Bitcoin: Dubious Speculation transcript

Hey everyone and thanks for jumping back into the cryptoverse. Today we're going to talk about Bitcoin dubious speculation. If you guys like the content, make sure you subscribe to the channel, give the video a thumbs up, and also be sure to get your ticket to the Investing Through the Cycles conference, the first one. Uh it's going to be taking place, the main conference days November 21st. We'll have a few talks uh late November 20th.

Um, make sure you get your ticket uh links in the description below or the pinned comment. Okay, we got a lot of great speakers coming uh including uh Michael Sailor, uh Grant Cardone, we got uh Sen Carson, Mark Yusco, Allesio, James Czech, Mike Malone, the list goes on and on. Uh make sure you guys check that out. So, Bitcoin is is still currently trading around 83 84K. We're going to speculate in a dubious way, right? like and I I cannot overstate enough um you know how important 83K is, but also as a reminder to everyone because I I I I have to do this.

I know some people say you're you know you're being too hard on yourself or or whatever. No, I'm not. Right. I mean markets humble all of us no matter what. they will humble all of us and and that has happened many many times to me and it will happen many many more times. So as I said previously I was not expecting the move above 83k. I just wasn't expecting it and I'm not going to pretend like I was. I just simply was not expecting this to happen.

And so I was wrong. And honestly, I think the world deserves to hear people say that a little bit more. It's not a bad thing to say you're wrong. I I think it it just shows people that, hey, you recognize that you're wrong and you're not going to gaslight them into believing otherwise. I know there are a lot of people in this day and age uh that do that. And I'm not talking about in the markets. Um, but there are a lot of people that do that.

I do not want to be like that, right? Like I'd rather I'd rather own my mistakes than pretend like they they did not happen because it is from those mistakes that ultimately make us better investors, right? And you can't become a better investor if you don't own the mistake. If you ignore it and you pretend like it didn't happen. So, uh, Bitcoin is 83K. This is a um you know as I I made a video not too long ago. This is a very critical moment because the question is how does this play out from here?

Historically historically forget about the price for a moment. Historically Bitcoin goes down into Q4 historically in midterm years. Not in other years. In a lot of other years it goes up but in a lot of midterm years it goes down. Now, why does this time feel different? Well, it's because Bitcoin put in a higher high and there are are a lot of people that have been been defending 83K. So, there is two ways to look at this, right?

Either you have a real breakout here and it's all systems go or it's a massive fake out before you have the typical drop in the Q4. Okay. And you know I used to be very deterministic that we would have a drop into Q4. Obviously above 83K I'm less deterministic. It doesn't mean that it can't happen, but I think we'd have to get below 83K. And then you lean into that, right? Like you lean into that narrative and you say, you know what, this is how this year went and that's okay, right?

Like it it it put in a new high, but that doesn't mean it can't go back down. Um, and even if it does go back down, that doesn't necessarily mean that it has to go to a new low, right? Like it doesn't. In fact, you could argue that with a higher high, perhaps that would be something to to put a little bit more weight on if we were to give 83K back. Now, what's interesting is historically how this stuff plays out. Not from the price exactly.

Like I I know this is a higher high. Like I know it's a higher high and it's forced me to to reflect a lot and and think about try and force myself to see the market in the way that others see it. Right? I I'm I'm trying to force myself, but I also don't want to completely ignore the other outcome. Right? What's interesting is that we had a soft PCE print today. very soft. Inflation came in well below expectations. Now, one of the issues is the way in which they calculated some of those inflation gauges changed a lot.

So, um I've always expressed my distaste for that. Like when you have a series and then they update the series how it's calculated and then people then, you know, use that to then figure out what's going on. That's really difficult to to navigate. Like and it reminds me when I was in grad school and I was writing papers like I just can't even imagine writing a paper where for the first series of it of of or let's say I was running a simulation uh for the first half of the chart I was using different parameters than the second half like it wouldn't make sense to do that under most scenarios yet in economics it just seems to be the norm right like every year or two they change the way something's calculated.

And then the series continue we we continue to get prints in that series, but they're no longer calculated the same way that they were in prior years. So what are you to do with that? Core PCE today and headline PCE came in really soft. Really soft. So why if it came in so soft does the long end not believe it? because despite the fact that it came in soft. Let's go look at it. Core PCE. Do we have it? We have it year over year, I think.

Um, let me see. Core PC. So we have all let me just search it. All right. PCE index year-over-year 3.4 consensus was 3.8. Okay. Came in really really soft. Headline PCE also came in really really soft. So why if here you can see it right 3 4 3 so oh sorry yeah this is this is not core this is the the headline came in it was 34 core came in at three versus consensus of 34 so if that's the case right if you have a soft inflation print why does the long end not believe it the long end might not believe it because they changed the way in which this was calculated in fact the prior month PCE report was um let me see if I can find it.

We're going to go over to uh core PCE. You would think I would have this pulled up before I make the videos, but I don't actually plan these videos out. They're kind of I know that's surprising to some people, but it's just kind of uh the way I do it. Look at this. So you see you see this chart not this chart um you see how consensus was 33 and it came in at three but look closely look at previous it says 3% but if you actually go to previous it's 3.3 so core PCE didn't really go down.

It stayed what it was last month because they updated what it was last month. It's no longer 3.3. They changed it now to be three, which is the same thing that it is this month. So, the reason the long end doesn't believe it, right? 30-year yield, new highs again today. Why should today be any different than any other day, right? For the last week or so. The 10-year, not new highs, but it's heading up. The 20-year almost new highs.

The bond market either doesn't believe it or is concerned about something else, right? And I don't know if it's oil. And if you look at oil, there are plenty of midterm years where oil goes down at the end of the year. Um, so I I I don't know if it's if it's going to break here to the upside or not. I mean, this if it's going to break to the upside, this is when you would expect it to happen. But it doesn't have to. What's really interesting with Bitcoin is that Bitcoin has actually gone up as oil has gone up.

In fact, oil and Bitcoin basically bottomed at the same time in July, right? Bitcoin bottomed July 1st, oil bottomed uh July 2nd in the summer. So what what's interesting to me is that if if oil is forming support here, then maybe the markets are worried about that. But what I think is happening, what I really think is happening, if you ask me like because I you got, as I said before, I don't necessarily believe everything that I say.

You guys have to be aware of that, right? That just is is is true. Like sometimes I say things I don't necessarily believe it, but if the market is telling me one thing, I have to go with it. Uh that's why what I mean why I don't necessarily believe everything that I say, but when you look at at oil in midterm years, it's a mixed bag. Like you know, on average, oil in midterm years uh doesn't go up. In fact, on average, you average out all prior midterm years, oil ends the year exactly where it started at in 2026, it's obviously gone up a lot.

Probably because of the war in the Middle East, right? Because of this conflict we have going on over there. But what's interesting is that what I think is happening, why the long end is going up. You thought this was about Bitcoin, but it's all related, right? Like it's all the same. every it's all related. The long end is going up in my opinion because of the soft inflation print that's not really soft but people think it's soft because the soft inflation print is making it so that the odds of a rate hike in October have dropped.

So, the way in which you can get the 30-year yield down is to hike interest rates a lot to make people worry more about a recession than inflation. But if they don't raise rates in October, that I think is what's making the bond market nervous because the bond market is saying, "Oh no, the Fed markets are looking at this inflation print thinking that things are okay." But they changed the way they calculated it and now the Fed is no longer expected to raise rates in October.

Now there's a higher probability that they hold rates steady, which is exactly what happened in 2018. The Fed raised rates in September and then they skipped October. Now look at the year-to- date ROI, the 10-year yield in 2018 versus 2026. basically the same level, right? It's basically the same level uh today that it was back then. And what happened is the 10-year yield went up into October and then set a slightly higher high in early November after the Fed did not raise rates and then we had a growth scare where the 10-year yield came down.

You see, so the long end is arguably going up because sort of the fake soft inflation print is causing markets to expect the Fed to hold rates steady. And if the Fed holds rates steady, that means that the markets, the bond market is now more worried that inflation is just going to continue to get away from them and that they're not doing what in fact they need to do. That is the argument. What? How does that relate to Bitcoin?

How? Because I've gone off on a tangent who lasted who knows how long. Interestingly, if you look at the Bitcoin chart, right? What's interesting to look at is if you were to overlay the 10-year yield, we've been in a different regime the last couple years. basically since 2025 than before 2025. What I mean by that is this. Bitcoin's lows have tended to occur closer to when the 10-year yield is dropping rather than going up.

You see that we had a low in early February, but then the market stayed weak into the drop in the 10-year. And then look in the summer. When did Bitcoin drop in the summer? It dropped into July, which is also exactly where the 10-year yield dropped into into July. In fact, again, as we showed earlier, oil bottomed basically the same time that Bitcoin did. So, what's happening is that Bitcoin is getting is going down when you get a growth scare, when the 10-year yield is going down and the 30-year yield is going down.

But when the 10year is going up, Bitcoin's doing okay. But it's on the other side of that that Bitcoin struggles where the 10-year yield tops. What's interesting is that gold is doing the trade that it always does. What do I mean by that? Well, if you look at gold in midterm years, so looking at gold and you overlay, you look at like say 2026 and then you look at 2018 and 2022, you can see that gold's normally weak going into October.

But remember the 10-year yield, sorry, let me go to the other chart. The 10-year yield, look at 2018 and 2022. the 10-year yield was going up into the October, November time frame, and yields did not top back then until early November. You see that? So, gold in 2018 and 2022 bottomed in the October, no, early November time frame. I mean, the the lows were in by November, before November. They were in by like October or whatever.

Um, gold bottomed a few weeks before the long end topped. So, gold bottoms first because it goes down as the long end goes up and as the dollar goes up, gold goes down. But then when yields top, so when yields top and then come back down, that has historically been where Bitcoin has showed weakness, right? Because remember in 2018, gold bottomed in like September time frame. and started going up. In 2022, gold bottomed again.

It's around September, October. Bitcoin's final drop wasn't until after gold bottomed. And it was around the time that yields were topping. What's difficult this time is the fact that Bitcoin has made a new high, right? And that is what makes it so hard is, you know, could could 83K hold despite all the bad stuff happening? Because normally Bitcoin doesn't have the luxury of trying to hold a prior high as support, right?

Like normally Bitcoin is below the prior high. So there's no chance to hold it as support because it never gets up to the prior high in the first place. You see? But this time it's at least trying to hold the prior high as support. So then the question just simply becomes is it a fake out or is it not? If it is a fake out and this is a big if right if this is a fake out and we get back below it then this whole thing unwinds really quickly right like really really quickly.

It'd be the same way in which it unwound in 2015 and 2020. Not because of a pandemic, right? But it would just simply be because, you know, like in in 2015, Bitcoin swept a prior high and then it trapped all the breakout traders, right? It it trapped the breakout traders and then it went right back down to the range lows. 2020 was basically the same thing, right? you know, if you were a breakout trader over here, you might you maybe were buying and then people realized, oh crap, it was just a false breakout.

In this case, wasn't even really a breakout. Um, and then it went back down. I don't think it would look like that. I mean, the pandemic was was was kind of crazy. But what it means though is that if you were to lose this level, then you could argue that it would unwind relatively quickly because then all the breakout traders just simply get trapped and then they panic because they're like, "Oh, well, I thought the bull market was back on." And if it's not back on, then that means we have to worry about the typical Q4 weakness just as everyone was giving up on it actually happening.

So I can't sit here and beat the drum that 83K has to fall fall because I was never beating the drum that it was going to go that Bitcoin was going to go above 83k in the first place. So it would be not very, you know, it'd be disingenuine to to to to say that, right? There's no way I could say that without it just simply sounding like I'm coping, which is what exactly I would be doing. But I'm just simply arguing that if 83 is lost, then the whole thing unwinds very quickly.

If it's not lost and we keep holding it through rising yields over the next couple of weeks or so, uh then the bullcase continues. Right now, what's interesting in 2018, the Russell was dropping when the long end was going up. Okay, so if you overlay the Russell 2000, the Russell was down about 5% in 2018 while the S&P was still at all-time highs. The reason the Russell was struggling is because yields were going up, right?

And they're more the Russell is more rate sensitive, right? So you can see here yields were going up the Russell was dropping but the stock market was staying the purple line the stock market was basically staying at all-time highs eventually the stock market caught down to the Russell and the Russell went lower. The same thing is happening today right like you have an environment where the the Russell is down about 8%.

You know how I've talked about a stock market correction? The Russell's already down 8%. Why? Because yields are skyrocketing, but the stock market is hanging out near the highs. It did the same thing in 2018. Now, I went through history and looked at all these different examples. There are times where the stock market does not drop to where the Russell is, and in fact, the Russell just bounces back up to where the stock market is.

And it would happen if the if the long end were to go back down, but not because of a growth scare. If the longing were to go down, let's say the Middle Eastern conflict completely finalizes and oil prices collapsed, but the market is not worried about a growth scare, that's a scenario where all these rate hikes get priced out, but not because of a recession, but just because we realize that, oh no, we no longer have to hike rates into a supply shock anymore.

Okay? But if the stock market catches down to the Russell because let's say the market we we get these rising yields that then leads to a growth scare later in Q4 then that's exactly how you get that weakness in Bitcoin uh at the end of the year. So I again it's confusing to me. um the Russell is reacting to the rising rates and and metals are reacting to the rising rates. But it is true in prior bare market years and prior midterm years the the the rates when they were going up did not immediately cause Bitcoin to falter.

I mean there there are times where Bitcoin tops before the long end tops and there are times it tops after it very very slightly. But when the long end comes back down if it's because of a growth scare that's where Bitcoin could theoretically show weakness. So I would watch 83K. 83K is important. If we give away 83, then this thing unwinds because then everyone looks at this and you're like, "Oh, well, how is this different than every other midterm year?" It it could I mean, that doesn't mean you have to go necessarily to a new low, but it it could mean that it that it unwinds and and then we have to kind of build back up to this thing again.

And remember when you look at at rate hikes um and how Bitcoin historically has performed after the first rate hike in a rate hiking cycle, the average return in Bitcoin looks something like that after a rate hike. And this is 2026, right? You can see that 2026 has outperformed. March 2022, it even actually went higher than where it is before. And then also uh December 2015, the low was already in after the first rate hike.

Um, so that was why I was looking at like sort of the average move. And then if you look at the ROI of Bitcoin after a September rate hike, um, this is this is what it looks like so far in 2026. This is what it looked like in 2018, and this is what it looked like in 2022. What's interesting is that in both cases, Bitcoin actually held on for 30 to 40 days before, you know, anything really negative happened. So, you know, I don't know if it's going to play out the same way or not.

Um certainly with Bitcoin above 83K, it is it has challenged me on on in many different ways. Um everything else kind of makes sense to me, right? Like yields are going up. Like that makes sense. The dollar is going up. We've talked about the dollar going up for a while. It looks to continue going higher. You can see the 30-year yield is just continuing to go to new highs. um the stock market is still holding strong, which again makes sense because in 2018 and in 2014 the stock market was holding strong even until you know through through mid to late September.

So it's not really that abnormal. Um the only thing abnormal uh in that I can see is just the the new high by Bitcoin. That's the one thing that has really surprised me. every other trade idea, every other thing we've talked about has kind of played out like what we talked about on the channel for the last 3 to 6 months. It's just that Bitcoin has behaved in a in a different way. So, it's it's interesting. Obviously, this is just all dubious speculation.

If Bitcoin holds 83K despite rising rates as we get into October, then then I you know, you you have you have to respect that, right? You have to say, "Hey, you know what? the market does not have to conform to my expectations. Maybe the market's going to do what it wants to do, which is what it normally does. And sometimes it aligns with what I think and sometimes it doesn't. But 83K is kind of the line in the sand, I think.

And that's why you see so many people defending it. That's why the the bulls are defending it when it goes down there. And that's why the bears are trying to get it below 83K is because it means a lot. You lose 83, you go a lot lower. you hold 83, then Q4 looks a lot different than typical midterm year Q4s. So, that is the dubious speculation I have for you. Um, and uh, you know, we'll see how Bitcoin does here. I'm guessing it's basically kind of holding as we get all these uh macro data points coming in and then we'll make a decision after it's been able to kind of digest a lot of the the macro data that has in fact come in and you know we have the uh you know a big labor market report coming in on Friday so we'll see how that uh shapes up and and where that comes in.

We had ADP employment today and it came in hot and that could be another reason why yields are higher is because the labor market actually looks relatively okay. So those are my views. That is the dubious speculation for you today. Thank you guys for tuning in. Subscribe, give the video a thumbs up, and make sure you check out the first Investing Through the Cycles conference, main conference day, November 21st with a few talks on November 20th.

I will see you guys next time. Bye.