The Birth of a Cycle

[00:01] hello followers of the four-year Journey this is Bob Lucas here on November the 3rd 2022 nearly four years since the very first video was published back in December of 2018 back then I was talking about the coming four-year cycle and how it was very very close to forming and here I am again today nearly four years later tell you that an end to a cycle is near or is already here it may not seem like
[00:34] it today but like many things in life it's always the darkest near the end of a cycle the end of a cycle signals the death of a period and the birth of a new period And I believe we are right now transitioning from the end of one cycle and to the beginning of a next cycle the beginning of a cycle like this is always in my opinion an exciting time it allows us to potentially get in well
[01:07] before the crowds return way before the Mania returns and hopefully being able to acknowledge what has occurred during the prior four years and use that experience learn from that experience regardless of how well you performed or took advantage of it or did not take advantage of it or whatever your result was this is one of those sort of reset moments when you
[01:38] hopefully get to put that behind but take the experience from it and begin to look forward again and begin to position yourself for what I believe is yet another major opportunity ahead what people don't realize in investing is that a lot of time you don't necessarily always need to be right and you don't need to be first and you certainly don't want to be lost but when you're early when you're early to a cycle
[02:08] it has a tendency or a way to correct all future timing errors that you make being able to get in at a low cost basis and be able to ride a cycle higher again before it becomes news and before your neighbors and your friends begin talking about it in 2023 or 2024 more likely that ability to get in at the ground up
[02:38] or near the ground up allows for you to really be able to profit from the cycle ahead and to be able to um still manage to walk out doing really well from a cycle even if you don't manage to get out near a top of a cycle so in today's video I really want to talk about just how close are we to an end to a cycle is it possible that we're already in a new cycle or what might the final move in this cycle look like
[03:11] you also want to talk about positioning for this next cycle should you be buying should you've already bought or should you be waiting and what that risk reward looks like taking any either of those decisions then I want to talk about some of the fears that you may still have around Rising rates risk-off environment possible recession and so on so let's start now with some charts here and talk about where we stand in this cycle first I'm going to share with you a
[03:43] chart that was shared four years ago who follow this was filled in and you know I talked about this three years up one year down right translation that you see in these four-year cycles and we had exactly that in this four-year cycle of course looking at prior four-year Cycle Performance some of the expectation was at least in the most bullish scenario that would reach its Target of around 200 000 in this past cycle and of course
[04:14] we didn't come close to that but from a timing standpoint we did top exactly at that three-year Mark 75 of the duration of the cycle moving mostly or trending mostly in the up Direction with what has now been and of course it hasn't ended yet has been nearly a year in the declining phase of this bear Market all the four-year the bear Market of this four-year cycle
[04:45] you actually get a nice visual of the four-year cycle for you if you use a yearly bar on bitcoin as you can see the rising portion of the cycle followed by the bare phase of the cycle and the three is up and the one year down the three is up a very clean simple look at the ebb and flow of the four-year cycle represented in yearly candles um flipping over to a monthly View here of the cycles
[05:16] and what you see is that we are now we have now entered what we call the timing band for the next cycle low the next four year cycle low with Bitcoin sitting now on month 47 since the cycle began back here in December 2018. you notice the distinct move up to that 34 month high like the prior cycle and the 33 months before that but what I think a lot of people are talking about now is this idea that
[05:47] Bitcoin is going to drop down into the sort of lower teens area that mirrors the type of move that we saw here in November of 2018 and to a lesser extent what you saw back here in January of 2015 into that cycle low and this I believe has has got a lot of people holding back from investing because they think there is a yet another move yet to come towards his
[06:19] thirteen thousand dollar level and I've given this a lot of thought and my takeaway from this is that one should not be waiting or anticipating a move down to that 12 or 13 000 range doesn't mean it won't come and I believe there probably is a 50 50 chance that we still have one more significant decline down into this twelve or thirteen thousand dollar range but part of me thinks it just doesn't have to come when you consider
[06:49] that Cycles rhyme and and obviously the Bitcoin four-year Cycles um the Rhythm has been very um you know very distinct and has mirrored prior Cycles very well but that in itself is a trap in thinking that the next cycle or the end of this cycle must end the same way also when you consider that as this asset class um has reached far wider adoption with
[07:19] more institutional play and also the market cap of Bitcoin itself at a much higher level the asset is maturing okay it's obviously still very early but it's maturing and in some regards you see that in in the way it's sort of topped out by that 70 80 000 range you had um a lot hungrier Capital chasing this and that Capital saw enough of a gain in this cycle to uh to basically
[07:50] close the top and to sell out and profit from the cycle unlike other cycles and the same I believe works on the downside so in the past where we had these massive extensions to a peak then 85 drawdowns to the trough I don't think we need to necessarily expect the same thing to happen in fact as I just said we didn't get that blow off at 200 000 but we got a blow off okay to make no mistake we had a significant run and
[08:20] especially the first run to a peak um and we've now down 75 percent now that in theory should be enough for a an asset that is showing more diminishing returns over time that's maturing so I caution everybody when they ask should I be buying should I wait the question really is I think we've seen enough of a decline where the the surprise really now is going to be that you don't get that decline it
[08:50] just seems that sentiment is heavily leaning towards us dropping down to that 13 12 13 14 000 range and the pain trade is that this releases to the upside and this sort of four or five month consolidation around this 18 to 24 000 range ends with the market breaking higher leading to a move possibly to 28.30 getting people to jump back in and then shaking them out one time for a drop
[09:21] back to double test kind of that twenty thousand dollar range or some variation of that where it becomes difficult to to get in and you also get shaken out trying to chase the market in the early phase of a four-year cycle so when it comes to positioning the way I see something like this is that if you're in this for the long term and you're looking at the next four year cycle and that you're looking for somewhat of a repeat of of Prior of of
[09:54] the sort of structure that we've seen in Prior Cycles then again you're looking for a move to all-time highs and then you're looking for a move a number of multiples above that okay and I really reluctant this time around to sort of throw out targets and throw out numbers but even in this little left translated scenario and that means that you get a big move up early in the in the cycle and spend more time declining
[10:24] even in that type of scenario we would expect a move that takes us above the all-time high level and from from this point even sort of something conservative to just above all-time highs is a 4X move from where we are today so if you have a long-term view after the market being down 75 percent it is my position that you should at least have a substantial core allocation at this point at this sort of twenty
[10:55] thousand dollar range because you're a long-term investor who believes in Bitcoin who believes in these Cycles and that believes that by some point possibly around 2024 that will be up into all-time highs again and pushing Beyond at that point and possibly possibly looking for the type of blow-off move that puts 2017 to shame that has absolute worldwide involvement
[11:32] significant play by Major institutions and major even Sovereign wealth funds for example essentially everybody on board for a generational kind of blow off something similar or the equivalent to say the.com boom in 1999 to 2000. and in that type of case the upside targets could be significant obviously again don't want to really throw out any numbers I don't think it really helps I
[12:03] think what helps is to understand that just like in 2018 December when I recorded that video I believe Bitcoin was at 3700 and then within two weeks it dropped to 3 100. it doesn't sound like a lot but that's close to a 20 decline but getting in at 3 700 and watching a drop to 3100 was fine right because I had a long-term view at that point my position entered position
[12:35] at that point was with the reasonable allocation a reasonable size with the understanding that I wanted to hold that for a couple of years or three years up to the top of the next cycle so I wasn't making a call to catch a falling knife for example I wasn't looking to catch the absolute bottom I simply said to myself after near 80 well I think it was more than 80 percent decline over nearly 12 months at that point that I was very
[13:05] content to get in not knowing exactly if we had bottomed or whether bottom was still ahead but I was content at that point and I think we find ourselves at a very similar position here today at twenty thousand I think one should be content to get in at 20. content to see this fall to 13 or 14 to Not freak out if it does to understand that you can't time every Market perfectly but to understand that you're getting that position in case we just begin to
[13:35] sort of move out firmly and strongly from this position sentiment is fairly extreme we've gone through sort of those liquidation phases of this this four-year cycle we've gone through some major clean outs and some major bankruptcies again the 75 decline all coins have gone through their usual uh you know littering of of dead bodies on this cycle everything is in place now for this
[14:05] market and cycle to turn now of course we do have and I'll get into a little bit later on we do have so this risk-off environment across the board that is obviously impacting equities but that doesn't mean that that Bitcoin itself has to remain correlated to what equities are doing or what the risk often a market is currently doing doesn't have to remain correlated we saw for example in 2008 2009 when equities went on a final
[14:37] decline we saw assets like gold for example and silver shoot up and not correlate on that final Decline and shoot up towards their all-time high a similar situation could occur again in Bitcoin Okay so I think what's important is to not get too greedy on the downside but on the by the same token if we do see that eventual drop or if we do see a
[15:07] drop down to 12 13 or 14 to understand that that is actually or that would be that final move that final capitulation down into the four-year cycle low and that would not be a reason to panic and to not be a reason to sell like many people would but to realize that that would be an opportunity to add some more so you want to leave some dry powder in that case in the event that it does fall down to double down at that point but of
[15:39] course all within reason okay and for me all within reason means 25 30 of your of your portfolio of your wealth and even that could be high um but that's within reason because um you just don't know first of all you don't know what surprises are out there um we we think we know what's in the what's coming because of what's happened in the past but there are no guarantees in anything we're doing investing and Bitcoin is no exception to that there are risks out
[16:10] there that probably are unforeseen so I never advise anybody just sort of you know betting the ranch and uh and taking a full position with all that wealth I know many of you have and will and that's really your own personal choice but I can say that when you enter an investment with a reasonably science position what that affords them the most is the luxury to be able to sleep comfortably at night when the Market's capitulating on the market selling and
[16:41] it also leaves room to be able to take advantage of opportunities that may come beyond that as well and an opportunity in this case would be if it actually did fall down towards that 10 12 13 000 and I know if it went down to that level I would be buying more I'd be allocating more from other Investments or from other asset class Investments that I hold because at that level two things one I believe a drop down to that twelve or thirteen thousand dollar level represents an extension from the
[17:13] high that then mirrors extensions down for in Prior Cycles it also would mean that it'd be coming much deeper in the four-year cycle and that would give me a lot more confidence to say that that would be the ending or the final move in this cycle so therefore from a model portfolio standpoint as you know I re-entered in with 15 BTC from the model at the 19 000 level not because I thought the
[17:43] four-year cycle had ended but because I thought 19 000 was a level that I had comfort in buying and holding for the next cycle knowing that it could fall deeper uh but it was at a capitulation point in the cycle that I thought had a chance when I looked back that could actually Mark the low of the four-year cycle so that was purchased at that point specifically for that reason knowing that I'm going to hold that into the future but there's some dry powder
[18:13] left from this four-year cycle from the prior four-year cycle and that is reserved for that possible final capitulation into the four-year cycle low and at that point around the 14 500 level I would look to deploy the remaining Capital left that's left over from the cells of this four-year cycle if it doesn't come and for whatever reason the cycle holds and the lows are in then
[18:46] that's it that's my buying for this cycle I've got enough uh the cycle the portfolio would be mostly fully allocated from the prior cycle and I would be then content to hold that in a very strong hand position for the next four year cycle but Bob what about Rising interest rates the FED recession Ukraine nuclear war China Iran
[19:16] regulation I mean you can keep going if you're afraid you will find something to be afraid of um and those not to Discount any of those as risks they're all risks they're all out there and we're all living those and some of that is what you see in the cycles and what you're seeing in inequities for example in that sell-off the market is already pricing in a lot of those risks but there Comes A Time and again generally near the end of a
[19:47] cycle it's the darkest because we've just gone through a period of pain and selling and you're looking at the high water mark of your account which is the wrong way to look at things and you're looking at a prior paper balance of USD that you had achieved and you're looking at today and you're shaking your head and that makes you fearful that makes you afraid and this is why it comes down to being in position at the right time
[20:17] and having a positive mindset for the cycle ahead so yes there are risks out there and they could weigh on the market further and they could be the Catalyst for Bitcoin dropping down to those low teens as I mentioned but don't discount the Market's ability to front run those events um and to price them in well in advance we've seen equities drop you know 25 and 30 percent we've seen growth stocks down 40 50 and 60 percent there has been pain
[20:48] out there already and at some point the market will turn well in advance and often when you look back at prior recessions the market drops well before the recession and often will even bottom out before the recession is known and the same with REITs the market will really begin to understand when the FED is looking or could be looking at a top or an end to a rate cycle and could turn higher but you could also have situations as I mentioned earlier where
[21:18] Bitcoin stops acting like this risk asset and the narrative shifts and the narrative becomes well it's a hedge it's a store of value or it's an Untouchable asset it's a self-sovereign kind of asset and rallies for that point or for that reason so don't discount the fact that we're in and we've seen not just necessarily a 12-month decline but when you consider this this from a from a bubble bull
[21:48] perspective it really did top back up in here in April 21 and this period here was the distribution period of the cycle so when you look at it from sort of a different lens here is a quarterly chart so each bar representing three months you see in Prior Cycles the top the bubble phase right here led to the decline but here's the bubble phase and we spent four quarters Distributing before the capitulation
[22:19] occurred so in many regards you know we're already gone through all of that bare phase and we're ready to move higher from this point I think ultimately what I'm trying to really illustrate here really really talk to you about is that nobody has the answer of whether Bitcoin has bottomed whether the bear Market is over or whether it's going to drop to 10 or 12 000 the people out there want to tell you um you know definitively what's going to
[22:49] happen but I don't think they can or they should and I certainly can't do that the only thing I know is that from a cycle standpoint where in the timing ban for a low I also know that we went through a distribution phase we went through a couple of liquidation phases and now have gone through this despair phase and low sentiment phase where sentiment has hit an extreme I know a lot of the on-chain analytics look really good for a low and I know a lot of people are expecting
[23:19] a big downside move to Common I think a lot of people are afraid in general and all that when put together doesn't tell me that we've bottomed or that we have one more decline to come but it tells me we're on the eve of an end to this cycle and the birth of a new cycle and that's what I could care about and when I can take out the short-term noise or the intermediate time frame noise and I can look at this from an Investor's perspective
[23:49] and be able to sleep at night and be positioned to back up my theory that Bitcoin is still an asset in demand with growing adoption that's going to rise its market cap is going to rise over time then when I put all that together I can ignore that sort of possibility over the next couple of months and get my position my reasonable position and then look forward to the next four year cycle knowing that there'll be volatility in
[24:21] the short term and to me and chairman that this asset class will always have volatility but when I had that long-term View in a reasonable size position I can ignore that volatility knowing it's going to come and look a year or two or possibly three years out for when I really want to be on guard and really want to be looking to extract maximum value from this cycle so this is going to end up being one of the shortest four-year cycles and I
[24:52] think that's probably a fitting because I want the message to be very simple and very straightforward if you're in the business of trying time at bottom and trying to extract every ounce that you can get out of it then you may be successful but there's a very good chance that you won't be and that you may miss the next big move so I just basically say at this point that just like I said in the very first video four years ago and nearly four
[25:23] if you get your position get it early buckle up because as the next four year cycle gets going and the and the the accumulation grows and the sellers begin to run dry and price begins to unlock and the trend begins to develop to the upside sentiment will begin to shift Capital begin to come back back in and before you know it this Market may be well well ahead and if you haven't taken that position
[25:53] you may find it very difficult to get in and if you do get in it's likely because you can't resist just like the folks that got in after 10 000 here from that move still waiting for a decline that didn't come and ended up buying this local top and spent seven eight months into a capitulation in March 2020 of course covert induced it doesn't really matter they probably capitulate at that point and took a loss out of a cycle
[26:23] that ended up going from 3000 to 70th and the year 70 000. so by removing understand that volatility will come and getting in relatively early taking advantage of any final capitulation by possibly doubling up or adding some more at least understanding that that volatility might come and looking at the prize again being the next high of the next four year cycle I think people that can focus on that discipline and focus on just those few things getting the
[26:55] right position at the right time understanding there'll be volatility understanding that this is not a weak trade or monthly trade it's a yearly trade those folks will do well and will look back and be satisfied so thank you very much everybody wishing you all the best