Be Smart – Not Dumb

[00:01] hello followers of the four year journey this is bob lucas here on august the 4th 2022 i hope you're doing well this is yet another installment in the four year journey series it's been two months almost exactly since the last video which was titled there will be blood bitcoin sat just off thirty thousand dollars at that point and unfortunately or fortunately depending on your exposure
[00:31] we have seen some serious blood in this market unfortunately because it involved the collapse of some pretty significant institutions a lot of funds that i'm i'm assuming many of you uh held were either lost or have been locked in in those platforms that's unfortunate and i i hope many of you or most of you are not caught up in that i say fortunately though
[01:01] because it's just the normal part of any cycle there's uh there's an accumulation phase in the cycle then there's an expansion phase in the cycle then of course there's the mania and fever phase when uh it just gets really crazy and really stupid out there but on the tail end of that on the other side of that it's the unwinding portion where it eventually and always ends in this type of liquidation this type of capitulation that we see in the market and i say fortunately because
[01:32] it simply just means that we are much closer to what will become the eventual bottom in this four year cycle we see it in every cycle not just in bitcoin but in every asset class every asset class that goes through a typical boom bust cycle it's nothing unusual it's humans becoming extremely greedy and irrational and then the unwind is that rush for the exits when somebody calls
[02:02] fire and there is a fire in there there's a rush and people get hurt and unfortunately there really isn't much we can do about that except for of course be aware and cognizant of these cycles and how they move and to be on the right side of that or to be near the exits knowing that there will be trouble at some point so that was a couple of months ago we've seen obviously um the capitulation end i think that's probably for the most part going to be all of the
[02:32] capitulation that we're going to see in this cycle but i think there's still a little more ahead a little more work to do ahead i want to talk about time as well because we're getting now close to the four year anniversary of the first video the first video came out in december of 2018 and at that point at least to me it was clear that we were at a bottom i don't think we're right there yet but we're getting close but my point on time here as i show you in the agenda i just
[03:03] want to talk briefly about time because i think most investors just can't respect or cannot remain disciplined enough to invest over a time frame i know when i came out with that video um you know four years ago and so it just it just seemed too far ahead for most people to comprehend that they can invest and have to wait two years or three years but here we are now almost four years later we've gone through an entire
[03:33] market cycle and the folks that got in doesn't necessarily have to be right at the bottom but got in relatively early in the cycle well before the mania and the celebrities and and every and the scammers and everybody else got involved the folks that were able to get in near a bottom are the ones that are sitting pretty today even if they didn't get any out during this bull market fees they're still sitting at a four or five actually more like a six x
[04:04] on their capital which by any um any metric in the investing world is a phenomenal return and of course hopefully you were able to get at least some out a decent now at much higher prices during that cycle and therefore you should be sitting really well so it's just a lesson for what's ahead okay we're not at that four year cycle low point right now but we have to change the mindset again and begin to be an accumulator in our in our
[04:36] positioning but also in our thought right we're getting set and we're getting prepared again forget another cycle that's to follow and i believe that cycle of course will come it's always at the bottom of the cycle that it's very difficult to see how we could go back to the heights again just like it is at the top of a cycle when everybody is super bullish and everybody's talking about super cycles how it's difficult to envision a price of let's say 17 000 like we saw in bitcoin so it's at those extremes that's
[05:08] most difficult but at those extremes where the opportunity is the greatest so that's something you need to begin to think about and let the past go at this point how you performed over that last cycle over the full entire cycle that has already completed your performance and your results over that period cemented they're done they're behind us all we can do now or all you can do now
[05:39] going forward is take all the lessons that you learn because nobody can invest over a cycle absolutely perfectly every time but our goal as investors over each cycle whether it's a four year cycle or a one year cycle or whatever the cycle time frame is that you're investing on the goal is to improve and to take lessons learned from prior cycles and to implement those into cycles going forward so with that said i wanted to just again
[06:09] briefly speak a little about time because as investors time is really the the tool here that you need to leverage and if you're investing on a specific time frame then that's going to be the focus and we can't allow what happens in a shorter period of time during that time frame to influence the strategy that you have over a long period so as i do
[06:40] in every video i'm going to talk about where we stand right now in the current four year cycle and this here is a weekly chart and at the moment we're in a sort of an uptrend we're in a counter trend move after that capitulating event we actually saw two capitulating events right here uh with some high volume and these are obviously corresponding to the tesla sell-off and of course a 3ac blow-off blow-up i should say the lunar collapse
[07:11] and then all the cascading liquidations and bankruptcies that came with that those there represent a um a transition between uh you know the the speculators to the long-term holders this here is coins that are moving to the next to holders of the next cycle to smart holders who see the opportunity ahead in the future who are patient enough and who want to
[07:42] accumulate coins at a good favorable price doesn't mean the lowest price possible but at a good price in this market so that is behind us i believe this main thrust or this main downtrend to towards the lows has now probably completed the capitulating lows here around 17 000 may end up actually being the lows of the four year cycle and i use the word may because of course i don't know
[08:13] and none of you know um but there's a chance that in the coming months when we come in towards the four-year cycle low that those lows hold again i'll cover that in a minute point is near this level here i believe at the from a price perspective we are getting close to the bottom of a four-year cycle what we're seeing right here is a counter-trend move and this counter trend move could have some legs it could
[08:44] still make a run up towards this 27 28 000 level and of course these videos aren't about short-term timing but i point that out because i don't think you need to be fomo'ing in if we get this big move up to 27 28 29 even 30 000 over the next few weeks or month i think that would be a a natural trend move in the dying phases of the bear market before it begins to roll over and head down
[09:15] one more time towards the eventual lows of the four year cycle which at this point are still scheduled around the december time frame i think this is a little clearer when you go to a monthly chart and you can see this here from a monthly chart again the cycles have been unfolding perfectly now did they get the price targets that at least i had in mind no not exactly but from a timing standpoint which is really what cycles are only about at this point
[09:45] we hit the 34-month high in a 48-month cycle we also hit a high some six seven months before that which really was from a from a an accumulator's standpoint the high of the cycle ever since then it's been all distribution and all selling and and then distribution all the way here that they ended with this liquidating event and now we're into the accumulation or reaccumulation phase of the cycle but that takes time it
[10:17] to occur it takes time for sellers to exhaust and it also takes time from a sentiment standpoint it's just very unusual very rare that a market will just recover sharply and quickly without a significant amount of time that elapsed time does wonders for a market and i just believe that we still need to see around three to five or six months into the december time frame where the next
[10:47] scheduled cycle low is due now that cycle low i've talked about in the past can come sort of you know ten percent either side of a scheduled low so three to four months on either side could be where the actual low forms the point is that this capitulating event is very likely to be too early to be a cycle low and that the best case scenario is that it's a sideways movement into that december time frame where the four-year
[11:18] cycle low forms and that's why i said earlier that it's likely sorry not likely it's possible that the lows at that 17 000 range end up becoming the actual lows for this declining phase of the cycle and by that you would have something where for the next month we come up and there's that so 28 29 who knows exactly where and that we just move sideways we hold above or we form a low above these lows
[11:49] right here and then we begin the next phase of the four year cycle or the next and that still becomes a four-year cycle low in the timing band for the next four year cycle the other view which is one that you need to be prepared for because generally a cycle low forms with the price low it happens around 75 percent of the time in cycle lows so what we really need to be more mindful
[12:20] of not that it changes the way i necessarily approach this but the view is that we would come down and then we would test the lows and exceed those lows that we saw back here in june and form a cycle low excuse me form a cycle low deep down around possibly just looking at the chart from an eyeball perspective around that 13 000 range and a move down towards 13 or 14 000
[12:52] in this time frame around the november december time frame for me is a major major green light for adding and buying more in preparation for a beginning of a next cycle that will eventually head up to make another new all-time high so there's still some time here left there's some work left to do before what i believe will be the next four-year cycle but the good news is that we are many many many months into
[13:24] this cycle and very close now to that eventual cycle low as you can see we are now on month 43 of a scheduled 47-48 month cycle so we're within sort of four to six months at the most before the next cycle low and that's great that's an opportunity that we need to begin to prepare for and position ourselves for in in preparation for that next cycle
[13:56] and then lastly i just want to show you the quarterly chart because we are looking at four year cycles so looking at it from a three-month bar perspective or quarterly perspective i think helps to frame this a little better as well and here it is right here it's just clearly showing the prior cycles in this market and how we're probably just one three month bar short of completing this four year cycle and the other unfortunate thing is that we
[14:26] just have to also be prepared for any real significant downside that blows even my bearish expectations of that thirteen thousand i don't think we get below that thirteen thousand dollar level but um it's not an absolute it's not a guarantee there's no guarantees there is an outside possibility that we head down below that ten thousand dollar level that's not creating fud that's not spreading fear in any way it's just the reality of the market when you look at prior cycles being down
[14:58] some 85 or so from a high right you can see how we can get down to those levels it's possible anything is i'm thinking bitcoin the ecosystem is a little more mature now than it was in the much lower market caps when it really wasn't um there wasn't as many institutions involved so we saw that kind of on the upside here where the upside was a little more limited compared to prior cycles theory being here now with a much more mature asset class
[15:29] that we're not going to see typical 85 to 90 declines that we've seen before and that the current sort of 75 or so percent or maybe a little more by the end of the cycle is going to be enough again i don't know and nobody really knows and and you really can't approach an investment thesis thinking that you do know where a loan must come or where a price must hold it's just there's just no such thing your thesis and your strategy needs to allow and accommodate for that and more
[16:01] importantly that's why i always say don't try and approach this thinking you have to pick and find the absolute bottom of a market it doesn't matter in the end what matters is getting into a position around the right time and getting out of position at the best time and even in this prior um four-year cycle lower if you look at this back here in december of 2018 when i created the video i think it was something like 38 3 900. the low
[16:33] eventually formed around 3 100. that's around about 20 percent decline from when the eventual low occurred i didn't catch that bottom exactly but when you look at it now some three years later that's almost like a rounding error at that point right from 3 800 to 3 100 it's very insignificant yeah of course you would love to catch catch the absolute bottom of a market but it's just not it's just not feasible and by taking an
[17:04] approach of wanting to catch absolute bottoms you end up in the end fumbling and not getting into the right position around the right times by focusing too much on that so what i'm saying here is we're accumulators in this range i accumulated some more and i'll cover that shortly in the portfolio update at the 19 000 level because to me i wanted to get some more exposure back after selling some at the 43 000 level because the price was just good for me i
[17:35] know it's not probably the lowest and it hasn't been it's not going to be the lowest because we've already hit 17 000 but it was good enough and i'm happy enough to get more at that level so coming into this period what you want to be looking for now is increasing that exposure again and a reasonable amount of exposure of course right relative to your net worth relative to your asset base you want to be accumulating at these lower levels certainly anything below 20 000 for me is a range where you want to be
[18:06] accumulating but more importantly the closer we get towards the end of the year the closer we get to that next four cycle lower and that's where you want to be adding and accumulating some more but you can't fear a move down to 12 or 9 000 at that point if it means taking too much of a position where you will panic sell at ten thousand and nine thousand then um then don't do it you're taking on too much size and if it if it means
[18:36] being stressed by your position size being down 20 or 30 from 18 000 down to sort of 12 000 then you're not going to be comfortable in that position at any time and you're not sized correctly so being a position at the right time is important but also having that right size i talked a lot about that earlier on the cycle if you get in early you don't need a significant amount of size you look at you know and this is not to have a go anybody but you look at
[19:06] michael sailor for example down a billion dollars in a position because the timing is just not there the time so you may have the conviction of of the position but the timing has to be right you can take a small position at these lower levels at the cycle lows and you'll significantly outperform those who take bigger positions but can't handle those positions at much higher prices because you have your position at that low level the base
[19:36] of this cycle and that's kind of the same thing we're looking for coming forward if we're looking for the next cycle to exceed the all-time highs and that means go up to a six figure number in the next cycle then getting in anything below 20 anything anything else in that area is again is going to be more of a rounding error if price is going to be a hundred or 120 130 000 in the future then getting in at 17 versus 14 is probably not going to matter all that much
[20:06] considering the peace of mind that you'll get by establishing position so in summary here where we stand yeah i think we have a short-term possible move higher but really we have to respect the fact that we're in the declining phase of a four-year cycle we're in the bear market phase of a cycle which means the surprises are more likely to come to that downside than anything else i think it's too early to call a bottom
[20:36] it's too early to get sucked into a move higher and if we do get a move to 28 29 or 30 yeah you'll get some excitement again you'll get some fomo and people will start buying back in at that level and they probably will regret it because i think the market will reverse on them into the four-year cycle low and they will lose capital doing that buy at the lower levels and be content if it comes back you buy some more and you accumulate some more and you do that reasonably okay smart money versus dumb money so
[21:08] what i mean by that is um smart money is accumulating right now it's pretty clear from the unchained metrics and this happens every cycle every cycle um the dumb money comes in when everybody's talking about the gains others are making and they lever up at the wrong times they make some money in the beginning some come away with riches because they just um you know they're levered to the hill and we're smart enough or lucky enough to get out but there's very few are able to do that
[21:38] most will ride their position to liquidation and bankruptcy um and those coins will rotate back into smart money so you want to be smart money right here you want to be accumulating at this point if you're selling below 30 000 and you have a long term view especially after a decline of 70 percent this close to the four-year cycle low the next four-year cycle low then you're either just letting fear
[22:10] get to you or you firmly believe the future of bitcoin is over and it's full stop it's it's one or the other if you've been selling below 30 000 you should be packing up because you're making a statement to me that you don't believe in the future of viability that's fine that's that's an investment position one could take for whatever reason they can believe that it's over right that crypto or bitcoin ethereum you name it has had its day and it's going to be in nothing but a
[22:41] declining phase if you believe that then that's a market thesis that i can support and you're getting out for that reason but i think that's not that's not true for the vast majority of people that have been selling i think they're doing that based on fear they had at some point a high net worth or high value of crypto and they've watched it bleed and bleed and bleed they had plans for greatness
[23:11] with their allocation and being down 50 60 and 70 percent it becomes far too much for them to handle and they need that pain to stop and that's where we get the term blood in the street right people spill their blood at the wrong time it happens again through every cycle and they're responding to fear a smart money or smart investor is disciplined and patient and they're waiting for the market to come to them
[23:42] so they may have missed selling the top but right now they're not going to be dumb money and sell near a four-year cycle low after a 70 odd percent decline so you want to be that smart money again and like i said in the beginning of the video how you performed or the actions and you took over the last cycle they're done with now just don't repeat them again or try and minimize them again right we all make mistakes we all could have done things differently and better we want to improve on how
[24:13] perform in the future so here's the four year cycle model portfolio it's available on bitcoin.live forward slash four year cycle um so we're now holding 35 bitcoin in the model portfolio and that's because there was a purchase back in june at 19 000 pretty much a few days before the lows around 17 odd thousand dollars picked up for the model portfolio
[24:43] another 15 bitcoin some people met reached out to me and saying well why are you doing that if it's not the four year cycle low and quite simply because the price was good as again i want to be a smart accumulator but i bought 15 for the model portfolio because i like that price below 20 000 knowing that we may see a low that's around 13 000 or even below 10. i don't really care at that point
[25:15] because i'm just comfortable accumulating that range because i have the conviction and i have the belief that in the next four year cycle we will see a six figure number for bitcoin and i'm happy to do that i have left some room in the portfolio so i'm using essentially the profits the cash that were generated from the sales in the last cycle here so from a 100 000 starting position
[25:46] 580 000 so around six times the value of the initial portfolio was sold and i'm just using that to rebuy back in at 19 000. and i've still left room here for another buy at around 14 500. so between now and the next video if price hits 14 500 you can assume i've bought and i will be buying i'll be buying again at that level regardless of where we are from a time standpoint same type of
[26:16] thing i'll be buying at that level because i'm okay with more exposure at that point buying back for using funds and proceeds from sales earlier in this cycle and that would get the model portfolio still using the initial 100 000 up to a level of 50 bitcoin from the initial 25. so the result if we can get down to that point would be the same
[26:47] initial outlay of four years ago having doubled the amount of bitcoin on hand not a bad performance i would have hoped for more or better certainly if i had sold um another 10 for example at that 43 000 level um then of course this would have been a situation where we could maybe triple if not quadruple the amount of bitcoin on hand but hey like i said can't look back we can only learn from the past don't think we've done a whole lot different
[27:17] besides sell some more here at this 43 000 level the price don't think i could have got a better price based on just tracking the cycles and waiting for a breakdown on the monthly chart to occur so the price i'm happy with that just the amount of sold should have been more again happy to have sold enough at least in in that last cycle so that's where we stand from a portfolio standpoint i want to close this video by just
[27:47] sharing some thoughts on the next four-year cycle i don't want to go too deep into the next cycle because we need to clean out or close out this cycle still and so the next cycle won't begin until next year and the fireworks probably won't begin until of of course a little later than that um but first of all this is the point where you know you have to re-think uh the intuition that you have on crypto or bitcoin specifically
[28:18] uh and you know look at your conviction again do you have the conviction that you had in the past okay do you still believe in the narrative do you still believe in the future in this and if you do then we need to recognize that there is an opportunity here we can't be caught up in the sentiment that is out there the negative sentiment the berry sentiment that's out there we need to look beyond that sure there is still some short-term pain likely ahead but this journey is not about the short term this journey is about the long term
[28:48] this journey is about four year cycles at a time and we're coming close to closing one of those which i think has been successful and we want the next one to be even more successful than the prior so we want to be shifting our mindset here and thinking about the next coming cycle and the conviction that we have in my opinion even though the opportunity with each cycle i think is not as great as prior cycles as the adoption
[29:19] unfolds or as the adoption grows and the market cap grows and the exposure grows in general i still feel the optionality that bitcoin has and of course ethereum and others okay i know i've only focused on bitcoin but um i think it's no secret that i'm a pretty um pretty big holder of ethereum as well uh and believer in it as well so i i think whatever i say here pretty much applies to ethereum as well more specifically than some of the other coins or l ones
[29:51] um but just going back i the probability of success for bitcoin and the optionality that we have given where we stand today at that 20 000 level is still great all right there's still i believe a pretty high probability of another all-time high given that that all-time high is 4x above where we stand today and the and the possibility that we get at two or
[30:22] three x or four x extension from the last highs that optionality is is just too great to pass up and it's still like the last cycle in cycles before life-changing opportunities ahead so um you know i just ask you to to really think about that long term don't get caught up from cycle to cycle and the flashy coins or the projects that come up and the white papers and what everybody's pumping on twitter and everywhere else if you want
[30:53] to speculate in some of those create a little separate account maybe it's 10 of your holdings maybe it's a little bit more and play around fiddle around with it i i'd be surprised if you outperformed on the four year cycle time frame i'd be very surprised some of you will but in general that's that would still come with a significant amount of exposure and significant amount of risk to that to that portfolio the surest path here in bitcoin and in crypto in general is the longer time frame over this four year cycle that has
[31:23] the highest probability of increasing in value and increasing in value significantly over the next few years versus any other project versus any other coin or nft or whatever you want to call it on a risk adjusted basis and it also comes with peace of mind because again i can assure you if this space in general this this ecosystem in general if it's going to survive of course
[31:53] that's what i believe if it's going to survive and flourish then bitcoin will be part of that i can't say the same except for maybe ethereum as the exception can't say the same for much else i can see an ecosystem surviving and thriving but many of the existing participants going away like we've seen from prior cycles so this opportunity here over the next four year cycle in bitcoin provides one of the lowest risk for this
[32:23] for the space with the least amount of stress and with the least amount of knowledge that's required the knowledge that's required is patience and discipline and understanding the role of time and the role time is going to play in this upcoming cycle that's all you need to know you don't need to know about classical charts and head and shoulders patterns or technology or nodes or staking or anything like that you just need to know to hold your crypto holder securely
[32:54] that's something you need to know how to custody custody that asset correctly but then you need to worry about the self you the investor and not succumbing to all those shiny objects around you and all those opportunities and staying steadfast in your position a new allocation over the duration of the cycle and lastly just introducing the next cycle i i did sort of tweet about this the other day
[33:25] about the 16-year cycle most assets or all assets in fact have intertwined cycles right so you've got a 60-day cycle you've got the yearly cycle you've got the four-year cycle but there's a cycle beyond that and that's more of the long-term secular trend of an asset class and for bitcoin as we have four year cycles just like in s p 16 year cycle of course we haven't seen one yet right so i know people sort of scoff at this and laugh at the idea of a 16-year cycle
[33:57] when we've never had a 16-year cycle i can fully appreciate and understand that the point being though is that all assets regardless of what asset it is have a long-term cycle of balloon bear okay a boom and bust in my opinion bitcoin and crypto hasn't gone through its full-blown blow-off mania phase yet we've of course we've come close but from a market cap standpoint and an
[34:27] adoption standpoint we haven't reached that point and i believe that point lies ahead in the near future and if we look at it from a four-year cycle and 16-year cycle standpoint the next four-year cycle is due out in besides the one that's upcoming of course the one beyond that is around the december 2026 time frame and all these these three current cycles of the only three four year cycles we've seen formed what we call right translated
[34:57] meaning that the peak in that cycle occurred well past the midpoint and that makes sense if something is rising over time over a four year period then especially rising by the the the amounts that we've seen in bitcoin then you need more time rising and less time declining more time rising and less declining and that's the structure of a right translation that's a structure of a bull market or a secular bull market uptrend but i believe we're going to see a bear market just like we saw in the dot com and the internet phase right
[35:27] nobody would have thought we would have a three-year bear market we pretty much did and a significant one where apple was down 85 percent amazon 90 the nasdaq close to 80 percent uh and the internet was just fine the instant kept building throughout that period so i believe we're going to see something like that upcoming in the next four year cycle it doesn't necessarily matter at this point okay because we'll have to approach how we trade or how we invest that as the cycle unfolds
[35:57] so i'm mindful not to introduce something that's confusing but i do believe there's a chance that in this next cycle we get a run quicker and sharper than we've seen in prior cycles price cycles took a while to form into base and i think there's a chance that we see something develop quicker and run up to a high of the four year cycle that comes before before the midpoint of the cycle and that forms left translated so the the
[36:28] peak in that cycle occurs before the midpoint which means there's more time in the four-year cycle in a declining phase which also means that it's possible that the four-year cycle low gets breached in the next four-year cycle and i know that sounds crazy to many of you because of the halving and because of the stock to flow models and all these other models or mostly because of what you're accustomed to seeing right bitcoin fans and crypto fans have been spoiled by thinking by looking at this chart and looking at the
[37:00] metrics and just thinking this goes on forever these four year cycles keep going on right translate that forever no it doesn't happen that way there will come a time where you'll see a left translated cycle that i can guarantee you that is going to happen and i believe it will likely is to happen in the next cycle so again i don't want to spend too much time on this um and this isn't new if you go back over my videos as far back as i think 2019 i've talked about this because there was
[37:31] a debate about lengthening cycles and you know i was told you know we can't have a peak here because really is a peak jew in 2023 or sorry 2023 or 2024. and that to me always worked that was actually fine because i made the argument that we were going to look for a left translated cycle in the next four year cycle peak that that was the true one big mania blow-off that puts the rest of the mania bluffs into um you know
[38:01] into perspective really so that's what i think is probably coming up here i don't want to throw out price targets i don't think it helps i i probably did that in the past and it's not so helpful what is helpful is knowing when we're close to a four-year cycle low and then doing our best to identify peaks in the market cycles work well on lows that's where they're powerful and if uh and that's where they work really well that's where they're measured that's how
[38:32] they're measured where the peak occurs in the cycle will change from cycle to okay i don't measure cycles to a peak okay the peak will can occur early or late the peak is dependent on the trend on the long-term trend so when you have a long-term uptrend like this then it makes sense for the peak to occur late and that's why when the cycle first started i said peak around 34 months and that's exactly where we peaked because i was looking at it from a right translated cycle standpoint i was
[39:03] looking at it from an uptrend standpoint like this okay i'm now not going to take that position in the next cycle i'm not looking for a 34-month peak and that blows every model that's been developed out there based on halving and so on and i could be wrong i'm going to be prepared to be wrong but i'll try and allocate my portfolio where it won't really matter so much if i'm right or wrong but it will probably or significantly influence how i take some
[39:33] profit or how i use maybe trailing stops and so on again more to come next year and in subsequent videos but that is my just want to throw that out there again for uh my thoughts on what the next cycle is all about here just to sort of summarize and end this video look out now we're getting close i think we can fill the gap here to the 10-month moving average that's now declining um but that would be more of a counter-trend move we're looking for
[40:03] more downside action hopefully we can double bottom in around november december timeframe that would be bullish that would be great but watch out for lower prices look to accumulate some more don't don't fear these levels now the fear should have come a long time ago it's past the point of fear it is now the time for opportunity thank you guys wishing you all the best take care