So, we're here with another crypto duel with
Jacob Canfield and Eric Krown.
And today we're gonna be talking about a few
different things.
And we're going to start and just jump right
into it.
So if you guys want to bump gloves, have a
fair fight.
You don't watch boxing?
I'm just kidding.
Well, to be honest, man, it's good to meet
you.
It's good to meet you, Jacob.
Spent a lot of time, actually on Discord and
Twitter.
So it's actually cool to see face to face
now.
Definitely.
Good to meet you, finally.
We've been chatting about doing a livestream
together for a while.
Great.
Well, it's a great matchup.
And we're really happy to have you guys.
All right, so let's jump right in and let's
talk about, I guess I'm interested in Bitcoin
adoption.
And, you know, right now, are we actually
using Bitcoin to make payments?
Do you guys use Bitcoin in that way or are
you just trading, are you saving?
What do you think?
Maybe, Eric, we could start with you.
So realistically, I've never used Bitcoin
to pay for anything.
I think maybe once I used it to buy a flight
on this site called Abitsky something like
that.
Pretty cool, it actually did work out.
But as far as like a day to day expense, no
real interest in using it as of right now.
You know, the volatility within it, it just
doesn't really appeal to me as something that
I want to use as like a daily payment driver.
All right, and Jacob, what do you think?
I am one of those unfortunate souls that have
been in the space for a long time and I spent
a lot in Bitcoin a while ago and so like I
bought a mattress on Overstock and that mattress
ended up costing me at the height of the market
around $100,000-$200,000 in future value,
you know.
And it ended up being a shitty mattress.
And it's more of, you know, it started as
a peer-to-peer cash system.
And now it's more of a store of value and
it's being used exactly as that for, you know,
Argentina, Venezuela, Zimbabwe, these countries
that have like shitty fiat currencies, people
are hedging their store of value.
Even in Korea when we saw like the nuclear
threat, Korea was like a massive hotspot for
people that were converting their life savings
over to Bitcoin.
And also, I got taxed on that purchase because
it was a taxable exchange from Bitcoin into
USD.
So, no, all around is a very shitty experience
spending my Bitcoin.
So, I don't use it as a payment system, but
that means that I do have some international
employees, my companies and they want to be
paid in Bitcoin.
So I do buy in Bitcoin, but our agreement
is if I buy it at this price, that's exactly
what you're getting paid.
So if it moves here and there or anywhere,
it's basically whatever I bought it at, that's
what they get paid, just to hedge for the
volatility because they do want to get paid
a Bitcoin.
I see, so it's kind of, you know, means to
get money from one country to another, but
not to buy coffee at Starbucks.
Well, it just doesn't really make too much
sense right now for something like that.
Because if you are a believer in Bitcoin,
if you do believe it is going to hit some
of these more like John McAfee numbers, there's
not really too much of an incentive to be
paying it out right now.
It's not really an economical decision now,
is it?
But then why are all these companies, you
know, Coinbase and, you know, all these kind
of exchanges are coming out with their own
crypto debit cards?
That doesn't mean it's a good idea.
I mean, they're on this service because they're
gonna get paid off of it, not because you
should be using it on a day to day.
But that's just my perspective again, you
know, coming through it in the sense that,
you know, I am a believer in Bitcoin long
term.
So, you know, if you do think it's gonna get
into these more crazy numbers.
I don't know what crazy means to some people
here.
But for myself, you know, maybe into like,
you know, past the prior highs, something
like that within that $50,000-$100,000 region,
then, you know, spending it right now when
it's literally a fraction of that isn't really
the best decision, in my opinion.
Well, Tim Draper said recently he thought,
you know, by 2023 it would be at $250,000.
What do you guys think about that?
Is that a realistic number by 2023?
You know, I think the problem is that both
Eric and I are traders and asking someone
to,
and his reasoning was because of the payment
processing technology and I don't think that
has anything to do with it because I have
no issue buying anything right now.
I don't think anybody has an issue with buying
anything.
I have an American Express card.
It works all over the world in China, Malaysia,
India, it doesn't matter.
American Express it works everywhere.
So I don't think the issue, I don't think
the technology coming in is what's going to
drive up the value.
I think that our government's being horribly
irresponsible with our money and the fact
that the Federal Reserve keeps cutting interest
rates and it's a race to zero with our fiat
currencies, I think that is more of a driver
of exponential Bitcoin value, especially because
that's what Bitcoin was designed for by Satoshi
Nakamoto.
So I think that's more of a driver and I think
that's what's going to create more adoption.
But I don't think that it has anything to
do with the spending it or the ability to
spend it.
Eric, do you see that as well?
Yes, so we can actually do this mathematically.
I'll share my screen right now and I'm going
to do something that's a lot of people going
to really hate.
So, the thing with that is we can actually
kind of plot out like expected moves with
the graphs of historic volatility percentile,
which can give us estimated sort of probabilities
of what a price range could be at a later
date.
So right now we're looking at it on a daily
timeframe.
You know, obviously not all that helpful,
you know, for what we're talking about, we're
talking about a likely range between where
we are right now and about $8,800 it looks
like.
But if we actually adjust this so that we
could include the next what was it, 2023 is
what he said?
What do you think?
Okay, 2023.
So what that's three years away from now essentially.
Almost at the end of whatever this year is.
So that's 365 times about 3.
So we're talking somewhere around like 1100
days.
So that's kind of doing some bad math in my
head.
We'll just take the middle of that and put
out 10-50 days on top of that, we come out
with a range, actually, although this range
is not that helpful.
Lets actually go to a weekly for a second
and we can do this.
Well, actually it's easier doing weekly anyways
to 1/50.
It's going to be about 50 weeks per thing.
So this would actually suggest from a historical
volatility percentile that it would be less
than a 1% chance, actually, literally actually
less than 0.5% chance to get above about $106,000
around that time.
You know, equally as unlikely is going below
about $1,000 as you can see right over here.
This would be about 760.
Now, how accurate is this at this moment in
time?
You know, it's more experimental than anything.
But I just want to show that even in the most
sort of bullish, enthusiastic ways, it's pretty
unlikely.
And this is coming from someone who does believe
in Bitcoin, but what's most likely my opinion
is, you know, somewhere between about $50,000
and maybe like $100,000 is probably around,
I'd be looking towards.
By 2023?
Yeah, by 2023.
And Jacob, what do you think?
Do you agree with this math?
I'm gonna share my screen as well.
The battle of screensharing, okay, let's go.
So this is, for lack of a better descriptor,
these are called the Canfield Fibonacci extensions.
And I use these for long term value forecasting.
And basically what they are is everyone's
familiar with the most common Fibonacci levels,
the 1618; 2618; 3618, and then the 4236.
But you can actually extrapolate further extended
values using the same derived logic of how
they get the Fibonacci values, which is basically
you take the Fibonacci sequence, you take
one number, you divide it by the previous
number, and that's how you get those extended
numbers.
Then in the same way with the way that you
derive the Fibonacci retracement level, so
basically Bitcoin historically has respected
these extended Fibonacci levels from the first
wave.
First impulse basically done it on Bitfinex.
You can use Bitstamp, you can use the BLX
index, you can use any one of these.
But basically when we get these extensions,
you can see the respect that it shows for
these extensions.
The other 1618, it was a perfect retraced
bounce point, the 2618 was a rejection, 4236
was up here.
But then beyond the 4236, we actually have
these extended numbers, 6854, the 1109 and
then the 1794.
And you know, you can actually find these
on Apple, Amazon and you can see how well
it respects all of these Fibonacci levels,
the 1109, 6854.
So for me I use these as a forecast to see
how well or what values we can expect beyond
this.
So the next level, beyond the 1794, if you
look at gold, gold actually respected the
1794 as well.
But beyond this, the next level is the 2903,
which is we just saw the Dow Jones Industrial
Index hit the 2903 on the extended Fibonacci
levels and that's right around $31,000, so
if we break this previous high I think that
$31,000 will probably be our next high before
retracement.
Maybe back down to the 1794, we'll find support
at $20,000.
But first we have to break and hold the 1109,
which is around that $12,000 level, which
obviously on the weekly chart was a very historically
strong level.
And then beyond that, the 4697, which we just
saw the S&P 500 hit as well as, I think, Apple,
and that's right around $50,000, which basically
was that same range that Eric gave.
So the 2903 and the 4697, those are the two
levels that I'm watching.
But in my opinion, based on kind of what how
Bitcoin reacts, I think that the 2903 was
probably the level that I would be watching
for.
So basically right around $31,000 and that
lines up with market cap having all that stuff
and based on timeframes, I would probably
put that out end of 2020 to reach that $31,000
level.
Right, so from my stance, that would imply
a timeframe for that, wouldn't just price
levels and price targets based upon.
There's no timeframe, you can use like Fibonacci
timeframe cycles maybe Gann theory and some
other things to try and derive like a price.
But I'm not that well-trained in that stuff
to really give a timeframe based on it.
I'm just looking at kind of like historical,
you know, how long it took.
But you know, we're in a bull market.
The last bull market was, I think, like, you
know, 2,5-3 years.
And so we're just now starting.
If we lose, I think probably $7,400 level,
that now would imply a deeper retrace.
But until then, we're kind of chopping around
and maybe a wave, too, before we kind of start
moving into that next exponential wave.
But I'm kind of focused right now, I'm interested
in really what's driving this.
If it's mass adoption, I mean, is that back
to the question, you know, if the masses start
using Bitcoin to buy Starbucks, is that going
to drive the price or you think it's silly
for you to be buying mattresses using Bitcoin,
but you kind of want other people to be buying
coffee with Bitcoin, what do you think?
I don't think that mass adoption is occurring
at all.
I mean, we might be seeing it in China after,
you know, the president announced that they're
moving forward with the blockchain.
But the Google interest shows that almost
no retail money is coming in.
I think a lot of people got burned on buying
Ripple at the top or investing in Bitconnect.
And I don't think retail's really interested
in cryptocurrencies like they were.
What I think is driving this is just institutional
money, non-correlated asset risk.
You know, maybe they're putting a 5% of the
portfolio in family offices.
I'm seeing a lot of these friends and family
that were involved in investing at a high
level.
Maybe they've got like 20 million to a billion
dollars under management, and some of them
are asking me questions about Bitcoin, whereas
before, you know, we'd have conversations,
but there was almost no interest.
So I think that's where most of the adoption's
at, especially when like a global leader,
like ICE, they are, you know, going all in
with their Bakkt futures.
And, you know, they revolutionized the game
for the New York Stock Exchange.
They got rid of pit trading, they did all
these things.
And for the fact that they're stepping in
and they're, you know, kind of putting their
focus on Bitcoin and Bitcoin futures and options
and all these other things, I think that wakes
up the rest of the financial market to say,
hey, this thing is here to stay, you know,
kind of pay attention.
And also you've got, you know, like Fidelity,
TD Ameritrade.
So these other people that are also building
desks and some other stuff.
So that's why I think the adoption is coming
in.
So I think it's more of a speculative asset.
It's got a lot of volatility, so it's kind
of a trader's paradise.
And what I think is mostly driving the price
right now is just open interest values on
leverage exchanges where you get massive loss
squeezes, massive short squeezes.
I don't think personally that it's retail
adoption from my perspective.
And Eric, what do you think?
What about, you know, what's your stance on
the retail factor?
Right, so I'd have to disagree with Jacob
on this one, because I don't think that retail
means anything.
It is pretty much worthless as far as when
you compare it to a hedge fund, which compared
to the money managers with those people with
access to, you know, billions and billions,
you know, of the upper echelons, 50 to 100
billion.
These are people who would make just you know,
the whole conglomeration of the retail sector
just look like peanuts, right.
It's a drop of piss in the ocean.
It's nothing.
So actually, adoption does come from institutions
and that is what you want if do you want this
to become a more legitimate asset, you know,
going forwards.
What we're seeing right now is very slow,
as you'd expect and as it should be.
But all of the infrastructure is being built
up, as Jacob said, we are seeing CMEs offer
futures.
We see Bakkt in the game.
We see CME start talking about options.
And you see all across the globe that, you
know, as the insfrastructure gets set in place
as the laws get, you know, set, there becomes
a path towards an adoption for institutions.
So before they it didn't really happen because
you cannot really get into it.
I mean, you know, not to mention just the
lack of equity in this house to begin with
is a major problem.
So even if institutions do want to force it
in right now, it's not really there, but it's
going be a slow process.
And with all that said, you know, the retailers
are just you know, in my opinion, they're
the kind of like the last ones to come.
Once Bitcoin is probably near the upper echelon,
that's when the retailers will come to market.
That's typically what we see, you know, during
these sorts of major life changing technologies,
you know, the retailers are the last ones.
No, that's the whole thing to be early, right.
It's got to be in a stealth phase, is going
to be in the early adoption phase.
But, you know, for the people coming later,
that's usually when the party is over.
That's, you know, end of 2008 with the housing
market.
That's what we saw in the 2000 .com boom.
You know, those crashed.
You know, you get what I'm saying, though.
So I would say that it is that way, but that's
actually kind of a good thing.
And in ads, things get built up.
I would think that it's over time, that does
speak to the health of the market.
Do you think that maybe, you know, at that
point, Bitcoin would be pretty much considered
like a crypto asset, not a cryptocurrency?
And that other players, you know, Facebook,
Libra, you know, that might fill the void
of the actual currency for retail purposes.
You know, will Bitcoin just be, you know,
its own thing that's not even connected with
currency at all
I think that if we see Bitcoin up in the $250,000
million range, I think that it could very
well act as a currency, especially because
it's so divisible, it's divisible down to
the one millionth, you know, down to the Satoshi,
so Satoshi could act as the everyday dollar
or whatever.
If we get into those upper levels of value.
But like Eric and I said before, it's at a
very early nascent technology.
You know, it's only 10 years old and it's
so volatile right now as a payment.
It's, you know, there's like a meme that says,
you know, basically like the kid bought some
Bitcoin to pay for something and then shows
the value changing of that, that specific
object based on, you know, the minute to minute
value of a Bitcoin.
So I don't see it as being... it is a cryptocurrency,
you can never take that away because I mean,
that's just the definition of what it is.
It facilitates transactions on the Bitcoin
blockchain network.
I mean, by definition, it's always going to
be a cryptocurrency, but whether it's a medium
of exchange or whether it's a store of value,
I think it really depends on what happens
macro economically and whether or not this
trend continues for, you know, global adoption
around the world.
But, you know, you could still use it as a
medium of payment.
But I think that there's going to be better,
better mediums of payment.
Like we don't buy things in gold, but we store
gold.
But you can transfer gold into a medium of
exchange that works well.
It's just whether or not you want to, I mean,
it really depends on what you want to hold
your base currency and you want to hold it
in U.S. dollars?
Do you want to hold it in Bitcoin?
And then do you want to transact back into
dollars?
There's so many questions that you can ask,
but I don't know.
I don't see it as a good medium of exchange
at this point in time, especially with tax
laws.
Right, so a little soon to say.
But, you know, just like the institutional
players like Bakkt and ICE are getting into
the game.
We also see major corporations like Facebook,
you know, with Libra trying to, you know,
I think get the questions started in Congress
about regulation and whatnot.
But I think yesterday they just announced
their Facebook Pay for, you know, kind of
a cross-platform currency for Facebook and
Instagram and WhatsApp.
What do you guys feel about that?
Do you have any thoughts?
You know, is that a cool thing?
Is that great for, you know, kind of their
ecosystem or is that going to have an effect
on the crypto space in general?
I think I'll take this one first, then I'll
let Eric give us his thoughts.
But I think they fucked up by trying to introduce
a cryptocurrency first.
I think that the biggest thing watching that
hearing, nobody trusts Facebook.
They've got the other Cambridge Analytica
scandal.
Every single person that signed on, whether
it was PayPal, American Express, all these
guys, they signed on to the Libra project,
I think all of them pulled out.
And so they invest up by trying to launch
a cryptocurrency project first.
So I think launching Facebook Pay, they've
got PayPal signed on and they're just trying
to build trust, I think, before they launch
their Libra project, they're not going to
get cryptocurrency project approved.
They realize that, so now they're launching
this Pay, because the biggest question that
everyone has is, can we trust you with our
data?
Can we trust you with our privacy?
Are we safe to transact on your platform?
And the hearing was an emphatic 'no'.
The social media was an emphatic 'no'.
Nobody trusts you.
Nobody, you know, you're exploiting us.
Basically we're open to propaganda for Russia,
the US did all kinds of misinformation, censorship
going out.
And so, you know, it begs the question, are
payments going to be censored?
You know, because information is being censored.
So our payments going to be censored.
And so that's a big question everybody has,
so launching Facebook Pay, I think is a step
in the right direction to build trust with
regulators, build trust with the public.
They get everybody used to it.
And then launching cryptocurrency makes sense
to have basically, you know, not government
consent where you can transact anywhere where
it doesn't have to be in U.S. dollars or Fiat.
It can be, you know, anywhere, which is a
basket of stablecoin.
Right, so in that sense, it's kind of maybe
a little bit safer.
But, you know, isn't it also a little bit
more centralized to have Facebook Pay versus
the Libra Consortium, you know, the Libra
Association?
I think both are centralized, in my opinion,
a decentralized entity is one you can't censor,
control or, you know, take control of.
And there's no governing authority, like Bitcoin
doesn't have a governing authority.
You can't shut it down.
What do you think, Eric?
Yeah, so I have to disagree on the premise.
I think that Facebook actually did a genius
thing.
They went asking more for first.
They probably knew that that was never going
to get passed.
I mean, first things first, Libra is not really
even a cryptocurrency, they just kind of slap
that name on to give it a little bit of hype.
And I imagine what their strategy is, you
know, the traditional ask for the most first
like ask for the most ridiculous thing first
and then, you know, when that gets rejected,
pull back after Facebook Pay.
And no one's really going to stop that.
So I do agree with Jacob on this point that
once they can kind of, you know, get some
iterations and get some experience in that
realm and gain people's trust, then it opens
up the road for them once again, if they do
want to go back and do something like Libra.
That would make sense.
But right now, you know, again, the process
is slow.
And I think that they're, you know, I think
that they just kind playing the system really.
Really interesting.
So maybe it was a kind of a strategy, actually.
Yeah, absolutely.
Well, and what effect might that have on Bitcoin?
So the market likes to treat anything that
has the word like blockchain or cryptocurrency
in it as related to Bitcoin and big investors
and big money managers will kind of play off
that sort of news.
So, you know, positive things with Libra,
we're correlating with, you know, big upward
moves in Bitcoin obviously, this last major
run that we had, a lot of it, it was off the
back of, you know, Libra getting more more
clout within the general sphere.
And that adds into the validity of Bitcoin
just by getting into the public lexicon now.
So it's you know, it's the same thing when
Trump said, he says a lot of things, but he
said something along the lines of like Bitcoin
is based off of air.
It doesn't matter what he says, the second
he mentions the word Bitcoin is secondary
legitimized that it is kind of the same thing
here.
So I do think that actually, you know, it
correlates well with Bitcoin, but is there
like really an interplay there?
No, not really.
Libra, again, is not a cryptocurrency.
And Jake, what do you think?
Is that kind of like, you know, any publicity
is good publicity?
Yeah, I mean, how many news organizations
have declared Bitcoin dead?
You know, the more that they talk about it,
the more it legitimizes it in the face of
the public, in my opinion.
But the beauty of it is they've attacked it
so many times and they've declared it dead
so many times that it has less and less effect
on the overall price.
Like you said, Trump came out and said that
Bitcoin was based on air and didn't really
have much of an effect on price, whereas before
in 2017, Jamie Dimon called it a fraud and
it dropped 42% in less than 24 hours.
So I think that the more and more that this
happens, I think it gets more and more priced
in based on the price action.
Yeah, okay, interesting.
And so, you know, I guess shifting back now
a little bit to some of these forecasts, another
kind of big range, big prediction was Bobby
Lee, who said by 2028 Bitcoin could be like
half a million.
But what I'm interested not so much on, you
know, because who knows what's going to happen
in 2028, but he put a lot of stock in the
halvings.
What do you guys feel?
You know, we're coming up to a halving I think
you know, next year.
What's that going to mean for Bitcoin?
Well, what I'd say look at Bobby Lee's track
record for one, two, I would also say that
having something that's become in my mind
a little bit of a maybe and what I mean by
that is that halving effect is something that
everyone talks about now.
And, you know, even the people on CNBC were
referencing that, this is a very public known
thing.
And because of that, I do believe that it's
likely already priced in.
Think about it like this, and for anyone listening
right now, just think about it in your own
perspective.
When you hear about the halving, that is information
that is publicly available.
It has been publicly available since the dawn
of time for Bitcoin.
And so people are ought to make a decision
based upon that because they know that those
things are going to happen in the future,
it is in the code, it's in there.
It's for all purposes.
It's going to be done.
So you can make decisions based on that today.
And you also have to interpret and extrapolate
that just one step further and say, okay,
well, I'm doing that.
You know, everyone else with the same information,
they can do the same thing as well.
So these sort of things get priced in.
And yes, while the first two ones did have
a very nice interplay with each other, I would
say that this one, I actually think is probably
going to be a little bit more rocky path.
In fact, I'm really kind of looking at it
right now.
And I got to say something that a lot of people
are not going to like.
I wouldn't be surprised if we are nowhere
near prior highs coming halving time.
I should also say, though, don't get me wrong,
longer term, is it a good thing?
Yes.
You know, reducing of supply.
But as far as the massive indication that
a lot of people are making out to be, I think
just the fact that so many people are talking
about it is a great sign in of itself that
we probably saw a good portion of the run,
on that last run from $3,000 to $14,000.
We have to realize that this is insanity what
we're seeing right here.
That's more than a 4x, more than 4x and over
the course of what, 3, 4 months?
I mean, it's very, very reasonable to think
that we probably saw a lot of that move already
happened pre to it.
And the thing is that the miners, right, it's
mainly a big deal for the miners because well,
their whole wares is going to be cut in half,
right?
That is a humongous revenue loss.
So the less sophisticated miners, they're
going to be likely washed out.
And what does that mean, especially in today's
day and age?
We have a shit ton of these, just gotta like,
you know, people who is jumped on the craze
in 2017, and so they're operating like, you
know, barely above water.
Or maybe they're okay right now.
But if there is any sort of, you know, major
downwards action, they're going to get, you
know, they're gonna get crushed.
And so what are they going to do?
Well, they have to sell in order to liquidate,
in order to cover their losses, in order to
cover all of their costs and everything.
So I'd say that this market right now with
more and more players in it, more and more
minors in it, that actually produces slightly
more sell pressures.
I don't think that a lot of the miners are
very sophisticated.
In fact, I think very few of them are.
And the smart ones have already made their
moves.
The smart ones have already been selling futures
on CME most likely, and walking into profits
right now.
Very, very likely.
Jacob, what do you think, is the halving already
priced in?
Yes, I believe it's priced in, and you can
see that with, I think early warning sign
of what may happen with the halving is what
we saw with Litecoin.
Everybody and their brother was screaming
about the Litecoin halving and we had the
speculative run up similar to what we had
probably 2019 for Bitcoin.
But what happens after the halving?
The price can explode to the heavens?
No, it retraced 78.6% from its all-time high.
Litecoin just got absolutely smashed.
Did the reduce of supply have any effect on
it?
No, not in pricing.
So I do agree with Eric on that concept, and
I've had a lot of interesting conversations
with some sophisticated traders of size about
miners and whether or not they're locking
in profits.
But the analogy that I always use is oil.
Oil is really similar to Bitcoin in the fact
that you have all these people with sophisticated
mining equipment that, you know, they're constantly
trying to get oil out of the ground.
But you have the futures market where you
can lock in price in same concept, but what
happens is when you see a massive supply hit
the market or when you see price crash, like
we saw Saudi Arabia release all this oil on
the market, the price per barrel crashed well
below $40 a barrel.
And what happens is you've got all these people
who think that they know what they're doing
and operating in the US, but they're operating
on profit margins of $70 per barrel or more.
And so when you see that, you basically watch
all of these oil companies just go bankrupt.
They have to, you know, get massive loans
from the banks.
And so you going to see that all across the
world with Bitcoin miners, just like he said,
you're gonna see capitulation.
But what you're also going to see is you're
also gonna see all of this mining equipment
flood the market.
So miners go back below market value.
But if you follow people like Christopher
Walken on Twitter, he's a high level miner.
He built his own, you know, mining operating
system.
And when the price was below $4,000, this
mining equipment was super, super cheap.
He's yelling to everybody, hey, start buying
this stuff up, start speculative mining, because
now you can get everything super cheap where
you can start mining all this stuff.
And so what you're going to see is you're
going to see a lot of those unsophisticated
miners capitulate to sophisticated miners
and they're going to buy it at cheap rock
bottom prices and then they're going to start
building up their farms again.
And it's always efficiency, right.
So everybody's going to find a more efficient,
economical way to mine Bitcoin.
We saw it before, we saw people building mining
facilities in the hydro dams in Russia where
they don't have to pay for cooling, where
they get power, electricity.
You're going to see that again.
You're going to find untapped ways to buy
Bitcoin without spending a lot of money on
electricity.
But right now across the world, it's average
around $5,000-6,000 per Bitcoin to mine.
In Venezuela it's very, very cheap because
it's subsidized electricity.
Same thing, you know, kind of all these other
countries, you just get to find more efficient
ways to mine and all these people who are
not efficiently mining like, you know, you're
setting up $20 million facility in Michigan
or New York or something like that, where
you're paying not rock bottom prices for electricity,
you're gonna get washed out.
And I think that halving has nothing to do
with that except that you're going to get
less reward for the same exact output of electricity.
So I don't see it as being a major bullish
catalyst.
I mean, historically, yes, we've seen that.
But I think more of a bullish catalyst is
difficulty adjustments and how quickly you
can mine Bitcoin as well as the lower number
of miners out of the market allows for easier,
easier mining.
So when you wash all these people out, the
difficulty adjustment goes down so you can
buy more Bitcoin and it allows... there's
lots of ways to look at it.
But I think that the halving is definitely
priced in, there's just too many people who
are watching it and the majority is almost
never right.
All right, all right, well, yes, maybe you
guys can tell us, you know, go from long term
to more short term.
What do you see in the next few months?
Just finishing out the year.
Some people talk about, you know, the seasonality
of Bitcoin, how, you know, the winter months
are historically, you know, good for Bitcoin
in price rises.
Do you see that happening this year as we
finish up 2019?
I think it is irrelevant what a time of year
it is.
Bitcoin's, you know, we've been around, for
what, 9-10 years.
I don't think that has had anything to do
with the season or anything like that.
I think you'd actually be better off reading
moon charts, which I've seen so many of them
which actually worked out, and I'm starting
to think myself.
But what I can say about, you know, the next
few months, the price action, I mean, we can
go back to screenshare.
All right, let me bring it up right there.
Let me know when it's sharing.
And so we're good to go.
Very cool.
So next few months of action, realistically,
you know, long term, you know, we are in uptrend.
You know, this is a quarterly chart right
here.
We don't really have that much, you know,
we don't have that much history to really
be aware of.
But for what it is, you know, it is still
creating higher highs and higher lows now,
isn't it?
So the next few months of action.
Looking at a quarter like this, assuming that
we don't break down below, let's call it $8,000
again, I would still be looking at, you know,
mostly probably, you know, probably flirting
around with, you know, the lower tens again
or $10,000, whatever it ends up being.
We could go back and look at the expected
moves chart and kind of just plot out, you
know, what might be the next, you know, he
said maybe three months.
How many days is that, maybe like 90, we'll
call it.
And let's see what it comes up with, I'd say
that we're mostly going to be where it's very,
very likely that we're just ranging somewhere
between about $7,500 and in about $10,000.
So I think what's most likely to happen here
is what everyone doesn't want to happen.
Everyone wants to be a massive bull or a massive
bear.
They're always looking for the major massive
trending movement because that's a very sexy
thing to get.
You get to show your PNL without like your
actual PNL, just like the percentage are alive
for like, you know, a cross-trade most likely
on Twitter, which is great.
But what's most likely thing to happen here,
we probably just range for a little bit longer
and this actually would line up around that
halving date.
So I don't think that Bitcoin has a major
break down before that date.
I don't think that Bitcoin has a major break
before that date.
I mean, for all intents and purposes, you
know, just using the most basic of basic tools
here, there is no reason at all whatsoever
to be bullish on Bitcoin.
As long as we're closing weeklies below, let's
call it like $11,500.
As long as we're doing that, we are still
you know, we're still we are actually just
creating lower highs as far as monthly goes.
And as far as the weekly goes, we're in the
downtrend right now.
So trends are more than likely to continue.
In fact, looking at this weekly right here
and spending a little more time on it, you
know, again, just the most basic of basic
tools, every time that we've gone to a downtrend
on a weekly meaning two consecutive lower
highs and lower lows, it's always resulted
in a year+ of downwards action afterwards.
In fact, as time goes onwards and forwards,
that time gets, you know, that downtrend gets
elongated likely due to just the amount of
people joining into the market.
So going back over here, you know, here's
a first example right here.
Major, massive down, this one maybe a little
bit of outlier, as you know, that's a 94%
move, that's a crash now.
This one right here, we have another like
72%-73% pullback, there it goes again.
And then this guy right over here, another
86.5% pullback, if you want to call it that.
And then this most recent one, we had about
84% pullback right there, right.
Well, let's put this in perspective.
If we're looking at this chart right here
and we quite literally are making, you know,
a downtrend on a weekly.
If we actually autoplay this out, you know,
historically speaking, that would probably
aline with a move down here to this region.
So I actually think that it's a little more
likely that we moved down, you know, within
these next few months rather than move up.
You know, we probably felt the bottoms out
of the range rather than the top side of the
range.
And then maybe sometime like mid 2020 or some
like that, you know, Bitcoin pulls itself
together and puts in another rally.
But for right now, you know, the big areas
that I'm watching and kind of the way I'd
looking at this from from a weekly perspective,
which I think is probably most relevant to
most people, is there's two majors there.
Well, there's a lot of major trendlines, but
there's two major ones that I'm looking at
right now.
This one that we're currently watching, the
process of breaking, which looks very much
like it does want to break, which I'd say
likely leads us down somewhere right around
these low $8,000 region, probably will have
another bounce right there.
If the bounce fails, then I'll be looking
for, then I'd actually be looking for a major
washout down in this region, low $6,000, actually,
which not a lot of people don't want to hear,
but again, you know, what's the thing that
most people don't want to see is a large trading
movement.
So what is most likely?
Probably just range and just piss people off,
you know, people hate trading ranges.
People call it chop.
I mean, that's my favorite thing to do.
That's the bread and butter in my game.
So I'm more than happy for that.
I mean, I don't really care what Bitcoin,
as a trader, I don't really care what price
Bitcoin is.
As a Bitcoin, you know, enthusiast I should.
But again, looking at this right here, you
know, if this area does get violated, the
downside of the range as we looked at, especially
with regards to the next three month outlook,
if you want to call it that, right around
let's call it a weekly closed below maybe
$7,800 we'll call.
Then yeah, I would be looking for this actually,
absolutely collapse down into the low $6,000,
upper $5,000.
You know it's not gonna happen on the snap
of the fingers but it will likely happen over
time by the same token.
I don't see any reason to be even you know,
even like moderately bullish.
From a long term perspective, as long as Bitcoin
is below this $11,500 in this area right here,
we can close above there then yeah, you know,
I would be looking for moves basically back
to the prior highs and likely beyond, but
it's unlikely to happen right now.
You know, I think I'll let the probabilities
speak for themselves.
As a trader, you know, you take your edge
when it gives you edge and that's really all
that matters as a moon boy investor, you know,
maybe a little bit less likely to hear, but,
you know, that's what I'm looking at right
now.
Okay, Jake, what do you think?
Let me share my screen and then.
Okay, so Eric and I, we have kind of similar
trading styles, so it's not as sexy as someone
that trades differently, but I also use moving
averages, price action, RSI and stochastic
indicator.
It just works, you know, so.
So there's no reason for me to not use it.
So what I look for is I look for, for me short
term, I'm just looking at the 4-hour, if we
just pull up our, you know, EMA, MA, the problem
is, is everyone is kind of watching this flag
structure.
And let me get rid of some of this shit.
The only thing about flags?
So somebody was watching this flag structure/pennant
structure, whatever, the issue that I see
is I have a couple of edges that I've been
using for quite a long while and one of them
is funding rates.
I look for extend, it's basically a lagging
indicator, but it's a really good indicator
for me to know which side of the market is
offsides or onsides.
As far as price action is going, and so when
we saw price action basically down here range
between $8,700 and I guess it dropped all
the way down to $7,400, but the funding was
paying long this entire time.
So funding was positive for basically from
all of September to the end of October, almost
for almost 30 days straight funding was paying
out logs.
And so that basically means that shorts, any
position they had taken, they were paying
out on that position for a long period time.
But what that does, that sets up for a squeeze
or a Bart pattern.
And that's what I feel like is mostly driving
Bitcoin price action right now are these open
interest patterns, we see open interest creep,
creep, creep get up to about a billion dollars
and then we see these massive explosive moves
and it usually happens when the futures market
is closed, so I don't know why anybody would
be trading the futures market or even leave
a position open on the futures market on the
weekend because they're just getting absolutely
smashed.
And you can't do anything about your position
because it's a 24/7 market.
But so we see this open interest creep, creep,
creep, creep up to about a billion dollars,
and then we see these explosive moves to the
downside poses most of the upside.
So what I got to do is I'm gonna throw out
the funding indicator and kind of explain
exactly what I mean by that.
So there's a really good indicator called
Bitmex Funding by NeoButane.
But you could obviously just look at this
on BitMex or whatever.
This is a Bitmex Funding indicator.
But what we're gonna do is we're gonna zoom
out look look at it on a daily and I will
expand this and I'm actually gonna change
my color so people can see this a little bit
easier.
So this funding indicator right here, this
kind of shows which side of the market is
getting paid.
So when it's positive up here, that means
that shorts are getting paid.
When it's negative down here, that means that
longs are getting paid.
So what we typically see is just a kind of
example here, where we see funding prolonged
for an extended period of time where shorts
are getting paid and price is kind of consolidating.
What we typically see is we typically see
that long squeeze to the downside because
of the offsides nature, if we see any sort
of spark to one side, we typically see these
positions.
And this is really just mostly like a stop
loss market, a market stop loss/liquidation
cascade.
So what you see is you see a little bit of
movement and then what you see is you see
the 25x leverage traders, they get liquidated
and then that pushes them down where they're
having to buy back into their position.
So they're buying in or they're selling their
positions.
If it's a long squeeze to the downside, if
its shorts it's the upside, then you see is
100x, 50x, 25x, 10x traders and it kind of
cascades it to the downside.
That's what we sort of typically see with
these Bart patterns.
And so we saw that back here where the funding
was offsides for quite a long while, where
we saw a little bit of movement and then we
saw that long squeeze exposed too much to
the downside.
Then we see the funding rate was on the other
side where basically longs were paying shorts
for an extended period of time.
But that means that longs were out of position
because with longs paying shorts, that means
that most people are long, sorry, when shorts
are paying longs and vice versa.
So in this area, shorts were paying longs
for about a month, right?
So that means that longs were getting paid,
getting paid, getting paid.
So if you have a million dollar position,
you're making let's say 0.2% per day.
That's a pretty solid return each and every
day.
But again, when we see that nice spark and
this was just off the Chinese news, but we
see a nice spark, then you get the 50x traders
liquidated and 25x then 10x traders all the
way up here.
And now we've just been chopping.
But what we typically see is we typically
see big move and then a slow bleed back to
origin, big moves, slow bleed back to origin.
So that's my edge, that's what I've been trading.
But I also watch for whether or not big positions
are being open and you can see that with open
interest and other things.
And so that lets me know whether or not I
want to be in the market right now.
I see that longs are basically paying shorts
right now.
So the majority of the market is long.
I see a lot of death crosses happening on
the 4-hour.
We just lost our 200 simple on the daily hour,
so we lost our 200 EMA on the daily.
We got rejected at the 200 simple on that
last move up to $9,300.
So to me, I'm about 70% bearish.
I am hedged from uphigher into a short position
and I basically kind of been abandoned in
this little choppy range and mostly I've been
trading alts.
I know that Eric's not a huge fan of alts,
but for me that's my bread and butter.
I'm a very good altcoin trader.
I can watch a lot of volumetric movements
and orderbooks and I love watching buy/loss,
sell/loss.
So that's where I make a lot of my money specifically.
So right now I mostly just hedge on my Bitcoin
trading and I'm mostly just trading alts.
Cool.
So actually, let's throw it back to Eric,
actually, I'm curious, so you're not really
an alt-trader.
What's your strategy or your philosophy about
not trading alts? and.
Sorry.
Jake, you switch yours, is it?
To me, it'd be like trading drugs, basically.
It's like, what's the point there?
I just don't understand what the allure is
with alts.
But also, I think that's for alts, I think
what most people say the allure is with alts,
and this is completely discounting that, you
know, you're not a fundamental investor.
None of these things have fundamentals to
begin with.
But you haven't read the white paper and you've
done all the research and do you truly believe
the project?
That's a whole different thing.
The reason why I don't really care to trade
for alts is because, yes, they do have some
pretty massive moves, absolutely, which look
really, really cool.
But getting those moves is almost impossible
with the liquidity available in these assets.
You can't market a million contract position
into like pretty much anything that's not
Bitcoin, even Bitcoin, you're going to move
it a little bit now too, used to be like you
had to have about 10 million marketing you
probably would move the marks a little bit
with that.
But now, you know, it's actually quite less
anyways, the alts are significantly, significantly
further down that.
So I just see it as more of a risk than anything,
because if you do get into position, assuming
that you even get in your buyside and you
get all your perfect fills, what happens if
that goes against you?
Well, you're going to have to get out.
And how you're gonna get out on an asset that
is very illiquid, probably you're gonna have
to market it at some point, assuming that,
you know, if things do get in a truly desperate
situation, which if anyone's who traded for,
you know, for a long time, they can tell you
that the worst can happen when you least expect
it.
And for me, that's just a massive risk.
I'd rather not deal with that.
And again, this is not to say that people
who have, you know, done a ton of research
into, you know, X, Y, Z change, whatever,
whatever it is right here, if you know, that's
a complete different game.
Perhaps you have your merit, perhaps not.
I'm not here to judge that, I'm not really
here to judge anyone to be fair.
But, you know, going back to Bitcoin, that's
the allure of Bitcoin right now.
You're getting these crazy moves.
It's very, very volatile already.
And we already have 100x leverage on top of
that.
So even if, you know, it just doesn't make
sense to me to trade it alts as a trader to
begin with, because you can get those that
same possible percentage gain or loss just
based upon it.
You know, if you really wanted to you just
add leverage onto it, you know, on top of
these absolutely massive moves to begin with.
I mean, this is just insanity what we're looking
at.
So I actually do want to put back on the screenshare
once again and talk a little bit more about
Bitcoin.
Before we do, if I can head back to your screen,
we'll give you a chance to show a few more
charts.
But I'm curious just for Jake to respond on
that point.
You know, like Jake, what does the altcoin
market have that Bitcoin doesn't, besides
illiquidity?
Everything is illiquid.
I traded Ethereum, I traded EOS, I traded
Ripple, and I found plenty of liquidity in
my opinion.
Obviously in the last year, the liquidity
has gone way down.
Considering where it was, I think 2017, 2018,
I could trade million dollar positions very
easily on almost any altcoin on Binance.
The volume was, you know, 4000, 5000 Bitcoin
24-hour volume.
Now it's like hard to find a top-10 coin that
trades above like 500 bitcoin volume on a
consistent regular basis.
But on derivatives exchange like Bitmex, you
could still find some good, good liquidity
for altcoins.
But I will have to clarify, I will trade Bitcoin
when I see good Bitcoin trading opportunities.
But I trade to all markets, right.
I trade options, I trade bitcoin, I trade
stocks, I trade crypto.
I just like to trade where the market's moving
and when Bitcoin is stable and choppy and
let's say like a 2% range, you'll see big
swings on altcoins where you can capture 40%
to 60% moves on an altcoin.
And you know, I'll throw $50,000 position
in there.
And that's a great I mean, that's a great
trade.
And there are very, very obvious and easy
setups for the, you know, if you've been trading
them for a long time, I mean, you could see
the market makers, they have all their little
buy programs in the market.
And so for me, it's just such an easy market
to trade that I don't see a reason not to
trade it, but for a very first time trader
who's never traded, it's not the best idea
to try and trade like a shitcoin that has
less than 25 Bitcoin volume because of what
he said.
And we saw this with emerging markets and
we saw this in the currency markets where
the people, you start with the majors, right,
you start with, you know, the GBP, the JPY,
the USD, the Euro.
And then as you start to trade, you start
to get into these really, really, really shitty
currencies that are really, really small caps.
But they move like, you know, massively in
a day.
But the risk is if something happens, it's
really hard to get out of the market.
And we just saw this with the massive market
crash in general.
So Bitcoin is by far a safer trade just based
on liquidity.
But if you have a very small portfolio, $1,000
to $5,000, I think that trading altcoins is
fine because it's just easier to spot, you
know, big trades like 40% to 50% moves.
Whereas if you're not an experienced leverage
trader or anything like that, it's harder
to get that in Bitcoin.
But the other thing with Bitcoin is you see
massive, you see massive stop in really choppy
ranges.
You see a lot of Darth Maul candles where
it's really hard to manage risk because the
orderbooks can get really thin.
But, you know, to each their own and everybody
has their own trading style.
I like to trade both I like to trade Bitcoin
and I like to trade altcoins, but I don't
trade them both simultaneously.
I like to trade when the market conditions
are right, when the altcoin markets trading
up, when Bitcoin dominance is starting to
fall, I think that altcoins you can throw
a dart and make consistently 10% to 20% on
a trade.
All right, interesting.
Yeah, I'd have to push back on that a little
bit.
And again, teach their own.
You know, if it's been working for you, it
works for you.
You know, if it has been working for you,
then you certainly have more skills than me
with trading those, but just looking at something
as simple as CoinMarketCap, we can very quickly,
quickly see that is just not true.
Look at the trading by volume even in just
the top-5.
This is abysmal.
This is literally fucking up, this is a joke.
It is what it is.
Even Bitcoin volume is not that great.
I mean, again, you could move the markets
probably with just a few million bucks.
I mean, you can really put a dent in the market
with just that much and most people have way
more than that.
I mean, to me that, you know, that anything
less than that is just humongous risk to begin
with.
But at least on Bitcoin, if you need to get
out, you can probably get out.
Assuming that you're not on Bitmex and a service
not overloaded.
But look at it, you know, just looking at
it right here.
This is pathetic, this is absolutely pathetic.
I mean, what the hell is it?
Cardano is trading 54000 volume per day.
What the fuck?
That makes very little sense to me.
You know, and this is the top-10.
I mean, there is multiple pages on this CoinMarketShitCap,
which, you know, if you start, god damn, looking
at this one right here?
This is just scary.
I just...
If it's been working for you, man, it's been
working for you, I would say that this is
just one catastrophic event from just a humongous
disaster with my own account.
Going and looking at some alts, I think that
you referenced Ripple.
We can look at Ripple right here.
Actually look at it versus the Bitcoin parent.
Give it a little bit of justice.
I mean, this is just a daily.
This is just a daily, man.
This is just very illiquid markets, very,
very illiquid markets.
I mean, what the fuck?
How do you know, assuming that, let's just
say that you got your position right here,
whatever, you know, whatever it might be,
and you get a massive wake up.
You're fucked.
That's just a catastrophic event, so to me,
that's more risk than I'm comfortable with
as a trader, that's already enough risk in
just using TA to begin with as an edge because
TA is not perfect.
You're most likely gonna take losses.
I certainly take losses.
I've been around some of the best traders
in the world.
They certainly take losses as well.
It's baked into the strategy.
But this is just too much, man, it's too much.
So in my opinion, that's why I don't trade
alts.
But again, then, you know, you know anyone
who's looking out there, if you've been doing
that, if you're like Jake and you've been
making money with, you know, with their positions
on an asset like this, and this is not even
like the top-5 we're not even talking about
like, you know, I don't even know it's on
page 2 or 3.
It's just too much to deal with.
And as a trader, I don't want any more risk
than necessary.
But would you agree that when they trend,
they trend much, much harder and much longer?
I mean, it's very easy to identify a trend
build positions.
I don't know, I've been trading for years.
Well, let's look at this right here.
I mean, let's look at Ripple, right?
You reference Ripple.
When they trend, they trend hard.
I mean, this is just a pump and dump.
This is the definition of a pump and dump.
Pump it all the way up, literally dump it
all the way back down to where it started.
I don't see this as a trend.
I don't see, I mean, you know, could traders
make money off of this?
Yeah, absolutely.
But to say that a trend is hard, I mean, this
is just the pump and dump to me.
I mean, you can say the same thing, I mean,
we could bring this even one step further.
Let's go look at that.
That's basically the entire cryptocurrency
market.
Oh, yeah.
I mean, look at Dogecoin, right.
Legitimate pump and dump, right.
I mean I left an incredible amount of money
on Doge.
It just literally bleeds back to base value
and then pumps.
I mean that trends hard.
Trends all the way down then all the way up.
Trends all the way down then all the way up.
Yeah, I mean, yeah, it's interesting.
But I mean, is that like, you know, when you
know when to get out, right, you can maybe
ride those waves.
But I mean you're definitely not trading the
same on these altcoins like you would on Bitcoin,
are you?
Oh, of course not.
You can't use the same strategies for every
asset, for every market.
And I would say that, you know, you can use
similar strategies, but Bitcoin trades very
different than Ethereum, and Ethereum trades
very different than Ripple.
Like Ripple hasn't been that sexy lately.
It's been a very, very tight consolidating
range for almost like two years.
It hasn't had much allure.
Ethereum has been a dream to trade.
And I would push back a little bit on the
volume.
I mean, Ethereum has almost 8 billion dollars
in volume.
That's nothing.
I just have to disagree on that one, that's
fucking nothing.
I mean, I trade a half million dollar position
size and I had no problem getting in getting
out for my positions.
But, you know, it sounds like I'm trading
like a million dollar in positions in less
than one million dollar volume.
All right.
So the point that I'm making with that then
is that for me, yes, you might be able to
have a very good result.
You might gonna have, you know, similar results
we get on Bitcoin.
But you get extra risk with that.
So you're saying you lower your position down,
well, that makes sense.
Yes, you want to lower your size, absolutely.
But it's still just to me, it doesn't make
sense as a trader to add in more risk than
really necessary.
That's what it's always gonna come down to.
That's why I kind of gravitate a little bit
more to Bitcoin.
It just plays a little bit more tactically
than most of these guys and at least has 10
years of history of it, actually, you know,
not what we see with almost all of altcoins,
which is just, you know, for the most part
be irrelevant, although there are few that
stand the test time.
Ethereum, as you said, has kind of stood the
test of time, Litecoin and Ripple, actually,
although, you know, the one that people hate
the most, funnily enough, it's actually been
around quite a bit, which does speak for itself.
But for the other ones, I just you know, most
these projects have very little interest in
ever doing what they ever set out to do.
You know, they're probably not going to come
to their goals.
And you have these charts that are just going
to be very, very sad charts, the same charts
we see from 2014/2015, which are still basically
irrelevant.
Are they dead?
No, they're not going to go to literal zero.
But there is an opportunity possible in these
trades, like let's say you get one of these
trade, let's say you get into Dogecoin trade.
And what if it doesn't pump again?
You know what if the game is over.
And then now you know, now it's an opportunity
cost.
It could've been somthing else that is actually
moving in your direction.
And so the way that I think about it, and
this is not to say that this is the only way
to think about it, you know, again, if you've
been making money doing what you do, fucking
more power to you, man.
But the way that I think about it is that
if I'm in an asset that is not moving and
there's another asset that is moving, which
inevitably in a market, especially with trading
in altmarkets, there's got to be something
that's moving.
That's yeah, that's kind of a loss of potential
gains.
So I look at that as a bad thing.
I mean, so, yeah, I can understand that, but
we take on inherent risk in crypto in general,
so people that are in crypto are generally
more on the "I want to want to be exposed
to risk,".
There is a difference between being exposed
to risk with Bitcoin, which doesn't really
have a CEO, doesn't really have, you know,
anything that can truly get in the way.
In the same way that if you have maybe like
a just, I'm picking a random one, Vertcoin,
you know, I'm assuming that they have some
sort of a CEO.
What if he comes out the next day or what
if he gets arrested?
What if he dies?
You know, something like that.
That's unnecessary risk, in my opinion.
I'll just give you an analogy that makes sense
for you.
So I was trading Ethereum and there was a
fake news that Vitalik Buterin died in a car
crash.
This was like early 2017 and the price dropped
by about 50%.
I understand what you're talking about, so
I'm going to give you a point to your favor.
I think we need to really differentiate between
what the hell we're talking about.
First off, I'm talking about trading.
I'm talking about maybe, maybe swing trade,
maybe three days to a 30 day trade.
I'm not talking about holding it and investing
in these altcoins or these cryptocurrencies,
although there is merit to hodling.
If you find the right project, I think that
hold line is a very overrated mean type philosophy,
especially in cryptocurrencies where there
is no way to peg value to these altcoins.
I'm talking about specifically trading, getting
in, getting out.
I'm not talking about holding these for an
extended period time.
And there's plenty of time to exit a position.
Even on Ripple when it got to $3.
You still had over a week to sell above two
dollars and eighty cents, it's not like it
went from $3 all the way back down to 30 cents
in a day.
Some of them do, I understand that.
But I mean, if you understand how to trade
altcoins, then there is a lot of potential
to be made.
But for a seasoned professional veteran trader,
you know, Bitcoin is by far, you know, it's
a less risky asset.
I just have made a ton of money trading altcoins.
So I continue to trade them because they have
very explosive moves.
So we can agree to disagree for sure.
That's great.
That's what this duel is all about.
So, you know, different perspectives.
I know some people are on both sides.
And I think you guys both make really good
points.
So I don't want to keep us too much longer.
But Eric, did you have some more thoughts
on Bitcoin moving?
Yeah.
So if you're looking at, I think you also
wanted a little bit more information on recent
price action.
Where are we headed in the next week or so.
Over the weekend, you know.
What's around the corner for us?
Here's our chart.
Don't really care too much for 4-hour in general.
But we are in the midst of a death cross between
the green 55 and the purple 200 right here.
Yes, technically, you want to use the 54 death
crosses.
Next exponential is going to be about the
same things.
Few more periods, actually mean that's a little
bit worse.
The thing with this is, is that when we have
these crosses, both golden crosses and death
crosses, this is probably the lowest timeframe
that I've found that holds merit when it's
on the overall side of the dominant trend,
meaning a weekly.
Those signals play out and they play out,
you know, harshly.
For example, write it over here, for this
last break down from about $10,300 to where
we are, right, where we got down to like low
sevens or mid sevens.
You know, that was a 30% move to the downside.
If we go back a little bit further and we
actually take one of the positive examples
for Golden Cross right here, dominate trend
moving up.
We break the structure and so we get the 200
simple supporting.
And, you know, this one a little you know,
a little bit unfair of an example.
But just to show how good it can get.
You know, that's a 3% move to the upside,
of course, you know, another example with
the downside right here, dominate trend is
down for all of 2018.
All the death crosses during 2018 were very,
very good.
This guy right here, this guy right here,
this guy right here and this guy and this
last guy right here.
So what I'm looking at right now and this
is going to be most relevant to the price
action that's coming in the next week, week
or two, is if we actually do get this death
cross, which could be initiated as soon as
like, you know, later today, I guess.
And it will inevitably happen as long as you're
below the 200 exponential moving average which
is $8,850 right now.
So we're well below, although, you know, you
never know when Bart shows up.
So, hey, if we do get back above $8,850, this
all goes out the window.
Another probably short term, medium term looking
for move back up to like $9,100-$9,200 region.
But assuming that that doesn't happen and
assuming that we continue to use 200 simple
as resistance here.
You know, this would line up with another
pretty nasty move likely back down to the
low $8,000s.
I would be looking for a bounce likely in
the low $8,000 somewhere around maybe $8,100-$8,200,
within that region.
You see this nice orderblock coming in from
our late-September region.
So, you know, we'll have to reassess it after
that.
But kind of putting two and two together once
again.
It's going back over here to the weekly.
And looking at this right now.
Well, actually, let me take these guys off.
We'll get to them a second.
So the yellow moving average right here.
There we go.
And let me get this guy right there.
And we put on the red.
OK, beautiful.
So the yellow moving average is the 21 exponential
moving average which Bitcoin loves to play
off of, you know, let's play off of, you know,
as support and his bullish markets and resistance
in its bearish market.
It's not perfect, but it gets the general
feeling up and we can expand this quite a
bit.
So going all through the dawn of time, essentially
all of our major dumps were too essentially
to this level, buoys at back up, if we're
bullish.
And, you know, the highs continue to go upwards
and outwards.
And same thing for when we lose it to the
downside.
The first take that we lose it is, you know,
is a catastrophic crash right here, right
here as well.
And more recently in 2018 happened right here.
What's going on right now?
Well, we're actually in danger of breaking
it.
And this will close, this will confirm at
Sunday 7pm EST, I believe it is.
And that's probably coming in right around
about $9,000.
A little bit below $9,000.
So assuming that we do close below it, to
me, this is you know, it's going to likely
set in the greater trend going onwards and
forwards for next couple of months, probably
even into the end of the year.
And we probably do find ourselves at the very
least at the bottom of this range.
And if that range breaks and very, very likely,
much, much, much worse than that.
But like I said, we could take it one step
further.
Looking at both this red moving average and
21 in relation to each other, that is the
red ten symbol that it's the yellow 21.
When they have the lower period cross into
the upside of the higher period meaning the
10 above the 21, it's exactly what you think.
Intuitively speaking it means that the trend
is strengthening as you know to the upside
in this example.
It is blindly trading this over the history
of time has been pretty darn profitable to
be fair.
Selling it right here, while it's not like
the best entry, it does get the momentum and
gets the momentum for the next year and half
of price action.
And this guy right here, you know, equally
as awesome, you know, 300% move the upside.
Fuck, yeah.
So, you know, we can we can back this all
the way back over here.
Yes.
We do get a few one offs.
But for the most part, once these guys get
divergence between each other, that's when
we get big momentous moves.
You know, more, you know, multi-thousand dollar
moves on top of that.
In fact, if we actually just look at the slope
analysis of these guys, there's a very, very
specific signature that we see in the history
of Bitcoin.
Whenever we see both these guys having negative
slopes, meaning the 10 simple and 21 are both
angled downwards, I mean it's exactly what
it sounds like.
The average price is down.
And when they're barely crossed, we actually
have a pretty nasty, pretty nasty history
of this.
All the way back right over here when we get
a negative slope on the 10 simple and the
21, you know, that's a little correction right
there.
70% correction to be fair, this guy right
here, same sort of thing, this one playing
out all the way down to, I think this one
has 80% move, although even if you gave this
one benefit of the doubt, and so that's you
know, you actually had a nice little bottom
right.
It's still, what, a set of 50%, 60% move and
then we get another trigger right here.
That's another 75% move interface.
And then same thing right over here.
So we are in danger of getting the bearish
cross of this.
And more importantly, where we're in danger
of getting a negative slope on this.
Take this even one step further on top of
that.
Looking at CMEs, which I put more weight on
CME charts than I do on spot chart as they're
the most professional exchange.
And I do believe that the most money is probably
interested in looking at this chart right
here.
This one's already broken.
If you go look at GBC, which not the best
thing to be looking at, to be fair, but broken
and now using it as resistance, pump and dump.
Not good.
Now, if we do take out last week's low, I
would be looking for attenuation back down
and lower end of the region so that, you know,
that's next few weeks of price action.
But this is all again, coming off of the assumption
that we actually do get that initial for our
signal and then everything else kind of plays
out, you know, looking for the avalanche of
effects.
We'd actually even look at this, just one
last thing, you know, I promise.
I'm going over here and checking it out, what
is this, the VWAP Ratio.
And credit to Willy Woo for this.
He's a goddamn genius.
I've been trying to reach out to him.
No response, but it's all good.
And I do want to thank you for this, because
this is amazing tools right here.
So this is the Bitcoin VWAP ratio.
And there's a very, very specific interplay
between the relationship between all these
different moving averages on the VWAP, right.
We see that not only is it just they're posturing
around where my cursor is right now, that
kind of judges, whether we're generally bullish
or generally bearish, there's actually much
more complicated stuff on top of that.
We also think that the interplay between the
positioning of the most reactive, the blue
to the purple, which is semi reactive, and
then you've got the pink, right.
It's like some sort of red.
What is the one with like the suits to whatever
the fuck it is.
I don't even know it's some sort of children's
tale with like you know what I'm talking about.
The three bears, if you want to call it that.
Awesome.
Anyways, we do see that, first things first.
There's three prongs of this, if you want
to call it that.
I want you to kind of imagine a regression
line where my cursor is right now, I kind
of just running it across right there.
When they're all about there - generally bullish,
when they all are below there - generally
bearish.
Now, the relation between the blue, purple
and pink speaks to the strength of that trend.
So when we have the blue, the most reacted
to trading above the purple, trying to the
paint all above the regression line.
That's a bull market.
That's right here.
That's right here.
That's right.
And more recently, right here.
And of course, going all the way back right
over here as well.
And then the divergence between all those
moving averages on the VWAP.
Can you maximize that so people can see that
a little bit easier?
Let's see.
I think there's a full screen on that.
So the opposite of the opposite logic applies,
right.
When we see all these guys below that regression
line, that's usually when we play in our bear
markets.
And when I say in bear markets, I mean, you
know, those like the 70% moves to the downside,
we're talking about i.e. crash.
You can see right now or so, let me just show
what it's done in the past first and then
we'll kind of go to our current area when
they all kind of trend low right here and
we see especially the purple with a little
bit of pink.
That was the beginning of the high of $20,000.
Yes, a little bit of a what is called a lagging
indicator.
But you don't really care about a lagging
indicator when it gets next year and a half
where the price action.
Same thing right here.
We see them all go down.
That calls this top right here.
And then we see the same thing after this
bull trap right here.
You know, once again, remember, this is a
70% move to the downside.
This was also like a 75% move to the downside
right here.
It doesn't look like much because it's a log
scale, but it was really, really nasty.
Same thing right here.
The same sort of interplay.
And this, again, doesn't look that nasty,
but this is very much a 75% pullback right
here.
And this guy right here, you know, an outlier
of probably 94%.
Anyways, what we're doing right now is we
are in what I think it's kind of like the
dangerous territory if we actually are going
to play as some like legitimate downside,
because we have both the purple and the pink
below the regression and they're starting
to get diverted away to each other.
The blue is still reactive and above, but
it is angled down right now.
And even in the past when we've just got both
the purple and the pink in that portion below
the regression that has let on to that, that
it's actually been good enough to get at those
70%+ moves to the downside.
So getting the blue, which is more reactive,
it's kind of like icing on the cake and probably
speaks more, and my theory is that it speaks
more towards like the longevity of that trend.
So, you know, in a really aggressive one,
like this guy right here, this plays out for
a year.
Right.
This guy plays up for a year as well.
We get them all like perfect portion for bearish
market.
So that, again, speaks to all the same corrections
that we've seen going back on over here.
You know, from $20,000 or high from Bull Trap
right here, from you know, from high right
here.
And these are all again, they're like, you
know, high percentage move 75% right there.
This guy right here.
72.5%.
This guy right here.
Another 76.025% this one right here.
That's kind of an outlier.
And this guy more recently, about 83%.
So if we just even take the lower echelon
of that, does that kind of line up with what
we're looking at right now?
Well, let's just play around the numbers.
Right.
And I want to preface this statement by saying,
hey, this is really experimental.
This is mostly just for like a crypto duel
because you might as well talk some shit right
now, you know.
But at the end day, like looking for this
to happen.
Am I angling my trades for this right now?
Fuck, no, I'm not.
You know, I could care less, really.
I'm mostly a rain trader, you know, both of
us are.
But if we do play out like a 75% down, which
is pretty much par for the course of these
signals that put us right around our prior
lows, around 4,000 bucks if we actually put
on a major moving averages especially the
200 simple, and 377 and 200 exponential moving
average that actually put us back down around
the 200 simple right here.
Right.
Which pulls up of our 2018 lows and also our
2015 lows going back on over here.
So I would like to say that as a absolutely
deathly scenario, if you want to call it that,
not the thing that I'm looking for the most
happening, not the thing that I really want
to happen either.
You know, that is possible.
So for all the people, you know, looking for
the halving to produce like, you know, back
to $20,000 and then or double or whatever,
whatever they're thinking.
I just don't think that at least for myself,
speaking just purely true to my strategy,
I don't see any reason be bullish on Bitcoin
until you get back above this area right here.
And I mostly be looking for raging action
back down to high 7,000, low 8,000 better
embrace then we could legitimately talk about
a scenario like this longer term.
Again, you know, it's highly experimental,
but there are, you know, you know, there's
no things in there for me to give it to some
merit.
Give it some thought.
Yeah.
Okay.
And just very quickly, we're running out of
time, so we got to wrap up.
Pretty soon, but Jake, what do you think about
that whole analysis?
You know, yes, it's speculative, but do you
mainly agree with broad strokes?
You know, kind of a little bit of warning
to the bulls in the next few, like few weeks?
Few months.
Yeah.
I mean, it's not very popular to say and I
have been publicly short since about 9,900.
I've showed all my positions and basically
I've highly recommended hedging short at least
just to keep your portfolio USD neutral.
When you get a massive move that's like the
biggest third largest candle in history in
your USD portfolio, for Bitcoin goes up 43%
a day.
I like to lock in those USD gains, you know,
when your portfolio was up 40 percent a day.
You're kind of an idiot if you don't want
to take profits or at least lock in some of
those profits.
But so I'm not sure my screen also really
quick and kind of just go over some broad
strokes as well.
So I do agree, I do agree with the Death Cross.
I do agree with his moving average analysis.
I'm a big moving average trader myself.
But just making price action, I'll kind of
go over some stuff that's like really simple,
really basic, but kind of shows like kind
of where we're at.
So this blue line at the top here, this blue
line on the bottom, this is the weekly closing.
This is the weekly open.
The previous prior weekly open.
So basically we just got rejected at the weekly
opening.
But also we got this internal trend line that
there was basically resistance here and an
acted as support one, two, three, four, four
times in of this descending triangle that
everybody was watching.
But basically, this moved down and then this
move back up was a bearish retest.
That was not a bullish move.
As much as people wanted to say that was a
bullish move, that was just a bearish retest.
We never actually broke back above the previous
supporter that acted as resistance.
We got rejected once.
We got rejected twice, and then they swept
the highs and they also grabbed all this liquidity.
To me, that looked like more of a positional
shortfill than anything else.
Yes, it was a short squeeze, but this massive
weak rejection, especially at the bearish
retest and it couldn't close above, that was
incredibly bearish to me.
Now, the one thing that we do have going for
the bulls is we did break above this, the
simple resistance level that was acting as
a downtrend resistance, a kind of a dynamic
resistance rather than just a horizontal level.
And we've tested that one, two, three, four,
five, six times and it has not broken yet.
Back down to the downside.
So if we can hold that level or if we can
at least break out of this wedge that I can
see is definitely ranging back up, maybe to
test the 9,400-9,500 level and get in another
crack at the weekly level.
But our monthly level is also about the same
level it's around 8,000.
Now I'm going to share a chart that isn't
mine and kind of go over some of the same
stuff that he went over.
So Willy Woo is part of Adaptive Capital which
is a which is a fund with David Puell and
Murad Mahmudov.
And there are a couple of my close friends
and Murad shared this chart with me.
And it's kind of interesting what he said
is he's watching for the 8,000 to about 8,200
level.
And you've got that basically you've got the
yearly pivot right around the 8,000.
And you've got the the VPBR, which stands
for a volume profile range, a visible range.
But basically the VPBR is sitting right around
8,000 as well.
And you've also got the the yearly VWAP from
the December 25, 2015 bottom sitting right
at around 7,900.
So there's a lot of confluence and also the
78.6 between the 70.6 level retrace of that
bullish move.
But there's a lot of confidence around that
8,000 level.
So I do agree with Eric that I'm watching
that 8,000 now we break that, then all probably
will break loose.
We'll probably see another massive long squeeze
to the downside.
But I am watching for right now, I'm head
short.
But we are in this kind of consolidating wedge
structure with prices, you know, consolidating
between the previous resistance and the topside
resistance, which is active as support right
here.
So I'm watching for a break down or a break
up of this range.
I don't see any reason to be long at this
point.
Funding is still paying out shorts and so
it's paying for me to be short.
I've actually made a good amount of money
just by holding my position.
The Holy Grail is when the price goes down
with your trade and you're making money on
funding.
That's like the best feeling in the world,
in my opinion.
So I'm also leaning bearish about 65%-75%
percent bearish.
I don't see any reason to get along.
I don't see any accumulation buys from the
big boys on Coinbase either, which is another
telltale sign.
But we are kind of retesting this topside
resistance and it's acting as support right
now.
But real quick, I know we're running out of
time.
Actually we only have 1 minute left.
I do agree with Eric that the Bitcoin futures
chart is by far the chart that you should
really be paying attention to.
And the level that held our lows was a 61.8
of the total move from the swing to the swing
high, as well as the 200 simple.
And we rejected right at the 38.2, as well
as this internal trend line.
We got rejected right here, though, been in
an extremely beautiful short around $10,000,
but unfortunately didn't get that short.
I got the retests up here on 9,100.
We do have a descending channel right now.
We're coming back to the 200 EMA which did
support this random spike down, which took
out a lot of liquidity here.
But if we could hold the 8,400 level, I think
8,400 level would be a decent play to get
long.
But right now, I'm not trading that.
I do want to see some reaction from the bulls.
Jake, we got 15 seconds.
It's just interesting watching spot in futures.
So you got to watch both.
Guys, thanks so much for this crypto duel.
It's been awesome.
And we'll talk to you soon.
That's f%cking awesome, man.
Massive respect, Jake.
Massive respect.
So, thank you, Eric and Jake, a little bit
of warning for the bulls.
And a little bit of difference on opinions
on altcoins.
But that's what we're all about here in Crypto
Duels.
So, be sure to check our YouTube page and
like, subscribe and hodl.
