# Bitcoin Volatility Compression Signals Major Market Breakout

**Podcast:** The Milk Road Show
**Published:** 2026-08-18

## Transcript

All of these are kind of pointing towards the fact that if we haven't bottomed, we're so close that it's risky to not be scaling in at these levels.
Bitcoin has been range bound around 64k for over 45 days now.
Are we just going to bounce in this channel forever?
Or is Bitcoin about to break out, break down or break dance?
Hello and welcome to the Milkrow Show, the podcast that knows that staying parked at 64k is not what most people had in mind when they said that Bitcoin was a store of value.
I'm your host, John Gill, and today is Tuesday, August 18th, and today we are joined by Matt Crosby.
Matt is the former director of research and analytics at Bitcoin Pro and is now pivoted back to look into Bitcoin.
We'll have them explain what all that means.
But he is a great on-chain technical analyst.
He is an expert on market cycles on Bitcoin and all things Bitcoin in general.
He's going to share a ton of alpha with us today.
I'm going to ask him to unplug Bitcoin and plug it back in and see if that fixes things.
But if that sounds good to you, make sure you like and subscribe.
Share this episode with somebody who's going to enjoy it.
A reminder that our podcast today is free and that would not be possible without our wonderful partners at Sabre.Money, the stablecoin payments platform built for Asia.
So keep an ear out for more information about them later in the episode.
But without further ado for now, welcome back to The Milk Road Show, our old friend, Matt Crosby.
How are you?
I'm very well, thank you.
How are you, Joe?
I'm doing pretty good.
I would be doing better if Bitcoin was over 100K.
Wouldn't we all?
I would like to start there, Matt.
Bitcoin has been chopping around like a lumberjack in this range for over two months at this point.
I think Bitcoin is almost exactly the same price it was the last time you were on this channel.
Just give me your updated outlook on Bitcoin here.
What's the high-level picture you're seeing in the markets?
It's been a long summer.
It's been a whole lot of nothing going on.
Before I come...
Back on the milk road, I like that I'm a bit more of a recurring guest.
I always go back and look at the previous episodes, be like, what did we talk about?
What can we talk about this time?
And as you said, literally nothing has happened.
It has been the most boring, sideways, choppy, consolidationary summer in recent memory.
But in terms of where Bitcoin is, I'm still thinking Bitcoin looks pretty attractive down at these levels.
And I don't think this period of nothingness is going to continue too much longer.
So if we look at the Bitcoin volatility, which is just as cyclical as the price action, we have bull and bear markets and we have periods of expansion and contraction.
If we look at the Bitcoin volatility, as measured by the rolling volatility on a one week basis, as measured by the Bollinger Band widths on the standard 20 day basis, we're in some of the lowest levels ever recorded.
This was a few days ago, but we reached the bottom about 1.5th percentile.
meaning that it's incredibly rare to see Bitcoin's price action so stagnant.
And the one thing that we need to take from this is, again, Bitcoin's volatility is cyclical, almost like a spring being compressed.
Once we see such low levels of activity and an exciting price action, it's not long before that resolves in a much larger and more trending move.
So if we actually compare the price action volatility, the range that we typically see, prior to Bitcoin reaching such extreme levels of low volatility, we can see we usually have a move two plus times greater than the volatility we'd previously experienced.
So the median move after we've seen Bitcoin in such low periods of volatility, we finally break out is about 10% in a week, another 50% in the following quarter.
I think we're very, very close to seeing Bitcoin finally breaking out of this $64,000 range.
I was writing an article earlier today and I had that Groundhog Day meme where it's, you know, Bitcoin's at $64,000 again.
It just feels like never ending that we've been going sideways.
I don't think that's going to last too much longer.
And in terms of why I think this is still a good region to be considering accumulating Bitcoin is because even if you think we could have a bit more of a volatile move to the downside, if there's a black swan, if you're a four-year cycle believer, whatever it may be, I think it's hard to deny that there is...
a hell of a lot of value to be seen at these levels.
This is one of the newer charts we have, the MVRV quantile bands.
Now, I actually showed something similar to this on our previous stream, but that was just in trading view.
That was almost a working prototype.
Now it's officially live, published and free for everyone to use.
It shows you relative to the realized price or the average accumulation price, the cost basis of all Bitcoin on the network, the ratio between the underlying price and that cost basis gives us these MVRV quantile bands.
When we're incredibly overvalued, you can see we're reaching these upper 90 plus percentile ranges.
And if you don't want to sell, that's fine.
But maybe at these levels, you can maybe scale in a little bit less aggressively, put a little bit of cash to the side for days like today, where Bitcoin is at incredibly discounted levels.
Recently in the bottom fifth percentile, currently at around the 12th percentile.
Regardless of which way you're looking at Bitcoin, if you're waiting for...
$55,000, $50,000.
If you're waiting for October the 6th or whatever it may be, I think it's risky to not consider at least having a little nibble at these prices because to me, it's buy one, get one free sats.
Hi everyone, this is John.
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Okay, so I want to unpack a couple of things.
You just went through a lot of information, a lot of charts here.
But that first point about volatility, I think, is what really stands out to me.
I was watching another on-chain analyst, and he said that Bitcoin, throughout its history, 94% of its history, it has had more volatility than it does right now.
So only 6% of Bitcoin's entire history, the entire history of Bitcoin, has been this low in volatility.
So a lot of people are saying, just like you said, that...
That's unlikely to continue.
We will see a rise in volatility on Bitcoin.
But the question that comes up naturally is volatility doesn't have a direction.
Do you have any kind of tilt in your bias in the data that you're seeing one way or the other if you're expecting that volatility to be the upside to the downside or are you not sure right now?
So as any good analyst.
I have an answer for both directions, almost a get out of jail free card, if you will.
So I always have a backup by saying, well, I did say that could happen.
But no, my bias is to the upside.
As we've said, we're at some discounted levels right now.
But I do have some data which kind of supports the fact that I think we're so close to a bottom.
either occurring or having already occurred, that the path of least resistance is to the upside.
So I'll first cover the bullish case and then I'll cover the bearish case.
Again, if anyone says they know exactly what's going to happen, they probably have the best snake oil in town.
If anyone says there's no chance we can go lower.
You know, again, they probably have a little bit of an incentive to sell site subscriptions or something.
And by the way, if you do want to subscribe to look into Bitcoin, I'm joking, I'm not going to do that.
I'm not going to be that obvious about it.
But if we look at the long term holder supply of Bitcoin, we can see that this recently surpassed about 80%, meaning that a vast, vast majority of Bitcoin just...
hasn't moved hands in a long, long time.
And people are realizing the opportunity cost of potentially moving their coins at this time.
But another way to look at it, rather than just looking at these raw percentages, is if we look at the cumulative percentage of Bitcoin moved by long-term holders throughout the cycle.
So what we can see on this chart here is looking at the, as I said, the cumulative percentage of long-term holder Bitcoin that's been transferred throughout bull and bear markets.
There's a huge amount of similarity between bull markets topping out at somewhere around 38% of all Bitcoin held by long-term holders changing hands.
Very, very consistent.
But it's very similar for the downside as well.
Somewhere around 10% of long-term holders capitulate and move their Bitcoin as we're finding a bear market low.
And very recently, we actually reached this exact same level, which again, just gives me some insight of the supply and demand economics.
I just don't think there's enough people looking at Bitcoin right now and thinking, Now's the time to be selling.
We can look at it through another lens as well, through the long-term holder percent supply in profit.
If we look at the level of paying experience, the amount of Bitcoin actually held by long-term holders and the amount that's underwater, we can again see it's bottoming out at the exact same levels as the two previous bear markets, just around that 50% to 60% range.
Again, just showing that when most, well, not most, but a huge portion.
of long-term holding participants are experiencing pain.
It kind of carves out these lows that we see in the Bitcoin cycles.
And we're going to take it another step further.
You're going to dive in.
I'm rambling.
No, I just want to make sure I understand that point before I let you continue here.
But what you're saying with this chart is that long-term holders of Bitcoin, which again, define that term for me, just like how many days is a long-term holder, but most of them you're saying now are underwater on their investment.
That's what you mean when you say pain, correct?
Correct.
So this is using the static 155 day threshold of defining a long term holder.
Now it's 155 days because if you hold beyond that, the chances of you spending it over the next week essentially drop towards zero.
I think it should be a more dynamic threshold, but that's a story for another day.
Maybe we covered that in the last episode.
But yes, essentially, when these more experienced holders that aren't likely to be moving their Bitcoin anytime soon, when a huge percentage of those start experiencing losses on their position.
Their accumulation price was higher than what it is today.
That's where we start to see the supply and demand economics kind of working in the favor of there just not being enough additional sell-side liquidity to push prices significantly lower.
It's not actually 50%.
It's somewhere around the 55% region.
It doesn't actually reach a majority.
But what we can do is actually take that a slight step further.
So rather than just looking at long-term holders, again, we can look at the entire supply of Bitcoin.
And recently that supply in Bitcoin in profit did drop beneath 50%.
So again, this isn't just long-term holders, this is long and short-term holders.
And it's a pattern that we see in every single cycle.
Once we drop beneath this 50% level, it usually gives a good indication that this is capitulation, this is blood in the streets.
And we can transform that chart a little bit.
So rather than just looking at the percentage of supply, in profit.
We can take the realized price that we looked at previously, the average accumulation price, but rather than looking at the mean average, which takes into consideration Bitcoin that was mined over a decade ago for a fraction of a penny and is lost in a landfill somewhere.
If we look at the median realized price, so this is the most common average accumulation price.
50% of people accumulated above this level and 50% accumulated beneath it.
then that median price is somewhere around $62,000, $63,000.
And we dipped beneath that, indicating that, again, a majority of investors were actually at a loss on their position.
And it also plays into the fact that a lot of people saying, I'm not going to buy Bitcoin until we reach this realized price.
I think that is too heavily weighted by a lot of Bitcoin acquired it.
fractions of a penny and that may be lost and satoshi's coins which are never going to move again if instead you work in medians by looking at what level 50 is above and 50 is below as we see with this chart then i think it can better define levels of maximum pain and capitulation when a genuine majority of participants are at a loss on their position.
And we've already dipped beneath this level, the level which has marked the most opportune moments to accumulate in previous bear markets.
Okay, so this is another way of slicing the data that basically says that we've seen enough pain, in your opinion, to say that the bear market bottom may already be in.
I believe so, yes.
And just to throw even more fuel onto the fire, we can look at that through a slightly different lens.
So again, rather than looking at the amount of supply, so the medium realized price we looked at there was almost 50% of the accumulated Bitcoin.
But again, if we look at the raw UTXOs, to try and look at not the...
amount of supply, not the percentage of circulating supply, but looking at the actual transaction.
So at what point 50% of all transactions would be at a loss.
We can see that recently we actually dropped to somewhere around 40%, which is the lowest level we've experienced since around 2015, over a decade ago, and considerably lower than we experienced in the previous two bear markets.
And again, all of these just screaming that this is...
as close to peak pain and capitulation that we could possibly experience.
Now, could we have an unforeseen black swan event that takes markets lower?
Yes, of course.
Realistically, Bitcoin is incredibly correlated to US equity indexes like the NASDAQ and the S&P 500.
And due to the geopolitical uncertainty, if we do see a big escalation there, if we do see, again, another major bearish catalyst that sends equity markets into a 10, 20, 30% drawdown, Bitcoin is almost certainly going to struggle.
I think having a black swan event is your base case thesis to accumulate lower because we haven't gone down X percentage from the all time high is missing what really moves markets and that's supply and demand economics.
It's investor psychology.
It's the behavior of people that are actually participating in the market rather than static calendars of the month or static percentages on a chart.
I think these levels are what's actually moving the price.
And these are the levels that I think most people right now are overlooking to a large extent.
Okay.
Yeah.
And just so our audience knows, UTXO stands for unspent transaction outputs, which is like the raw Bitcoin wallet addresses.
So that's what Matt is presenting here.
And so, again, this aligns with what you're saying is that there are a lot of ways to look at the data, but a lot of what you're seeing on chain seems to indicate that.
you know, compared with prior bear markets, we are at a point of pain and of loss of profit that is comparable to those markets.
So you think we might be at or past the bottom?
Yeah, 100%.
And again, this is why I do think charts like the Quantile bands, which we looked at previously, are going to be incredibly popular going forward because so many people are focusing on Is this the bottom?
You know, are we going to go to 56, 52K, whatever it may be?
Potentially.
But if you ask the person in the previous bear market who was buying Bitcoin at $18,000, $19,000, do you think he is furious because he was buying 20% higher than where the ultimate bear market lowers?
No, they don't care.
That's a huge amount of Bitcoin for the amount of dollars you're actually investing.
in a few years if you're watching this video you're bullish on bitcoin long term you shouldn't be arguing and squeaking out and risking not accumulating over a few percentage points so when you can look at the market through more probabilistic viewpoints such as these taking into consideration the macroeconomic factors the technical factors when we see bitcoin crossing above and regaining support on the 200 weekly moving average the on-chain data again looking at the the holder composition the flows coming into the market if we look at etfs if we look at derivative markets All of these are kind of pointing towards the fact that...
If we haven't bottomed, we're so close that it's risky to not be scaling in at these levels.
So the risk now is not having exposure as opposed to having too much exposure.
Matt, I want to raise a couple of objections here.
This is a lot of great on-chain analysis.
A lot of what I'm hearing from analysts in the Bitcoin community right now is more things around seasonality.
People saying that August is a historically bad month for Bitcoin.
People saying that the bottom can't be in until October because the four-year cycle calendar says so.
How do you square a lot of what you're doing here in your on-chain analysis with some of these seasonality or cyclicality arguments?
And how do you give credence to that in your own analysis as you're thinking about Bitcoin here?
Great point.
It's probably one of my more controversial and unpopular opinions when it comes to this type of thing, because a lot of four-year cyclists, the thing is, is I wholeheartedly, completely understand the viewpoint of do not change.
what isn't broken.
Of course, Bitcoin traditionally has followed this four-year cycle where we have the halving event followed by a big bull market, followed by a big bear market, followed by a transitionary period up until the next halving.
I think the halving events, which undeniably drove a huge amount of the cyclical performance of Bitcoin, have massively reduced or diminished their influence on price action.
We're at about 95% to 96% of all Bitcoin that will ever exist are already in circulation.
So If for a second we just assume, and I hate assuming when it comes to this analysis, because again, don't fix what isn't broken and don't rely on data that doesn't exist yet.
But if we look to Bitcoin's correlation to other markets, such as US equities, specifically the S&P 500, we can clearly see Bitcoin, especially since 2020, has become incredibly correlated, almost a high beta play of US equities.
I wanted to look to see if there was some seasonality in these markets, because if Bitcoin is going to start trading a little bit more like a risk on US stock or potentially like a commodity, precious metal like gold being the digital gold narrative being fulfilled, is there true seasonality in these other markets?
And there was some interesting finds.
So I'll quickly run through it.
If we look at US equities, and this was looking at where we are in the presidential cycle, because a lot of people are looking at...
markets right now and saying, yeah, but we're in a midterm cycle.
So obviously markets are going to struggle.
Bitcoin's going to go down.
We're in a midterm year.
It's always done this.
Well, it's also always aligned with where that halving kind of lined up.
And if you look at the Bitcoin four-year cycles, everyone ignores that the first two cycles didn't play out in a four-year cycle way.
It's only the previous two.
So it's an incredibly small sample size.
But equities do, in fact, I hold my hands up, have historically been poor performing in midterm years.
If we look at gold, however, though, so again, it kind of comes into question of where do we see Bitcoin going, going forward?
Are we going to be this inflationary hedge asset?
Because gold actually performs the best in midterm years.
But a lot of people look and say, well, it kind of depends on what the US dollar is doing.
But the US dollar index, the DXY, actually usually goes down in midterm years.
So if Bitcoin has this inverse correlation, you'd be anticipating Bitcoin to actually be doing well, which it isn't.
And if we look at the S&P 500, which, again, usually has its worst performance in midterm years, excluding this year, in which it's been performing exceptionally well and continues to rally to new highs.
And that effect has actually massively dampened over the past few decades.
If you look over the past six presidential cycles, it's basically in a coin flip.
It's been 50-50 whether the midterm year is going to outperform the pre-election year, the following year.
it's been a coin toss.
No one's been able to decide if this seasonality is actually working.
It's mainly a consequence of the earlier years, but we're going back way to the seventies and eighties before this seasonality was, it was a concrete thesis over the past 20, 30 years.
It's not really played out like that.
And I looked into if the party currently in power made a difference, it rarely makes a notable difference.
Maybe gold performs better with a Republican president, but for equity markets, it's essentially exactly the same.
And then, taking the presidential cycle out of things and looking at the month-on-month seasonality.
A lot of people will say, you know, sell in May and go away.
Q4 is where markets really start ripping to the upside.
And again, I looked into this and there was some truth to this.
With gold, not so much.
There was so much variance every single month, it didn't really make a difference.
But with the S&P 500, there certainly was some notable months where it typically performed better.
November, December, January were usually a good stretch of performance.
However, Again, this is an artifact of days gone by.
If you look pre-2002, then winter beats summer 72% of the time.
But in the past 23 years, winter's actually beaten summer only 55% of the time.
Again, it's pretty much a coin flip of seasonality of what six-month period of the year outperforms the other.
So I think people relying on the seasonality, what calendar, where the moon is in the sky, are really simplifying a much more complicated process.
Because if we look at the things actually moving price action, the relationship between the US dollar declining and global M2 increasing and inflationary rates and bond yields, etc.
These have a much more quantifiable influence on all markets.
And Bitcoin, without a doubt, is going to start trending in that direction.
That was a very passionate and informative speech, Matt.
But just to summarize, it sounds like what you're saying is that a lot of these ideas of seasonality and cyclicality are maybe artifacts from prior market cycles that are, let's say, if not completely gone, maybe losing a little bit of their predictive power.
And I'm sure that's extremely controversial.
So I'll let you deal with that in the comment section.
But I do want to ask, is there a bear case that does seem credible to you?
Because you gave us the bull case, right?
Like basically saying that there's a lot of on-chain analytics that point.
to the fact that we may have had enough pain for the bear market to be over or at least have bottomed, if not over.
Is there anything that you're seeing that gives credibility to the bear case that maybe there is additional downsides still ahead of us?
Yes.
So for a couple of reasons, I was afraid you would say that.
The Global M2 chart, especially over the past few days, has been really popular on Twitter.
I'm not sure if you've seen this, but there's been a huge amount of people saying, You know, Bitcoin is decoupled from GlobalM2.
It no longer follows it.
And if you just look at the raw Bitcoin versus GlobalM2 chart, it kind of makes sense because Bitcoin over the past few months has obviously been in a bear market.
We're all very much aware of that.
But GlobalM2 has been skyrocketing to new all time highs.
So is this relationship dead?
Can we no longer follow liquidity?
It's no longer a good proxy of potential Bitcoin price action.
Well.
Again, it depends on the lens you're looking through.
If you zoom out further than the history of Bitcoin exists, global liquidity almost always trends up into the right.
Governments just love printing money.
So instead of looking at it just on a raw basis, if you look at it on a year on year basis, and again, I think this is something we actually looked in the last episode.
But if you look at global M2, again, on a year on year basis, now I've laid that onto Bitcoin, it adds a substantially stronger correlation than just looking at it on a raw basis, especially if you had around a 10 week, 70 day offset.
they really do line up exceptionally well.
And this is actually pointing towards potentially a few more weeks of bearish, choppy, sideways, consolidationary price action in towards mid-September.
And along with that, the US dollar index, the DXY, has also been doing something fairly similar.
Now, if we look over the past few months, again, lots of people are pointing towards the fact that global M2 has been rallying, yet Bitcoin's been lagging behind.
But if we look at the US dollar index, the DXY, on a year-on-year basis, this has been absolutely skyrocketing over the past few months.
But it peaked out on July 1st, which is exactly one day off where the most recent low has been.
And since then, it has been declining.
So clearly, the inverse relationship between these two is incredibly notable.
But again, over the past few days...
this has been moving to the upside.
I do think if inflation continues to run rampant, I do think if interest rates rise, I do think if more people are going into bond markets and we see the TUE yield rising, global liquidity contracting, that's not going to look good for Bitcoin.
That is my short-term bear case.
I actually have a long-term bear case on Bitcoin, which isn't the jolliest topic of conversation to have at this point in a market cycle.
But again, if we look at Bitcoin...
objectively and remove all emotion because again, I'm a Bitcoin analyst.
I'm a little bit biased that long-term it's going to be great.
And all the world's transactions are going to be happening on chain.
But if you look at Bitcoin from a fundamental perspective, and again, I don't think this is something we need to be worrying about right now, but a lot of miners have been pivoting away from Bitcoin.
Marathon have sold 1.6 billion, I think they announced recently of Bitcoin.
Riot have been...
transitioning into supplying AI data infrastructure and have just agreed a massive $9 billion deal, I think, with Anthropic, I think this trend could continue.
Not because BIP110 is coming about and is trying to block some nonsense for 1% of on-chain transactions, but Bitcoin's block subsidy is trending towards zero.
It's an undeniable fact that at some point the block subsidy is going to be zero.
So what's going to actually sustain and incentivize Bitcoin's on-chain security?
Because the premise is, well, everyone's going to be using Bitcoin and the revenue generated from fees is going to surpass the block subsidy and the miners are going to be incentivized to secure it because everyone's using Bitcoin, etc.
But the more people are seeing Bitcoin as a treasury asset, a reserve asset, something that you don't spend, it's something to save and not actually use, the fewer transaction fees are actually generated.
And recently, the yearly average revenue from these fees decreased to its lowest level since 2011.
Now, considering the current block subsidy is 3.125 Bitcoin, the entire day of Bitcoin revenue generated from fees was lower than the block subsidy of one block, and we get 144 blocks a day.
So it is a tiny, minuscule percentage.
And in the not too distant future, the entire Bitcoin security incentive system is relying on this, which has a dubious future.
And I know a lot of people are going to say, yes, but people are going to set up individual solo miners and people are going to be mining Bitcoin just to secure the network and the difficulty is going to decrease, etc.
But if we do see an age of exponential computational power and quantum computing, and we're relying on everyday Joes with their tiny little...
lottery miners to secure Bitcoin.
I think at some point that leads to a large centralization risk.
And again, the potential for a 51% attack by a nefarious nation state or something.
So I'm not saying that this is definitely going to happen, but I think people arguing about NFTs on Bitcoin or arguing about whatever it may be are really missing the larger picture of Bitcoin needing a better mechanism to secure itself decades into the future.
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Well, that's, I think, a very deep in the weeds kind of a Bitcoin specific topic.
But I think it's an important one.
And I think, you know, to me, the way I've been reading this is just it's a symptom of the bear market dynamics.
When the value of Bitcoin drops, the demand for the network usage drops, and the value the miners are getting drops, it's kind of natural that some of them leave, some of them look for other sources of revenue.
But I do think that if...
price and sentiment turn that a lot of them will come back to.
So I'm not too concerned about that yet.
But yeah, I think you raised some valid points.
And like, it's something that everybody who is a Bitcoiner or a Bitcoin investor needs to be thinking about.
I'm curious if there's anything here that we can end on to give us a little bit of a view of the roadmap ahead, you know, for the next month until we get you back on, like what you're looking at, what you're anticipating and just what we should be watching for as we go forward here.
Good question.
I think right now the important level to watch for Bitcoin is, of course, the 200 weekly moving average, something everyone's watching, someone everyone's hoping we can continue to break and continue to hold above as support.
But for me, I think...
probably one of the most important levels right now is the short-term holder realized price.
So we've mentioned a lot today about the long-term holders and the general cost basis and the median price, et cetera.
But the short-term holder realized price is the level at which new market participants on average accumulate at their Bitcoin.
And what we can see throughout Bitcoin bull markets, it typically acts as a very strong level of support, almost like a moving average, but adapting based on the genuine supply and demand economics and flows of the network.
Yet through a bear market, again, it kind of does the opposite.
It acts very strongly as resistance.
What you'll notice is this is the previous bear market.
We was rejected of it multiple times.
Once we finally broke back above this level and retested it as support, that kind of kickstarted the subsequent bull market.
Same thing, exact same thing happened in the previous Bitcoin bear market and the one before that as well.
If we look to where this level is today, after bearishly rejecting from it, two separate occasions during this current downwards move.
It's not that far above where price currently sits today.
And again, we're filming this on the 18th of August.
Hopefully, by the time I come back, we've actually broken above this and we've had this volatile move, but it's only sitting around $67,000.
Now, this would be a big psychological flip because for the past few months, anyone who's been buying Bitcoin has been seeing it just consistently continue to decline.
And every time it's come back up to their average cost basis, their accumulation level, they think, oh, amazing.
And it break even again.
And we immediately get rejected.
So from a psychological standpoint, it's a pretty key level to be breaking.
But alongside that also aligns quite closely with some key moving averages for Bitcoin.
So that $67,000 is the average accumulation.
That cost basis for new market participants is pretty much bang on.
It's not going to load now.
I mean, it's going to break out.
But it's pretty much exactly aligning with the 200 daily moving average.
Now, again, just from a psychological and technical standpoint, that'd be a pretty key level for Bitcoin to break above.
If you look at the Bitcoin price chart, that's also aligning with a major resistance zone.
Again, at around $67,000, $68,000, $69,000.
So for me...
So realistically, the trend is your friend until the end.
I'm not getting too bullish right now.
I'm accumulating, but more on a mean reversion basis.
And this is for Bitcoin that I'm intending to hold for the very, very foreseeable future.
If you are someone that's a little bit more active in the market, looking at where the price action could be going, then I think really we can't be too bullish until we break above kind of the $70,000 level.
I think that'll be a big...
major bullish catalyst because that also aligns pretty much with where the previous cycle all-time high was.
And again, if we look at the previous Bitcoin bear market, once we actually dipped beneath that all-time high, reclaimed the 200 daily moving average, retested that as well as the previous all-time high, that was kind of the all systems go moment.
But one thing you need to consider as well is Bitcoin, when it moves off the bottom, it really doesn't hang around.
So anyone who's thinking, you know, I'll take my time, I'll wait for the trend to, you know, really confirm and come back, et cetera.
If you look at the three previous Bitcoin bear markets, once we'd actually broken above the key levels of resistance, be it the 200 daily moving average, the short-term hold to realize price, within 100 days in all instances, we had rallied practically exponentially.
So from 2015, within 100 days, we'd gone from $250 to about $460 within just a couple of months.
If we look to 2018, 2019, we'd gone from around $5,000 to within 100 days, about $14,000.
So again, a pretty exponential rally.
thing in 2023.
We've gone from around $18,000, $19,000 to over $13,000.
So once Bitcoin starts moving, again, people forget we are still this relatively small $1.5 trillion asset.
If you look at gold, I mean, it's probably reclaimed $1.5 trillion of market cap increase in the past week alone.
We're a minuscule asset and it wouldn't require a huge rotation of capital from other markets to really get the ball rolling.
And as we can see, we are still the best asymmetric asset.
In the world, if you're looking at Pokemon cards and thinking maybe I should be investing here, there or wherever else, I think just zoom out, look at the big picture of things, realize that this bear market is long and is boring and is painful.
It may have been.
It's reassuring that Bitcoin does have these passive flows coming in and supporting the price.
All previous Bitcoin bear markets had 70, 80, 90% plus drawdowns.
Right now we're at a 50, 55%, I think from the all time high to that recent low we set.
And we're already talking about the bear market potentially being finished.
I think it just shows that Bitcoin is maturing as an asset.
And potentially people are underestimating the long-term effects of having passive flows from pension funds, ETFs, hedge fund managers, etc.
I'm just, again, I'm a little bit biased, but I'm incredibly bullish on Bitcoin over the coming few years.
And for me, I sound like a broken record, but the opportunity granted to us at these levels is too hard to ignore.
Gotcha.
Okay.
So there's some good price targets for short-term resistance.
You said 67, 69, and you'd like to see us above 70 to feel like we've really kind of gotten over those levels and cleared a lot of those moving averages.
Matt, I've seen a lot of people talking about rising open interest on Bitcoin.
And I don't know if you have a take on this or not, but I wanted to get your thoughts.
Do you think that you're seeing anything in the rising levels of open interest, of leverage that's coming into Bitcoin that tells you anything about which direction the market is betting that Bitcoin moves here?
In other words, are more people coming in to short?
Are people coming in to go long?
And just what direction do you think the market is betting that Bitcoin picks here?
Well, we can cheat.
We can just see which way they're betting.
That's what I've seen a lot, actually.
Yeah, the open interest rising.
I don't think it's at levels that are too worrying right now.
But the fact that a majority of them are actually betting on further upside.
isn't exactly what you want to see and potentially leads me to believe that we may have a little bit of a fake out or some tomfoolery to the downside before we can actually have any positive momentum to the upside.
Because if you look at the Bitcoin funding rates, now these are calculated by the premium paid by leveraged derivative perpetual futures traders every eight hours just to keep their positions open.
Now, when this is positive, they're essentially paying to keep their long positions open and people shorting the market actually get paid the privilege to do so.
And we can see the unfortunate reality is a vast majority of leveraged traders are wrong most of the time.
When Bitcoin bottomed out in the previous bear market, that's when everyone shorted.
That's when everyone thought it was going to go significantly lower on multiple different occasions.
And when we started rallying again, what were leveraged traders doing?
Thinking that the train was going to continue.
don't stop this.
It's going to continue rallying until I can buy two bright orange Lamborghinis.
Yet now what we really want to be seeing is people shorting the market.
And that's not because I want people to be losing money, not at all.
But if we look at when people were really starting to short the market, as we first dropped towards $60,000, we had this big shorting spike.
People were betting on further downside.
And that kind of...
solidified that that was the low for a few weeks.
And then we started trending a little bit higher and higher.
But now everyone's actually longing the market.
And these are coin-derived or denominated funding rates.
So these are when people are using their underlying Bitcoin as collateral.
But it's a similar story if you do USD-denominated funding rates.
People are trying to catch a falling knife right now.
And that's not something that typically works for most market participants.
So for me to get truly 100% bullish, maybe we need to see this start trending to the downside.
Because not only does this going negative provide the contrarian viewpoint that we need to do with the opposite of what majority are doing, but it also gives the potential for what's called a short squeeze.
So when price starts moving in the opposite direction of where a majority of derivative traders have actually placed their bets, eventually when price moves that way, they're forced to close out, they're liquidated.
And to actually cover their position, The exchange has to buy Bitcoin if they're shorting the market or sell Bitcoin if they're longing the market.
And that has a little bit of a positive influence on the price action if this is a short squeeze.
Price moves up, short traders get liquidated, the exchange has to buy.
Price moves up a little bit, but that's going to squeeze more traders.
That's going to liquidate more.
And this is where we get these big exponential moves very, very quickly in price action.
So that's one thing that I would like to see.
And again, I like to try and be rational.
Of course, I'm bullish, but you need to take all of these things into consideration.
And realistically, for me to have been 100% bullish, I'd like to be seeing some differences in the derivatives markets.
But if anything, I think it's just showing that people are bored.
I think this is, again, playing into the volatility argument we had previously.
In that period of chopping and consolidation and sideways, boring price action, people get a little bit...
angsty people are looking for something to do people are starting to place their bets and this is potentially where we have the the most explosive moves in bitcoin so hopefully it is to the upside potentially it's it's a week to the downside fake everyone out move to the upside i don't know i'm not very good at speculating on very short-term price action it's much easier if you zoom out in bitcoin almost always goes in one direction but i would just say don't try and outsmart the market.
Don't try and take any leverage long or short positions and try and big brain everything.
There's too much game theory involved and there's too much data to support that.
Actoring alongside a majority, not just in Bitcoin, but in any markets, is unlikely to play out in your favor.
But if you just zoom out and look at Bitcoin objectively, there's so much value down here.
You don't need to be leverage longing.
There's no other asset that's potentially going to provide a 2, 3, 4, 5x in a couple of years time.
Bitcoin is still the only one that can do that.
If you do believe Bitcoin is going to be flipping gold at any point in the near future, then we still have, what, a 25x or something on the cards?
You know, it's the opportunity of a lifetime.
I don't want to say we're still early because anytime Wall Street's here and pension funds are buying and we're arguing over, you know, what regulations should be coming into effect, it's not early.
But in terms of the percentage of Bitcoin as global capital, we are still an absolute minuscule drop in the bucket.
Matt, I really appreciate the outlook on that.
And what I'm hearing you saying is that if you zoom out, take a bigger picture, the volatility on Bitcoin is at a historic low.
That should change soon.
And it could go either direction in the moment.
And there's some short-term targets you're looking for.
And the market is trying to figure this out as well.
But zooming out the bigger picture, this is a great time to be accumulating and taking a longer-term view of the asset, the asset class.
And that'll pay off in the long run.
Not financial advice, of course.
But I like that framing of things and getting a little bit of the big picture.
and the short-term targets to watch as well.
Matt, you are under new management, so I would love for you to tell us where we can send our audience to find more of you and your work online.
Yep, so Bitcoin Magazine sacked us, kicked us out of the door.
No, that's not true.
It was a mutual conclusion.
So we were originally looking to Bitcoin, and then we partnered with Bitcoin Magazine to provide their data and analytics.
So we were Bitcoin Magazine pro for two years.
It genuinely just came to a nice and mutual conclusion.
We're actually still going to be providing some articles and data for them for the foreseeable future.
So thanks to their team.
But it is good to be independent again, back as Look Into Bitcoin.
So if you go onto YouTube, Twitter, wherever it may be, and just search Look Into Bitcoin, then you'll find all of our content, charts, indicators, whatever it may be.
And yeah, I'm excited to be able to...
not be at the helm of the big evil corporation as everyone sees Bitcoin magazine.
But it will be nice to be, again, independent and focus on just Bitcoin.
The one thing that really matters, providing Bitcoin in a more open source, a more favorable and actionable manner to retail participants, to investors, to people who are just interested in learning a little bit more about Bitcoin.
Hopefully we can be the shining light to do so alongside the other.
joint best channel in the space, which is of course Milk Road.
I appreciate that.
Matt, I've always been a big fan of looking to Bitcoin and of your work.
We always love your content, the wisdom you share with us here at Milk Road.
So thanks for being on the show.
I hope next time we speak, Bitcoin is not at 64K, but thanks for being on the show and I hope we speak again soon.
Thank you very much.
It's always a pleasure and looking forward to be back again.
Thank you, Matt, and thank you all for joining us.
I hope you all learned something today.
There's a lot of alpha in this one.
I'm going to have to go back and watch this and digest it again slower myself.
But until next time, stay safe, stay educated, stay bullish, and we will see you all on the next episode of The Milk Road Show.
Thanks for being here, everyone.
Bye.
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