98. Are We Really On The Cusp Of Another Bull Market

We did a calculation recently of the last hundred strategy calls I've done with individual investors, 75 to 80% of them are either break even or in the red. Most people don't buy in bear markets, most people buy in the bull.

Even people that have been in crypto are starting to go the other way, away from crypto. That makes me want to go towards it and invest more because I see the opportunity. I'm willing to take the risk because I know what is going to come. And we mapped it out. You keep your money in cash, you're losing money, you buy some bonds, your money just stays there. Same with gold. Then you move over to shares, you move to private equity, you move to vc. What's going to give you that biggest return for the smallest percent? That is going to be crypto. The opportunity is there. We've seen this before. We've been through multiple market cycles and this looks and feels a lot like the previous cycles before we had a bull run.

Welcome back to the Ben and Bergs Podcast. I'm Ben, your favorite high school dropout and founder of Collective Shift, alongside me as Bergs, your favorite MBA and COO of Collective Shift, Australia's leading crypto portfolio insights company, providing professional analysis and portfolio strategies for crypto investors. Like you, we are a unique blend of the established and the self made and we're here to break down crypto business and personal growth. But we're not here just to talk crap. We're giving you the insights you need to make better investments, build successful businesses and level up your life. And today we're talking about why crypto is complete tumbleweeds. It's boring, it's the bear market.

People have given up, people don't care. People are questioning the relevance of crypto. Is crypto going to come back? We're going to talk about where we are in the market. Are we on the cusp of another bull market coming or are we all just kidding ourselves? And things are just going to take longer than what we first anticipated. So we're just going to have a bit of a general chat. I'm over here in Perth at the moment with Berg, so it's good to have you with us. Bergs in person. Well, great to have me here, I guess, in Perth.

Good to have you. Good to host you in Perth.

Thanks for having me again, man. Yeah, as you know, I don't like being here, but I am out of, out of force.

Will, let's be honest mate, you've had the best time. We turned the weather on for you, mate. We've done cracking strategy session. You did an amazing talk. Everything's coming up Perth, mate. Just admit it.

And we've got, we've got golf next and we'll absolutely whoop you in golf and then that'll just be final. Final for the week.

You're still the worst at golf. You play every single weekend. I play maybe twice a year and I'm pretty close to where you are, mate. So. Look, honestly.

So. So listeners. Boogs. Rocks up. Last time we played. Rocks up. No, no polo shirt. Rocks up with his cowboy hat comes out and first few holes were pretty. We're pretty average, right? And then by the back nine, this guy is just hoiking them from all ends of the park. I'm like, where the have you pulled this from, mate? You're just like 180 meters out, you know, five iron, putting on the green, you know, does not look like a golfer at all, you know, and just, just plonking it from everywhere, mate.

The last hole as well, it was killer. So there was almost like a right bend in it, right? And so you have to go, you know, one here down the fairway and then to the right, just bang, straight.

It was incredible.

We're launching straight to it.

One of the guys who just turns around, he's like, what the hell? He's like a. Almost like a pro golf. He plays all the time, right? He's just like, oh my God.

Yeah, we have inverse correlations. I start out good and just go to. And you started that shit and just went like. You just kept improving.

That's because I never practice. And classic Ben, you rock up like 15 minutes after we're supposed to start. So we, we can't even go to the driving range, have a few hits. I have to practice on the course.

Standard. Mate, even on the way here, standard was like five minutes late. Bergsey soon.

Amazing.

Feels like you're used to it now. You're like, you just know it's gonna be 10 minutes late if there's not.

A call from you or a message, something's gone wrong. Like if you're on time, like something's gone really wrong.

Something. Something sick. So, you know, there seems to be a little bit of a broader consensus in the market right now, you know, that we may be at the start of the next bull market.

I tend to believe that there is some truth to this. You know, I've been in crypto now for seven years. And as we know, crypto runs in four year cycles. And you know, One of the charts that I'm looking at here that Burges can't see, but I just want to explain is around which. Which by the way, before the podcast he had a crack on me for not showing him the chart. But it is around, you know, the drawdown of prices from all time highs. And this is basically, you know, looking at previous bull markets and seeing the price drawdown from the all time high. So on average we tend to draw down somewhere between. And this is bitcoin drawdown from all time high. We tend to draw down somewhere between, you know, 70% and you know, in some bear markets even out to 90%. And these bear markets tend in the past have lasted, you know, sort of 12 months out to, you know, even sometimes where we are right now, nearly, you know, 18 months to, you know, a little bit, you know, closer towards two years. We've been in the bear market for about 420 days.

I think it's the longest bear market.

Yeah, longest bear market. But the price drawdown from all time highs in this cycle is very similar to the last four cycles. And following these drawdowns of that 75% from all time highs, we get that rally and that price increase following it. So, you know, one of the things I guess here is looking at the charts and seeing, you know, when that drawdown happens, what, what tends to happen is the sentiment gets pulled down as well. So one of the biggest things that allows us to see when the bear market is starting to bottom is around how the market is looking at and how people are thinking about crypto. And right now there is no speculation, there's no fomo, but basically everyone's scared and labeling it dead and asking the relevance. Even like coming over here for Perth. I was, you know, scheduled basically to a crypto talk over here in Perth to business owners and the, the feedback to the event manager. For me, speaking there was what's the relevance of me speaking of crypto? Which basically goes to show where we're at in the market.

Exactly. And the things that we're seeing as well, just in the industry, a lot of people are exiting. Companies are either cutting their staff right down and going into stasis mode or they're shutting up shop. A lot of them have pivoted to AI companies. The big one is people that have been on Twitter for so long that are really active are like f this and they're leaving the space, they've literally quit. And you think about how great this is when you've had a bear market for what was you say? 420 days? 420 baby. And seriously, that is a very long time. That's over a year, probably like a year and a half, something like that. Bad maths. But all those people think about that like you're at those highs and then it's over a year and for a year you're there saying crypto is amazing. This is what I'm doing, this is what's happening. You're not getting the return that you want, you're not getting the engagement you want, you're not getting the customers you want. There is going to be a huge shakeout from that. And now I'm seeing the people that I would expect to stay around leaving the space.

Yeah. Which is a really good sign of a bottom. Right. And even if we think about the people that we speak to, we did a, we did a calculation recently of the last hundred strategy calls I've done with individual investors. 75 to 80% of them are either break even or in the red in loss, in negative. So many people have lost money or are holding negative holdings of their portfolio because again, most people don't buy in bear markets. Most people buy in the bull. And right now, you know, we've drawn down 70, 75% from our all time highs. Right. So price back in.

You know, October, So this time two years ago, we're sitting at US$60,000.

Yeah.

Right. And now we're currently sitting at that sort of $25,000 level. So sentiment is down. And as, as Berg said, when you get this peak peasant pessimistic viewpoint of the market and lack of interest, it's usually a really good bottom signal. Now there's a lot of other stuff that's really, I think keeping the markets down right now, which is probably holding us back a little bit further, one of which rates remain high. I think the Fed had an announcement today or yesterday that at the time recording that the rates will stay at about five and a half percent, Liquidity is low. Binance is being sort of targeted again from all different angles, which tends to still be a little bit of something overhanging, which is a little bit of worry in the market. And then just the regulation on crypto continues to be in the limelight. We've seen the SEC recently come out and basically said they're going to be targeting defi projects again. And you know, Gary Gensler just got his, got his knife out once again. I mean, but it goes to show like that even, even recently the, in the courts they've declined A number of things that have come from the sec, including inquiry into Binance, including some more stuff that Gary keeps pushing to the, to the court. So it's just this fight right now, it's going back and forth and I think it's just a bit of a, you know, a null, boring period because of the struggle that's going on, you know, throughout crypto. So yeah, I think overall what I'm seeing is that this usually as we start to come into where we are is usually a good sign of a bottom signal, but it doesn't mean we're going to turn around tomorrow. This could drag on for a little while.

That's right. You don't know when it's going to turn around. But we've seen this before. We've been through multiple market cycles and this looks and feels a lot like the previous cycles before we had a bull run. And you look at everything that's happening and the general population, even people that have been in crypto are starting to go the other way, away from crypto. That makes me want to go towards it and invest more because I see the opportunity and I'm willing to take the risk, but because I know what is going to come. And I think we should talk about.

What people that come to Collective Shift, the people that are approaching us now, who they are and what they want and what they understand then also our view on this. So this has been very interesting. The people that come to us, generally, they're people that have money, that have some crypto, that understand market cycles and maybe a business owner. But the key thing about them is they've generally been through at least one market, market cycle. They didn't get out. They know what the highs can look like and they see this opportunity right now and they say to themselves, I need to reach out to someone who knows what they're talking about, speak to them because I see this opportunity. Ben and I had a lunch yesterday with a business buddy of ours and the first thing he was talking about was the financing arm of his business and, and he wants to invest in Bitcoin. This is a guy that doesn't understand crypto, doesn't understand anything, but he knows it is a non correlated asset class and he knows that the halving is coming in April and he wants to know more about it to put some funds in there. This is really interesting.

Well, and in terms of holding cash, we've spoken about this so much, so many times before, like the US just hit an all time high debt of $33 trillion, let's keep pretty more and more money. Cash continues to decline. And if you're a business or you're holding a bunch of cash on your balance sheet that's declining year after year after year, day after day. Where else can you put that money? You know he's going to buy what, Keep buying property. Like, there's just, you know, there's only so many assets you can put in. That's actually a hedge against that inflation. Bitcoin's literally primed and programmed to be deflationary and hedge against that. And I think more people are starting to wake up to that.

Yeah, we went through this with that business owner because we were talking to my. Okay, cool. You know, you want to buy some things, why are you going to do it? And we kind of mapped it out where, you know, you keep your money in cash, you're losing money, you buy some bonds, your money kind of just stays there. Same with gold. Then you move over to shares, you move to private equity, you move to vc. What's going to give you that biggest return for the smallest percent? That is going to be crypto. The opportunity is there. It's a risk to reward. And I think now we should talk about what we're actually doing in this market cycle. We've been in crypto for a while, been through multiple market cycles, been had the opportunity to cash out 9 million bucks, ended up with a T shirt.

Amazing that he still wears. He loves the pain and. Okay, so for me personally, I do think we're on the tail end of a bear market that may last the next like four, five, six months. Right. But we're nearing that tail end. And for me personally, over this bear market cycle, let's say I have a hundred dollars to invest. I've probably deployed about 40 or $50 of that. A hundred. So not the entire amount. There's still at least half to go. I'm dollar cost averaging and I'm keeping about 20 to 30% for when we get a huge capitulation event. If it happens, I'm going to invest that sum immediately. Like November last year when we saw bitcoin, we just woke up and it dropped from like 3:30 to 16. Yeah, it was ridiculous. Right? That's a buy signal for me. If something's dropped 50% and nothing has changed about it, in my view, it's only gotten stronger. Black Friday sale. I'm buying.

And for those people that are listening, sometimes in these bear markets, and we saw this back in 2018, it wasn't 2018, I think it was 2019, we had these, the last final capitulation. So basically what happens is that, you know, say where we are now, everyone's over crypto, everyone's struggling, no one thinks going to come back. This is it, like it's all over. No one gives a flying fuhuza. And then there's the final stab, the final knife into the, into the stomach where it drops 40, 50%. That final capitulation where it's like, right, that's it, we're all over. And that potentially could, could happen here for crypto. One of the analysts was speaking about this, you know, heading into the Christmas Q4 is when things start to tend to heat up a little bit more action. But that could also be the final capitulation before we head into the Harvey next year. So I think having a bit of cash on the sidelines is not a bad idea.

And people are trying to predict that event. They're like an ETF is coming, prices will go up. But then they're like, FTX is going to return funds early next year, however many billion, and then there'll be a lot of market sale. So price is going to go down because they just have to liquidate. And then you've got things like, oh, binance might blow up that's going to affect crypto. Everyone's trying to predict that event that's going to happen. An event may or may not happen, you're probably not going to pick it. You can be aware of it, but you have to be absolutely in that 0.1% to pick it. You're far better off to dollar cost averaging and then have a chunk on the sidelines for when an event happens. And it's very clear to then go for it instead of waiting to put your entire stack in just for that event. Because again, if you, if you see that event like bitcoin going from 30 to 16 grand, you put money in, it could go down again. You need to have that capital available and not over collateralize on that.

Yeah, I totally agree. The other thing is in terms of, you know, how can we even look to validate that a bull market.

Might be back? We spoke about, Berks spoke about the etf, if that is granted. You know, I think that could really symbolize the start of a bull market. You know, that would be the real like catalyst, I think moving towards the halving stablecoins is another one. So, you know, despite the large drawdown in crypto, stablecoin market cap still remains above $120 billion and there's a lot of on chain activity on stablecoins. A lot of people still using stablecoins and has been one real legitimate use case for crypto aside of the speculative side. So as we start to see stablecoin supply increase, I think that could be another signal also if we get increased liquidity and lower rates. So we've seen that the four year cycle isn't the only, Sorry, the halving isn't the only catalyst. Sometimes looking at global liquidity and as money starts to pump into the economy, that also drives bitcoin price. And I think if we get clearer laws and regulation around legitimizing crypto, I think that's going to allow a lot better sentiment because every day I'm waking up to new SEC lawsuits and all sort of mumbo jumbo. So I think that will allow new projects to continue to grow and start and not be worried of the market. So yeah, I think there's some, there's some thing ones the other one as well. Looking at long term holders, you know, and seeing the patterns that they do, which they continue to accumulate, I think this is going to, we look back and really look, this is an accumulation period. But in saying that it's also really shitty time to be in crypto, like it's just really boring, isn't it? Like it's just sad.

That's the thing. We see some innovation. I think another thing that will spur things on is innovation. So the 2017 bull run that was ICOs and the innovation that happened there, 2021 was around NFTs and the innovation that happened there. We see a lot of stuff happening in the background. No one's quite cracked it and got the traction and I think.

People are starting to use that technology. But it's only the people that are super nerdy in crypto. What you need is those people that are just on the edge dipping their toes in and when you have that price action, they come in, they try everything, they buy everything and that really spurs price action totally.

You know, and then this was the question that came to us last night around like what, you know, why are you selling crypto? It's because that no one in that room last night really believed in crypto. There's maybe a couple of people and for me that's the asymmetric upside opportunity. When so many people don't believe in something and you do now, yes, you could be wrong, yeah, it could go to zero. But also if you're not wrong and when the 99% of people figure out that you're not wrong the amount of capital that flows in of human psychology chasing the opportunity when prices are going up. We see this in bull markets. It's so speculative. That's why I believe the next bull market's going to be absolutely face melting because everyone's going to be like oh shit, it's not dead.

Isn't it interesting where everyone is like why are you in crypto? It doesn't make sense, it's so dumb. Why don't you bail out and it gives you stronger conviction and you don't feel crazy about it. And I said to them last night look we've been through two market cycles on both of those. We're on the buy side. Yeah, you were on the sell side once. Yeah, you did really well and you put the money into the business. This time I'll be on the sell side. Right. So this is why I'm preparing now for when that next event happens to be selling to the people out there. And I hope I'm not selling to you dear listener. I hope that you are actually prepared and you're on the sell side with me and you're making cash.

Yeah, we're all going to be on the sell side if you listen to Bennett and Bergs in a bear market. So grads for those that listening I think as well like what sectors are going to get those price appreciation from those new retail investors? I honestly think it's going to be like, like it's going to be. Ethereum is going to be going to be a big performer in my opinion. As on chain activity returns more eth is burned. You get that supply shock that's happening with bitcoin as well. Anything tied into the Ethereum network. So you know you've got you know, gaming defi. I think they're going to be big ones. I honestly think bitcoin is just going to be just, just going to be nuts. I'm so excited for bitcoin. Like you know, regardless of government intervention you can't stop bitcoin. You know, greater use of the lightning network, more people buying it and holding it. You know an ETF comes in superannuation funds, you know, retirement funds, global, global funds across the world getting access to bitcoin like man, it's on the business.

Owner we spoke to yesterday, he's like I want to invest my super as well because he's got a wife super. His wife's super. Right? And he's probably his wife if similar age to him got at least 25 years to retirement. That is a long period of time where you can accumulate bitcoin and benefit from that growth.

Yeah, it's an exciting time. And for those that are taking advantage of that, you know, now is the most difficult time to buy. It's, it's the drawn out, like, it's the, you know, if you've seen the Wall street.

What'S it called? The Wall street cycle chart, Market cycle chart. Basically, you know, markets follow a pattern because markets, at the end of the day, it's just human psychology. Right. Humans are, you know, very repetitive and we do all the same things. You know, where I believe we are in, we're sort of in that sort of depression phase. So we've gone through. You start with hope, optimism, belief, thrill. As it goes up, euphoria at the top. We cool off into complacency. The market falls off. You go into anxiety, denial, panic. The market capitulates, which we had down that $16,000 level, I believe in December last year. Then the market just, just, you know, sits sideways. Everyone's in anger. Now we're sort of settling at that $25,000 level. People are depressed. No one gives a flying for who's. Everyone's left. And then I think as we head into Q4, we might get that sort of, that next rally, which is the disbelief rally. People don't believe it and then hopefully we're back onto better things.

That sounds like average week as a startup.

Yeah, that's an average day.

And for people out there, I've been a dollar cost averaging bitcoin. I haven't really, I haven't been looking at the price. That's the whole thing. When I used to do it, I'd like buy some bitcoin and then a week later I look at the price and the price would go down. I feel like an idiot if it went up. I would just literally just feel nothing. I wouldn't feel smart or anything.

Yeah.

But then you have to really zoom out and think about in a year from now, a year and a half from now, the prices today won't even matter. Like if you're buying it, 20 grand, 16 grand, 10 grand, it is not going to matter. Yeah. Like this market moves so fast, all bets are off. It'll melt faces. And you want to have exposure to that.

Yeah, 100%. I think we'll wrap it up there. It's a great way to finish. If you want any help and you know you've got, you've got your portfolio, maybe you're down you're not entirely sure if you've got the right strategy sorted. You know, you're not entirely sure if you've got the right information. You know, we'd love to help. We're offering these 15 minute strategy calls, you know, where you can basically book it, book a time with either myself or one of our team and we basically go through your goals and your challenges and just basically pointing in the right direction. If we can help you, we'll share with that what we do in our membership. If we can't, we'll point in the right direction. And you can find that link in the, in the description below. Just go to our website. We can help you out. But holding there, we're, we're, we're, we're kind of the tail end, I think Bergs, that's the moral story here.

Absolutely. And when you look back on this moment, be the person that bought some crypto, not the one that missed out.

Be on the sell side, not the buy side. That's it. And don't wait another four years, don't.

Wait another four years for this opportunity. That is, that is a key point.

Totally agree. Thank you everyone for listening. If you love this episode, we'd love for you to share it with a friend, family member, other crypto investor. It's how we grow the podcast and we love to come to you each and every week giving you the insights you need to win in crypto. Thank you so much. We'll wrap it up there. Or if you want to follow us on Twitter as well, you can follow Bergs at babybackburg, you follow me at BenSimpsonAU. And we've also got the Benneberg Twitter, which you can head over there and check us out. We'll see you next time.

Thanks, champions.