8 Years of Crypto Market Experience in 20mins

To make generational wealth in crypto, you need to time the cycles. This isn't a cheesy video to just talk about buy low, sell high. It is a lot more complicated than that. And so many people just look at cryptocurrency as a market cap, as a sector that is only impacted by itself. But that is the furthest thing from the truth. The upside risks to inflation have diminished and the downside risks to employment. Cryptocurrency is a very small industry amongst a larger macroeconomic financial sector. These super complicated with so much stuff going on that impacts the prices of crypto day to day.

In this video, I'm going to try and break it down very, very simply to help you understand what impacts cryptocurrency prices, how to time market bottoms, how to time market tops so you can make the most out of your crypto portfolio and grow it from where you are now into hopefully some generational returns so you can live a happy epic lifestyle like I'm trying to do. So the first thing to understand is there's really, you know, two factors that impact crypto. You've got cryptocurrency markets and you've also got the macroeconomic factors, right? They're really the two things you need to understand. And predominantly the macro is the thing that impacts crypto the most right now. What are those macroeconomic factors? Well, they're things like interest rates, there's things like money printing and the central bank balance sheet, there's things like the stock market, there's international trade recession, there's war, there's, you know, there's so many different things that impact crypto on a day to day level. And really it all comes down to the underlying factor of supply and demand. Every market at the end of the day is impacted by the demand of an asset and the amount there is to buy, right? If we think at a really fundamental level, like fiat currency, you know, the reason Bitcoin exists is the fact that there is an infinite supply of fiat currency where central banks continue to print more and more fiat currency which increases the supply. And as demand stays the same or decreases, you start to get a lower purchasing power of that dollar and you get, you know, what's called inflation, as we all know, on the opposite side of that something like Bitcoin, we have a limited supply and growing, that puts pressure on the price and the asset goes up. That's a very simple level. But across the board, if you think about supply and demand and if you think about when the stock market goes up, there's more demand for assets, there's more money in the economy, more people have money to invest. The same goes for cryptocurrency. And they're looking for what's called risk on assets. So they're looking to adjust their risk to a higher profile. They're going to look at something like Bitcoin, Ethereum and cryptocurrency. That's when the demand goes up. So many coins, especially bitcoin and the top ones, you have a lower supply. Economics, right? So when you have low supply or less supply coming into the market and high demand, it pushes the pressure of the price up. Now that's all well and good, okay? We can say, great, more people want to buy it, the price can go up. But who are these people and when do we know when they have enough money they want to even buy it? Or do they, you know, is it going to have demand at all? Right. There's so many levels to this. So I really want to start with just Bitcoin. If we think about just Bitcoin, who is buying bitcoin, Right? Why would you buy bitcoin? Well, again, for a lot of people it's about hedging against the macroeconomic industry or the assets that you may hold outside of crypto, right? So for someone that has a lot of property, maybe it's a business with a lot of cash on the balance sheet, like microstrategy, maybe it's a country, right, like, you know, Venezuela and places like these. Maybe it's just an individual that's looking to diversify against their stock portfolio, whatever it might be. They're looking at Bitcoin as a hedge against what's going on and that increases demand. Now, if money is hard to come by, right? If we think about the macroeconomic factors, if interest rates are high, what does that even mean? What means that it's more expensive to go and loan money from the bank, right? So if it's expensive to go and loan money from the bank, well, then there's going to be less people loaning money. There's going to be less businesses going to get money from the bank, there's going to be less money circulating the economy. So as central banks increase the interest rates, it becomes harder for money to be accessed, which means there's less money physically in the economy to go and buy cryptocurrency. Now if we think back in 2017, for example, when Bitcoin ran up to $20,000 that year, the all time high, there was a lot of money in the economy, interest rates were down, a lot of people had excess capital, there was a lot of discretionary spending and people were looking to invest that money because they had surplus cash. Right, so where would you put that? Well, let's go punt it on some crypto, let's go gamble, maybe, let's speculate, let's go buy some crypto. And that market cycle is very much retail led. Now if you think about this current cycle, there is very few retail investors at all. In fact, the retail interest from a sentiment level is down 75% compared to the 2021 peak. Why is that? Well, we think about interest rates are high, cost of living has gone up, inflation has been high, there is less discretionary spending, there is less money, which means the demand is down, which means prices don't go up as much. Right? Okay, that's a very simplified level of thinking, but that's basically the reason why prices don't go up is there's less demand. Now when you get big corrections like we've seen in August this year, technically speaking, there's two types of corrections you can technical correction or fundamental correction. Now a technical correction is where you usually get this domino effect of liquidations and there's usually impacts at the top that circle down. You get this domino effects and the market corrects, right? So in August what we saw was, we saw fears of recession, we saw the US Stock market sell off. So a lot of people were fearful, right? Demand was down, supply was higher, a lot of fear in the market. People sell down their positions, right? When you get a lot of people selling down their positions, you, you get this cascading effect of liquidations. What does that mean? Well, you basically got people that are betting for the market to go higher and they have margin calls, right? So let's say you're, you're betting at this price to go to 10 to 100 and the price goes to 5 or 4. This person now needs to add more capital at their position at 3 to 4 because they're betting it to go to 100, otherwise they're going to get liquidated. And if they get liquidated, they lose everything. So what happens, you get these cascading liquidation effects where one after the other they get liquidated. And when you get multiple large positions getting liquidated, it has huge sell pressure on the price and then you get these massive cascading effects. So in August we saw jump trading start to sell off a lot of their crypto, a lot of their Ethereum, for example. And we just saw the Market tumble, right? Then you had fears, you know, in Japan. Japan had its worst day on the stock market since the 1980s. The Korean stock exchange shut down. We got these cascading effects and all of a sudden everyone panics and you get these huge liquidation events. Now that's a technical sell off event, right? That is better than a fundamental selling off event. A fundamental selling off event is when something physically is broken within the system, right? Something fundamental has changed. Maybe, you know, something's busted on the Ethereum blockchain, you know, God forbid something bad has happened. And fundamentally we have a huge sell off, right? So there's two different types there. The technical sell off is the better one. You know, it's not great regardless, but you know, it is, it is the better of the two. So when we were looking at those positions and I saw a lot of people very fearful in August around, you know, why we were selling off and why prices were going down, we had to look broader because this wasn't just an impact of crypto. This was the impact of the macro coming in, hitting crypto. Again. Crypto is just a very small percentage of the, of the financial markets that ultimately is impacted primarily by bigger markets. Okay? So it's really important to understand that macro has a large impact on crypto. And we think back to the COVID period, right? Back in 2020, this was the biggest impact, the biggest example of how regardless of what industry you're in, if there's mass fear in the markets and there's mass uncertainty about where the world is going and what's going on, there's recession, fees, no one knows what's going on. Everything will sell off. Bonds went into negative. Crypto plummeted. The worst day I think we had, we dropped. Bitcoin dropped 50% from 10,000 to 5,000. Everything plummeted, right? Markets do not like uncertainty, right? When there's uncertainty and fear in the markets, they are going to sell off. Okay? But this is where it creates opportunity. If we look back and see what happened during those Covid periods when bitcoin went from 10,000 to 5,000 in a day, bitcoin for the next 18 months went on one of the biggest runs in cryptocurrency history and went on to do a 13 times its growth from 5,000 to 67,000 in the space of 18 months now, what happened? Well, there was a lot of uncertainty. There was blood in the streets, there was a lot of fear. Everyone was panic selling. They gave up, they threw in the towel. But this was the Counter trade. And if you look historically amongst the best investors, when Amazon went down 98%, you look at Warren Buffett, you know, be fearful when people are greedy and greedy, but when people are fearful, these are the opportunistic times to buy. It's going to feel bad, though, it's going to feel wrong. You're going to feel like, you know, you shouldn't be buying. Everyone's throwing in the towel and it's very negative, very bearish sentiment. But these have been the best opportunities to buy. Why is that? Because you're playing against the market. We've got to remember these are two sides of the markets. We're not living in some virtual reality world and there is a buyer and a seller right on the other side of the market. So when we look at those returns, buying when the market is in those fear states is usually a really good time to buy. Now, fundamentally, why did bitcoin then go on a massive run afterwards? Well, we started to see interest rates come down. We started to see the US buy back their bonds and start the money printers. They started expanding the balance sheet. And if you look at the central bank balance sheet chart over the bitcoin price, it is highly correlated. The money printers get started, that money finds its way into risk on assets. And back to what I said at the start, when money's easier to come by, when businesses can go and lend out and people have discretionary spending, they go and invest that money into areas where they might get a greater return. They'll do that over periods of time when interest rates are high and it's harder to get money and there's recession fees and there's fees. They're not going to invest that money into highly risky assets. They want to protect that money. Right? People don't want to go bet the farm and, and lose their capital. Maybe some of you do, because we're in crypto, right, not necessarily losing money, but, you know, we have high risk appetites, but we are a very small percentage of the investing world. We've got to remember that guys like crypto people. We think sometimes the world revolves around crypto and Solana and Ethereum. I guarantee it doesn't. You go outside Twitter, you go outside your bedroom and you go into the real world and you go and talk to someone on the Street. Most people are not going to have a clue what cryptocurrency is. They probably heard of it, but they don't really know. So that's important to remember that the macro impacts have the biggest price I guess correlation or impact with the cryptocurrency market. So to understand crypto cycles and when the right time to buy and sell is, you need to understand the macro. Okay, once you've got that down pattern, now we can look into crypto side. So now we understand the macro. Really what drives crypto prices outside of the demand of the asset, right? Where does that value get created? Well, it really comes down to the fees generated, the transaction volume, the amount of people buying and selling a token, the amount of people utilizing that token. You know, for example, you've got eth, you've got the gas fees that are created by transactions. Solana with staking. And also using the Solana blockchain, you've got Bitcoin. And using the bitcoin network that generates the fees to miners, you've got things like Maple, for example, is a defi project that I'm invested in, creates the utility. And when people are taking out loans and earning any interest on their assets, you know, that derives a lot of those fees through the Maple token. So really it's about the utility of the asset. And if you think about just something being utilized more and more, that's what drives the price up. And you can think about that like in the share market, right, or the stock market, when you've got more cash flows, more profits, that drives the price of a share up. Different in crypto, we're not talking about shares or ownership, we're more talking about utility and how much, you know, revenue and I guess currency is driven through that token. So many different cryptocurrencies are completely different. I'm oversimplifying it, but basically, if you think about the more people that are using an asset, more people using a token, the more the price of that asset should increase. Also, if you think about just buying and holding, right, you think about one of the best things about Bitcoin is you've got so many people in the bitcoin network in the bitcoin industry that, you know, don't spend it, don't send it, they just huddle. And that as well drives up demand because you're basically restricting supply. You've got a large percentage of owners that just continue to hold and accumulate more. That is ultimately a very positive thing for an asset like Bitcoin. Same with Ethereum, right, with its deflationary supply. And you've got 30% staked that is restricting the supply. And as demand goes up, it ultimately puts pressure on the price to increase. Now the other side is you've Also got restricting supply of bitcoin. Right. And if we think about cryptocurrency and one of the things that continues to be true amongst cryptocurrency is the four year cycle. And this is the bitcoin four year cycle. We had the bitcoin halving earlier in the year and we know every four years the circulating supply, the new supply that comes in halves every four years and that ultimately reduces the supply. And as demand increases, we get upwards pressure on the price. And historically the 12 to 18 months after that bitcoin halving event has been the most profitable for bitcoin and that continues to be true. So I'm still holding out that I believe later this year, into 2024, into 2025, we're going to start to see bitcoin really start to increase its value and growth based on previous, you know, bull cycles. And just ultimately with that four year cycle maybe playing in with the macro, as I mentioned, whereas we start to get the money printers going, rates come down, you know, we've got a political year with the election. You know, these government officials, they're not going to, they're not going to want a recession or the stock market to go down because that's what they're going to be remembered for. Right? They're going to be very political. They're already pandering to crypto and I believe that's also going to line up with the four year cycle to push the price of crypto up over the next 12 to 18 months. Okay, so we've spoken about macro, we've spoken about crypto, we spoke about the cycle supply and demand. But the other really big one that I haven't spoken about just yet is the sentiment and narratives and themes that drive cryptocurrency. If we Remember back in 2017, we had the ICO boom, any of the 2021 cycle, we had the NFT boom and the gaming and Metaverse, and now this cycle. We haven't really had that big, you know, retail narrative just yet. There hasn't been that real thing that's driven a lot of prices up. And I think, you know, inside crypto we've definitely had like the Solana meme coin run, but that's ultimately been led by, you have people already within the space that hasn't been that real big retail narrative that's driven prices. And that ultimately is what excites people. People get excited by narratives, people get excited about visions and dreams and ideas about how the future could be perceived in the future. And that's what drives crypto prices up a lot. And we saw that, as I mentioned, the ICO era, we had so much money coming through Ethereum, which drove these new ICOs. And the reality is when we look back, what ICOS made it through from 2017, you know, I could probably count them on on one hand, even the NFTs, right, we had this huge bubble, huge excitement. NFT is going to be the future and ultimately look where they are now. Not to say the technology isn't good, I fundamentally like NFTs for example, but the narrative is what drove a lot of those prices. And again that's what drives a lot of cryptocurrencies still now, right, with speculation, people speculating D5 is going to be big or they're going to be speculating the gaming is going to be big or AI or you know, depend decentralized infrastructure, whatever that might be. Those themes and narratives drives cryptocurrency prices and that's really what drives social media, drives the conversations behind closed doors with your friends and family. That's what drives the impact of prices of cryptocurrency a lot is that speculation community, you know, that cult like following look at something like xrp, which I'm personally not a fan of, which you probably know, if you follow me for a little while now, they have one of the best communities is nearly a cult like following. If you speak to any XRP fan that really loves xrp, they are believers. They're going to hold that thing forever. Even though that it's probably down over the last four years, they are going to hold forever because that culture and communities what sticks the value of these assets because you've got so many people that just believe in it, which is a good and a bad thing, right? It's good if you're on the right side of an asset that has also the fundamental value, the utility, the supply and demand economics, the macro factors and the narrative, you've got a winner. If you've just got narrative though that doesn't hold true from a fundamental perspective, especially in corrections, right? And that's something like for me, xrp Cardano, these projects I don't believe have a huge risk to reward return coming up. I think a lot of them are overvalued and I just don't think they're going to return a lot in this next cycle to come. But they've got a good strong community and that's what's holding them through. So that's something to consider. You've got the narratives and themes is a big one. Trying to predict those narratives, that's where you can get big returns as well. Where I made most of my money was investing into the Metaverse back in 2018, before Facebook renamed a meta, then Facebook renamed and we had a huge growth in the Metaverse era. I was able to get out 20, 30, 40x returns. Selling it like 2020, 2021. That was a huge return for me. If you can predict those narratives, that's where you can get a lot of return. Easier said than done. Especially as nez now literally thousands more coins. It becomes. The asset selection component becomes far harder during this cycle than previous cycles because there's just so many more assets to select and the capital needs to find its way to. So to stand out of the crowd, you need the community, you need the narrative, you need the fundamentals, you need the macro. Need all three of these to really come together and succeed in the cycle. The other thing as well, with the cryptocurrency and as I mentioned, you know, the Cardanos of the world, this is where it comes back to also technological developments like what are the roadmaps, what are the things they're unlocking, what's exciting them and exciting the market about what's to come. And I think this is where Solana has done so well over the last, you know, year or so. They've had so many technological advancements. Arguably, you know, why Solana is outperforming Ethereum and has been for a little while, is because Ethereum has already done a lot of these upgrades. You know, the upgrades now are fewer and further between because they're a more mature blockchain. You know, they're growing to a certain size where they're. The upgrades aren't coming as frequent. Where Solana has just continued to drive new technological advancements, new upgrades, those things get people excited. If you think about a new product, you know, I own a Tesla, right? Every time there's a new feature or a new update, you get excited. You go and update and see the new ui, the new ux, the way it drives the autopilot. These are things that keep you engaged with a product. If a product is not consistently updating its infrastructure or its developments, then people are going to get bored and people forget about these assets. So technological advancements and I guess building of those assets and continuing to solve problems and get people excited is another reason why, you know, holding an asset that does those things can continue to drive the prices up. So these are really the key things that impact prices. And if you can time those things accordingly with the macro, with the four year cycle, with a narrative, with technological advancements, this is ultimately the things that combine to drive prices up. And if your assets aren't doing that, that's probably why they're underperforming. And a good indication to me is if something is outperforming or underperforming the market is how is that asset performing its bitcoin? Literally, go to CoinGecko or CoinMarketCap, hit the little settings button, change the currency to Bitcoin and have a look at your altcoins and see the last 12 months performance against bitcoin. A lot of you will be surprised about how bad your altcoins are performing. It's Bitcoin because of the way the industry is going and where the demand is at the moment is more at the higher end of the market. Considering where we are in the cycle, I think that will change as we start to see a retail wave. But about timing the market and getting in the right assets at the right time is the most important thing for your portfolio returns. Hopefully that's been helpful. If you like these videos, I'd love for you to leave me a subscribe. Only about 50% of you subscribe to the channel. It'd be a massive help. It allows me to add more resources, add to my team, spend more money on these videos so I can come to you and help you each and every week. So thank you so much for listening and I'll see you on the next episode.