99% Of Bitcoin Holders Are Waiting For A 10x That Isn't Coming Transcript, AI Summary & Key Points

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Bitcoin's returns have diminished cycle to  cycle. Each cycle, Bitcoin has gone up less than it went up the cycle before. This is to  be expected. As assets get bigger and bigger, their returns begin to diminish. So, in today's  little episode, we are going to be looking at what is a realistic forward expectation  for Bitcoin that we could use as a model, based upon previous cycles' returns, considering  that each cycle itself is getting smaller in its returns.

Obviously, this is a model; it  absolutely is not a prediction of where Bitcoin is going to go. Bitcoin could  go anywhere. Crypto is incredibly risky. You could lose all the money that you put in,  of course. But let us have a little look. Again, it is a model. Models are made to be tested, to  be broken, and Bitcoin is notoriously terrible at following anybody who puts a model to it.

So, with that said, let us have a little look. So, this chart just simply says, how much did  Bitcoin go up in X's cycle to cycle? In its first cycle, absolutely enormous: 512x. Afterwards, 21x.  Afterwards, you know, a very modest 8x in the last cycle. And if this is the low, if 58K is the low,  and Bitcoin is going back into a bull market here, I think Bitcoin is more likely to go up than down  from here.

Again, I could be wrong. I have put in multiple videos on why I think the low is already  in. It might not be, though. My expectations are that Bitcoin does go up. Is it going to go  up in line with previous cycles? It is still almost certainly not going to do an 8x in the next  couple of years. I definitely do not think it is going to do a 21x. So, what is realistic?

Well,  this model that we made sort of maps Bitcoin going forward to 145K by the end of the cycle. So,  roughly a 4x from here. Again, it easily could be wrong. Apply any margin of error you want to apply  to this. It is just a model for thinking about what is a realistic kind of expectation. And if we  look at Bitcoin's returns right in this bar chart, it makes it a little bit easier to see where this  progression of 4x comes from.

As I said, 539x, 112x. You can see these returns get massively,  massively compressed every single cycle. So, what is the relationship? Well, if we go, we  can think of different ways to create geometric progressions. Not many of them fit this kind of  progression, though, because it is quite a big drop off. But one thing that does fit surprisingly  well is looking at how many times did Bitcoin double in that cycle.

So, how many times did it  go from 2 to 4, and then 4 to 8, and then 8 to 16? You know, that kind of progression, as opposed to  it went up 500x, it only went up 100x, whatever. So, in the first cycle, Bitcoin did nine and a  bit doublings. So, it doubled in price nine and a bit times. In the second, it doubled in price six  and a bit times. In the third, it doubled in price four and a bit times.

And then it doubled in price  in 2022 three and a bit times. And suddenly, with this kind of relationship, it becomes a little  bit easier to extract or extrapolate some kind of expectation of where it could be going forwards.  And so, this 75% reduction, 65% reduction, a 68% reduction between the third and the fourth cycle.  So, if we kind of like, these are roughly, give or take, 70% reductions.

So, if we take that kind of  70% reduction, then we get roughly two doublings, 2.1 doublings, about 4.2x. But, you know, I think  the decimal place is largely irrelevant here. You can say it is roughly a 4x, roughly it is going  to double in price twice. Again, no guarantees, absolutely no guarantees. Do not get it twisted.  I am not saying Bitcoin has to double in price twice.

That is ridiculous. Of course, it is  ridiculous. It is enormously enormous returns. But this is what this mathematical progression ends up  being for this cycle. We have to wait, you know, three years, I guess, two and a half years, three  years to see if it is true or not. Maybe this is the end of Bitcoin's four-year cycles anyway.  Maybe Bitcoin breaks the four-year cycle, but to the downside, we have already seen it  break the four-year cycle.

I would argue it is not really broken, but the low should have come,  if 58K was the low, then the four-year cycle would say it should have come a little bit later, right?  The timing has been far more regular than the size of the returns. So, from the bottom in 2015,  this is just well documented now. Everyone thinks the four-year cycle was written into Bitcoin's  law forever, which is why the low had to come, you know, in October.

Wouldn't it be funny  if Bitcoin was at all-time highs when it should have been at, you know, cycle lows? I  do not think that is happening, but it would just be, it would just be funny, right? The  timings of the cycles have been incredibly regular. Maybe this is the cycle that is a bit  different. Who knows? Who knows? Time will tell. All right, before we go on with today's video,  I just want to talk about today's sponsor, Kelshi.

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Back to the show. But what is interesting, right, is if we take the  ratio of alts to Bitcoin and we map forward alts against Bitcoin, it is actually easy if we see  it in this chart here. This is the relationship of altcoins relative to Bitcoin. Right? So, this  chart is saying everything except Bitcoin measured in Bitcoin. So, Bitcoin is the denominator, and we  are just measuring everything as a market against Bitcoin.

Last cycle was awful, was it not, for  alts relative to Bitcoin? Alts peaked in sort of 2022, 2023, and they just bled out non-stop. This  is why last cycle's performance of alts was just, it felt like a bear market for everybody all the  time last cycle because their alt performance was just horrendous relative to Bitcoin's performance.  So, the cycle before was obviously quite good.

You know, alts as a market, they actually beat  Bitcoin's returns by about 1.65x. The year before, obviously, the cycle before was the best  cycle for alts ever. So, you can see these lower highs. Are we going to get another lower  high in here? My opinion on most alts right now: I think if you hold a basket of alts, if a  basket of alts is what someone is holding in their portfolio, they are very likely to  have something that mirrors exactly this, right?

A basket of alts is incredibly likely to  mirror this exact relationship. Now, who is to say this might change? Maybe alts go up against  Bitcoin for the first time in effectively nine years this cycle. Maybe they actually break this  cycle. I do not think alts as a basket are going to do that, but I think some alts definitely will.  I think some will because some are just on-chain businesses.

It would be weird if no on-chain  businesses could outperform Bitcoin. I mean, that would not be right because any business  could outperform Bitcoin. Of course, it could over a four-year period, eight-year period. It  would be weird if Bitcoin was the best performing asset of absolutely everything now that it is $2  trillion. That would not really lead innovation.

You have only got to look at NVIDIA. NVIDIA is  the best performing asset across five years, ten years. Why is that? Because it is  driving the entire AI train forward. So, anyway, if we just sort of take this as  a thought experiment and we push this on, if we hold the ratios where they are  today, the performance is pretty bad, really, across the board, is it not?

ETH peaks  at 7.8K, SOL peaks at 320K. So, by holding alt, you are really hoping that whatever it is you  are holding really outperforms Bitcoin. And, you know, it might, by all means, it might. This  might be the cycle that it does, but in the past, it has been a bad bet to hold a basket of these  things relative to Bitcoin because the basket of those alts just tends to bleed to Bitcoin.

One  thing that kind of breaks this relationship, right, is that, well, what if 58K was not the  low? Well, then 245K is absolutely not the target, right? Because if you are only going to  expect Bitcoin to double twice based upon this mathematical model from the low, well, if the  low is 20, wow, it is not going to go very high. In fact, it is unlikely to even beat its previous  cycle highs.

Right? So, Bitcoin's low is very, very relevant to this calculation. Again, if I  just quickly show you one more time, just show you here. Bitcoin's low is very, very relevant  because we are only talking about a roughly, based upon this geometric progression, two doublings  from its low this cycle. If that low is not 58K, well, it is going to go, the high is going to  be much, much lower.

Guys, thanks for watching. Let me know what you think about the geometric  progression. Have I lost my mind? Do you reckon there is any validity to thinking about it in this  way? Let me know in the comments. It is always fun to read them. And actually, I read a lot more  than you might think. I have them on my phone. I quickly check them. And if you want to start  some conversations, just ask me questions. It is all good with me. So, thanks for watching, you  guys. I shall see you in the next one. Cha chia.