this was awesome. We did over two hours. We started super macro and then we went way down the weeds. And now we've got some incredible stuff to look back on to either make fun of ourselves or tap ourselves on the shoulder when it comes true in the next few months.
Brian: Yeah, I love it. I love recording it all so that, yes, we can look back and get a good laugh at just how wrong we were on some of the stuff. But hey, we're doing it real time and we're taking that risk, and we're trying to do the best that we can not to analyze markets looking backwards, cause that's not really useful for your audience. Like, that's not really useful for people. We want to help people. I want to help them navigate choppy, volatile, complex environment. And to do that, you got to look at things real time. You got to make some calls, you got to stick your neck out there. You're going to get some things right. You're going to get some things wrong.
Hopefully we'll get more wrong than right over time, or at least have bigger positions on when we're right than when we're wrong, and overall just help people get better at this. Cause it's tricky, it's complex, but it can be a lot of fun. And, yeah, man, it's always fun chatting with you. I had a blast today.