Bitcoin’s price rallied from its March and April lows. It’s now down 4% from January’s all-time high.

Historical comparisons for the top of similar rallies in similar conditions ranged from $87,000 to $115,000 between April and June. From that perspective, Bitcoin has done what we expected so far, albeit within a wide range of potential outcomes.

Everybody’s bullish

With the recent surge, I hear people rejoicing in the streets, proclaiming that liquidity, financial easing, world peace, and free trade will lift the headwinds that have plagued asset markets. Once the nasty Fed cuts US interest rates, crypto will explode on a burst of new inflows and momentum.

Standard Chartered apologized for predicting a target of $120,000. It is now much higher. 

Do you need more hype?

You don’t have to look far to find content creators more than eager to give it to you.

And why would they not? As a content creator myself, I assure you there is no downside to being bullish. 

When the market goes up, your content aligns with the general sentiment. You build and grow your audience. The Internet algorithms love you.

When the market goes down, most of your audience tunes out. Those who stick around want reasons to stick around. Bearish content won't give them that.

To put it another way:

• Nobody wants bearish content when they’re looking to buy.

• When they're looking to sell, there's no point encouraging them because once they're out, they probably won’t come back to your content.

Many content creators live off their subscribers and promotional revenue, not their investment returns. They need to do what makes their subscribers happy.

That means telling their audience to do this:

That approach gives you better returns than you would get with the stock market or a 60/40 portfolio. 

You’ll do better if you buy a fixed amount, blindly, on a fixed schedule, regardless of price.

Mind over matter

Does that mean you shouldn’t follow the gurus?

No.

Find people who speak a truth that you appreciate with a goal that matches yours. Does the content you're consuming fit what you're looking for? 

For example, traders want to get money out of the market. When they buy and sell, it's not an investment decision. Their goal is to get more of their government's money. Buying crypto is simply a cost of doing business. 

As investors, we need a different approach. We want growth. We plant during the planting season and harvest during the harvest season. We use the bad times to prepare for the good times. We use the good times to prepare for the bad times. 

The trick is knowing which is which.

Tony on the TV will tell you that every time is a good time to buy. Priya in the park will tell you that every time is a bad time to buy.

When the price goes down, you think Tony's an idiot. When the price goes up, you think Priya’s getting REKT.

If you obsess about finding consensus and stress about what happens from one day to the next, you make it hard to recognize the larger shifts in behavior and circumstances that frame the market and your expectations. You jump from one indicator to another, one chart to the next. 

You will obsess about 10% swings in a market where 30% is normal and neither is enough to make anybody rich.

The “right” decision changes over time and often depends on your personal circumstances. It won’t reveal itself until after you have to act. 

Do you want to know what I do?

It’s all in my plan.

My plan

Three lines on a chart tell you when to buy, two metrics tell you when to sell. Sometimes market circumstances force you to deviate. I send you alerts when it’s time to act. 

If you follow my plan, you're down 9% at worst, up 1,850% at best, and most likely up 200% on average.

Where you fall depends on when you started, how much you sold when you sold, and how much you bought when you bought.

Most of the time, you’re HODLing and setting aside fresh cash while you prepare to buy more. The most recent buying window ran from the end of February to early April, but another will come.

My plan doesn't apply to altcoins, but generally, when we’re buying Bitcoin, you can buy altcoins, too. I’ll tell you what I’m doing with my altcoins in my market updates. 

The data says . . .

The gurus point to various charts to explain our recent rally. We started talking about this rally in March because it fit historical patterns, technical analysis, on-chain metrics, and psychological frameworks.

So far, it’s followed a common pattern we often see in crypto:

1. The price goes down long enough for people to think it’ll keep going lower. They sell.

2. Once you run out of sellers, the price goes up a bit (it has nowhere else to go).

3. Once the price goes up a bit, short traders get zapped, pushing the price up higher.

4. Once the price goes up long enough for people to think it will keep going up, they buy, pushing it higher.

5. Early buyers start to sell.

Throw out that detour for the tariff tantrum, and you can see the pattern reflected in price movements.

How high will this rally go? How long will it last? When will it turn? 

That’s the excitement. Nobody knows! We only know what to look for.

The pumps in March and mid-April came from traders getting blown apart betting the market would go lower. 

ETFs and MSTR pumped the market in late April and early May. Throw in some short squeezes and Tether pumps, and the rest takes care of itself. 

We saw this in real time in my market updates.

With each pump, diamond hands and OGs sold often and in a proportion larger than usual. They’re still doing it now, as you can see in the 2-7 year realized cap HODL waves.

At the same time, volume continues to fall and we see no signs of widespread engagement. 

Still, we don’t see broad selling. We’re not at step 5. As a result, the market can stay afloat for a while.

MSTR says it’s raising $82 billion and the gurus say we’ll get a rush of liquidity from institutions and legacy entities. 

Let’s hope so, because unlike 2023 or 2024, we don’t have any other sources of inflows, and from the looks of unrealized profit, we have plenty of people who will sell in a panic to protect their gains.

Until that changes, 2025 is a bet on the “macro,” not the metrics. It’s a bet on legacy financial entities, not cycle theories. 

Not so fast

Mark, long-term HODLers grew!

Yes, like it did at the start of previous bear markets and sometimes in bull markets.

As time goes on, this chart will collect more and more inactive wallets that have no bearing on the market. Some say as many as 6 million already! 

I prefer a different metric that uses the realized cap filter to sift out inactive wallets and split the groups based on the price/time they bought (e.g., 1-3 months, 6-12 months, etc). When you look at the market conditions in which they bought, you can make better assumptions about their mindset and more accurately read into their behaviors.

Most people use the metric above, which counts wallets that haven't sold or sent for more than 155 days.

People who bought five months ago bought the most recent major peak and haven’t yet suffered a big drawdown. We can’t read much into their behaviors. Technically, they’re “long-term holders.” In reality, you don’t know how they react to market volitility.

For that reason, I look at the 2+ year cohorts. That cohort has gone through the most volatility without selling, which implies they're very dedicated to Bitcoin. They form the foundation of the market. When they sell more than usual, you need to take notice.

Mark, stablecoins keep going up!

True.

Stablecoins act as a cushion when the market drops—a source of natively crypto capital that can easily buy (and often does).

The problem is, only Tether keeps growing. USDC is down $2 billion this month.

We don’t know how much USDT is real. With over $150 billion in reserves, Tether can easily float a few billion free tokens or sell them for a big discount. 

“Paolo, I need $100 million, can you spot me 100 million USDT and I’ll get you back later?” or “Paolo, I’ll pay you $50 million for 100 million USDT, sounds good?”

They’ve done those deals before, and there’s no reason they shouldn’t continue doing them. Their new home, El Salvador, doesn’t allow extradition, and they have close ties with key US officials. It's less risky now than ever.

This makes the analysis harder because when Tether fires up the printers, it doesn't matter what you see in the charts or on-chain. They’ll pump the market whenever they want.

Problems with on-chain metrics

It’s not just Tether that mucks up the data. Off-chain activities can change the way you interpret on-chain data. 

This was a significant issue in late 2021 and early 2022. We saw a lot of bullish metrics that reflected the knock-on effects of centralized lending activities and fraud. 

As people bought their tokens or deposited funds into lending platforms, those platforms pumped people’s money back into the market, creating the false impression that everything looked good.

If you looked at the on-chain data, you saw healthy HODLing, growth, and new activity.

In truth, centralized entities and other large actors used various sleights-of-hand and fraudulent schemes to recycle money without new inflows.

I didn’t put two and two together until LUNA collapsed and we discovered what was going on behind the scenes. You can't find those activities in the on-chain data.

Today, we have another confounding factor—though let’s hope none of the fraud and shenanigans of 2021. 

The Wall Street ETFs skew every metric that uses “realized” or “short-term” data.

Why?

Because the Wall Street ETFs account for 15 to 20% of Bitcoin activity on any given day. When the ETFs move those tokens, they do not buy and sell the same tokens they acquired for their clients. They can move any Bitcoin from any time.

As a result, these metrics no longer capture genuine individual user behavior and intent. While they probably point in the right direction, their absolute values are probably not valid anymore. For each day, each variable could drift 15-20%.

Look beyond the on-chain data. Incorporate common psychological and investment frameworks. Do a little technical analysis. Try to identify changes in market participants' behavior.

Often, there’s more than meets the eye.

Best we got

I’m seeing lots of talk about validating and invalidating cycle theories and data models.

I remember how it felt from 2019 to 2022, when analysts spent a lot of time debating which model and prediction would be right. With the benefit of time and reflection, we know the answer.

I wrapped this into a report, Exposing Bitcoin Data Models and Cycle Theories: Good, Bad, and Ugly. 

In my report, you’ll learn what these models say and what you can use them for. It’s free until the end of this month. On June 1, 2025, it will revert to premium-only content.

For example, stock to flow (S2F) predicts huge prices this year. Do you want to know something crazy?

S2F’s range is so wide that you can’t plan anything around it. Bitcoin’s price can go 50% lower and 400% higher for months at a time.

Which makes for a wild coincidence. 

January’s all-time high of $109,300 hit exactly where S2F predicted it would.

S2F’s creator ignores this. Wouldn’t it be ironic if the one time S2F was accurate, nobody believed it?

(If that seems contradictory or wrong, ask yourself why you believe in S2F when it tells you what you want to see, but not when it tells you things you don’t want to see.)

A big drop this summer—let’s say to $50,000—would throw everybody for a loop. That outcome would likely come from a larger problem in the legacy financial system. 

As such, you'll see the global money printer start up and pump the markets. Could you imagine a quick 3x to $150,000 from September to December? A re-run of the October 2020 - January 2021 zoom?

This could also fit the classic Elliott Wave A-B-C correction pattern below before kicking off another five-wave uptrend as follows, with Wave 2’s low coinciding with the end of 2026—exactly where Bob Loukas’s version of the four-year cycle predicts the next long-term structural bottom.

That’s the amazing power of these data models and cycle theories. They all disagree with each other—and fit.

About that bear market . . .

You'll hear people tell you, “The bears are in disbelief.”

What if the bulls are the ones in disbelief?

Flip the classic Wall Street cheat sheet upside down, and the past few months look like the start of “disbelief” for the bulls.

I’ll call this a bull market until everybody agrees it’s not. For an asset that goes up 300% in bear markets and drops 70% in bull markets, you can't get so precise.

As long as you appreciate the circumstances, you don't need to think about bull/bear. If anything, you should hope we are in a bear market because they give you the best buying opportunities.

For all assets, bear markets often start with a strong rally. The most famous is probably the four-month, 40% rally at the start of the Great Depression.

Most rallies aren’t so pronounced. 1981’s drop in the S&P 500 started with a rally of 13% and gave you two more double-digit rallies as the index fell for almost two years.

When these rallies start, you can’t tell whether they complete a normal correction before the market goes higher, or reflect a momentary relief before a larger downturn. You have to take a leap of faith—and no guru, data model, or cycle theory can tell you how that leap will turn out.

The greatest investors and traders can’t get their timing right. Warren Buffett says he doesn’t try. Why should you?

Imagine that

Imagine if we do something like 2014 and range from $90k-ish to 100k-ish for the next two months. You keep putting money in expecting a huge Q3 and whatever else the gurus say. Everybody agrees with you. 

Then the wheels fall off.

Near the end of that four-month, 40% rally mentioned above, Herbert Hoover gave a speech about how deflating the stock market shifted capital from dirty, greedy speculators to good, honest US businesses.

Within a year, the economy was in ruins.

When JP Morgan bought Bear Sterns, Wall Street said everything was fixed. The Fed chairman told the world he could not see a US recession.

The Great Recession started that year.

When I was in college, politicians told me the 9/11 attacks caused the bear market in US stocks from 2001 to 2003. That’s impossible. The market peaked in March 2000. 

Everybody loves a good story. Often, bigger factors are at play.

Big shifts happen over months. Your Internet algorithm adjusts minute by minute, day by day. 

You hear somebody tell you that the last time SPX fell more than 10% in a month, then rallied to close less than 2% down, was the Great Depression.

Then you hear somebody say that the last time SPY erased a 2% intraday decline, it marked the bottom of the 2022 bear market.

Who do you believe?

My bear case for the US economy does not stem from any specific metric, chart, or data point, though I’ve shared cautionary signs for months. It also has little to do with the swings in the stock or bond markets.

It’s simpler and less objective than that. For the past five years, three factors drove US growth: immigration, government spending, and international trade.

The new administration wants to get rid of those. 

As the president says, we will pay a “transition cost.”

I’m betting voters, Main Street, and Wall Street have mispriced that cost, both in size and duration. As a result, they haven’t protected themselves and their assets from those transition costs.

Why does this matter for your crypto portfolio?

Because so much crypto activity comes from US entities. On one metric, US-based entities account for roughly 44% more crypto than the rest of the world combined.

As a result, we can assume any economic turbulence from the US will spill over into the crypto market.

Until that changes, 2025 is a bet on the “macro,” not the metrics. It’s a bet on Saylor’s strategy, not ours. 

Mark, no altseason?

We shall see.

I treat each altcoin as its own investment and let the market tell me when to allocate. You can’t judge these projects on price or news alone. No altcoin is worth the price you pay for it, though some will get so big, they’re worth buying now.

For example, Illuvium. Its token, ILV, underpins a gaming ecosystem.

On September 23, 2024, a major holder, luggis.eth, unloaded 100,000+ ILV tokens, leading to a price drop of about 7.8%. Other insiders trimmed. They’ve trimmed more since then. Many staking contracts have unlocked, giving insiders free rein to sell substantial amounts.

Development hasn’t worked out as planned, with bot activity and problems minting items on its platform. People don’t enjoy the games. Setting up a wallet is hard.

Hence, this:

Yet, the team persists.

Is ILV a bad project because it’s down 99% from its $1,900 peak? Or does it seem that way because it should’ve never gone to $1,900 in the first place?

At $15, you’re getting a great price to see if Illuvium succeeds. You can also get rewards from staking and contributing to liquidity pools. You can buy land and gaming items. You can even play the games!

When the price goes lower, you can buy more.

Worth the effort

How much of your crypto experience comes from unrealistic expectations?

Crypto is a very hard market. High expectations lead to big letdowns. Blind faith leads to disappointment. 

Too often, you get yourself psyched up or psyched out from a pump or dump, when usually those swings reflect the vagaries of the market, hard to predict and harder to plan around.

Once you appreciate the circumstances, you will find it easier to navigate the ups and downs. You will recognize the value of cash. You will understand how to separate fantasy from reality. 

Embrace uncertainty. Focus more on your own mindset, needs, and personal situation rather than a price, time, or projection.

I know so many people who have stopped buying or only buy a little here or there. They expect institutions and retail to pump their bags one last time so they can cash out.

They’re HODLing and posting bullish content, but they’ve already filled their allocations.

How long can the market go up when its most loyal participants no longer have the desire or resources to push it higher?

A long time. You can always find a new source of money. Tether can pump at will. Without a lot of sellers, prices can run.

Eventually, the sellers return.

Models, cycle theories, and content creators won’t tell you when that happens. Nobody will.

The good news?

We don’t need them to. With my plan, you double your return on investment every 2-3 years.

A low expectation compared to the lofty predictions floating around the internet. Physically easy to do. Emotionally hard to do.

You need patience and tolerance for big swings. You may need to stick it out for months or years at a time. It can be stressful. You will never get your timing perfect.

In the end, it’s worth it.

Relax and enjoy the ride!