Dylan LeClair & James Check on the Post-Halving Landscape

Dylan LeClair & James Check on the Post-Halving Landscape

well hi Chris Wesson here head of
research at pepperstone really exciting
times in the crypto scene and
specifically we’ve got a a very mpic
Focus today on bitcoin uh we’re 41 days
since the all-time highs we’ve just seen
the Haring come through for a lot of
people that’s a a fairly important part
in the Bitcoin cycle I’ve got a couple
of absolute whales in terms of the
crypto scene to break this all down talk
about their trading and investment
thesis I’m going to approach this from
more of a trading perspective long and
short and look at you know the
characteristics of trading crypto but
the scene evolves and we want to be part
of this it’s a really important time
it’s going to be a really interesting
chat that I’ve got with uh with Dylan
and James today we’re going to break it
all down for
you all welcome back uh I’m going to
bring uh Dylan lir into the program and
also James
cze two big big dogs on on Twitter
they’ve got a really ingrained situation
in the whole world of crypto both from
an onchain data perspective from an
investment perspective very reputable um
thought processes indeed uh James Dylan
welcome to the program Lads um I G to
start with you Dylan how are you going
and uh jna just give us a bit of a
background uh into who you are and and
how you your journey into the crypto
scene yeah Chris appreciate you having
me on uh super excited for this chat um
a little about me well I think four four
or five years years ago about uh kind of
went all in on the thesis that Bitcoin
is an engineering solution um to a world
where Financial repression and the
Perpetual debasement of a fiat currency
is an absolute certainty um and and not
cryptocurrency broadly but Bitcoin
absolutely scarce to centralized digital
cash is the is the hundred trillion
dollar idea um and so you know that’s a
that’s a rabbit hole uh in it in itself
so uh all of the data around it the fact
that we have a trans parent Ledger of
ownership um makes it actually one of
the most uh interesting and unique uh
asset classes or you know instruments
that we’ve ever seen um and so it’s a
you know I’ve been in this space
full-time 247 uh since then um and I’ve
kind of you know uh done a whole whole
bunch of stuff from writing two years of
research to uh working with a liquid
fund to kind of navigate these markets
so yeah really excited to chat and kind
of Bounce some ideas off each other well
it’s our it’s our benefit to have you on
mate so thank you very much for joining
us and James fellow uh fellow Australian
um it’s great to see in obviously such a
big world where so many people are
heavily you know dominating from the US
and Europe as well that you know we’ve
got two two australian-based analysts in
the house so yeah welcome to the program
and um want to tell us about your
involvement in the Bitcoin in the crypto
scene thanks Chris yeah no you got to
put Australians on the map right we we
do a lot right and uh you just got to
sing about it so yeah I mean I I started
my journey I actually was a a civil
engineer so I used to design basements
tunnel mines everything underground um
and in that world you learn a lot about
probability and risk and in 2018 I
really I mean I discovered Bitcoin um I
paid my tuition fees as you do in a bare
Market but I just love the idea of
markets and uh just the way price moves
all of the emotions and all the the
investor psychology that gets baked in a
price and Bitcoin as as you mentioned
it’s it’s such an incredible asset
because we can actually see the whole
Ledger and I fell down the rabbit hole
of onchan analysis roughly 2018 and it’s
about as long as the discipline’s been
around um so I think I would have been
one of probably the first five or six
guys who started really writing about
and educating about onchain data um
spent about three and a half years
working with glass node as a uh a data
analyst and led the analyst team there
and more recently spun off to to found
check on chain which is an onchain
analysis well kind of based but we still
look at derivatives and all the other
Market factors so really understanding
how the Bitcoin Market trades but with a
kind of unique perspective of what
Bitcoin itself is actually telling us
yeah well I want to uh focus on some of
the onchain data and how we can use that
for more classic trading strategies I
mean for me what I really like about
that effect the fact that it’s open 247
and you minimize that gapping risk that
you would get from for example with
equities and other other markets is that
you get this real strong propensity to
Trend as well you know like you do with
agricultural Commodities if you’re
trading momentum if you’re trading Trend
following strategies you often see it
really going in One Direction and and
and I love that for for for those type
of stratches it works well you know in
times of mean reversion as well but I
feel like that propensity to Trend but
also from a day trading perspective as
well if you don’t want to hold those
positions overnight um you know you do
get this situation where you you can
easily get 6,000 Point points in a day
high to low range so for the day traders
who are directionally agnostic you’re
just trading the price intraday um you
get that huge rage expansion like we saw
in March where it was trading um 6,000
points I mean the average sort of 5day
high to low range and Bitcoins come back
to about 1500 points uh but relative to
the spread it’s pretty good so you get
good liquidity
you get really good intraday trading
conditions but you also get that
propensity to Trend as well so I’m
really interested to see how you can use
some of those classic technical
strategies um and actually use and
heighten that with with some of this
onchain data let’s let’s just have a set
the scene and then we’ll go into the
Haring because it’s obviously a big
situation I want to we’ve got that sort
of in the rearview mirror now but we
want to talk about hash rates and and
what this means for the sort of price in
the short term but I I just want to set
the scene because if we just use Bitcoin
in isolation rather than going to some
of the mcoins alt coins for example you
know you had this move up um you know
between September and into January what
90 odd 96% we had this bit of a pullback
uh we traded into the all-time highs in
March it was another 96% move that that
came through and really we’ve just been
sort of just trading uh in a bit of a
short-term range between the all-time
highs I say it’s been about 41 days
since that point um but we’ve seen good
buying you know coming below the 6,000
level so we’ve seen about a 17 18%
pullback uh from the highs and really we
haven’t seen much more than a 20%
correction in this bull market that
we’ve been seeing but we’re just sort of
trading in a bit of a range it looks
like this wants to kick a little bit
higher um you know I’m hoping you know
from a momentum perspective that this
really starts to to kick higher I’m
seeing fundamental reasons why that can
um Dylan just talk about um you know in
the short term while we’re setting the
scene in terms of price um yeah how you
how have you been actively involved how
active have you been in in the market in
the short
term yeah well you know I think there’s
a few things to you know of note so far
this year one was obviously the the
etf’s approval and that was a large
Catalyst from not only a narrative but
just a pure flows perspective um and and
from a narrative perspective this is an
asset that was been called a Ponzi
scheme and money laundering index and
now that you know the largest
institutions in the world largest asset
managers in the world are offering
products uh not because they’re Bitcoin
maximalist but because their clients are
knocking down their doors demanding that
they do um the second point is that
you know this bull run right the fact
that we’ve made new highs as Bitcoin
often does and you know whenever you
look at a Bitcoin you you look at the
Bitcoin exchange rate on a linear chart
like right now we’re looking at a a log
scale with the draw Downs visualized as
well uh whenever you look at Bitcoin on
a linear chart it either looks like a
you know somewhat of a bubble or a large
bust um and that’s you know that’s the
beauty of this asset um but really this
bull market and all Bitcoin bull markets
are primed because of the actions of the
be because you have have an increasing
hodler base um as this asset is
monetizing that is acquiring it they’re
price agnostic and they’re acquiring
more so if you look you check the tape
you look at what Checkmate was saying
all of 2023 you look at what myself was
posting on the timeline as well the the
the just a data view the data driven
analysis was all it takes is a a
inflection in the macro Outlook and this
thing’s going to absolutely rip because
it had never been more constrained on a
supply side so you have you have an
absolutely scar asset it’s extremely
inelastic relative to demand like unlike
any other commodity it is inelastic to
additional demand so if oil doubles in
price if gold doubles in price if wheat
doubles in price if any if any uh you
know agricultural or industrial
commodity doubles or 10x is in price all
of a sudden the next year’s production
the next season’s production there’s
going to be a lot more investment into
actually you know digging it out of the
ground per se Bitcoin yeah is is very
much different and so because that it
trades very much what someone may look
and say that’s irrational but really
it’s just extremely inelastic and it’s
why you get this you know extreme
volatility both to the upside to the
downside so the fact that we had a new
all-time high before the having uh if
you asked me before the year I would
have been pleasantly surprised um I was
pleasantly surprised that the ETF flows
uh you know ibit has been this the most
successful ETF launch in history um
there’s obviously institutional demand
for this and I think a lot of investors
are waking up to the fact that never
mind the next week or the next month the
next quarter the US fiscal situation the
global macroeconomic situation even
after a once in 50y year inflation shock
is not improving it’s actually getting
worse yeah and so there’s this there’s a
realization that oh crap I need
long-term debasement protection and
Bitcoin at a trillion dollars is is an
unbelievable bargain um and I think a
lot of people are looking at a linear
chart saying well it looks a little
expensive and I think that’s uh you know
the wrong way to look at this James um
Dylan just touched on an important point
that um we we were hit an alltime High
70 or 74,000 before the Haring I think
that’s the first time in the three other
episodes that that we’ve seen um an
all-time high I mean how how significant
is that um is is there any significance
towards towards um the fact that we
we’re trading an alltime high prior to
the harving does that make this time
this harving slightly different how do
you see interpret that
situation yeah great question um uh in
terms of just like a very structural
sense there was a narrative in the 2022
bare Market that price cannot go below
the previous all-time high and it of
course did and there was also a
narrative that we can’t alltime high
before the Haring and of course here we
are um so in my in my view like I
wouldn’t too much put too much weight to
that mechanic what I would do is say
well how did we get here and actually
might be worth bringing up the the chart
that I’ve got shown here um this is just
a visualization I often find that
visualizing things in a different way
can just give you a really neat
perspective what we’re looking at is all
of the previous bull markets um index to
to 100 and then up the top in the area
charts we’re looking at the draw down
during that cycle so not from the
alltime high the draw down of that cycle
and if you can believe it since FTX blew
up back in 2022 this entire run we
haven’t had you mentioned before a 20%
draw down on a closing basis so when we
look at how do we actually get to an
all-time high pre harving 2023 we saw an
enormous amount of Supply just getting
soaked up um I call that kind of coming
off the bottom of a market like an
uncertain recovery everyone’s got a bit
of PTSD from the bare Market everyone
expects it to go lower and yet we just
haven’t given back 20% correction and
you can see the distinct difference I
mean it looks the most like the 201617
market um which was pre- derivatives by
the way so that blue area um really
that’s describing a spot driven Market
because there literally were no
derivatives at that point in time we
have Futures options and you know these
things are expanding at a rapid clip and
yet it looks a lot more like a spot
driven market and actually got even
fewer draw Downs so in many ways it
speaks to a tight Supply um spot driven
regime and really these ETFs are a whole
another level to it as well and
impressively during this current
correction there was a lot of concern
that these ETFs would just as quickly
unload their their shares we just
haven’t seen those outflows it continues
to be very very uh firm-hand which is
great to see yeah I think the ETFs got
to I think it was the 21st of March
there was that was the high that we saw
um in the in terms of the ETF FL fund
flows I look at the sort of the 10 ETFs
I’ve taken away the gray scale because
we’ve actually seen big outflows this
year from from gry scale in their ETF
but um it was interesting because the
high that we saw on the inflows going
into into the C 10 ETFs was pretty much
at the high we saw in Bitcoin so there
has been a reasonable correlation and
we’ll talk about the future of Bitcoin
and we’ll touch on the ETFs as well um I
want to go into the Haring itself let’s
move on to to that stage so I I’ll push
this one back to GES um I I was running
um a Google scan I went into my media
monitors to look at the the level of
press that have been writing about the
Haring itself and it’s just been water
to all blanket coverage which is great
for the the crypto see more broadly
because you the Press have done a great
job of of bringing people back in and
and focusing on on this and obviously if
you look at the the positivity rating
all the articles are very very positive
about the Outlook you know the the the
scarcity angle the reduction in in
future Supply potential for you to
supply demand damage pick up but James
just talk to us for I know there’s a lot
of people who are watching this who have
probably heard a million podcasts now
about the
harving um and then I I know I’ll show
you a question in a second Dylan about
the sort of mining side of things but
just for those people who are watching
this for the first time um and and and
and are new to the sort of the crypto
world just just to explain to you your
your take uh on the harving um for you
Bitcoin subsidies production and and and
how important this is in the in the
cycle yeah for sure I mean it’s funny
because the longer you spend in Bitcoin
the more you see these narratives come
and go and there’s always people who
come in to go the harving is the best
thing since sliced bread so to give a
very quick overview um pre-programmed in
the the Bitcoin protocols every four
years um the amount of new coins that
get minted will have so it started at 50
per 10 minutes then it went down to 25
then it went to 12 and a half
6.125 and we’ve just hared one more time
so it’s down at 3.125 coin per block so
what that essentially means is that the
new coins com to the market is is fewer
um and also it means so there kind of
two components there’s fewer coins
coming to Market and usually the
adoption is on the the ticking higher so
you’ve got more demand meeting less
Supply coming to Market but for the
miners and Dylan could probably touch on
this later on um the the miners lose 50%
of a major portion of their revenue and
it’s a really Cutthroat industry in the
mining space so that’s kind of two
separate ways to look at it so um from
the mining angle I’ll leave that to for
Dylan to tou on from the market
perspective and this is why I love
looking at this data because when I
bring things into perspective actually
I’ve got a chart shown here to really
put things into a bit of a bit of view
the question is how big is the impact so
we’re talking about the daily coins
coming to Market going from 900 to 450
now if we put that into dollar terms
it’s about 65 million that was being
issued to miners before the harving um
and then 50% of that so something old 32
million today so how big is a $32
million drop in overall Supply so um
I’ve actually got four traces shown here
if you ignore the price chart um there’s
the light orange which is Futures volume
there’s the orange which is spot volume
there’s the blue which is the ETFs
trading on the stock exchange and if you
really really really squint hard enough
you might see that little red line down
the bottom that’s the minor issuance so
we’re talking about that the actual
impact the total amount of coins being
issued to miners is 850 times smaller
than daily Futures trade volume 200
times smaller than spot 100 times
smaller than the ETFs now given that the
Haring is literally a harving of that
you can actually double all of those
multipliers that’s the difference that’s
the actual impact of the harving so from
a market based perspective it kind of
just Blends in but what I think is
actually much more important I think you
mentioned it earlier it’s the The
Narrative it’s the story it’s the fact
that Bitcoin has this monetary policy
that just does its thing none of us can
change it and you contrast that with the
the global central banks and you’ve just
got this night and day approach um so I
think in many ways it’s more of a
narrative thing rather than a a
necessary Market impact it’s very small
in that regard one final point it is
still 30 million a day that doesn’t need
to get soaked up so it’s not going to be
a net negative and it is net one side
it’s only sells side pressure um but in
the grand scheme of things it probably
Fades out more important in the long
term less in the short term yeah Dylan
um
uh James touched on the mining side of
things these are the primary guys who
are going out and solving out the
cryptographic puzzles um the hashes
effectively um I don’t know how much you
you focus specifically on the mining
industry you know things like um I was
looking at some of the listed plays Riot
platforms Marathon digital core
scientific they’ve had a really really
big Rebound in the last two week or last
week or some and I’m looking at um clean
spark for example has gone from $14 up
to $21
um I’m not sure how you look at that or
whether you would look more at the the
hash rate for example which has pulled
back a little bit but perhaps not much
as that some people have been looking
for and and ultimately what does that
tell you is there any kind of readr into
the way that these their Equity is and
and the hash rates into the underlying
Bitcoin
itself yeah totally well you know the
public mining space is is something that
is relatively new a lot of these were
listed you know post 2020 um so this is
kind of you know really the a second
cycle for a lot of these companies the
first for some of them um and and Mining
is it’s it’s important to understand
mining is brutally competitive uh unlike
any other any other industry in the
world it has a difficulty adjustment so
the more you chase this carrot the more
computation you throw at the Bitcoin
Network the the more difficult quite
literally it becomes to mine a block so
the more and more and so this this
incentivizes an increasing level of
inicien
globally right it’s this is is a global
race to find the the wasted lowest cost
most efficient power sources and anyone
else you know anyone that’s using
expensive commercial power has to turn
off so there is this natural cleansing
process that oftentimes in something
like you know the traditional Financial
world or you know just industry in
general especially one very tight with
big government you don’t see right
there’s kind of this this uh the full
business cycle hasn’t been able to play
out in Bitcoin it’s the opposite and
they kind of get this programmatic wash
out um so hash rate right hash rate’s up
and to the right basically forever um
there’s been somewhat of a diminishing
level of growth but the growth is still
in absolute terms extremely impressive
and that’s because there is this ins
insatiable demand to monetize waste
energy and and more and more efficient
as6 if you’ve follow Mo’s law
semiconductors becoming more and more
efficient these as6 these Bitcoin miners
become more and more efficient and the
old generation miners are still online
so public mining Vehicles themselves if
you look at them really there’s the the
time and this is somewhat of a
generalization but you want to own the
miners when price over a certain period
of time is out generally broadly is
outpacing the growth of hash rate um and
all other times if hash rate is going up
and price is going down it’s a pretty
brutal time so I think in terms of the
minor how I look at this on a 12mon time
frame is 2022 23 and you know I guess
the start of this year uh if you look at
the price growth vers the you know just
a share price versus the market cap a
lot of these public miners have market
caps at all-time Highs but their their
chart doesn’t look all that sexy because
they’ve diluted so much right they these
guys all had to to survive the depths of
a pretty brutal bare market and they
used that share delution to build out
their Fleet and to remain liquid so I
think most of the dilution has taken
place and you have a lot of these pupco
with you know some of them have
obviously different sort of all-in
production costs but a lot of these
puposes you know have a decent Runway
and in a you know in a Raging Bull
Market will serve as as pretty extreme
beta so on a you know kind of a
medium-term time frame I’m pretty
bullish um on a longer term time frame
like if you’re just thinking about you
know how most Bitcoin holders think of
just buying Bitcoin you know and and
waking up in a decade or five years or a
multi-year time frame the miners if you
just look through history have actually
on a you know on bitcoin terms
underperformed quite quite because it’s
it’s really really challenging to
outpace this asset itself so but there
there is that kind of you know
one year one out of every four year one
you know small window in each cycle
where these things absolutely rip and
that’s when Price Is Going Bonkers and
hash rate just given the lag that these
things see um because of the physical
infrastructure you know the Bitcoin
mining uh requires uh there is that lag
so as when price rips these things go
Bonkers and then that physical that
capex you know that build that comes
later on and that’s where these things
uh you know don’t do quite as well so I
think we’re we’re in that period where
um they have underperformed Bitcoin to
start the year after a great 2023 um and
I think if we’re if we’re still in
somewhat of a secular bull market which
I I believe um then then these things
will be good you know good for a good
swing if you can handle the volatility
and that’s a that’s a big F I think a
mental model that I use it’s probably
not going to be too dissimilar to GDX
where GDX makes a lot of Widowmaker
trades as you’re waiting the gold price
is ripping but you’re like why aren’t my
miners going up I think that’s probably
the right mental model because then one
day they just go yeah I just like um you
got clean spark which I I was looking at
um their uh recent um uh releases and
and they they’ve got an all-in cash cost
I think they’re the cheapest of the
listed miners at 31,000 so they’re
they’re mining which you take into
consideration electrical costs and fees
and all those factors they’re they’re
they’re producing at
$31,000 per Bitcoin effectively so
that’s probably one of the best if you
go into some like rice and Mar and
they’re they’re they’re releasing their
earnings on the 10th of May so maybe
that’s something to watch out for but
going back to the Bitcoin price and and
and you know while these guys are
obviously at the Forefront of of mining
architecture um what’s really important
Now is really quick question actually to
you James really then before we can move
on to the ACT thing if we were to see um
consolidation in the industry some of
the the higher cost producers the guys
who have got I think they measure the
efficiency by Jews per teror hash
anything above 40 Jews per Tera
hashes bitcoin price of 90,000 to to
stay in
business get some consolidation in the
Bitcoin scene and therefore you’re going
to have less um computational Power
going for and you see a a lower hash
rate does that make you more nervous
about the Bitcoin price because it’s a
less robust system would you would you
potentially take some lungs off the
table some yeah how does the hash rate
influence your your conviction about the
the robustness of Bitcoin
architecture question so uh here’s a fun
fact the hash rate has been at all-time
high in every single Haring event and
what this tells you just that the fact
that hash rate is going up means that
one of two things is happening or both
you’ve either got new rigs being
purchased and brought online that’s
capex or you’ve got um new efficient
Asic models being designed and built
that’s R&D and also capex so when I look
at that as a as a broad picture at the
whole mining industry that is telling me
that not only is the Revenue sufficient
because if they were stressed they would
just be running the machines they have
they wouldn’t be buying new ones and
they wouldn’t be developing new ones so
the fact that we have hash reek
continuing to climb means there’s enough
cream in the revenue for the aggregate
miners to continue to invest in new
capex now internally you can have some
miners with a better balance sheet and a
worse balance sheet than others so even
though hash rate in aggregate can be
heading higher you can actually have
some miners who go bankrupt and go broke
now what that you have to remember that
every single minor all their machines
they’re basically like a physical call
option they have a limited lifespan at
some point in time they’ll be obsolete
in terms of their efficiency so they
have to buy them at the right time at
the right price get them rigged and
running and get EX extract as much value
as they can out of that option before it
expires worthless because it will expire
worthless so the net result is that if
one guy’s balance sheet isn’t strong
enough to to make the cut he will fold
and someone else will come in and buy
those machines off at a much lower
machine cost basis spin them up and the
way they go so um hash rate going down
actually doesn’t personally when I look
at my price uh analysis um hash rate
actually to me has very very low signal
um I don’t use any kind of hash rate it
doesn’t affect my conviction in Bitcoin
the network because the system will
naturally wash these guys out and it’s
designed to do exactly that perfect
James let’s switch gears a little bit um
you know I bring up the miners and and
and that because obviously it’s when it
comes to the Haring they’re going to be
the the natural things that are issued
it doesn’t change the amount of
outstanding coins in you 19.7 million
coins in the ecosystem which is why we
haven’t seen you know this big being a
liquidity event or a volatility event in
itself um but what it does is it changes
the Dynamics as well from the mining
perspective but into the secondary
Market the supply growth the amount of
new tokens that are being produced
relative those that are outstanding will
come down to about 3.3% which obviously
that’s the supply element that we talk
about Supply demand which everyone’s
getting very excited about but let’s
talk about the near-term kickers uh
Dylan um because you know let’s talk
about the shortterm trading Outlook or
the short-term volatility because the
way I’m seeing saying this is you’ve got
that Supply issue I think um you know
you’ve got the ETF side of things uh
we’ve talked about that and and and you
know the the levels of inflows into the
10 ETFs have dissipated a little bit
recently um but if we look at the
kickers um in the short term you we’ve
got uh an ethereum ETF which we thought
probably could come in in um in May it
looks like that’s going to be pushed out
a little bit further and we can see that
in the grayscale ETF um which is trading
at what 26% discount to net net asset
value the UK’s got a bit more excited
recently they recently approved a spot
etm similar situation in Hong Kong where
we we’ve seen n ETF given their blessing
for both Bitcoin and ethereum so it does
seem that you know from from a
government level that the that ETF scene
is becoming you know people are
tolerating it a little bit more we saw
in Japan the the gpif the the big
Sovereign wealth fund saying that they
may look to invest in in in ETFs going
forward as well so obviously that’s
something we are focused on uh longer
term um yeah there’s just a lot of I
think there’s a lot of positive kickers
um on the negative side obviously you
got the SEC um you looking at Unis swap
as well um and we’ve seen a bit of
length coming out of the market on on on
what we’ve been seeing recently with a
liquidation
when Israel you know put out drones and
missiles to to Iran but I’m looking at
the macro situation I’m looking at the
fact that yeah we did see a bit of a
backup in bond yields the 10-year um got
nicely above 460 we saw the 2-year
government treasury above 5% real rates
moving up but that’s come back a little
bit now I think people are saying that
Bon gelds would probably uh have peaked
up which could be seen as a negative for
Bitcoin um you know risk assets pulled
back a little bit but now we’re starting
to see some positive flow back into the
S&P and the NASDAQ as well um the
Dollar’s come off off its off its highs
recently so you know I’m seeing some
some positive flow which is probably why
bitcoin’s trading just above 66,000
Dylan um talk to me about the you know
your short-term outlook for for for
Bitcoin what are the big kickers um and
how you’re sort of complimenting with
some of the onchain data for
example yeah totally um so I think you
know if we can go to slide 14 I think
this really sets up the you know it
really lays out the situation quite
quite well um it’s actually the chart
it’s the the area chart um it’s the the
long-term holder um percentage Supply um
if if we have it yeah there we go great
um so every Bitcoin bull market if we’re
just thinking about Bitcoin in general
and I can I’m happy to touch on the
macro right uh during last week’s kind
of puke on the fears of the Iranian and
Israeli conflict you know you had vixs
year-to date highs equities where you
know SPX traded down six days in a row
Bitcoin certainly you know pulled back
20 20% in change uh or you know give or
take from the from the all-time highs um
and obviously the dollar strengthening
relative to some of the other currencies
but you know the all theats are
competitively debasing on on a longer
time frame but if we look at just
Bitcoin right what really primes these
seemingly random irrational animal
spirit bull markets especially when
you’re looking at this on linear scale
uh is again this Supply this this Supply
constraint right so you can see this
long-term holders it’s not the the exact
technical definition but it’s
essentially coins that have been huddled
held for longer than six months and if
you run a data analysis the reason that
this threshold is is chosen is because
after that six months statistically
they’re less much less likely to spend
those coins in the future the longer
they’re held whereas the coins that are
changing hands every every day every
week are much more likely to change
hands again so what really sets the
table for these crazy parabolic bull
markets is this this massive
accumulation and Supply constraint and
what you see at the start of really
every one of these you know Raging Bull
markets is right around the point of the
prior all-time high you know the the
alltime high set two three years ago
feels like a distant memory you start to
see some of these this this hardcore
holder base that caught knives that was
that was getting you know just
absolutely you know beat to the ground
with the Bitcoin exchange rate for the
last couple years and it’s an 80% 70%
draw down take a little bit of profit
right so they don’t sell all their stack
but they right they treat themselves
they they peel a little bit off and we
see that it’s not just an anecdotal
thing we see that in the data right so
that accumulation turns to a slight
distribution and so the ETFs like the
unlocking of grayscales coins that were
kind of held captive hostage for three
years that’s certainly been there but I
would say if we’re just looking at this
from the utxo set just the a fancy word
for the Bitcoin Supply um with that we
can see with complete transparency this
is nothing new and we see this every
every bull market so I think if we go to
uh the short-term holder price uh that I
think it’s number nine um as long as
that as long as Bitcoin is trending
above the average cost basis of this
this short-term money money that’s not
the long-term holders but the opposite
right the the money that’s in the market
over the last six months that have
swapped hands so shortterm shortterm
shortterm sorry to interrupt shortterm
is designed is is seen as 6 months so
that’s the the six month holders right
it’s the fast money so people who
acquired in the last six months yeah y
it’s it’s yeah yeah I mean there’s a
little bit more of a math there but it’s
it’s you know more or less that and what
we can see is just given the again the
absolute scarcity and supply and
elasticity of this asset when you can
see in a bull and bare Market this level
that that average short-term holder cost
basis similar to kind of like you know
some how some Traders choose a a moving
average or you know uh you know kind of
TR take momentum strategies uh this this
is a a very I think there’s a very much
a psychological aspect to this and in a
bull and be Market it’s very much a
strong support in a bull and strong
resistance in a be so as you know that
level is like 58 and a half 59,000 um
and in Bull markets and bare markets we
frequently kind of retest this level um
and often it’s again very very strong
support so as long as we’re above that
that kind of price level on a shorter to
intermediate time frame there’s I think
very much sort of a a Chase underway
where these these players this new money
anyone that’s buying ETFs anyone that’s
kind of had to change their view on this
asset as it’s become increasingly
institutionalized as Larry think has
given it a stamp of approval he’s a man
to so yeah what a flip and um yeah I
mean I think the Larry think stamp of
approval is not just not the fact that
ibid has bought all these coins it’s the
fact that you know oh crap it didn’t die
with FTX it didn’t die after you know it
didn’t oh it’s not just a zero interest
rate phenomenon right Bitcoin made up
new all-time highs with the FED funds
rate at five and a half percent right so
there’s a lot of previous thesis and
previous kind of preconceived notions
that have had to been you know changed
that have had to be written off um and
so with that you know allocations have
to change and so I think that’s you know
going from a 0% to a 1% allocation for
Global wealth um in an asset that has a
trillion dollar market cap but you know
isn’t nearly you know it doesn’t take
nearly that much to send this thing to
you know even to double it right it’s a
billion dollars into this asset can
really move the market um in you know
both ways the liquidity and in
elasticity cut both ways uh but this is
why it Trends so hard right it’s just
because that holder base that rabbit
holder base doesn’t like to let go of
their coins I wanted to touch on just on
the ETF I read this quite an interesting
stat and then we’ll go back I wanted to
talk to you Jones about um in the last
100 days um well since the the adoptions
of the the 10 ETFs there was two the
equivalent inflows of
222,000 um coins effectively been were
bought by the ETFs in that time 990,000
coins were mined um over the next 100
days we’re going to see 45,000 uh coins
effectively mined so you know do the
maaps from that
situation Dylan was talking about
momentum strategies and and he B the
short-term holders index which I think
is one that the the you know that could
be quite useful for me when I when I get
that breakout you know you might have I
like to see you know for example price
come together you see lower realized
volatility you see that in say for
Ballinger bands and the longer that goes
on for the more excited I get about a
potential breakout one way or the other
when you when it finally reveals itself
um you know it can be very powerful and
that’s what I love about Bitcoin you
don’t know how long it’s going to go on
for which is why I sort of take a more
systematic approach with with with with
where my stops are using moving averages
for example but I don’t know how long
this is going to go for I don’t know how
long it’s going to kick I just stay in
the position for as long as the system
tells me um from a fundamental
perspective we’re looking at those flows
and those various factors but you know
what what other things that can you use
for a nonchain data to tell you about
you who’s buying Wales versus retail um
what does that mean do you want to see
more Wales buying um talk to me a little
bit about realized price and how you can
use that as a as an indicator as
well yeah absolutely so I mean onchain
data is incredible because we we
basically get x-ray vision into what the
whole Market is doing we can see coins
going in and out of exchanges we can see
what their cost basis is um how long
they’ve held them and if they’re locking
in a profit or a loss so all of this
stuff is really really powerful because
human beings in any Market we tend to
all behave similarly you know if you
think about the sophisticated investor
what are they really good at they’re
good at knowing what the crowd does and
when you know what the crowd is doing
it’s like having that friend who’s
always wrong if you can see what that
friend who’s always wrong is doing and
you trade against him it puts you in a
much better positions um so you
mentioned the realized price um so I’ll
bring it up on the on the next chart the
realized price is essentially the cost
basis for every coin now Dylan mentioned
before we’ve got long-term holders
short-term holders you can look at it
from Wales you can slice and dice the
supply however you want and get a cost
basis for all these different groups so
it’s a beautiful tool for mean reversion
because it’s essentially where
everybody’s literally Financial um
anchor is it’s their cost basis overall
now we can turn that into this is called
the mvrv ratio it’s literally just the
ratio between price and that cost bases
um and to really just think about what
this is describing this is how much
unrealized paper gains High values or
paper losses low Val vales the market is
holding so if we think about when would
we expect these Trends to finally break
it’s when there’s too many guys who are
too rich and their portfolios are too
green that the incentive is so strong
they’re going to just take chips off the
table that’s more Aion
situation exactly so what does the
bottom look like it’s when people have
just beaten down they’ve had their
portfolios are down 70% and Only the
strongest holders who really get this
thing are still here and essentially if
you think about who do when a bottom
gets formed who do you want to be in the
trenches with they’re really the guys
who are willing to buy this thing every
day all day I don’t care what the price
is I’m here for the Long Haul so you
really get to see that very commodity
like Behavior now um the next one is
really looking at momentum so you were
talking about how do you know when this
trend is a bust and um whilst you’ve
also got all these guys who go into a
lot of profit what we’re doing here is
just doing a very simple oneyear moving
average crossover of that mvrv ratio now
when lots and lots of guys buy very high
lots of people buy too high at too high
of a price and then the market sells out
from under them they’re unrealized
profits all the fun in the games and the
green portfolios very quickly go red so
when you’ve got like a trapped buyer
base at a very high level this thing
will slice through its one-year moving
average and get this beautiful negative
crossover so on a more macro view this
is the kind of tool that I’m looking at
to really track those sentiment breaks
those things that just put too many
investors bought too high or flip side
when a whole bunch of people capitulate
and the smart money buys the bottom
you’ll see their profit go from in loss
in profit in very quick uh quick order
so you can use this to really gauge that
longer term sentiment as well is this
what you use as well Dylan I mean have
you you got any uh tools that you like
to use other maybe than than just normal
you know generic technicals to to give
you a sense of uh the strength of the
trend um the strength of the buying um
and whether you stay in the position and
ultimately what is it telling you about
the current situation
now yeah well I will say and this is a
you know this is somewhat of a shell
after after learning from him uh for so
many for so many years uh James is
actually if you go to checkon chain.com
he has all he has a suite of tools built
out for free for people to use and kind
of experiment with some of the stuff and
kind of get their their feet wet um with
you know with this data we’re talking
about because you know for a lot of this
data the the absolute Giga brains the
the you know brilliant computer
scientists you can spit up a Bitcoin
node that you could download Open Source
software and you could go into the
supply yourself and you could pull out
this data and you can look at it uh but
the beauty is we now have uh you know
some some brilliant some brilliant
analysts that have already done the work
uh and data scientists so we have we
have this uh you know a lot of these
tools out there and so the the
interesting thing is that despite having
this open transparent Ledger despite
Bitcoin being you know breaking new
highs and despite this you know Suite of
tools in general kind of I would almost
say like a new form of of economics in a
way right it’s like imagine if instead
of waiting on the CPI report and waiting
on the Fred data to update every week or
waiting around for the fomc every you
know eight times a year where where we
all listen to one guy and try to
interpret his tone we just have the data
available and we have an open
transparent Ledger you can see imagine
if it wasn’t like you were waited on a
report from a bank to see what the you
know currency flows were you could just
see the flows and so Bitcoin gives you a
quarterly report every 10 minutes
essentially exactly every block right
and so and similarly um you know a bit
more of a you know trust involved the
the ethos of this you know broad broader
crypto market with the exchanges right a
lot of this exchange data the derivative
data the funding rates the interest
rates you know you don’t have to pay
$100,000 a year to an investment Bank
you can just see this because they they
publish it every 10 minutes or every you
know couple hours for free right so we
can see that you know at the $70,000
highs you know Traders were paying 20
30% annualized rates to Long Bitcoin on
Perpetual Futures and that’s since then
you know since the Iranian uh you know
the the kind of
retaliation uh and the you know somewhat
of a liquidation under briefly under
60,000 uh for the last week Futures have
been trading under the spot market so
you have this kind of this interesting
interplay between uh you know the the
spot buyers the people that are going in
and exchanging a dollar of Fiat cash for
for Bitcoin for Satoshi and then you
have the you know the the traders that
are either Trend following or they just
get exuberant uh you know longing or
shorting and again these these crypto
exchanges you can put on a 10x leverage
position a 50x leverage position so it’s
like this volatility that’s already you
know otherworldly for a lot of Traders
and asset managers Juiced Juiced up
levered up and so with that I think you
you kind of see these really interesting
opportun right where you know someone
from traditional Finance says wait what
do you mean I can go on with Bitcoin
collateral and I can short the thing I
can be delta neutral and I can get a 25%
annualized return no way that can’t be
that can’t be true and it and it very
much is because there’s a whole bunch of
holders in in the space there’s a whole
bunch of people that think in Bitcoin
terms and think dollars I don’t care if
it’s a 12% yield I’m interested in
acquiring more Bitcoin I’m interested in
longing my Longs per se and so every
once in a while you know we really have
to wash out that you know that crowd and
um you know while maybe it’s it’s not as
the funding rate that kind of variable
interest rate isn’t as negative as we’ve
seen in the the worst of times the march
of 2020 lows or uh the you know November
2022 um where you see where actually you
get paid you get literally paid interest
rates v a variable interest rate every
eight hours to Long Bitcoin right shorts
are literally paying Longs and and the
you know the most uh worst capitulation
events we’ve seen funding flap right so
essentially that variable interest rate
right there’s no Central planner it’s
essentially what’s the Futures price
relative to the spot rate the spot index
and so we have this really interesting
developing not only the onchain data but
also this this derivatives complex which
has undergone a lot of change if we look
at the last if we look at the last bull
market during the peak during you know
the coinbase IPO micro strategies you
know borrowing billions of dollars
Bitcoin has gone from 10,000 to 60,000
in the span of about you know three or
four months um what you saw was a bunch
of of of players were paying 30 40 50%
annualized interest rates to Long
Bitcoin and crypto broadly using crypto
collateral so 70% of this derivative
complex was collateralized with Bitcoin
itself or with crypto itself crypto
margin right and now that led decape
that that environment is completely
reversed to the point where right now
about you know 30 to 40% of this
derivatives complex is Bitcoin or crypto
margin and the rest is dollar margin
stable coins or in the form of a CME uh
it’s they’re using a treasury collateral
dollar collateral right so if you think
about the profile of those Longs or of
those derivative positions right if I’m
long Bitcoin with Bitcoin collateral
it’s great in a Raging Bull Market it’s
great when bitcoin’s going parabolic but
when Bitcoin reverses it gets ugly
really really fast there’s a convexity
there that that you know it it really
kind of juices your returns but also you
know that Margin Call comes quick so now
with a dollar with a dollar
collateralized Futures Market um and you
know in the last you know couple weeks
or so a real cool off in the in the
funding rates that variable interest
rate we have a really healthy
environment in the derivatives landscape
and I think that this this kind of
change in the underlying collateral
has really played into the fact that we
you know we’ve really only dipped 20%
from the highs and can that change
obviously but uh you know I think that
that plays a big role in it being less
volatile to the downside and kind of
being more of like an orderly orderly
walk up and I I would expect you know
during the peak mania this you know
changes and the animal spirits return in
some form but for now it’s the
derivative Market’s very much in a
really healthy spot yeah um and you know
I think the the Wall Street interest in
this asset as well is going to you know
really help keep this these basis trades
um manageable right where okay you have
a lot of let’s say hedge funds long
short uh funds on Wall Street that are
very happy to long ibit long the spot
ETF right um get Bitcoin spot uh spot uh
exposure and short the you know one or
two or three month out Futures have no
have no Delta or no uh directional risk
and you know Harvest a nice 10 15 20%
return and that’s much healthy and I
know that sounds pretty outrageous but
and I I promise you in Bitcoin markets
that’s like you know that’s the the
standard rate um so pretty healthy spot
yeah very nice interesting one um James
or who I don’t know who’s who’s got the
experience in this world but one of the
things we we talking about obviously
with Bitcoin being fungible um you know
I’m interested in the Arbitrage
opportunities that that that obviously
exist and and and you know how much you
speak to people about doing this I’m
more from The High Frequency side of
things
but you know if one exchange is trading
one price and and you can move your
coins across and get inside of spread um
you know how how big is this world of
Arbitrage between you know big players
trading prices between different
exchanges how much how much of that
influences the price going forward you
know what you are you involved in that
world at all uh I’m not directly
involved but in terms of just just to
give you a bit of a sense of scale so
with with onchain data we can actually
track coins flowing in and out of
exchanges right um so there is on any
particular day tens of billions of
dollars flowing in and out of exchanges
it’s it’s quite incredible um quite
often it’s something between like 30% is
a typical day sometimes it’s 80% of spot
volume is flowing in and out in deposits
so there is a huge amount of Arbitrage
that’s going on in fact last I checked
exchanges was something like 60% of
total onchain volume is something to do
with an exchange right who are the
players who are the players doing this
is it is it is it going to be you know
is it going to be your citadels or is it
going to be is it going to be your Mar
is it actually going to be the miners
who who who are the big players in this
world there’s a whole bunch so obviously
the miners have to sell at some point so
they’re going to be some part of it but
I would say they’re going to be more one
directional right they’re going to be
sellers um they may be using options to
sell covered calls because that would be
a nice strategy to just kind of get that
extra return until they finally sell the
coins um you’re going to have there’s
there’s a lot of crypto native firms who
have been doing Market making for a long
time um and in many ways I actually
think that Wall Street is probably less
involved it’s more so going to be the
hedge funds and the prop trading shops
because Wall Street usually can’t I mean
the two biggest exchanges in the world
is coinbase and binance and binance I
think a lot of companies in in Wall
Street would probably struggle to get
the approval um to to move their money
offshore so in many ways they’re kind of
constrained actually so there really has
been an opportunity for a lot of these
hedge funds and and crypto native Prop
Shops to really take advantage of these
Arbitrage opportunities um but in many
ways I think Dylan really touched on
probably where most of the Arbitrage
comes from um which is the funding rate
and in the traditional world this is
actually an innovation that I almost
guarantee you will make its way into the
traditional Finance world and that is
the Perpetual Swap and the idea is it’s
a future that never expires so Futures
make a lot of sense for oil because
there’s a storage cost it’s a pain in
the ass to stick it in your basement um
whereas with Bitcoin there’s no storage
cost right it’s 12 words so does it
really make sense for a expiring future
to have a overly different price not
really so what is that the market
invented the Perpetual swap which is
basically there’s as Dylan was saying
there’s an interest rate depending on
the deviation between the Futures and
the spot market and arbitragers can
essentially come in and do the cash and
carry trade to yield that spot so that’s
really where I think a lot of the
Arbitrage is it’s between that spot
index and the Futures price where you
can actually capture a yield on both
directions yeah um something you touched
on a minute ago Dylan is is is is the
volatility in Bitcoin if I divide um
the spot price of Bitcoin at the moment
by core pce the fed’s inflation Target
and we we look at the sort of purchasing
power of of that we got to an all-time
high in in February and it’s pulled back
a little bit from that point but the the
realized volatility in Bitcoin has is is
still good for me as a Trader I think
it’s at a really nice level but it has
come off the crazy levels we saw you
know a couple of years ago it was well
over 100% for example but um you know
how how much is the the volatility in in
in in crypto so do you see that as a as
an attribute um relative to it being you
know to some people it could be a bit of
a deterrent especially some of those
people who got burnt a couple of years
ago in the big pullback that we saw in
mcoins and and gr but how much do you
use volatility um do you think is is a
positive attribute towards the crypto
scene well yeah um I mean volatility is
definitely your friend and I say that
with a Bitcoin focus a lot of these uh
you know mcoins or altcoins kind of you
maybe have a oneoff event uh burst of
attention or maybe you could call it
generously a catalyst uh but after that
it’s usually a trend lower in Bitcoin
terms I I I actually welcome anyone to
to take their favorite altcoin or go on
you know coin market cap and look at any
of the top cryptos and look at them in
Bitcoin terms and it looks pretty even
the ones that look somewhat good in
dollar terms in Bitcoin terms they look
really bad um and so that obviously
that’s I’m not that’s a broad statement
um but on a long time frame I generally
ascribe that to be true in in almost
every case um but in terms of the
volatility I will say this a lot of
people and especially in the depths of
the bear or in kind of their you know
the recovery or the chop consolidation
phase that you know seemingly goes on
from months or you know years on end
people will say well bitcoin’s 30,000 it
was 69,000 that’s a 55 60% draw down
that’s bad you you know how are you
feeling and you know sometimes even it’s
like a a bit of a mocking tone and the
interesting thing is that a lot of those
people people that comment let that
actually haven’t even done the math and
when we were at 30,000 in 2023 before
the kind of the run up to the new highs
for the people that had purchased daily
since the starting on the worst time to
ever start buying Bitcoin if you started
in November of 20121 at 69,000 and
bought when it would literally went
straight down and had since recovered
you know had doubled off the bottom from
15 to 30,000 you were up like 40 or 50%
and you had you had outpaced the people
buying and holding the stack you had
outpaced most of the best hedge funds in
in you know compound annual return you
had obviously outpaced people that
buying bonds and and gold as well doing
the same strategy so it’s interesting
because the volatility is very much your
friend and position sizing of course is
key y someone someone that’s young like
myself and has a high risk tolerance
certainly has a different risk profile
than say my parents than me um but but
yeah and everyone’s a little bit
different but the volatility is you know
as long as it’s a you know a scale a an
okay size of your portfolio and it’s in
spot which is a real key right so if I
if I buy Bitcoin in spot and it draws
down 20% 30% 50% I don’t really care I’m
not a for seller but the people that are
that are throwing on you know layering
on a lot of this leverage oftentimes can
lose you know massive almost
irrecoverable amounts of their Bitcoin
uh due to this volatility so obviously
it’s a it’s a it’s a plus it’s one of
the reasons that there’s so much
opportunity in this asset because if it
traded like gold if it traded like bonds
there wouldn’t still be a massive
massive opportunity on a long time frame
um and you know I joked about this like
a month ago and it was you know the my
the dumbest friend I know that
accumulates Bitcoin just paycheck to
paycheck with an auto Buy has
outperformed the smartest hedge fund
manager I know a brilliant Quant um on
every time frame that exists so and I
think that’s actually a key point there
if you look at it from like let’s BR it
to the tradire world sharp ratio stino
ratio compound growth however you want
to measure it in like um there’s been
people who’ve literally done the Bitcoin
price performance and done like a hedge
fund tear sheet and then given it out
and said hey there’s this fund that I
want to invest in what do you think and
given it to their managers and they look
at and go I mean we got to call this guy
it’s like well that’s just that’s just
that’s just the Bitcoin price right like
oh you got me but when you bring Bitcoin
into the traditional Finance world the
numbers are getting to the point now
where you can’t argue with it it’s it’s
just so consistently performative um
that you know even the most ofout um guy
who’s going to push back maybe not Peter
shiff I don’t think we’ll get him there
but everyone else eventually I think he
does like some coins I think he does
like some coins it’s just not Bitcoin I
I still re I still stand by that he’s
one of the world’s greatest trolls and
he’s a massive bitcoiner in the in the
in the background yeah probably um we
talked about a couple of factors um you
talked about realized price and how we
can use that um as a sort of buy the dep
kind of level that that we could see
some support in but on on the upside
what an indicator that that I I see a
lot of people talking about um is the
stock to flow model now obviously in the
in commodity markets people use this
quite a lot you know gold we use this
quite a lot because it’s a scarce asset
um so a lot of people say well the
logic’s same in in in Bitcoin because it
is that the scarcity becomes even more
as we get closer towards 2140 the year
2140 when yeah all the coins are in
circulation or 21 million um I’ll said
this to both I mean I think Plan B is a
big advocate of the of the stock to flow
model and the stock to flow model now is
what
122,000 how much did I can see I can see
a bit of a smile on James’s face um I
think you’ll get the same response from
both of us here uh yeah I mean I I think
um you know I it’s but I do see you know
I think the investment banks have tried
to get into this world of trying to
Value Bitcoin and they’ve they’ve used
the stock to flow model which obviously
has its critics so shoot me down shoot
the theory
down um so to kind of put a bit of a
sense of scale on this have you got
chart of it as well no I don’t and
there’s a very good reason why I don’t I
think the stock you won’t find the stock
tolow model in any of my charts in fact
one of the uh so in the 2021 era um the
stock to flow model was kind of the the
everything everyone was looking at it um
I of the view and many very very qual
far more qualified than I statisticians
have done work to show that there is
absolutely no correlation whatsoever um
you could literally get the same kind of
correlation by the amount of steps that
you’ve done over the course of the last
couple of weeks so um in many ways it’s
a spous correlation um however it is
very good at at mimics now um one of the
main reasons that I actually went down
the path of saying all right I need to
get really good this onchain data thing
um is to essentially just give people an
alternative to what is I think an
enormously destructive and horrifically
well horrifically poorly designed model
um by a man who simply can’t take
critique which is Plan B so I have I
have very little time for the model um
to be honest but I do find it very funny
that we you’re right there are
investment Banks um and in fact Dylan it
might have even been at one of your
talks in Bitcoin 2022 um a couple of
guys asked me that same question and I I
gave a very similar Tire to what I’ve
just given and they said oh we’re
actually plan B’s friend I was like oh
god what have I walked into right now
but uh yeah I don’t have much time for
that model unfortunately well you Dylan
similar yeah well like uh look all all
models are wrong some are useful um I
think the stock to flow model uh is is
unique in that it maybe got people to
think about okay how do the actual
mechanics of Bitcoin work what is the
difficulty adjustment what is how is
this Supply uh algorithmic right what is
how does this system tick what how is 21
million Bitcoin enforcable um right
that’s okay that’s great but you know
the arbitrary price targets right I
think are again there they’re somewhat
spous and just some of the stuff we
talked with on this um you know over the
past hour right we have so much Insight
on you know every 10 minutes there’s new
insight there’s new data we have this
living breathing mechanical organism um
that’s globally distributed that’s
telling us all this stuff to say well
you know once every four years number go
up I think is a bit of a disservice um I
think really like the key to actually
valuing this asset and there’s a bunch
of different ways you can do this and
you can you can you know assign you know
any of these um variables as you want
but look we live in a world with with
global debt to GDP higher than it’s ever
been in basically every developing
developed country on the planet right
with demo with demographics that are
that are not improving and actually
worsening so we live in a world where
Financial repression
is a is a must going forward and in a
world where there’s 200 100 200 300
trillion do of Fiat denominated
liabilities bonds out there what’s the
value of an absolutely scarce Bearer
asset with this is the real key you know
among other things when you’re talking
about the having when you’re talking
about these Miners and you’re talking
about this hash rate the real key to
understand if you’re thinking of it as a
commodity if you want to look if you
want to talk about stock flow great well
what is gold silver all these other
monetary Commodities one of the keys is
their production cost so Bitcoin has a
programmatic production cost a it’s a
digital synthetic commodity with a
programmatic marginal production cost
that’s only increasing so you have an
absolutely scarce asset that’s becoming
programmatically verifiably harder
harder harder to produce so what’s the
value of that in a world where the C the
ECB the boj and the fed the Bank of
China and every Central Bank on the
planet have to competitively debase
and you know in that world all your
models are destroyed um so the stock to
flow model I think you know it’s been
useful to some I got it got a little
ahead of its skis in the 2021 Market um
but that’s okay right um again all all
models are wrong yeah I’m GNA wrap it up
in a minute but I’m just going to give
you um a chance just to if there’s
anything else you want to bring up um
I’ve got a pretty C clear idea about
where Dylan sees the long-term future of
Bitcoin
um but James is there any charts that
you wanted to sort of show up before we
wrap it up and you know what is the big
kicker for you um for in the near term
to medium term for
crypto yeah absolutely so I mean look
I’m I’m as optimistic as as Dylan is I
think billan uh sorry bitcoin’s in a
fantastic position in terms of where the
world is at I think the world needs an
asset like this um in terms of some near
catalysts um we can bring up the chart
so I think the first one that just
really I think the ETFs are quite
remarkable obviously seen a big big
slowdown um over the last couple of
weeks but I think the next chart so this
is the total inflows broken down by each
ETF now it’s important to note that the
red down the bottom is gbtc and this is
what I would consider to be structural
sell side they have to sell these coins
over time because people have been in
like there’s a whole plethora of reasons
why that will happen but if we remove
gbtc there was a lot of concern that all
of the money that flowed into these
other ETFs was going to be fast money in
the first correction it would sell out
and I’m just not seeing any of these ETF
hands selling which to me is just that
means that supply has just gone in and
again speaks to why we’ve got this
basically no 20 and it’s all retail I
here yeah that’s what they’re all saying
it’s all retail a large portion of it is
is actually seems to be retail so we’re
very early a lot of the wirehouses
haven’t even switched on yet um two more
charts just to kind of wrap it all up we
were talking about the the funding rates
before what you actually want to see is
funding rates really correct and take
out all of this leverage and we’ve seen
this happen
all that excess long leverage and people
bidding up the price we’ve seen that get
washed out over recent weeks which is
very constructive and that exact same
framework but coming into the onchain
world this oscillator is looking at the
amount of profit or loss and if you’re
the contrarium right let’s let’s bring
really short-term Trader you want to see
people buy high and then panic and sell
low and that is exactly what we’re
seeing going on in this green box these
little undercuts where you get the red
zone and then it rapidly recovers that’s
telling you the people who bought
recently which is the highs bought high
are selling low that’s what a wash out
looks like so you’ve got ETFs that look
good you’ve got spot that looks good and
you’ve got the Futures Market that’s
calm down so overall it’s a pretty
healthy picture as it stands yeah I so I
like the I like I’m not a massive buyer
of dips from a momentum perspective I
want that rate to change to pick up so I
like to buy the rip after the dip if
that makes sense so I’ll let I’ll let
the aggressive guys go out and buy this
pullback and you make maybe Wales or
whoever it’s going to be but I like to
see volume coming in a bit of momentum
coming in so buy I’m buying I’m a buyer
of the rip after the dip and I think
that sort of is the next stage and if
you’re looking for when that rip might
be about to become a dip you want those
very very high green values because that
means that a bunch of guys are taking
profits and that profit taking is
essentially what’s going to put the top
in perfect Dylan have you got anything
else before we wrap this
up no I think uh we covered a lot um
again I I really encourage everyone um
you know that’s interested in some of
the stuff to check out some of the stuff
that Checkmate has built out checkon
chain.com it’s fantastic resource and uh
it’s free brilliant well we’ve covered a
lot of grounds uh there’s there’s some
you exciting times ahead obviously we
talk about the reduction in Supply but
from a demand perspective you know we
are seeing governments around the world
warming towards the ETF side of things
we’re going to potentially see an
ethereum ETF over time being developed
although it’s been pushed back a little
bit fun flows into into the the crypto
cach ETF aren’t going away anytime soon
uh you know Dylan talked about currency
debasement from Global central banks
this debt pool which continues to to
increasing the US debts well over 36
trillion and that’s going only one way
into an election no government’s going
to want to cut back in that anytime soon
because you obviously just loseing
election so there’s a lot of kickers to
go an interesting time we also what I
thought was very interesting covered um
a lot of these onchain data metrics
which James uh puts out um which can
really give good Insight around the flow
you know who’s buying what at what time
and some interesting oscillators which
can complement traditional um you know
technical analysis like Ballinger bands
rate of change oscillators those factors
as well so definitely something to keep
out anyway thanks to everyone for
watching uh I want to obviously extend a
thank you to to James and Dylan if you
want to get in touch with them you can
obviously see their details I’m sure
they’d love to to hear from you and and
and how you guys can work together um or
what work together so uh anyway thank
you if anyone’s got any questions around
um trading um crypto with with pepper
Stone obviously reach out to the team
here as well B you
well cheers thanks thanks guys
[Music]

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As the dust settles following the highly anticipated Bitcoin halving, there’s a lot to unpack. Our panelists assess the near-term trading environment and debate the implications of halving on the outlook of Bitcoin. Hosted by our Global Head of Research, Chris Weston, the discussion promises to be lively with two of the hottest names in crypto right now – Dylan LeClair and James Check.

Our panelists will discuss and assess:
– The platform for progress – assessing recent price action, the technical set and news flow into the halving
– A review of the halving and what it means for the mining industry, supply, and the medium-term fundamentals
– The near-term outlook and key influences that drive price action
– The medium and long-term outlook for Bitcoin

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