Every YouTuber Uses This Chart and It’s Wrong Transcript, AI Summary & Key Points

00:00 This content is directed at persons  outside the United Kingdom. It is not directed at and must not be acted upon  by persons inside the United Kingdom. All right, so by now you probably know I  think we're in a bull market. Bull markets mean you're going to get loads of analysis  from loads of YouTubers, and in a lot of ways it's all terrible. You're going to see  these charts distributed all over the place.

00:27 There are a few charts that add up the market  caps of all the things in crypto and give you the total market cap of those things. There's  Total, which is every token in crypto: Bitcoin, Ethereum, Solana, USDC, etc. There's Total2, which  is everything other than Bitcoin. There's Total3, which is everything other than Bitcoin  and Ethereum. There's a bunch more, right?

00:50 And people are going to  continue to use them. Obviously, if you've got a bunch of information inside  a chart and the information is flawed, the chart is inherently flawed. So let  me show you why these charts are flawed. First of all, Bitcoin dominance, very simply.  This is the chart of Bitcoin dominance. Right now Bitcoin dominance is around 59%.

01:11 You can see  Bitcoin dominance has been in a bull market ever since 2022. It never really looked like it  was going to turn around. It reached a peak of about 65% and has since kind of sold off,  but basically stayed in that kind of range. This chart, Bitcoin dominance, includes  stablecoins: USDC, USDT, USDe, USDS. It includes tokenized gold. It includes RWAs on  chain.

01:37 It includes the exact things that are being tokenized, brought on chain, and are  the entire bull case for this crypto cycle, which have nothing to do with the  underlying strength of altcoins. So think about this. People are using this  particular chart to say, hey, alts are going to be bullish when this chart breaks down, not  really considering that this chart is going to get more stuffed into it.

02:09 More RWAs, more  stablecoins, the entire growth of tokenized assets on chain. They're going to show up in this  chart as a bullish thing for altcoins. Newsflash: that is not bullish for alts in any  way. It might be bullish for some alts, the alts that actually tokenize those  assets and bring them on chain. Yeah, sure, maybe it's bullish for Ethereum, maybe  it's bullish for Solana, no worries.

02:30 It's not bullish for the entire altcoin space.  Do not let people tell you that it is. So this is what this chart looks like  with these stablecoins and real world assets taken out. Bitcoin dominance right now  is about 65%. That's not low tier by any means, and you can see the charts are relatively  similar. But the thing to notice is they used to be bang on.

02:54 They used to be perfectly matched.  But over time, that difference is getting bigger. That isn't surprising, right? Because the bull  case for crypto is tokenized assets on chain. That really is one of the strongest bull cases.  As that happens, Bitcoin dominance should fall. Look, think about where the world's going  to be in five years or 10 years.

03:14 Is the biggest asset on chain going to be Bitcoin?  Well, it shouldn't be. If all gold could be tokenized and represented on chain, if stocks  could be tokenized and represented on chain, Bitcoin is 1% of their market cap at  the moment combined. Surely you'd expect Bitcoin to not be the largest thing. So  anyway, expect this divergence to increase.

03:40 Now it's time to look at this chart, the  chart of Others. This is all the crypto tokens outside the top 10, so that  doesn't include things like Bitcoin, Ethereum, Solana, USDT, USDC, XRP,  etc. If they're ranked 11 through 125, those market caps are all added up and put into  here. And this is the chart, right? Others. Others is often used as a proxy for whether  alts are bullish or bearish, and it kind of works.

04:11 But again, there's a very big problem  with this, because this includes, again, a bunch of tokenized dollars and tokenized gold, for  example. So for every $7 inside the Others chart, $1 of it is not altcoins. Now again, it's not  massive. But understand that when you're drawing lines and exact levels on the chart of Others, it  includes things that are totally irrelevant and don't move when the market's moving.

04:38 Dollars  stay flat. Gold does not move with crypto. And so again, if we zoom into this, we can  see that it never really used to be a problem, because tokenized assets weren't really a  thing. And then if we zoom in, it becomes a bigger and bigger issue over time. It's only  going to get worse throughout this bull market, with all the things that the SEC are talking about  right now and the CFTC are rumouring right now, with an influx of tokenization happening on chain.

05:08 Because look, there's already a big discrepancy  between where Others should be, which is this chart right here, and where Others is, which  is this one right here. So if we take the low in August, the real move in the Others chart is  about 26%. But if we take the actual Others chart, the move is about 19%. So people are using  this and taking real information from it, and it's multiple percentage points out  from where it should be, because this chart, the real Others chart, doesn't include stablecoins  and gold.

05:37 So obviously when the market's moving, it's going to move much faster. When the market's  pulling back, it's going to go down much faster. Others is dampened because it  includes stablecoins, RWAs, gold, etc. Now, the other thing that Others does that  people don't consider as well is that Others includes all the inflation that alts go through.  If you don't know, altcoins have an incredibly insatiable unlock demand.

06:07 Constantly, new coins  are being minted and dumped onto holders' heads via inflation. Unlocks happen all the time,  and these unlocks go straight into this chart. Just look how awful this inflation is. Right now, the Others chart has about 57% more supply  ready to come online over the next few years. So even if prices stay where they are today,  the Others market cap is going to grow, because more coins are going to come into  supply as those coins begin to be unlocked.

06:41 And you can see this is the inflation rate  of Others right here, new coins released each year. In 2018 it was 20%, and this is against  Bitcoin. Bitcoin's in gray. In 2021 we had an absolute flurry of unlocks, almost 40% inflation  during 2021. Last year we had about 8% inflation. You constantly get new coins into the market  in Others because unlocks continue to happen, which means the market cap rises  regardless.

07:08 It needs token prices to come down a lot across the board to offset  the rising market cap of all these unlocks. Anyway, so Others is a terrible proxy  for whether the market is bullish or not, because it's constantly getting inflated  away. And of the 115 coins in Others, since January 2024 only eight of them  beat Bitcoin. Right, Tron. We've spoken about Tron before, the waste management  of crypto.

07:34 I don't even know what GT is, to be honest. Bitcoin Cash, Zcash, LEO,  Pepe. It's hilarious, Pepe did it. XMR. Anyway, the point is, only eight tokens beat  Bitcoin. So why would you ever look at this? Just look at the token you want to look at  against Bitcoin and assess whether that is in an uptrend or downtrend against Bitcoin. Not  this chart here, which includes inflationary alts and tokenized real world assets.

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09:15 US  customers only. Trading perpetuals is high risk and you can lose all the money you put in.  Terms and conditions apply, check the screen. And the other thing is that alts move  beta to Bitcoin. When Bitcoin moves, alts move. 49% of the move in altcoins comes  from Bitcoin. So you don't even need to look at the market against Bitcoin. Just look at Bitcoin  and it will tell you, right, is your alt going to be moving or not?

09:43 And then look at your alt  against Bitcoin. That's all you need to do. You don't need to take these random, large, sort  of clever-looking analyses and assess whether or not your random alt, is Zcash going to  move against Bitcoin because Others is better than Bitcoin today? No, definitely not.  It's going to move whenever it wants to move. And actually, what's quite funny here  is when I was doing this analysis, I looked at alts against Bitcoin over 30 days  when Bitcoin has been falling, quiet or rising fast.

10:20 People think that when Bitcoin chills out  and goes quiet, alts outperform across the board. They don't. On the whole, in that instance,  when Bitcoin's quiet, they drop about 3%. Alts literally need Bitcoin moving up across  the board to make the basket of alts move up. So stop looking at the entire thing. Just  look at Bitcoin. What's Bitcoin doing?

10:37 Okay, alts are probably going to do something very, very  similar. And if you want to know about your alt, your special particular alt, well, just  chart that against Bitcoin. It's very simple. The other thing to consider, and maybe  we're going a bit into the weeds here, is that the only time alts have actually, across  the board, outperformed Bitcoin is when rates have been very, very low.

11:01 So as people say  this cycle, now this is a cycle for alts, alts are going to outperform Bitcoin. Honestly,  crazy idea. It's a very, very low chance that alts across the board are going to beat  Bitcoin in a rising rates environment. The cost of capital today is getting more  and more expensive. I'm not on about the Fed funds rate. I'm on about the real cost  of capital.

11:25 The US 10 year is at 5.2% today. The cost of capital is very, very high. Very  large companies are paying enormous interest rates on their debt. SoftBank just borrowed 10  billion dollars at about 10%. These numbers are really high. Your random alt, your new alt,  isn't going to raise money cheaply anymore, which it used to be able to. This  is a very different environment.

11:50 So for alts to go up across the board, I  think it needs cheaper money more generally. The best alt, the best business, is moving up because they're creating revenue. That  revenue is going back into the token. They're generating users. That company,  that on-chain business that's making money, growing its user base, putting that  money back into the token, creating the rails of the new financial world.

12:11 That business  should do well, agreed. The basket of alts, which includes alts from the last four years that  are absolutely terrible with awful tokenomics, should that basket do well? Definitely not.  Should you look at that basket to assess whether or not you should make a decision  on your particular alt? Definitely not, in my opinion. Anyway, obviously it's all my  opinion.

12:30 Maybe I'm the one who's lost the plot. This is what I think it's worth looking at  instead. Is the alt beating Bitcoin across the last 12 months or last three months? Is  it in an uptrend against Bitcoin? Yes or no? It's a very simple question. Has it got a  bullish market structure against Bitcoin? Zcash you can kind of ignore here because Zcash  is trying to be money, which is a different topic altogether, so obviously it doesn't need revenues.

12:54 But is it making money? Is that money going into the token? If those things are true, then it  might be, it could be something that's worthwhile. And are there more coins coming? Has it got  a bunch of unlocks that are ready to happen? Hyperliquid has an enormous amount of unlocks that  are yet to hit the market. I've done a few shows on my opinion on whether or not I think they're  going to hit the market, so go check that out here if you want to.

13:19 But fundamentally, tokens  that have large unlocks are going to need a lot of price appreciation to overcome those unlocks.  Generally, it's not something I want to be betting on personally. I want to see tokens that are close  to being fully unlocked. They have relatively deflationary tokenomics, there's not more tokens  coming in and being pulled off, or at least the amount of tokens that are being put in pales  in comparison to the reason that coin exists.

13:45 But anyway guys, that covers it, right? The point  is, when you measure stuff with a poor instrument, you're going to get poor results. You're going  to get unreliable results, especially when you have accurate instruments you can measure  stuff with. You can use Bitcoin dominance, and you can take out stablecoins and you can  take out RWAs. Yeah, okay, maybe you can use it then.

14:08 You can take OTHERS and you can take  out the RWAs and the stablecoins, so, oh yeah, maybe you can use it. Or you can just be specific.  What's Bitcoin going to do? Bitcoin predicts 50 percent of alts' moves anyway. Okay, use  that, and then compare your alt against Bitcoin, knowing that if Bitcoin moves down, yes, maybe  your alt will outperform Bitcoin to the downside if it's in a bullish market structure.

14:33 If  Bitcoin is moving to the upside and your alt is bullish against Bitcoin, then it could  also move up against Bitcoin to the upside. I know it seems simple to just use  everything, bundle it all together. The reality is it's going to get worse over time.  It's already pretty bad, it's already not great, and it's going to get worse. If this tokenization  bull case actually comes to fruition, it should get worse.

15:05 The vast majority of assets on chain  should not be tokens, should not be crypto. If you don't know what I'm talking about, think  about the world where everything's tokenized. Is crypto the largest thing inside that world?  Well, it shouldn't be. Should it be greater than all the property in the world, or all the oil in  the world, or all the gold in the world?

15:21 Maybe eventually it might get to those levels in 50  years, but in the next five years, definitely not. Anyway, that's the point. Let me know, tag me in the comments of who is using these  charts, and if I'm the crazy one. Honestly, I don't think I am. Guys, thanks for  watching. I shall see you in the next one.