Bitcoin bottom analysis and long-term price outlook with Matt Crosby of Look Into Bitcoin
Rob from Digital Asset News interviews analyst Matt Crosby about Bitcoin market cycles, on-chain data, and long-term price targets.
Summary
Rob from Digital Asset News interviews Matt Crosby, an analyst at Look Into Bitcoin, during a 20-hour charity livestream. Crosby argues that Bitcoin's bottom is already in, supported by on-chain data showing capitulation levels matching previous bear market lows — despite the percentage drawdown being smaller than many anticipated. He presents a comparison between Bitcoin and silver's market cap trajectory, suggesting Bitcoin could reach $340,000–$400,000 if it follows silver's recent run. The conversation also covers dollar-cost averaging strategy, the risks of borrowing against Bitcoin at cycle peaks, the dangers of relying on any single indicator or arbitrary cycle timing, the macroeconomic implications of the yen carry trade and rising bond yields, and a bullish long-term thesis for Bitcoin's technological evolution including Layer 2, Bitcoin-backed stablecoins, and potential DeFi applications.
Note on price-target methodology: Crosby's analysis projected a drawdown percentage of approximately 56.2% from the cycle peak — not a specific price floor of $56,000. The bull-case bottom he cited was around $59,000, which is roughly where Bitcoin actually bottomed. The $43,000–$44,000 figure represented what would have been required for the 'worst bear market ever.'
Key Takeaways
FULL TRANSCRIPT
Is This Time Different? Assessing the Bear Market Bottom
Matt Crosby: The big question is: is this time different? Is Bitcoin going to go to $1 million in the next month or so, as Samson Mow has predicted, or are we just going to follow along in a four-year cycle?
It's a big question, and as always I've come with a plethora of data — just to give everyone paralysis by analysis and try to cover as many angles as possible. But first and foremost: is this time different? Because I think a lot of people are looking at the Bitcoin price action and thinking it's looking bullish, but we haven't had this traditional cycle that many people are anticipating.
I can share some data points that go along with this, but from my perspective, I don't think this time is different at all. Yes, maybe we haven't had the time elapsed from the cycle peak that many were anticipating. But if you look at the on-chain data — the amount of capitulation we've truly experienced, the time elapsed from the initial price-based capitulation to the secondary time-based capitulation — bear markets are usually composed of two separate components. You had this initial massive spike to the downside, everyone panicking, and then usually a few weeks or months of chopping, consolidating, and boring people out of the market.
If we look at the on-chain data, if we look at the long-term holder percent in profit, we can see this bottomed out at exactly the previous two bear market levels. A lot of people are looking towards seasonality, waiting for a specific date — October 6th, exactly a one-year bear market. Of course, that could play out. No one knows exactly what is going to happen, and it's best to work in probabilities. A lot of people are thinking linearly — "I'm going to go all in on this day at this price" — when really it's a more probabilistic science any time you do this kind of analysis.
Looking at the long-term holder supply in profit and the percent of UTXOs in profit, this was the biggest capitulation we'd experienced since 2015. Yes, the percentage drawdown from the peak may have only been around 52%, where many people were saying we haven't had this big 70, 80, 90-plus percent drawdown. But Bitcoin is changing as an asset. As institutions are here, the volatility is diminishing to some extent. There are these passive flows coming in. We're not as reliant on big retail influxes of FOMO and euphoria and greed coming in at market peaks. Now there's almost this equity index-style movement in the price action — a more gentle grind to the upside, a stepping price action — and the downsides have been muted as well.
Rather than thinking linearly in ones and zeros, the way we've been trying to do things at Look Into Bitcoin is to think in probabilistic terms. If you look at something like the MVRV quantile bands — something we've added fairly recently — this is rather than looking at one buy zone or one sell zone. If we look at the Bitcoin market as a probability, where are we in relation to where we've historically been, accounting for the diminishing volatility we're experiencing?
When we were at around $58,000, we were at about the 4th or 5th percentile on this, meaning that about 95% of all of Bitcoin's history was at a higher valuation compared to the levels we were at. Now, did that mean we weren't going any lower? No, of course not. Did that mean we couldn't bottom out in a few months' time? No. But it meant that from our perspective we were getting pretty good value for money, and the asymmetric opportunity of strategically dollar-cost averaging in at those levels seemed favorable.
Probability Over Prediction: How to Position Now
Rob: Yes, and this is the big thing. We look at this and think: will it repeat or will it not repeat? But probabilistically — as you said, Matt — these are the things we should take into consideration before we get left behind. The probability of us doing the same thing is pretty high. We've seen this. But we should protect ourselves either way.
Matt, let me ask you this. You're an investor. You're looking at these charts all day long. This is your job. What are you personally doing right now with Bitcoin? Are you just holding, or are you saying probabilistically this is looking pretty good?
Matt Crosby: The way I like to approach the market is rather than going all in or all out — and I'm not an active trader — I'm just trying to increase my Bitcoin stack as much as possible over the long term. Realistically, if you're in Bitcoin for the right reasons, which I'm sure many of the viewers are, the way I'm looking at Bitcoin right now is that it's a 99.2% discount given the fact we're not at a million dollars yet. I'm trying to find where I can get the best bang for my buck, because a lot of people are blind dollar-cost averaging in and that's absolutely fine. But if I see buy-one-get-one-free Satoshis, I want a little bit of dry powder to the side so I can really accumulate at those prices.
If we look at the bottoming range and topping range for Bitcoin, we recently had about 85 days where we were almost within three standard deviations — three multiples of the ATR — of the lowest closing price. So I was accumulating both BTC and MSTR at those prices, because the data was presenting itself in a compelling way. Last time I was on the show we were talking about Bitcoin reaching the production cost, the level of capitulation in terms of the spent output profit ratio — all of these data points.
A lot of people have this arbitrary view that we're going to have an 80% drawdown and it's going to last exactly one year. But the bull market paints the picture of the subsequent bear market. If we look at the logarithmic returns of the previous bull market — which was underwhelming in terms of how much we actually rallied from the lows — the ratio between the returns and drawdowns in every cycle has actually been very, very consistent. So what we can do is apply those same ratios. It was actually projecting a drawdown of about 56.2%. We did this analysis well before Bitcoin had actually bottomed out, and we actually bottomed out around $58,000, which was slightly more bullish — kind of our bull case of somewhere around $59,000.
For this to have been literally the worst bear market of all time, price would have only had to go to about $43,000–$44,000. So I feel that those predictions of $30,000 or even $20,000 — I've seen some people saying that — were really outdated in terms of understanding an asset that's gone from a few billion dollars in market cap to a multi-trillion dollar asset that sovereign states and international pension funds are accumulating.
On the seasonality argument — a lot of people saying we always have these one-year cycles, we always have the halving event which causes this big bull market. To some extent I feel that is true, but I feel the impact of the halving event is diminishing. We have 95–96% of all Bitcoin that will ever exist already in circulation. Michael Saylor alone is buying more than the new issuance. And people say, "Yeah, but we always have a one-year bear market." Well, it takes 30 seconds to check: that one was 155 days, that one was 627 days. Two out of the last four bear markets were one year, and they were about two weeks apart. We have such a small sample size with Bitcoin, and it is such a new asset, that a lot of people are still trying to find this holy grail indicator or looking at a tiny sample size and trying to find patterns which are really just noise.
On-Chain Signals: What the Data Says About the Recovery
Matt Crosby: Looking at the question of whether we've really bottomed — the two lines I've got on the chart right now are the 200-day moving average and the short-term holder realized price, which is the average accumulation price for new market participants. Once Bitcoin convincingly breaks above these two levels in any previous bear market, it doesn't hang around too long.
People have kind of lost touch with the fact that Bitcoin still is this tiny asset with this massive potential. If we actually overlay the fractals of all the price action instances of Bitcoin breaking above these two levels, we can see that within 100 days, the earliest instance had Bitcoin at $92,000 and the most bullish was $200,000. I'm not saying that is going to be the case, but when we get to these levels — once seller exhaustion has really come to fruition — I mean, we had the ColdCard hack, we had Marathon selling billions of Bitcoin, we had Riot pivoting, we had Saylor selling, we had all of these terrible things, the Clarity Act getting delayed — and price went up. Even from a fundamental standpoint, ignoring the data: who's left to sell at these prices? Who's looking at Bitcoin at $60,000, seeing all of these terrible outcomes, and thinking, "Yeah, I think I'm going to wait for $50,000"? To me, that's picking up pennies in front of a steamroller and really missing the big picture.
Dollar-Cost Averaging Strategy and Keeping It Simple
Rob: Well said. There were a couple of things you said that I like — "buy-one-get-one-free Satoshis" is a good one, I'm going to steal that. And discounted Bitcoin, of course. But you also talked about layering in and percentages. We just talked to Rob Art about percentages in and percentages out. When you're doing these types of buys, how do you structure percentages — daily, weekly, monthly? How do you do it?
Matt Crosby: Good question, and I'm going to shamelessly plug my own Twitter account here because this is something I took great pride in. I wanted to make sure that I wasn't just saying we're doing these things and relying on the data — I really wanted to put the money where my mouth was. So I was showing in real time, every single day.
The thing I really value, rather than saying I'm trying to accumulate X amount of Bitcoin, is I don't want to spend eight hours a day in front of the charts. I want this to be not only an outperformance in terms of monetary gains, but an outperformance in terms of how much time and effort I'm really having to put into the market. I'll say the little caveat that I love looking at Bitcoin data and I'm basically a professional nerd — people pay me to do this, so I enjoy doing it anyway.
But the way I was doing it: I wasn't looking at the Bitcoin price. I was waking up, going about my day, and when I finally got to my desk, I was just buying a set amount spread over a daily amount. I wasn't trying to make it too complicated. I was waiting until we're in the bottom 20th percentile according to something like the MVRV quantile bands. But you could also use the 200-week moving average once we get within a few percentage points of that, or significantly beneath the 200-day moving average, or the Mayer Multiple once we get within the production cost of Bitcoin. There are a million and one different metrics that showed we were incredibly undervalued.
I wasn't stressing too much about it. I was going in with a set amount every single day — basically as much capital as I had that I'd been banking from when Bitcoin was at high valuations and from my paychecks. And then essentially it was good timing. I kind of ran out of money just as I'd practically accumulated as much BTC and a little bit of MSTR as I could.
A lot of people are really overcomplicating this when it comes to Bitcoin. If you're in this for the long term, trying to strategically optimize every single dollar and percentage point — I mean, the amount of times back in the day I was setting limit orders where the wick came just within a few dollars and then rallied away and I didn't actually get my entry filled. I don't have the time for that. I'm just market buying, keeping it simple, a set amount every single day, and just relaxing and enjoying the newfound Bitcoin I've managed to accumulate.
Rob: There's a beauty in that statement. I've got a couple of brothers — they're both morons, but they're really good at just buying the basics. ETFs, that type of stuff. They're not into crypto whatsoever. One's into silver, the other one's into Visa. He got into Visa when he was like a kid, in college, and he crushed it. I asked him, "What's the conviction?" He said, "Everybody uses it." And the silver one — everybody's going to use that at some point. I said, "Do you watch the charts? Do you take a look at the 50-day moving average?" He said, "What the hell are you talking about?" And they have a great life. They just travel, they have a good time. Again, both morons — but Matt, I think that is a great takeaway. Just don't overcomplicate things.
Bitcoin vs. Silver: A Market Cap Comparison
Matt Crosby: Yeah, 100%. And I actually have some really interesting data to share after you mentioned silver — some analysis I've done recently which I think people will find pretty interesting.
People saw the previous Bitcoin bull market and maybe were a little underwhelmed at how much Bitcoin's price ran up. Everyone thought: the ETFs are here, Saylor's here, literal nation states are buying Bitcoin — why aren't we at a quarter of a million dollars, half a million dollars? What's going on? Well, I think Bitcoin was almost suffering from success to some extent. A lot of the OGs, which previously relied on these big FOMO rallies to have sufficient exit liquidity to sell their hundreds or thousands of Bitcoin without crashing the market — now they didn't really have to wait for that. Now they could sell directly to BlackRock, directly to these treasury companies. So I think the liquidity that these new fundamental inflows provided almost limited Bitcoin's upside potential.
But if we look at where Bitcoin bottomed out in this most recent bear market — around a $1.1 trillion market cap — if you look at silver, it also bottomed out at about a trillion dollar market cap in September 2022. Now, silver isn't gold. Not many people look towards silver as a true store of value asset. Bitcoin has this digital gold narrative, but realistically a multi-trillion dollar market cap is going to be hard to beat.
If we look at Bitcoin versus silver: silver went on a rally from 2022 to 2026, going from around $1 trillion to a $7 trillion asset — nearly a 600% increase. You also have to take into consideration that Bitcoin is a 24/7 market, so it actually moves a little bit faster than most other asset classes. If you take into consideration the available trading hours for silver and Bitcoin and apply the run that silver experienced just a few years ago — keeping in mind that BlackRock aren't advising every single one of their investors to allocate 1 to 2% of their portfolios to silver, which they are now doing for Bitcoin — Bitcoin has the potential to do something similar.
If it were to do that, we would potentially see a peak — keeping in mind we trade about 50% faster than silver — around October 2028. If we look at the actual price targets: silver from wick to wick ran about a 6.93x, which would take Bitcoin to around $400,000. These will sound like outrageous, outlandish price targets. But if Bitcoin peaked at the same market cap as silver, we're talking about approximately $340,000 Bitcoin — the same percentage of global capital, about 1.246%. Keep in mind Bitcoin at around $126,000 was about half a percent of global capital.
We're talking about global capital, which is constantly expanding — currently around $560 trillion, compounding about 8% annually. If we project that forward and say, what if Bitcoin can obtain just 1.25% of global capital, then we're looking at about a 5x from where we are today just to meet silver's market cap. At the current price, it's about a 2.3x — roughly $180,000 Bitcoin. This isn't an outlandish thing. This happened in silver a few years ago, for an asset that not many people are looking towards as their retirement plan. Bitcoin is now in that conversation. Bitcoin is actively being accumulated and is one of the most illiquid assets, with over 80% of the circulating supply held by long-term holders.
If you look at the money multiplier effect — how many dollars actually come into Bitcoin to move the market cap — it's somewhere around 5 to 6x, meaning if I buy $10 of Bitcoin, I'm actually moving the market cap up by somewhere between $50 and $60. There are many different ways we can look at this to conclude that people are underestimating what Bitcoin can do in a relatively short space of time. Yes, of course I'm biased — I work in Bitcoin — but I am very, very bullish on where BTC could be in the next few years.
Rob: It's a good exercise to see where things could go. When I got in in 2017, I would see videos from 2013 and 2014 where people were saying, "At some point Bitcoin's going to be $10,000." And I would read the comments — and here we are. Then I remember a couple of guys like Da Vinci saying it's going to go over a hundred thousand. Back in the day people were like, "That is the dumbest thing I've ever heard." And now we're like, okay, that's the base case.
When you talk about this, Matt, I don't see Bitcoin depreciating massively. We have these pullbacks, but as long as governments — and that's all governments, not just America — as long as they keep printing money to debase the currency, the price will go up. Just overlay the M2 money supply with the price of Bitcoin, with the price of average real estate, with gold, silver — it doesn't really matter. It's just going to keep going up unless for some miraculous reason governments say, "We've got to stop printing all this money."
Matt Crosby: Exactly. I've said many times: to bet against Bitcoin is to bet against sensible monetary decisions from global banks and policymakers. It's just the most outlandish bet imaginable. Gold in the same time frame went from around $10 trillion to nearly $40 trillion — this is 10 times the market cap of Bitcoin at its peak, in just a few years. If at some point we just see a small rotation out of that, then again, these are very realistic targets.
I always think it's better to react to the data rather than predict it, because a lot of people may be sidelined waiting for a $30,000 October price target or whatever it may be. Whatever you may think — when the time comes for me to start maybe cutting back, rotating out of Bitcoin, or at least scaling back on my dollar-cost averaging — it'll be when everyone is saying we're going to go to a million dollars, when everyone starts getting overwhelmingly bullish. It just happened in the most recent bear market. As soon as we got to $60,000, where everyone said they were going to start accumulating, people thought, "We might go to $50,000. We might go to $40,000." It's going to happen in the next bull market.
Rob: That's correct. And it's going to happen whether we like it or not.
Matt Crosby: It's human nature.
Profit-Taking Strategy: Selling, Rotating, and the Buy-Borrow-Die Method
Rob: That's why I believe that even altcoins will pump — because all we need is speculation and a pinch of utility. Before we let Matt go, there's a couple of good questions here. This one from CR: when you sell, when you take your profits off Bitcoin, does it just sit there in dollars, in stables — how do you do it? And CR also asks about the buy-borrow-die method — you buy Bitcoin, you borrow against it, you take out debt, you spend that, and then you die and it kind of goes away. Matt, do you believe in buy-borrow-die, or are you just going to sell and pay some capital gains?
Matt Crosby: It's a difficult question, and I know it's a cop-out answer to say it depends on your own personal circumstances. Where I am, capital gains has just increased to 24%, which is a real pain. But in terms of what I do — I don't like to use the word "sell," I like to use the word "rotate," because realistically if I'm rotating into fiat currencies I'm going to be losing 4 to 6% a year in purchasing power. So it may be a case that I rotate into traditional inflationary hedges like gold or real estate.
A lot of Bitcoin maxis will dislike me saying this, but realistically, cash to some extent is still king. I can't pay my bills in Bitcoin. And even if I could, would I really want to? I know it's extreme to say I don't want to be the Bitcoin pizza guy, but I remember buying stickers back in 2017. I look at how much those stickers cost today and it's like I paid $300 for some stickers on a laptop I don't even own anymore. Having at least some available capital is a nice luxury to have.
Now, if you live somewhere where you can spend your Bitcoin freely and instantly convert without capital gains taxes, that's probably the best of both worlds — you can live somewhat on a Bitcoin standard and also easily convert.
In terms of borrowing against your Bitcoin: I feel like it's a great narrative and in certain circumstances it can be good, but I think a vast majority of people are going to borrow against their Bitcoin at bull cycle peaks, thinking, "I can get some free capital here, rotate into a house, and I don't have to sell my Bitcoin." Well, if we get a 50% Bitcoin retracement, those loan repayments get pretty expensive quite fast. The best time to take a Bitcoin loan is actually around the bear market lows, but no one really wants to do that — it's kind of just causing excessive leverage. So if it works for you, it works for you. Honestly, it's not something I'm immediately keen to implement. Do I want to live on a Bitcoin standard? Potentially. But I think it's nice to have the options available to rotate in and out of different assets that are appreciating — whether that's high-yielding stablecoins or whatever it may be.
Rob: There are a couple of things to break down. First of all, when you said you bought stickers and feel like you paid $300 for them — that sucks. But look on the bright side: you're not a Bored Ape Yacht Club founder holding an NFT that's essentially worthless.
Matt Crosby: I didn't say I didn't do that either, Rob.
Rob: Hey, we live and we learn. And speaking of living and learning — you said, and you were right, that you're going to take a loan against real estate at the peak. Damn it, man. That's exactly what I did. In 2021 when I first got to Puerto Rico — which, by the way, you might want to think about, because there's zero capital gains tax here — I took a loan out for a big chunk of a property and I collateralized my Bitcoin, Ethereum, and Solana. And I did that with Celsius. Everybody's groaning right now. And you're right. This was at the peak. Then two or three months later I get a margin call. Pay it. Another margin call a month later. Pay it. I add Bitcoin to that position. Then I'm traveling in Europe — I'm in the UK, I was at the Coin Bureau conference — and I missed a couple of calls. Liquidated. Boom. That's it.
When you get liquidated, that becomes a capital gains issue. Instead of a loan, you now owe capital gains on that, plus you just got liquidated for your Bitcoin, which you were trying not to sell but effectively sold anyway. People say, "But Rob, Coinbase is doing that right now." They are — you can use it for a down payment on real estate, not for the entire property. And what is good is that they're saying, "Okay, this is the valuation today, it does not change." However, the percentage rate is 1.5 to 2% higher than what you would pay elsewhere. If you look at an amortization table, you'll know that's going to be kind of pricey later on, but you could definitely do it.
Matt, what's your thoughts?
Matt Crosby: Yeah, 100%. Of course I'm bullish on Bitcoin, and I don't know if I see the true hyper-Bitcoin-maxi realized world where every transaction is happening in Bitcoin. My kind of bullish long-term thesis — and people aren't going to like it — would be something like Bitcoin banks, where we maybe transact in stablecoins that are backed by real, verifiable Bitcoin, and it's mainly just an international settlement layer and we're all transacting on Layer 2. But for that to happen, we need these other avenues to allow almost DeFi applications.
I know people will look at Bitcoin and think it's old technology, it's slow, it doesn't allow a large number of transactions or smart contracts or whatever. But it's software. We can develop these things. It's an evolving piece of technology — whatever we want Bitcoin to be, it can be that. And that's why I get a little bit of slack for saying I'm not a Bitcoin maxi, because I think altcoins at the very least can provide almost a testnet service to Bitcoin. If some XYZ coin comes along in a few years and looks amazing, there's nothing stopping Bitcoin adopting that technology in the future.
At some point I do see Bitcoin being this all-encompassing piece of financial and monetary software that does everything we need it to do. And at that point, maybe we can get these ideal Bitcoin loans or live entirely on an instantly convertible Bitcoin-based stablecoin standard. I don't know. But it's exciting to imagine all the possibilities. With quantum computing coming along and all of these AI developments, I think Bitcoin's development cycle is going to rapidly start accelerating. I know there are controversies around BIP 110 and chain forks — those are going to become, if anything, more common. But it's good to see at least the debate and people discussing what Bitcoin should be and what it can be. So I'm very bullish on not just the price appreciation of Bitcoin, but Bitcoin in 10 or 20 years from a purely technological perspective could be entirely different, which is exciting in its own right.
Rob: Exactly. And we wouldn't know what it's going to be. It's like when man found iron ore thousands of years ago — great, we'll make flints, we'll make armor. No one thought we'd make a spaceship out of it or build highrises. It just depends on what the technology enables.
Macro Factors: The Yen Carry Trade and Bond Markets
Rob: Here's a question: any opinion on how the yen carry trade — which we've been talking about for quite some time — do you guys track that over at Look Into Bitcoin? Or is that just something like, well, it's a macro factor and we'll see if it plays out?
Matt Crosby: I remember a few years ago when we saw that big yen carry trade unwinding and we saw an immediate reaction in the US stock market. I think it's part of a bigger picture — what we're currently seeing in the bond markets, with these exponentially rising yields giving a lot of macroeconomic uncertainty. It's easy when you can look somewhere with low interest rates, borrow cheap, invest elsewhere, and pay it back for almost nothing.
At the minute, bond yields are rising. Is this going to be the big bearish catalyst to send the entire world into a global recession? Or is it going to be the catalyst for governments to again kick the can down the road, print more money to do bond buybacks, try to reduce those yields, and have massive liquidity injections? It's kind of up in the air. But the way I would lean is that I really doubt we're going to see monetary sensibility. I think any way that politicians and policymakers can make it the next person's problem, we're going to see more and more of that.
So are we going to see a massive V-shaped dump and pump? Potentially. If we look at Bitcoin and risk-on speculative markets, it's rare that we get this big V-shaped recovery. And I know we showed the 100-days-off-the-lows charts for Bitcoin once we reclaim those two major levels of resistance, but those were just the immediate pump once it's very liquid and people start getting confidence. If you look at the year following that, usually there's a lot of chop and consolidation and boring price action. It's not like now Bitcoin has set this $58,000 low and run up to $80,000 and we're talking about $200,000 in a few weeks' time. It's probably going to take a few weeks, a few months, a year or so before we really see this start to come into play.
Rob: Well said. There's one thing that was pretty funny — you said "monetary sensibility." When I was in the army, we'd say there are also two words that don't go together: army intelligence. I think we might not see too much monetary sensibility. Governments will continue to print, rates will go up, inflation will go up — and that's pretty much how it is.
The Single Best Indicator for Finding the Bottom
Rob: Here's a good one from Rusty Bot — always got good questions. If you were to use one chart to find the bottom and go all in using Look Into Bitcoin, not anything else outside of that, what chart would that be?
Matt Crosby: Good question. And it kind of goes against everything we've said — please don't go all in based on one indicator, one chart, one date. Please don't do that. But if I had to come up with one, it's something we haven't covered today. I can pull it up very quickly. It's called the realized cap hodl waves.
What this does is almost show us the level of speculation and conviction in the market. Essentially, it shows us the influence on the average accumulation price by different age cohorts. To simplify it: if we looked at the normal hodl waves chart and looked at the 10-plus-year cohort, it would show the percentage of Bitcoin held in addresses for at least 10 years. But when we look at the realized cap hodl waves, it shows us the influence on the average accumulation price. Because you were in Bitcoin at least 10 years ago, chances are you have a very minimal impact on the average accumulation price.
What you can do — and what I like to do — is remove the lower cohorts, say three months and below. Once we start getting huge conviction peaks, this works in almost two ways. If we look at three months and above, for example, it shows us that there are barely any new market participants — very few people are entering the space and buying Bitcoin at disproportionately high prices. But it's also showing almost peak long-term holder conviction, because this Bitcoin has been held for at least three-plus months. If they start capitulating, they're going to capitulate at lower prices and start bringing this metric to the downside.
If we look at every single one of Bitcoin's bear market lows all the way back to 2011, this metric peaked at pretty much the exact bear market low every single time. Without exception, when we have seller exhaustion, almost no new market interest, no one speculating on Bitcoin, genuine long-term holder conviction — every single time this has signified Bitcoin being at pretty much a bear market bottom.
Is this going to work forever going forward? No. There's no one holy grail indicator. At some point we're going to have some tomfoolery and it's going to mess up the signal. But at the same time, if we look at it in almost the opposite view — rather than looking at long-term holder conviction and lack of retail speculation, if we had just the short-term bands on, this is almost FOMO quantified. When we get these huge spikes to the upside, it aligns pretty nicely with bull market peaks. It hasn't been quite as clean in the most recent bull market because we almost had this triple-peak cycle — a big ETF announcement, a huge run to $70,000, then a six-month cool-off, then a big run above $100,000. So I would not rely on any one indicator, but in terms of getting a general idea of where we could be in a market cycle based on one metric to accumulate around those bear market lows, I think this is a pretty good one.
Supporting Indicators: SOPR and Value Days Destroyed
Rob: Well said, well explained. I appreciate that. It irritates me too when I have to narrow it down to one thing. How about throwing in another couple that would kind of verify this — just another couple so people can look into Bitcoin and cross-reference?
Matt Crosby: Okay, so the spent output profit ratio. What we can see here is almost the fear and greed index visualized. Especially to the downside, if we're looking solely at accumulating bear market lows — there's the famous Warren Buffett saying, buy when there's blood in the streets, something along those lines. When people are capitulating, selling at huge realized losses — when we get these big spikes to the downside, these red negative spikes indicate that people don't believe in Bitcoin anymore.
The unfortunate thing about on-chain data analysis is it is essentially just mass psychology quantified. And the unfortunate reality is that a vast majority of participants are wrong most of the time. This isn't to dig on most retail participants — it's human nature, it's psychology. When you see your investment down 50, 60-plus percent, it's hard to have that conviction. It's going against those internal biases you have. But every single time this spikes massively to the downside, it just shows capitulation.
It happened in the recent cycle. When did these occur? The biggest spikes were when we first dipped beneath $60,000, and then when we dipped to $58,000 again — when people have lost all hope. Most of these will be people that bought the Bitcoin peak and say, "I'm done, I'm out, I can't do it anymore." That's when you're buying cheap Bitcoin. That's when you're buying when people have truly given up. You want to be doing the opposite of that. You want to be a contrarian in times where everyone's losing hope. And the same is true for the upside — when there are huge amounts of profit taking, when everyone's thinking they're making so much money, usually not a bad time to start doing something else.
One final one which I do like is the value days destroyed multiple. This is looking at coin days destroyed. Rather than looking at the level of capitulation or profit taking, this is almost weighting that movement by the amount of time the Bitcoin has been held. Not only are we looking at people that have sold Bitcoin, but we're almost exponentially weighting it by those that have held Bitcoin for a long period of time. If I held one Bitcoin for 100 days and moved it, I'd add 100 coin days destroyed. To have those same 100 coin days destroyed with 0.1 Bitcoin, I'd have to hold for 1,000 days.
What we can see is that when there's a huge amount of Bitcoin movement by long-experienced, large Bitcoin holders, these usually occur pretty much near the Bitcoin market cycle peaks. But when this cools off to these green levels, it shows that those who have been holding Bitcoin — especially large amounts for years, if not decades — are not selling. Again, it's peak conviction.
When you start looking at Bitcoin through the psychology, the on-chain data, the technical factors, the macroeconomic influences — once you get these pieces from all these different lenses and say, "Okay, everyone has lost hope, but the people who have been here a long time are starting to hold and gain hope and are actively accumulating" — and the macroeconomic factor. If you looked at the US social sentiment index, it reached its lowest level ever in May, June, July this year. That's not a contrarian viewpoint to say we're going lower. The contrarian viewpoint at that point is to be bullish. And it's really hard to be a contrarian bull at times where everyone expects significantly lower prices.
But this is when you look at the data, when you look at the actual behavior happening on-chain. You can get similar analysis looking at Bitcoin funding rates, looking at the options market, looking at Bitcoin proxies like treasury companies and altcoins. Once everyone has lost hope, it's time to do the opposite. And when Katy Perry is painting her fingernails with Bitcoin symbols, or politicians are saying we're going to go to a million dollars — that's usually time to maybe start thinking, "Yeah, maybe I need to rotate out of this a little bit. I'll save some cash for a rainy day."
Rob: I remember those days with Katy Perry. I'm like, this is not going to end well. And Matt, you're right — the contrarian view is when there is blood in the streets, we buy. A lot of people on the channel have been doing the same thing — just buying and waiting. This will be my fourth cycle. I have made all my money, all my gains, in the bear market. Every time I try to chase something near all-time highs, it backfired massively. You've got to be bored a little bit. It is boring. But the payoff coming in is pretty darn huge.
Matt, last question before we get out of here — do you have any pets yourself? Any dogs, cats, anything like that over there?
Matt Crosby: I always grew up with dogs. I did actually have two cocker spaniels — unfortunately no longer with us. Then I left home, went traveling, etc. So currently no pets, but I've definitely always been very much a dog person. My better half has always had dogs as well, so we're very much looking towards getting a little one of our own one day. But at the minute, in the rental unit here in rainy old England, I'm not sure if we're allowed dogs. One day we definitely will.
And I think the work that you're doing for the dog shelter is absolutely amazing. I was tuning in earlier. I'm not going to say I've got Ivan on Tech levels of capital available to donate to the good cause, but 210,000 Satoshis have just gone the way of that dog shelter. It's the very least I can do. I think it's amazing the work that you're doing, and hopefully we can reach that figure. I know you've got so many different interviewers, podcasters, and guests on today coming to help raise awareness, so I'm sure we can get you over the line.
Rob: We definitely all appreciate it. Matt, I appreciate you coming on. I'll see you in Miami on November 20th to the 22nd for the End of the Cryptoverse. Matt will be the MC and introducing everybody. Should be good times. Maybe have a couple of beers.
Matt Crosby: Maybe one or two non-alcoholic shandies. We'll be very sensible, like we always are at the conferences. Best of luck for the rest of your stream. Are you going to stand up for 20 hours?
Rob: Yeah, I'll probably take a break and sit down, but yeah. I should have got one of those treadmills you walk on at your desk, but I didn't do it. We're going to take a little bit of a break — coming up next we've got Wes from Smart Money Tracking in about 13 minutes. Matt, thanks for stopping by and thanks for the donation, man. We really appreciate it.
Matt Crosby: Anytime. Always a pleasure, and looking forward to catching up with you again in just a couple of weeks' time.