On Your Marks – 4 Year Journey

[00:01] hello followers of the four year journey this is bob lucas here on october the 14th 2021 i hope you're doing well this is yet another installment of the four year journey it's been two months since the last video where i talked about the hurdle that was upcoming for bitcoin at that time things were looking pretty grim in general and i think mr market here has really thrown another curveball like it has
[00:32] pretty much throughout this four year journey and i'm hoping this video series has at least helped you in some way to stay patient and disciplined and of course to stay the course through this journey where we stand today where i think we're on the other side of that and what i see ahead looks very encouraging and very exciting and i want to talk about how we want to approach that that period and what to expect because
[01:02] yes we've had some difficult times over the last three years we've had some good times but here we are today more than 10x more like 13 or 14x above where we were when i first published the video in december of 2018 and it's important when you're investing on that time frame to be able to filter out the news filter out the fud reject the fomo
[01:33] and stay the course so i'm hoping that again this series is helping and i'm hoping this video will reinforce some of that some of those ideas that i've shared with you in the past if you have not seen any of the prior videos i do encourage you probably to even stop watching this go back and watch maybe the first video and maybe the one from april of 2019 that is titled the four-year journey or the four-year cycle has started um they will give you a sort of a good foundation of what has uh you know what
[02:05] what the idea was and what the process is and how we have ended up here today so in this video i want to talk about the last video very briefly i want to talk about the current outlook for the cycle i do believe we are now entering into the final stretch of the uptrending portion of the cycle of course as you know my cycles and cycles in general should be measured to the lows and i think we are now
[02:35] close to what is going to be the top of this four year cycle many out there think the top has already in i don't believe that is the case but i'll also talk about where we could be wrong on the outlook and where the top may be in and how we want to handle that before closing out with some actionable ideas on the four-year journey on the model portfolio so before i get into the current outlook
[03:05] let's just take a quick three-minute look at a clip from the last video because it does set up this video well and talks about the hurdle into the final stretch so just take a quick listen to this video essentially i also think that this august third low of around about 37 600 should really hold over the next month or so on the way up
[03:35] we do have a significant cycle low a 60-day cycle low so just like there's a 16-year cycle and there's four four-year cycles there are 60-day cycles within a year cycle and this is going to be a test this is the final hurdle coming up i believe in september where that cycle low if it can stay comfortably above the true prior 60 day cycle lows the one in may and the one in july then it completes what i believe is a
[04:06] a bottom and shows a reversal of the decline that began in april that would mean a high we already have a higher high here's the peak of the last 60-day cycle on june 15th we already have a higher high a higher low in the september 60-day time frame puts us at a higher low as well and that is essentially the type of confirmation we're looking for to confirm the resumption of a bull
[04:37] trend further to that depending on where this current cycle peaks let's call it just for argument's sake 50 000 in the next few weeks what we would want to see coming out of a september low we want to see a september low that holds well above the prior law of course then we want to see that rally up in october to take out wherever this high occurs and if that happens
[05:08] then we have a series of higher highs at the 60-day cycle time frame and in my opinion a firm resumption of the primary bull trend something like this so a 60-day cycle low will shake out i believe a decline over the next sort of month depending on whenever that begins it could be next week the week after we don't know and then a reversal and a take out of this high that forms
[05:38] puts us on a path then over just probably three 60-day cycles to what could be the four-year cycle peak in the early portion of 2022. all right so welcome back um as you can see from that video i'm gonna flip over now to the weekly chart it's pretty much the same chart that i drew and have held in place now for the last couple of months since that video uh the last hurdle in august
[06:10] that video was recorded around this time frame right here where bitcoin was around 47 000. it didn't de-top a couple of weeks later at 52 9 so not too far away from where i outlined in that video and then as i had talked about a significant shakeout coming in september into the september 20th scheduled cycle low it hit perfectly to that week and we held that 37 000 level that i had
[06:42] shown we held 39 40 000 essentially and formed that 60-day cycle low so i'm pointing this out because not because it really did unfold essentially how the cycle expectation uh was showing but i'm just want to show you that since the cycle low here in september we've now rallied sharply for the last three weeks and i think a lot of people are in disbelief over this move because they're
[07:12] expecting the continuation of this bear market trend that we've seen but i outlined in the video the final hurdle was essentially this the final hurdle means that if we were to form a higher low at the 60 day time frame and then come up and take out this high this 60 day cycle it means that wherever this cycle peaks it's going to have a high that is above the high from august and
[07:43] we already know the high from august is above the high from june so we now have consecutive higher highs on the 60 day time frame we also have at least one higher cycle low and we also have this double bottom structure that we've seen so this 30 000 level held very well so because we have now higher highs in the 60 day time frame that is in my book the definition of a new trend
[08:14] so we have a new intermediate uptrend on the four-year cycle time frame and if we have a new uptrend that's confirmed and in place it means that the downtrend that we had seen from the peak in april has also by definition come to an end so if this decline has come to an end we're in a new uptrend we can essentially ignore this move now and focus on what should be a new developing trend
[08:45] and this is where we want to sort of zoom out a little bit and now put this fear behind us and focus on the four year cycle and talk about where this cycle may be heading over the next couple of 60-day cycles and what that expectation may look like a lot of people are still stuck on this big move here and this decline thinking this can roll over and of course it always could there is no there are no absolutes there are no guarantees in investing
[09:17] but we also need to be confident in a narrative as bias-free as possible to be able to position ourselves accordingly and then we want to have a solution for when that narrative is incorrect so for me this bull market four year cycle uptrend is still the right narrative it has been for three years and there were plenty of reasons to doubt that throughout the past whether
[09:47] it was this big pump early on and then the massive almost one year decline ending in the capitulation all this more recent decline but for me what it comes down to is the fact that i don't think we've seen what should be a peak in the four year cycle i haven't seen the mania type top that i expect to see for an asset class so young um that's expanding so rapidly that is also so speculative i want to see more
[10:19] than what we have seen back here in march so if i show you this chart this is a six month chart each bar represents six months going back to essentially the first time bitcoin was traded and you can see the prior two cycles of four year cycles here and then you see this massive extension from the highs to form a peak and each one of these have an element of sort of mania and bubble tops and extensions in price
[10:49] way way beyond the averages and what i see here is we just don't have that at this point this move here was only a 3x from the prior high that was four years before four years of adoption four years of growth to see a 3x high from that point to me does not feel like the top of the four year cycle and i think what's happening here is that this 55 decline partly
[11:19] a result of maybe some china news that really did rock the market but also just just the fact that this four year cycle has behaved differently than the prior ones and this last four year cycle was so entrenched in our minds and the way it was orderly and the way it moved up that the the different nature of this cycle is throwing a lot of people off and what their expectation may be and this 55 decline right here um has come at a point where it's near
[11:51] where the cycle should peak and we did have a move to all-time highs and we did have an element of extreme sentiment yes there was a retail component to it yes there was some media attention but in my book it was nothing remotely close to what it was like in 2017 and as the network is growing so rapidly and adoption is broadening i expect
[12:23] bigger mania tops and and moves out of this uh this market than what we've seen so far so i think this 55 decline has really helped the market to uh re-establish a new base here in this in this level and i think will allow it to springboard up into the top of the next four year cycle it's created enough negative sentiment and disbelief it's allowed for a lot of distribution
[12:53] in the market and now re-accumulation at these higher levels that can sustain and support this market continuing up towards the peak in the four-year cycle so if i go out to a monthly chart now okay i think this market now is beginning to look a lot more like the 2013 cycle and those cycles ever going to be the same but this happened this peak here happening here in april similar to the
[13:24] peak in april coming a little earlier than when the expectation is for a top and then the consolidating period and then the massive move puts us in a position now i think for that final run towards the top of the cycle so this is a chart i've shared with you with the before in the past what i do notice from a 10 month moving average i do like the 10 bar quite a bit for establishing a trend we haven't lost the 10 month moving average since back here
[13:55] when the market was heading down towards cover 2020 capitulation so since that level here we're still in this uptrend i think all we've seen here is this six-month rally that extended too far too quickly but didn't reach a blow-off top if this had moved just one more 60 day cycle higher and extended up to maybe even 100 110 120 then i could easily support and see how that
[14:26] could be the four-year cycle peak i think what we've seen instead is a move back to towards the the rising moving average and now some re-accumulation and now preparation for the final run or the final leg in this four year cycle to the peak in the market i also like the fact that the china news for example was significant yes we've had china flood for seven or eight years and they've been banning it ever since
[14:57] right but this time they went well beyond and they essentially kicked out all the miners and the majority of the hash or at least the the the more significant amount of the hash power behind the network was located in china we're talking you know hundreds of millions of dollars in capex and security that was turned off overnight and yes the market responded sharply lower but it was also in the position to be sold there's no question about that the
[15:27] market was extended so part of this decline can't be blamed on the china news alone but yet it hasn't crashed since then and if you think about how significant china banning mining transactions and trading and holding of crypto assets entirely this time completely and the market has responded tells me something very significant and i think it is that the china's actions is very bullish for
[15:58] bitcoin because it helps to harden bitcoin's security and it demonstrates to the market and it the uh the people that aren't sold on bitcoin's ability to be resilient and to be long-lasting that it can be and the fact that it's responded so quickly with the hash rate coming back on board in a more distributed manner and some and a lot of it back in the us i think demonstrates to the market that
[16:30] uh that bitcoin can survive just like it did the fork wars of 2017 that each one of these major events is actually good for bitcoin because it forces the network and the participants in general to come up with solutions and to adapt as quick as possible in a very decentralized manner and if you think about bitcoin as a store of value versus something like gold which holds
[17:01] let's say 10 trillion dollars worth of market cap and bitcoin only one trillion if you compare the two bitcoin is a far superior store of value in every single way there's no question about that except for where bitcoin is superior is in its proven ability to hold and to be redeemable when needed and when called and that's only because it's a function of time mostly right it has a
[17:33] four year four thousand year history of being a store of value of being something that has been sought after to secure and store wealth and bitcoin has just 10 years of that so from you know from a capital allocator standpoint if you're looking for a store of value and you have a significant amount of capital you really can't make that leap easily to place a significant amount of that at what you think would be at risk in
[18:03] something like bitcoin until you see more and more evidence that it is that real true story of value now you may be thinking of what i'm saying here and saying that just sounds crazy bitcoin is the only real store of value yes but you are biased you're a believer you're in early i'm talking about traditional fiduciaries in asset managers people with massive allocations of capital just don't see it the same way and will never see it the same way but they want to be able to participate and take
[18:33] advantage and when they see events like this it's bullish it's bullish for the network and as each block goes by and as time goes on there is more confidence that grows in the network and bitcoin security model and that is what's going to allow the capital to continue to flow and to come into this market there is 10 trillion or 14 trillion in uh in bonds in negative yielding bonds out there that people have to allocate capital to so they're buying that for
[19:03] the for the sense that it is backed backstopped by a central government by a central bank and that money is secure so my point is that there is plenty and plenty of capital out there waiting uh on the sidelines to be able to come into this market and as price and market cap expands the more legitimacy is given to bitcoin and as the market ages it is uh is more trusted and i think that's where the fuel begins to come in
[19:35] we've also had a very interesting development over the last few months with the u.s regulatory side where there was this you know this idea that we need to tax it more we need to regulate it more and there was a backlash from representatives from senators and from congressmen more than what i think we all thought was out there you know what i felt was was encouraging was that many senators from both sides came out in support
[20:05] and and yes i think they all acknowledge that some regulation is coming but sensible regulation but the fact that there were vocal representatives out there supporting bitcoin and supporting the ecosystem in general is very very positive and i think that's reflected in what we're seeing right here i think the market is the price is saying that bitcoin is going to survive that as well like it did the chinese and other events in the past and that it's blocked by block by
[20:38] block development is on track and that's the reason why people want to get behind and allocate capital so we're looking at this market now and i'm looking at this four year cycle time frame and i just again i just don't see where this here is the peak with such a small extension above the the prior 2017 four-year cycle peak and as i've said pretty much all along since the beginning of the video
[21:08] i think we're looking at a 10x extension from the prior high and a six figure number to come up now where does that peak occur originally you know my expectation was by the end of december of 2021 so basically within the next eight weeks or so now i think that's unrealistic although when you look at 2013 right you've got two monthly candles if we take those two monthly candles and you know and and place them where we
[21:39] are now then you easily do get up to 200 000 or close to it by the end of this year and that wouldn't surprise me and that's why i've been saying you know you don't want to get caught up in the noise the day-to-day the week-to-week noise you want to stay the course what we're looking for is a massive extension in price above the averages above the bollinger bands but also a significant kind of mania event and i think the 13 model probably
[22:12] doesn't lend itself to too well because back then it just didn't have the broad appeal it was more of an insular community that pushed and the market cap was so low that it was able to be pushed so rapidly from the 100 level to the 1 300 level i think now at this market cap the participation we need i think we're looking at a more sustainable move it doesn't have to be a long move but i think we're looking at more of a a two to three or even four 60-day cycle
[22:43] process and going back to the weekly so here it is here i move up and move down i move up and down and then i move into the first quarter of 2022 but maybe even further than that where we get another 60-day cycle after that to the final peak in may or june of next year it doesn't really matter when it peaks it's not you know picking the month or the date of when it pit of when it peaks is is really not my
[23:13] goal in this you know i don't want to be able to come back and say well you know i said two years ago that it's gonna peak on this month i mean that's just the guide what's more important is that we are able to take advantage of whenever that market peaks and be able to as best as possible begin to scale out of our positions and realize those gains to be able to then position ourselves in the future for the next four year cycle bottom with a much much larger bitcoin position
[23:46] than what we have today and that's really the goal that was my goal back in 17 and getting out um was because i wanted to avoid a massive what was going to be a massive drawdown in my opinion because i had always done that in the past and be able to re-accumulate much more bitcoin at the lows and i don't think the four year cycles will be as distinct in the future in terms of their volatility and the extensions in price but i still believe if we can get a 55 decline in two weeks if we get a massive
[24:18] move up we're still going to see 70 and 75 and 80 declines into the next bear market lows at some point i'm pretty confident um that that's going to happen so you know i don't want to over complicate a lot of what's already been said over the last two years if you go back again and watch those videos you know i've drawn multiple variations of how we get up towards this higher levels here at the end of uh of 2021 into early 2022 in
[24:52] preparation for what would probably be the bear market into december 2022 okay and it's taken a few variations if you see the 10-month moving average and look at the extension in price to the 10-month moving average you see that one extension higher lower and higher if you look at the 2017-2019 move sorry to 2015 to 2017 move it stuck to the 10-month moving average the entire way except for the extension
[25:22] to the peak and that in many ways made it easier this has been much more difficult to trade which is why i've always said forget the gyrations in price and focus on the trend the trend higher towards the peak that was always the goal so if you got caught up in the fomo when the mark was extended and added too much you probably reduced or puked that position when it came too far down i know many did
[25:53] and then the same more recently and the same more recently again whereas the whole journey has been holding the ground so when i go back to sort of the agenda and stay in the course you know it's really about just being content with the position that you have and staying the course with that position towards the top if you begin to think that you've outsmarted the market you know for sure which way it's
[26:23] going you're going to be adding too much at the wrong times and ending up you know losing a lot of that position when the market turns in the short term against you so again you should have that core allocation that core allocation should be more than enough to really make a very significant difference in your life if we do get the type of results we're looking for and i want to warn you again that like 2017 like 2013
[26:56] um and like i said before we're gonna see these ten thousand dollar declining days and we've already seen one of them we saw one recently but as we get higher and higher and a 10 000 decline only becomes in some cases you know at 10 decline and maybe later on a five or a seven percent decline and bitcoin can do that in a day very easily and if you look at the 17 move and all these moves into the 60 day cycle lows many of these were 30 35 and
[27:27] 37 declines just like we saw one recently this one wasn't 37 but this one was 55 so there's no reason not to expect that and if we do get a path like this forward again you want to expect declines right of 30 percent 20 000 decline at this level if it gets up to let's say 130 and declines 30 000 that's
[27:58] a 40 000 decline in bitcoin so where i said in the beginning the hardest part is coming up it's going to be coming up if we get this type of action in the market and that's because when when if bitcoin is at 125 000 and you're in at the lows as per the model portfolio and you're sitting on so much open profit there what happens is this is temptation to want to realize that gain because you're just so scared that you're going to lose all that gain
[28:29] you don't know what's you know when to get out if the market turns against you and when the market starts dropping by 10 15 20 and 30 thousand dollars it's very easy to see the open you'll see that open profit begin to drop drop dramatically and it's very easy to panic right at that wrong time so it's important that you're sized correctly to be able to understand that that is going to be happening that you will see a 30 percent reduction in your
[29:01] open profit position but it's also important to not look at the peak allo to keep the peak value of your portfolio at the top of these cycles okay because again you're focusing on the peak mania top that's what you're concerned with and to be able to get to that point you need to be able to take one step back for every two steps forward all the way up there's just no other way around it
[29:31] so if we get to these peaks if we get to a point where the market is extended in the short term and everybody's talking about bitcoin again and and posting uh you know new highs on twitter every single day then use those as opportunities to maybe trim some of your positions if you feel that you can't sleep easy at night don't use the 30 declines into the cycle lows to trim those positions so you if you're going to be doing any type of trading or
[30:04] buying and selling in this market one keep an allocation that you just don't touch no matter what and play on the margins play on the fringes but be aware of when you're buying and when you're selling if you're buying if you're selling after a 20 decline then you're responding to the emotion and the fear okay and if you're buying after an extension where the market is uh you know showing four or five green six green candles and
[30:34] it's at an all-time high then it's the fomo side of that you're buying in response to the thought that damn it if i had just a little bit more i'd have way more open profit and i can buy you know i can buy my wife you know the audi and i can have my mercedes as well that kind of idea and um so you want to be flipping the narrative on your motion typically your emotion in the market is not going to be correct right it's going to be trying to lead you astray all the way up on the process
[31:05] so you kind of want to do the opposite of what it's telling you to do so if you want to be buying more at some point it's probably a good time to be trimming some and the same goes for if you want to be selling some it may be a time to want to be buy some but if you want to be selling some also then there's an argument to be made that you probably went into it uh with a little bit too high of an allocation so i can't tell you what your allocation is going to be i can only share with you the emotional side of it but there is a thing where you can be
[31:36] too heavily sized okay and that's important now some of you are just huddlers through and through and have are all in and and you guys you know you guys are probably so stoic and and so strong in your emotion that you know that's not going to be applicable to you and kudos to you if you if you've done that and you can keep doing that um but i'm talking about the folks that have a history of of just selling at the wrong time and buying at the wrong time and uh and that hasn't
[32:06] served them well because here we are now again like i said 13 14 x from the from the lows but they may only be up 2 or 3x or 4x on their position and that's not because that they've entered at the right times only because the bull market can really save even the worst of decision-making so just be really aware of that so really again not much more to talk about that hasn't been talked about in two and a half almost three years of videos and this
[32:37] may really be you know if we get that kind of blow-off move this may be the last video you'll see before the selling but i quickly wanted to touch upon where we could be wrong because i think that's important and as a risk manager you always want to have an idea of you know where you're wrong and how do you turn back and how do you get out and get to live another day i think that's uh certainly very important so i think it's very clear we have a very clear invalidation point as far as i'm
[33:07] concerned and that's the last cycle low in an uptrend like this now each of the cycle lows should be respected meaning that once we form a low and then come up and make a new high each one of these lows leaves behind an invalidation point in the bulk trend especially this late in the four year cycle earlier in the four year cycle yes you'll get fail what i call failed cycles often where the trend is not as clear as cut but at this point this late in the four year cycle we should now be developing and we should develop a very clear
[33:39] serious trend of higher lows and higher highs and that means that this low now at 39 500 and you want to give a little bit of room just in case but essentially that's the point now for me where i won't do any worse than that okay and you may think that's crazy and it doesn't really matter because how i manage my money is my business but what i'm going to be doing if this market turns
[34:09] and trades below this 39 000 level then i will be at worst net neutral on the market meaning i'll either be sold on a bit my bitcoin and out of the market entirely or i'll be hedged um you know in in the futures markets to to have zero exposure to bitcoin i don't have any interest right now in being long bitcoin even in this huddle account if we get below
[34:39] this 39 000 level especially if we don't make a new all-time high if we turn over from this point for whatever reason and here it is here worst case scenario you know and i love talking worst case scenarios because it's very easy to talk about your bull scenario or your your your bias and our scenario because everyone has bias in their scenarios and it's very easy just to ignore the worst case because it goes against you know that that feeling of needing to be right but you know it's very important to be able to
[35:10] say well where am i wrong and this is where we're wrong okay we peak in this level we don't make a new high we turn over and as you can see we go down and take out this low then what we end up happening is that trend of higher lows is broken same as the higher highs then we would have to flip back to the idea that this high is the high and then here's the next high that's a higher low sorry lower high keep getting that mixed up lower
[35:41] high here and then the trend on the much longer time from the four-year cycle is lower so we don't obviously want to see that and i don't want to be in bitcoin if we lose this level because at that point it opens up the 30 000 level and realistically it opens up the 20 000 level and i'm certainly not going to sit there and watch my allocation decline by 60 70 80 percent at that point even at
[36:13] 38 000 that's a 10x move on the model portfolio and that's fine with me okay for every 100 000 invested as a model portfolio that's a one million dollar return that's not too bad from in in that worst case scenario that a market peaked only two or three x above the prior highs surprised a lot of people in an early four year cycle top didn't have a blow off mania top turned over and went into a bear market early
[36:44] being able to extract 10x on that is a good result in my opinion again not trying to be this doomsday sort of folk but you know what i don't want to be sit there sit there and be caught like a deer in headlights while i watch my value in my holdings drop significantly this at the moment to me is where i if the probability means anything is a 10 probability okay and that probability is not based on any scientific or any sort
[37:14] of math of course it's just my field for the market but based on my knowledge of cycles and where i think this four year cycle is going i think the the four-year cycle path is the right path still it hasn't really deviated all that much from the last two to three years and i want to be fully allocated and invested and in position for the run up higher to the peak so real quick here on the four year
[37:44] model portfolio there's a link to it below it's very simple it just talks about the allocations and here it is here just talks about the current holding on the hundred thousand dollar portfolio current value of the portfolio is one point seven this is a hundred thousand dollar starting current profit of course we did sell a small percentage of this portfolio just to recover the initial outlay and um you know my goal and my job here is to extract this most
[38:15] value most profit out of this four year cycle as possible in preparation for the next four year cycle that has been the four year cycle video for this month i don't know when the next one will be out there is a chance that the next one that comes out will basically say something like i have sold my position or i've sold majority of my position and i think the top is in or close to it but i'm hoping that's not going to be the case i'm hoping there's gonna be one
[38:45] more video but i do believe when that video does come we will be in the uh the latter stages of the run i think the sentiment will be running pretty high and i think we'll be getting pretty close to a peak until then please watch the prior videos try and stay disciplined patient and i think all will be well wishing you all the best thank you