Where’s the ETH Bottom? | Ben Cowen

When is this all going to reverse? That’s the question we asked Benjamin Cowen, YouTuber, Founder of Into The CryptoVerse and famous chart maximalist who does some fantastic technical analysis. The main goal of this pod is to understand if we're currently going through Ethereum’s bottom but we also cover: - Are crypto 4 year cycles dead? - What’s next for ETH/BTC? - How’s Ben positioning his portfolio for what’s coming? Except to learn that and much more. ------ 🌊 KELP | DEPOSIT ETH WITH GAIN TODAY https://kelpdao.xyz/gain/?utm_source=Bankless ------ 📣 INTO THE CRYPTOVERSE | GET 10% OFF https://intothecryptoverse.com/ref/bankless/ ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2 ⁠ ⚡️ CARTESI | LINUX-POWERED ROLLUPS https://bankless.cc/CartesiGovernance 🗣️TOKU | CRYPTO EMPLOYMENT https://bankless.cc/toku 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 🦄UNISWAP | BROWSER EXTENSION https://bankless.cc/uniswap ------ ✨ Mint the episode on Zora ✨ https://zora.co/collect/zora:0x0c294913a7596b427add7dcbd6d7bbfc7338d53f/60?referrer=0x077Fe9e96Aa9b20Bd36F1C6290f54F8717C5674E ------ TIMESTAMPS 0:00 Intro 5:33 Where Are We? 7:44 4 Year Cycles 22:52 ETH/BTC Ratio 29:28 ETH Price Analysis 37:55 Blue Chips vs Altcoins 55:32 ETH/BTC Final Equilibrium 1:01:11 Idiosyncratic Events 1:13:34 The Flippening 1:16:23 The Bull Market 1:20:58 2026 1:25:00 Presidential Election 1:27:30 Ben’s Portfolio 1:32:08 Closing Thoughts ------ RESOURCES Ben Cowen https://x.com/intocryptoverse Ben Cowen on YouTube https://www.youtube.com/channel/UCRvqjQPSeaWn-uEx-w0XOIg ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures ⁠

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  Yeah, I mean, I think that I think Ethereum will start to outperform Bitcoin in 2025. I feel pretty confident about that. Again, I could be wrong, you know, I mean, again, it wouldn't be the first time, but I do think absolutely that it will start to turn around as we get closer to 2025. My base case right now is that it just bottoms out sometime between now and the end of the year.

• 0:26David Hoffman?

  Welcome to Bankless, where we explore the frontier of internet money and internet finance. And today on the show, we ask, when will ETH turn itself around? The ETH BTC ratio has been down for over 700 days. ETH first, the altcoin markets also not doing so great either. When is all of this going to reverse? We got Ben Cowen on the pod today, famous charter, who does fantastic technical analysis and also cross-references all of his work with macro forces, monetary policy, the presidential election, QE and QT, and he's got some ideas about when ETH will turn itself around, and he thinks it's actually pretty soon. But first, a message from our friends and sponsors over at Kelp Dow, who want to save you time with their brand new product, Gain,

• 1:09David Hoffman?

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• 1:33Ryan Sean Adams?

  This is an episode you're definitely gonna wanna like catch the visuals for, okay? Because we're talking charts the entire time, and Ben is like busy marking up charts on screen, so.

• 1:43David Hoffman?

  Fluent in charts, fluent in charting.

• 1:45Ryan Sean Adams?

  You can check this out on YouTube, you get the video, or actually Spotify video. Spotify's got it. Fantastic place to check this out, because you're gonna want the visuals that accompany it. I would say Ben is a chart maximalist. In fact, we labeled him as such in the episode. In that, that's his lens on the world. It's basically, what are these assets going to do in the future? Well, we can look at what they've done previously and kind of extrapolate for it. It's a different lens than a you and I. I, David, bring to the table in Bankless Podcast, which is mostly about your fundamentals and thesis and this kind of thing. But there's a certain purity to just like looking at the charts and just like logarithmically extrapolating them forward and combining with the macro data. I think Ben is one of the best in the biz at actually doing this. So it's valuable to hear what he has to say.

• 2:30Ryan Sean Adams?

  In particular, a question that I wanted to ask him at the very beginning, where I feel like we got a good answer from him is the four-year cycle. Is it dead? Like, have we even entered a bull market yet? Or like, what is going on? So stay tuned for that. Guys, we're going to get right to the episode. But before we do, we want to thank the sponsors that made this episode possible, including our recommended place to go exchange your fiat for crypto. That is Kraken. Go create an account.

• 2:53David Hoffman?

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• 3:38David Hoffman?

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• 4:21David Hoffman?

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• 5:05David Hoffman?

  the best advice, and Toku can help optimize your taxes so you pay the least possible amount of taxes while still maintaining legal compliance. With Toku's guidance, you can concentrate on building your company while Toku handles the logistics. Token launches don't have to be complicated. Talk to Toku today to get a free initial token valuation. Bankless Nation, Ben Cowen is the founder of Into the Cryptoverse, most known for his analysis of various crypto charts, looking at long-term trends across crypto market cycles. Ben, welcome back to Bankless.

• 5:32Speaker 00

  Thanks for having me back. Pleased to be here.

• 5:34David Hoffman?

  I think we are coming up to some sort of inflection point in the market. Maybe I can kind of get that take corroborated by you, Ben, with some of the charts here. But the first question I just want to ask, is the bull market over? Or did it just start? Or has it not even started yet? I'm wondering if you have, just from the ways that you interpret all the data that's available to you, how do you interpret that question?

• 5:55Speaker 00

  I like to look at what happened in previous cycles, but I tend to sort of veer off from just looking at, you know, what everyone knows as the four-year cycle. But I look to see how monetary policy affects the crypto markets. So what I think that Bitcoin has just experienced, and overall, you know, the overall market, is sort of a quantitative tightening, sort of high-interest rate bull market, right? That's what Bitcoin and even Ethereum saw for the last couple of years. And the trend, it looks a lot like what happened in 2019, in fact, right? I mean, a very similar move. The only difference, really, between this You know, this bull market we had here and the one from 2019 is the time it took to to play out.

• 6:40Speaker 00

  But in terms of the percent gains, they were about the same in terms of of what led the market. It was Bitcoin that generally led the market, so that seemed very similar. So I would argue that the quantitative tightening phase of the bull market is is over. Okay, that there there still could be a QE phase of it that occurs later on. But my guess is if that occurs, it won't be until next year is is what I would I would I would generally guess. And so that is where I think we are right now. And the main difference, I think, and I think it's worthwhile to really understand how the two differ. Right? So in the QT high interest rate bull market, Bitcoin leads where Bitcoin dominance goes up.

• 7:25Speaker 00

  Same thing happened in 2019. In a QE bull market like you got in late 20, you know, 2020, 2021, that's where the the the lower market cap plays start to lead. And so that transition might occur sometime, you know, between now and early next year.

• 7:44Ryan Sean Adams?

  Ben, I just have a general question about kind of like bull markets and crypto and as you see them. So this is a conversation David and I had last week. And I don't know that we came to a definitive conclusion for like for our own perspectives. We might have different hypotheses on this, but like the four year cycles. That's been a thing that has been in crypto since everybody's been in crypto. And the like the market kind of expects another four year cycle. Do you think we are still living in the era of four year cycles? Whether that's driven by the happening or whether it's driven by like, you know, liquidity, you know, as Raul Paul says. But the four year cycle, is that a thing or is that broken this time around?

• 8:23Speaker 00

  I mean, it's honestly hard to argue against it. I I think it it's easy to dismiss it, but the reality is, is, you know, Bitcoin topped into 2013, into 2017.

• 8:35Speaker 00

  Into 2021, right? And it wasn't much more complicated than that. And it bottomed, you know, after the midterm year here, after the midterm here, the midterm year there, and then the same thing, right? So it seems like there is some cyclical component to these market cycles. And actually, if you measure out, you know, Bitcoin's ROI, and we could even look at the same thing for Ethereum as well. But if you look at Bitcoin's ROI from the low, and we just look at the last couple of cycles, I mean, this is where Bitcoin always is at this point in the cycle as measured from the low, right? So to some degree, this time really hasn't been that different.

• 9:20Speaker 00

  I think the thing that I think is throwing people off this cycle is the timing of rate cuts. So last cycle, rate cuts occurred in the pre-having year, right? They occurred in, they started in July 31 of 2019. And that corresponded to this cycle right here, where you had this QT high-interest rate bull market, where Bitcoin USD went up, and then Bitcoin dominance also went up. We've seen the same thing, and you can see how it got ahead of the cycle that came before it. And then eventually, it sort of bled back down until it got in line with the prior cycle. I think you're seeing the same thing happen again, where we had another QT bull market. And then it's basically just sort of faded,

• 10:04Speaker 00

  and now it's getting back in line with the prior cycle. So to a large extent, this does look awfully familiar, right? I mean, it seems like some things are relatively predictable in terms of the four-year cycle. But I also think there is another component, right? It's not just the four-year cycle. I think monetary policy also plays an important role in exactly how the cycle plays out. And at what point in the cycle do, you know, some of the other cryptocurrencies like Ethereum, at what point do they start to take over? And we just haven't seen that happen yet this cycle. But I think there's plenty of reasons why, right? We have not yet seen the Fed lower interest rates, although that's coming up relatively soon.

• 10:49Speaker 00

  And we also have not seen the pivot from quantitative tightening to quantitative easing, and that could also be coming up. Relatively soon theoretically. So I think the cycle is playing out how it typically does. It's just that the timing of rate cuts this cycle is coming much later than it did the prior cycle. And I think that's throwing people off.

• 11:07Ryan Sean Adams?

  So Ben, your base case is the four year cycle we're having again, and we're basically right on schedule as compared to previous cycles. So like people should wait. I will make a note in every four year cycle that I've been a part of around this time when things get flat, people start to doubt the four year cycle. Always happens right on schedule. So we're on schedule in the four year cycle to be in the period of time where people doubt the four year cycle. Would that be an accurate sum of your base case here?

• 11:35Speaker 00

  Yeah, I do think that, you know, I do think that it's good to see that the cycle has sort of gotten back on track where it normally was. It was somewhat uncomfortable when I was back over here. If you measure it from other ways, though, like if you measure the cycle from the peak, which is probably not the best way to measure it because, you know, the way I think, I mean, we're going to look at it regardless, but the one of the reasons I like to look at it from the low is because it's hard to really take into huge consideration what happens during a manic blow off top, right? The markets are just irrational. So measuring returns from that level, not always the best, but with that disclaimer, if you look at the ROI from the cycle peak, so you go peak to

• 12:17Speaker 00

  peak for Bitcoin, we are still slightly ahead of where we would normally be at this point in the cycle. What's fascinating is this is really the first cycle where Bitcoin put in new all time highs before the halving. And that's actually reflected here on the chart. I mean, you can see that this is the green line. We're still ahead of where we were at this point in the last two cycles. So even if Bitcoin were to sell off after rate cuts like it did last cycle, even if it were, it could still pick back up in 2025. I mean, it might just correspond to it getting back in line. As measured from the peak. So I mean, I do think every cycle is going to throw us a curve ball. Last cycle, it was a pandemic. You know, everyone got annihilated. I think you guys, I mean,

• 13:01Speaker 00

  you guys were there too. I mean, we, we woke up and, and the price of Ethereum was back at like a hundred bucks. And then I think we had gone to sleep and it was $200 and we woke up the next day. It was like a hundred dollars. Like what, what just happened? So yeah, I, I do think that there, there's something every cycle that, that does try to throw people off. And, and this cycle has certainly been no exception.

• 13:21David Hoffman?

  Yeah. Can I try and be a four year cycle bear for a moment? Uh, cause I'm, I'm still skeptical. That the four year cycle is intact and, and maybe at the end of the day, we fast forward in six months and, and we're totally right. And like the four year cycle is intact, but like there's some, just some things that happened. The ETFs, I think, pulled forward a lot of price action, a lot, a lot of demand. And Bitcoin especially has been experiencing the benefactor of that demand. Like it's weird that Bitcoin reached an all new high, but just a little bit and momentum didn't follow. And in all previous four year cycles, breaking all time highs meant following into like price discovery.

• 14:03David Hoffman?

  And we have not had price discovery right in this current, in this current market sector right now. Like right now Bitcoin touched like $74,000 ahead of like the $69,000 previous all time high. And it's the only one, like Ether got the ETF, but not the previous all time high. And now we're in like a law, a prolonged crab market. And maybe I'm just in like recency bias of being here in this present market. And rather than the last four year cycle that I was a part of, but this crab market feels real long, feels real long. And there's also like no new users and no new, uh, like things to do. And so maybe that's just contributing more to the idiosyncratic nature here. But like, what, what would it take to truly invalidate this four year cycle? Cause we've got the pulled forward, the, the one year accelerated like upswing.

• 14:48David Hoffman?

  I'm not going to call a bull market because we haven't had price discovery, uh, because of the ETFs. And then we've had this extra prolonged crab market that has like, is too, too long for what I would call like pattern matching into previous cycles. That's kind of my vibe. How, how do you take that Ben?

• 15:02Speaker 00

  No, I mean, absolutely. I think you're asking the right questions. I think that once everyone becomes comfortable with one particular outcome, it's probably time for that outcome to change. It's difficult because, as always, normally when Bitcoin hits all-time highs, it continues to accelerate from there. I think you're absolutely right. I mean, I think that you could argue that the ETFs helped pull forward some of those returns. And so in 2020, around this time, the market was generally trending up, right? I mean, we had the pandemic crash, and then the market basically exploded up into the summer, a brief pullback in August and September, and then it kept going up into Q4. We're not really seeing that this time, right? The summer has been relatively boring. August, September haven't been that great. But I think what's really happening is, and it

• 15:45Speaker 00

  goes back to what I mentioned a few minutes ago, it's the effects of monetary policy. So for instance, if we were to tickle, and by the way, I mean, I will be completely honest with you guys. I don't, I really think Ethereum could eventually go lower from here before it really gets back on track. And the reason I say that is because what I think, what I think has happened is every cycle, there's this thing that happens with Ethereum. I don't know why exactly. I always find it fascinating. I do actually, I mean, I do consider Ethereum to be a blue chip. I only consider two blue chips in the industry, Bitcoin and Ethereum. And there's this thing that happens every cycle with Ethereum. And it's fascinating. And it's basically the ETH-Bitcoin pair, right? It's the ETH-Bitcoin pair. And I think we could learn a lot, honestly, from the ETH-Bitcoin pair. And

• 16:30Speaker 00

  basically, what happens? And this is why I think, going back to your sort of, your observation, which is absolutely valid, is like, what's going on with this market? It just keeps on crabbing. And frankly, it's been going sideways with a slightly bearish bias, right? I mean, Ethereum has been putting in lower highs and lower lows, same with Bitcoin, ever since March. But I think the reasoning, the reason for it, and I think why people might be losing their way on this, is like, every cycle, ETH-Bitcoin goes through this pattern right here. And essentially, what it is, is it sets a top, and then it sets a low. And you can see that after it does that, it puts in sort of like a lower high, right? And the same thing here, right? A top, and then in between these, this bottom,

• 17:13Speaker 00

  lower high, and then sort of slowly bleed back down. This time has not been different, right? This lower high right here, that was actually going into the merge, which I'm sure you guys remember was a pretty crazy, a pretty big event for Ethereum. I mean, it had been something that they had been working up to for years and years and years. It finally happened. But what's fascinating is every cycle, we go through this process where ETH Bitcoin, you know, it, it, it tries to go up. It comes back down to earth, goes back up again, lower high. And then it gets into this phase right here, right? Where it's just above the range low that it set in between the two peaks, but it's not enough to really turn it back around.

• 17:53Speaker 00

  And then what happens is after it sort of crabs in that range for a number of months, it eventually breaks down, right? It eventually breaks down. So you can see that the first time it broke down in 2016, it had a fake out. It was actually in June, right? So it was actually in June of 2016, it broke that prior range low. The cycle after that, it occurred in July, right? The cycle after that, you can see it first started to break down really, you know, right around January, there was a wick below it. And then it really started to go below it in March, around the time that Bitcoin topped out. Now, what's fascinating about this chart is if you look at it through the lens of Ethereum, right?

• 18:35Speaker 00

  So look at it through the lens of Ethereum and, and you can see precisely how it has played out every single time. So look at ETH and remember, the first time it broke support in 2016 was in June, right? And then if you look at Ethereum in 2016, it topped in June. And from there, ETH bled about 70% before getting back on track. And then it went up in the post having year, right? It went up in the post having year, which is normally the one year of the cycle where Bitcoin dominance goes down, right? Every other year Bitcoin dominance seems to go up. It's the post having year where Bitcoin dominance goes down. So that was the first, that was the first like, right? That was the 2016 cycle. And then if you look at what happened next, right?

• 19:20Speaker 00

  ETH Bitcoin in 2019, when did it break down? It broke down in the summer, right? June, July is when ETH Bitcoin broke down. In 2019, ETH USD topped out.

• 19:32Speaker 00

  In, you know, June, July, right? So you can see that both prior cycles ETH USD followed that pattern. And after finding that top, it bled about 70%. Now, it's easy to get sidetracked on that and say, well, why include the pandemic? But I'm not, right? I mean, I'm purposely excluding this pandemic crash. Like, we're just looking at what happened going into the end of this year. So because of that, right? Because of that, when I'm looking at ETH Bitcoin, I'm like, all right, well, we saw a fake out here in March and April below the range low, kind of like 2016. And if you go look at what ETH did, that's exactly when it topped out, right? March, right before the Bitcoin halving.

• 20:15Speaker 00

  And so far, it's already dropped 54%, right? So to a large extent, this time has not been different, right? It actually is playing out in a very similar manner. And what's fascinating is if you look at ETH Bitcoin, the breakdown 2016, 2019, after that, right? Right after that, that's when Ethereum bled 70%. And then it started to pick back up the following year, right? The following year. And it bottomed out in both 2016, ETH USD bled until December, right? So December 2016, December 2019. And then it picked back up the following year. And you could argue that it was picking back up right here in 2020. And then the pandemic happened, right?

• 20:59Speaker 00

  And it kind of threw everything off course. What's fascinating, if you fit the data points, these data points with these data points, sort of like the non-bubble data points, if you want to call them that. If you fit those data points together, you get a curve that looks like this, right? So this is the logarithmic regression band. And what's fascinating is every time ETH Bitcoin has broken down. 2016, 2019, and now 2024. Every time ETH/USD bled into Q4, into the regression band, and then it had an explosive move the following year, right? The following year. And then that year where it has the explosive move tends to be the,

• 21:44Speaker 00

  where it starts to outperform Bitcoin, that tends to be the post-having year. So I kind of think-

• 21:49David Hoffman?

  That's where we would call it the bull market, the true bull market, the main maniac bull market.

• 21:54Speaker 00

  Right, like the QE phase of the bull market, right? The phase where Bitcoin is no longer leading, right? Because I think a lot of people think that Ethereum always outperforms Bitcoin in a bull market. And I would, I would say that is correct when there's lower interest rates and money printing, right? But when you're in a phase where higher and higher rates and more and more QT, where the Fed's reducing the size of their balance sheet, that's where people tend to flee higher-risk assets and go to lower-risk assets. Now, I'm not, in the grand scheme of things, Ethereum is number two for a reason, right? I think it is the second, you know, the second safest one. But I still do believe that just by market cap alone and by the fact that Bitcoin's been around the longest, right?

• 22:39Speaker 00

  That's generally going to be a safer play for, for most people, especially in a high-interest-rate environment. So I do think there's a pivot coming soon by the Fed, and therefore ETH/Bitcoin should theoretically bottom out sometime between now and the end of the year.

• 22:52David Hoffman?

  So the way that you present this with like, we have like three pretty strong data points across the ETH/BTC ratio that you're pointing out about the bleed into the, the bleed into the upside. It seems like it's all going according to plan. At least kind of that's the vibe that I got from you. Like ETH, the ETH/BTC ratio is in the middle of like, it's starting, it's like fourth pattern that we've seen for the last three cycles. And if you believe in patterns repeating themselves, then we are perfectly on track for that. And there's like not really much reason to think that we're outside of that bound. Is that a fair assessment?

• 23:29Speaker 00

  Yeah, absolutely. Actually, you know, I my my long term view for ETH Bitcoin really since 2021 was that it was gonna bleed to about 0.03 to 0.04. So I

• 23:38David Hoffman?

  Yeah, you call this ETH coming home, right?

• 23:41Speaker 00

  Yeah, yeah, it's basically basically it bleeds to the 0.03 to 0.04 range. That's why I've been so bearish on ETH Bitcoin is and I know I've I've made a lot of ETH people mad, but it's just it was what I saw happen last cycle. And I was like, you know what? Like, I do think there's a time to be bullish on Ethereum against Bitcoin, but I think a lot of people have like, you know, they they front run it. They they they think that it's gonna give them outsized gains compared to Bitcoin. But I I think it was a little too premature. And so what's really interesting, though, is is, you know, at this point, I I think it's far too late, right, to to make that trade. I mean, I think the time to make it would have been back over here in 2021. But if you look here at when ETH Bitcoin breaks down, like the last couple of times, after the first month that it broke down

• 24:24Speaker 00

  right here, 2016, and then here in 2019, it only went down for like one to two more months before ETH Bitcoin really bottomed out, right? And so I think that it's going to turn around relatively soon. But the the reason, I mean, it could still go below 0.04, right? It absolutely could still go below 0.04. But I will say this. If it does not go below 0.04 before the end of the year, then my guess is it's probably not going to. Okay? But in the short term, I would say there still is a chance. And the reason why I still remain I I don't really even want to call it super bearish because it's it's it's already hit my target range of 0.03 to 0.04. So it did hit 0.04.

• 25:06Speaker 00

  So I I remind myself, all right, like, there is a chance that it that the low is already in. But the reason why I would still express some skepticism towards that idea is last cycle, we know if we overlay two things, if we overlay interest rates, you can see that ETH Bitcoin bottomed out. After rate cuts, right? So it was about a month after the first rate cut. So the first rate cut was in July. It was actually July 31st of 2019. And then ETH Bitcoin bottomed out like the first week of September. So it was basically just a month later. And then also, what's actually, I think, a bigger signal than just rate cuts is the balance sheet of the Fed, actually. So if you overlay the balance sheet of the Fed,

• 25:49Speaker 00

  you can see that it was precisely when the Fed pivoted here from quantitative tightening to quantitative easing. That's what marked the bottom for ETH Bitcoin, right? Like, right here. You see that, right where they pivoted? That's ultimately what marked the bottom last cycle for ETH Bitcoin. And that is likely going to happen sometime in the next few months. And the reason why is it's not because, it's right, it's not because the Fed cares about Ethereum, right? We know they don't, you know, they don't care about the crypto markets. But the reason why we're likely going to see this pivot occur is because, you know, just to briefly get into the macro side of things, right? The unemployment rate is starting to look a little scary, right? It's sort of entered into its nonlinear phase

• 26:31Speaker 00

  where it's moving up a lot quicker than it had been previously.

• 26:37Speaker 00

  And so when it does something like this, right? When it, I'm not really sure why this one's a lot bigger, but when it does something like that, when the unemployment rate starts to move up this quickly, that's when the Fed is going to start to respond. So because the Fed's reaction function, you know, because the Fed's likely going to react in the next few months, it likely means that ETH Bitcoin will bottom out in the next few months because monetary policy is about to change.

• 27:00Ryan Sean Adams?

  Ben, I dream one day to be able to chart like you, man. This is just like incredible.

• 27:04Speaker 00

  No, you don't, right? You've never tried charting.

• 27:06Ryan Sean Adams?

  I haven't never tried, but like if there was one, you know, skill set, I could just like Matrix style, somebody could plug into my like neural net. It would be like charting. Wouldn't be athletic skills, it'd be charting. But I don't want to do the work to get there because there's people like Ben who've already done it. So we were looking at some charts like where Ben was doing an overlay on the ETH Bitcoin ratio of like the Fed balance sheet and also the interest rate. And that's really cool. And so I guess we're getting the picture of the true driver of these four-year cycles is not really, it's not really the halving. It's more like the, like the Fed and liquidity and interest rate. Is that kind of the true force behind all of this?

• 27:46Speaker 00

  Yeah, absolutely, because you know, I don't even think you can look at even Bitcoin and say that the reason it went up was only because of the ETFs, right? The reality is that Bitcoin is sort of a more volatile version of the NASDAQ. And the NASDAQ, right, if you overlay the NAS— this is actually really fascinating when you look at the market this way. When you overlay the NASDAQ with Bitcoin, you know, when Bitcoin started to go parabolic in Q4 in anticipation of the ETF, the NASDAQ was also going parabolic, right? So it's not even—I don't even think we can definitively say that it was the ETF—I'm not saying the ETF had no effect. It absolutely did. But my point is that if the NASDAQ were going down in Q4 of last year, then there's a good chance Bitcoin would have as well, right? But it was because, you know, we were generally in risk-on conditions.

• 28:31Speaker 00

  But I think one thing to note, and just another similarity between this cycle and last cycle, is that I think a lot of people have sort of said like, "Well, what's going on? Like, why, you know, why have equities gone up while crypto's gone down?" And actually, what's really fascinating is the same exact thing happened last cycle, right? There is a period last cycle where you can see it pretty clearly where Bitcoin was going down while the NASDAQ was going up. After, right, that was when ETH Bitcoin broke down. That was also when gold broke out, was right here. Gold broke out right there. Same thing's happened this time, right? You know, you can look over here and see that the NASDAQ has trended up while Bitcoin has been slowly trending down. So I think a lot of the same things are playing out.

• 29:14Speaker 00

  Again, I think the main difference is that instead of occurring in the pre-having year, it's all occurring in the having year. But you could argue that the four-year cycle still could be intact. It's just the timing of everything is just offset by one year.

• 29:28Ryan Sean Adams?

  Okay, and so let's maybe recap kind of where we are. So you think base cases where in the first part, the first part of the four-year bull cycle, yet again, and this is only the— this is the quantitative tightening part of it, not the quantitative easing part of it, which like could start after Powell starts to, you know, lower rates. And we may be in the probably the bottoming range of the ETH Bitcoin ratio. It still could go lower, but like, we're kind of close to where you feel like it's going. How about ETH, like with respect to dollars? So have we seen lows there, or are we going to dip below 2,000?

• 30:05Speaker 00

  Um, I've gotten in a lot of trouble. I'll just be honest, guys. I've gotten in a lot of trouble with my views on Ethereum.

• 30:13Ryan Sean Adams?

  Who's causing you trouble? It's just like, uh?

• 30:16Speaker 00

  No, the Twitter trolls, right? No, mainly because, um, like, I've sort of been of the opinion for the last few years, right? If you're gonna buy anything, just buy Bitcoin because ETH is gonna underperform, right? And so I've had this like, I've had these like bear goggles on for Ethereum because I just kept thinking like, well, why buy ETH when I can buy Bitcoin if ETH Bitcoin's gonna go down? I'm starting to force myself to see the other side of it because I think we're, as you just said, right? I think we're actually near the end of the ETH Bitcoin downturn. But as far as ETH USD, there's actually kind of a pattern here as well. You could almost argue that what has happened here is the same thing that happened in 2019. It looks a lot different because it's taken a lot longer.

• 30:58Speaker 00

  But I think, I think if you overlay rates, if you overlay interest rates, you can see what I'm talking about, I believe. So do you see how this cycle over here, rates only went up to 2.5% and then they came down? This time, they went more than doubled that, right? Where they went to 5.5%. But if you look at, if you look at the chart like this, basically what happened last cycle is that ETH formed this wedge that it was bouncing around between, right? And if you put a price label, sorry, a price label here, you can see it bottomed out around, what, 80 bucks? Around 80 bucks. This was, uh, not this cycle, right? Obviously, the 2019, 2019 cycle. And then it had a higher low at around 100.

• 31:41Speaker 00

  And then it had another low at around 150 before rallying up. And then you can see that it fell back into the wedge right before rate cuts arrived, where it went down to, guess what? Guess where it went down to? It went, the WIC on this, on this return to the wedge, the low was 190. So this move from 2019 is basically 1/10 of the move we've seen this cycle, right? So instead of, you know, instead of ETH bottoming out right at 80, 100, 150, and then 200, it's been just 10 times that, right? 10 times all of that. So you have, you have 800, right? 1,000, 1,500.

• 32:24Speaker 00

  And now this WIC that we just saw went to 1,900, right? So- It's basically the same thing. And the reason I think it's taking place on a grander scale is because the rate hike part of the cycle has taken place over a much longer timeframe, right? So when you look at it like this, right? So we can see that it's just a 10x move of the prior cycle. When you look at it like this, you can see that ETH has fallen back into the wedge just like it did in 2019. And what's even more fascinating is if you zoom in here, it was right after the first rate cut, the first rate cut last cycle was July 31st.

• 33:08Speaker 00

  And it was right after that rate cut that ETH USD broke to the downside. And it occurred in the third quarter of the year. It occurred in August. And so the downturn lasted a little bit longer into Q4. And then, and then, and then you could argue that was the soft landing, right? So that would have been the soft landing. Now, we ended up getting a hard landing because of the pandemic, but that would have been the soft landing. So like I have to, as much as, you know, it's taken forever, right? And there's been every reason to sort of, you know, make fun of these views because it's been, it's been taking far longer than I thought, which is fascinating because I actually thought the Fed would raise rates to five and a half percent. I thought they would keep them higher for longer.

• 33:50Speaker 00

  I just, I'm, I've actually was pretty amazed by how long the crypto markets held up. And I mean, I think it is a reflection that a lot of people do find value, you know, in, in the crypto markets. And even though Ethereum hasn't set new all time highs, remember last cycle, it, it first ETH Bitcoin had to break down. It had to go home, as, as, as I've said. And then after that is what led the rally into new all time highs. And I mean, you can see that in 2016, right? I mean, this rally was an explosive rally out of here, right? Same thing, um, the following cycle. Again, if you just sort of ignore the, the pandemic drop, it was getting a pretty, a pretty strong rally out of that.

• 34:33Speaker 00

  So I think that, that something similar could happen again. I'm not suggesting that people should like, you know, Try to, you know, time everything, right? Like, that's impossible. And frankly, I could be wrong, right? I mean, just, again, just because my views on ETH Bitcoin have been correct does not mean that my views on ETH USV will continue to be correct, at least for March, because I underestimated it. I absolutely underestimated it. So I think it's important for people to recognize that, right? I don't have a crystal ball. I'm just doing the best I can. And actually, you know, as far as Bitcoin is concerned and the ETH Bitcoin ratio, I absolutely think it's time to start hedging those views, right? And that could just mean, you know, instead of being like 99 or 100% Bitcoin for your portfolio

• 35:17Speaker 00

  because of, you know, the Bitcoin dominance rally, it might mean sort of tailoring that back, especially as we get closer to the end of the year, because that's normally when Bitcoin dominance goes down. So my base case, my base case right now is that ETH USD, you know, it still stays up here a little bit longer, above 2K. It goes below 2K in Q4, and then, starting next year, it then bounces out of that. And then, and then hopefully, we'll see if, I mean, my, my hope is that the Fed has not absolutely wrecked the markets, you know, for a long time. Because, I mean, you know, I think the, sort of the caveat to this is, as you guys, as actually you mentioned earlier, is that, you know, what happens if we deviate off the four-year cycle? And that's always a possibility.

• 35:59Speaker 00

  Um, you know, if the Fed, obviously, if we get a recession or something, that could, that could change things, right? And then all bets are off. Um, but I, I think that's going to be the base case for right now, is that there's still going to be some weakness going into the end of the year. And, and, and that is where things should turn around. And by the way, when ETH USD fell back into this wedge, um, right here, it then, it bottomed at 19, at 190, which is where we just bottomed, 10X, 1900. And then it rallied back up to right around 240. So, and, and right now, it's, you know, it's right below 2,400. So I'm wondering, right, I'm wondering if it's just going to hang out here for a couple more weeks,

• 36:42Speaker 00

  after rate cuts, fall off, everyone freaks out because they're like, oh, the recession's here. But in reality... That is just where it was always going to go.

• 36:51David Hoffman?

  That's the bottom, yeah.

• 36:52Speaker 00

  Right, that's where it was always just going to go anyways, and where we were going to find a reason for it. And then from there, I think you could, you could make a strong case that it could get a pretty big bounce out of it. I think another thing that we all have to remember is that by the time, even if we do have a recession, right? By the time it's declared, normally the markets have bottomed by then. So, I mean, you know, like if the Fed comes out in 2025 and like, oh yeah, we are in a recession, the markets probably knew that well ahead of time. And one last thing, I think actually that one of the really great things about crypto, I think it has a way of sniffing out that weakness before, say, the stock market does, right? Because I mean, crypto's been in a downturn since March. And maybe the reason for that is in the stock market,

• 37:34Speaker 00

  you have all these like passive 401k investing going on, whereas in crypto, it's not exactly the same thing. So I do wonder, you know, I wonder if Bitcoin and Ethereum have sort of sniffed out that weakness half a year before the stock market, you know, has sniffed it out. So by the time the markets get back down here, it's all been priced in, right? And then it just gets a big move out of it, just like it did the last two cycles.

• 37:55Ryan Sean Adams?

  So Ben, your, your, your takes on Ether from like, the prices are complex. And I can imagine how they don't make you like a fan favorite among the ETH bulls on crypto Twitter at least. But it sounds like you're saying basically the ETH Bitcoin ratio has come home, according to your predictions, according to the charting that you're doing. And also the ETH dollar like price is like pretty close to home too. I mean, we're within a few miles of like, we could see the front porch, maybe like, we're pretty close. And like if, if that kind of continues into Q4, is there a period of time in Q, or let's say Q1 2025, or in 2025 in general? Are you going to like full switch on Ether?

• 38:39Ryan Sean Adams?

  You did call it a blue chip asset earlier. And you said you, you only consider two blue chip assets in, in crypto, Bitcoin and Ether. Can we anticipate a possible future of 2025, Ben? Where you are like Ethereum's biggest bull?

• 38:58Speaker 00

  Yeah, I mean, I think Ethereum will start to outperform Bitcoin in 2025. I feel pretty confident about that. Again, I could be wrong. You know, I mean, again, it wouldn't be the first time. But I do think absolutely that it will start to turn around as we get closer to 2025. My base case right now is that it just bottoms out sometime between now and the end of the year. But what's fascinating is that doesn't mean I'm going to go full Ethereum. Like, I'm always going to have some Bitcoin. One of the cool things we can look at is if you do like this, there's this modern portfolio theory tool. This goes back like decades and decades for the stock market. But if you look at a modern portfolio theory simulation of, say, just a portfolio of Bitcoin and ETH, right?

• 39:41Speaker 00

  Let's just say I don't care about the altcoin market. For full reference, I don't actually consider ETH an alt. So when I talk about altcoins, I'm talking about everything besides Bitcoin and ETH. And then I sort of put Bitcoin in a league. What?

• 39:55David Hoffman?

  Well said. I totally agree with you.

• 39:57Speaker 00

  Yeah, but I also think that Bitcoin is kind of by itself. And then Ethereum is somewhere in between. It's not the altcoin market, but it's also, it doesn't actually have the same type of properties as Bitcoin. Like, we haven't had an ETH dominance rally during a high interest rate environment. Like, it was a Bitcoin dominance rally. So, but if you look at just this portfolio, the portfolio that maximizes your Sortino ratio, so your risk-adjusted returns, that does not punish positive volatility, because the Sharpe ratio punishes positive volatility, is 80% Bitcoin, 20% ETH, okay? Now, for me, my portfolio has been nowhere near 20% ETH, because I've been pretty bearish on the ETH-Bitcoin pair.

• 40:41Speaker 00

  But I will say that in 2025, there's a good chance I would start to get my percentage ETH much closer to... And I'm talking about my crypto portfolio. I'm not talking about my entire net worth, right? Just my crypto portfolio would probably be closer to 20% ETH, but not until 2025, or at least closer to it than we are right now. Because I still think, again, still a good chance that we see Bitcoin continue to eat the altcoin market's lunch for a little while. And by the way, one more thing about that, you know... ETH has underperformed for a while now. Not only Bitcoin, but actually also a lot of altcoins. But you could argue that that is about to change as well.

• 41:24Speaker 00

  And I want to show something that would, you know, that that kind of makes me believe that. And I could be wrong about this, but there's a chart. If you look at alt Bitcoin, so this is alt Bitcoin pairs, right? These are alt Bitcoin pairs, not so this is not ETH. There's nothing in this chart that includes Ethereum. It is total three, which is the altcoin market minus USDT divided by Bitcoin. Okay. So we already saw that ETH Bitcoin has already broken down, right? And maybe it has a little bit, a little bit more to go, but I think it's mostly done. I think you might see it go below 0.04, but but that'll probably be it. You might, you might see a print 0.03 for a month or two or something. But the altcoin market has not yet really made that same move.

• 42:09Speaker 00

  And I don't think it's because this time is different. I think it's because it just, it's about to happen. And actually, if you look at at monthly candles on alt Bitcoin pairs. Last cycle, you can see that it was this month right here, July 2019, July 2019, when the Fed cut. That was when alt Bitcoin pairs started to sell off to the range low. And and you can see they're trying to hold on, right? They're trying to hold on, but my guess is that they're going to come back down here. But the reason why I think we're about to see a pivot, probably first, it'll be altcoins will start to underperform ETH is if you look at the same chart. But instead of dividing by Bitcoin, right? Instead of dividing by Bitcoin, I want to divide by ETH, right?

• 42:53Speaker 00

  So if you do that, and we look at this chart here, let me just redraw all this. So you can actually see what I'm talking about. All coins have been in a downtrend against Ethereum since 2018, right? I mean, again, this is since 2018, right? And this is not, and this goes to show you guys, right? I mean, like every cycle, there's a, there's a thousand new altcoins, but most of them just wither and die. Right? There's only a few cryptocurrencies that stand the test of time. And so when this chart is going up, it means That altcoins are outperforming Ethereum, right? So you would have to cherry pick times where alts are outperforming Ethereum, right? Generally, alts are underperforming Ethereum because this chart is generally trending down. Every time that this chart has hit this trend line,

• 43:38Speaker 00

  that's when alts start to underperform Ethereum. So if we think about it, ETH Bitcoin is getting pretty close to a low. I think, right? It's pretty close to a low, probably within, you know, 10%, maybe 20%, maybe not even that, right? It's probably pretty close to a low at this point. We just looked at all Bitcoin pairs. They still seem pretty far away from a low, especially if you believe that altcoins are oscillators at best against Bitcoin, which I don't know why you wouldn't. You know, I mean, you know, a lot of them, a lot of them are gonna just go to zero asymptotically against Bitcoin anyways. But if you look at this, I could see sort of the reverse happening. You guys would remember this better than anyone.

• 44:21Speaker 00

  You guys remember in early 2021 when Ethereum was kind of just stuck at like $2,000? And, and everyone, like all these altcoins were popping off? And everyone was like, oh, sell your ETH for alts. And that was like the worst time to do it.

• 44:37David Hoffman?

  Yeah, it was the best time to counter trade.

• 44:40Speaker 00

  Right, the best time to counter trade, right? Because everyone, all they saw was they were like, oh, all the altcoins are going, doing well. Let's trade our ETH for alts. And that was when Ethereum started to outperform alts. I think the reverse is sort of happening. Like Ethereum has been really underperforming Bitcoin for a while. Altcoins have been holding up a little bit better, but I think that's about to change. And I think you're going to start to see Ethereum outperform the altcoin market. And maybe the, uh, the trend reversal could be right around the first rate cut, perhaps, right? Which might occur here in just a couple of weeks. So I do think that's, you know, I think there's a good chance we're gonna see this rejected off this trend line again. I just can't imagine the seventh time is the charm, you know? Or the sixth time is the charm.

• 45:24Speaker 00

  So if it does get rejected again, it means that all alts will start to bleed against Ethereum. Which by the way, that would make a ton of sense because there's one more chart I like to look at as it relates to all this. And that's blue chip dominance, right? There's Bitcoin dominance, which we probably should talk about. But before we get to that, look at blue chip dominance. So Bitcoin dominance plus ETH dominance, right?

• 45:46Speaker 00

  Right before rate cuts last cycle, this is June 2019. This was right before rate cut. Really, here's July. Bitcoin plus ETH dominance had a whip down to right around 71, 72%. And then it exploded up into after the rate cuts arrived. So if this chart here is an oscillator, meaning blue chip dominance, varies between, say, 58% and 80%. So let's just say between 60 to 80%. That means there's still a move here that needs to occur. And I think some of it's going to come from Bitcoin. Some of it could come from alt certain underperform Ethereum.

• 46:28Speaker 00

  But I do think we're going to see that, at least part of that move, right? It might not go up the entire way because, you know, their stable coins now make up a big component now. So you might not actually see it go all the way to 80. But you could certainly see it go back up into those rate cuts, just like it did, you know, just like it did last cycle.

• 46:49Ryan Sean Adams?

  Ben, a question on this. So like, what does it take to get on Ben's list of blue chips? Like Bitcoin and Ether are there, but like, everybody with their favorite, you know, altcoin, let's call it, says like, yeah, but we deserve to be in that top slot. Now we are a blue chip. And I could name this in previous cycles of all sorts of different coins. I remember there was a time where BNB was like purported to be sort of like one of the ETH killers, maybe. And we've gone through a lot of, you know, different cycles of this. What does it take to become a blue chip? Do you have to do certain things on the charts? You have to survive multiple markets? Is it a longevity thing?

• 47:24Speaker 00

  I think it's a longevity thing. I mean, I think that the reality is Ethereum's been number two for, what, a cycle and a half? I mean, I know at some point in like 2016, I believe, correct me if I'm wrong, but I think XRP was...

• 47:38David Hoffman?

  XRP flipped to Ether in 2019.

• 47:41Ryan Sean Adams?

  Yeah, as well. Briefly, right?

• 47:43David Hoffman?

  Briefly, for like a week.

• 47:45Speaker 00

  Okay. No, I honestly don't even remember. I just, I know that... Ether has been number two or right around number two for a long time. I think another thing, though, is a lot of alts, they put in lower lows against Bitcoin, right, over a long enough period of time, right? And actually, this is, this is sort of an unpopular view, but, which I'm no stranger to, right? But, you know, I've said altcoins are oscillators at best, right? Like, meaning they oscillate between parity with Bitcoin, so where they, where the altcoin market cap is essentially equivalent to Bitcoin's market cap. And then they also come all the way down here to 0.25, meaning they bottom out when

• 48:28Speaker 00

  alts are 25% of Bitcoin's market cap, right? So if you, if you overlay a, if we just put a price label here, right? They bottom out around 0.25 and they top out around parity with Bitcoin. Okay? So that's, that's the, that's actually the glass half-full approach to look at it. Because, and you could, and the glass half-full is to say, this is just a deviation above the range high, and this is a deviation below the range low, right? But there's actually another way to look at that. And the more pessimistic way is to say, you know, this is technically a series of lower highs and lower lows, right? That's a high, that's a lower high, that's a low, and then that's a lower low, right? And you can even draw the price labels.

• 49:13Speaker 00

  I mean, even if you don't even, if you exclude this wick way up there, just take these wicks, right? And you can see it's a series of lower highs and lower lows. And so for me, the altcoin market collectively is a bleeder against Bitcoin, right? There's a chance that alts bottom lower than they did last cycle, for all we know. It's probably not my base case, because if they go to 0.25, that's probably good enough, you know?

• 49:40Speaker 00

  But I'll, I'll answer your question, right? Because you, so your question was, why Ethereum? Yeah, like, why Ethereum? Like, why, why is Ethereum on the list of blue chips and, and not other things? All coins collectively, it looks like they put in lower highs and lower lows, right? Now, if you look at Ethereum, you look at Ethereum.

• 50:01Speaker 00

  There is an inconvenient truth, right? I think, look, it's better to address it than to ignore it, right? There is an inconvenient truth that it's been lower highs since 2017. But that's the glass half empty approach, right? It's lower highs. But there's another reality that it's also been putting in higher lows, right? So my actual base case for Ethereum is that it might actually be converging to whatever the fair value is, right? So you have a low, you have a higher low, you have a higher low, and then up here you have lower highs. And, you know, I got into a lot of trouble because people were like, well, you're ignoring the higher lows. I'm not. I just, you know, these are lower highs. But there's also higher lows in here as well.

• 50:45Speaker 00

  And so that gives me a little bit more confidence, right? You've gone a couple of cycles now where ETH Bitcoin has been putting in higher lows. It's also been putting in lower highs. My argument is this. You guys remember the ETH USD chart? This regression line? You see this regression line? How ETH USD kind of comes back to it eventually? I almost wonder, could you say the same thing about ETH Bitcoin? I don't actually have anything fit right now, but I think we can imagine, right? We could envision a, um, where's the curve here? We could envision something like this where there's sort of like a fair value associated with the ETH Bitcoin pair, where it comes down to it, sort of the good valuation, right?

• 51:27Speaker 00

  Like the, um, the great time to make the trade back if you have it, right? And I just wonder if that's what's going on. Like in the same way that ETH USD, right? In the same way that ETH USD checks back in with it once every few years, maybe ETH Bitcoin has to check back in with it once every few years. And so you could be getting a situation where ETH Bitcoin is converging to whatever the fair, the quote unquote fair value is, right? Whether it's 0.05, 0.06, I don't know. I gotta be honest, right? Like, I'm not really in the camp of it flipping Bitcoin. I'm not. But that doesn't mean that you can't see Ethereum go much higher, you know?

• 52:12Speaker 00

  Like, if Bitcoin were to go up... A lot in the future, which I think we probably all think it will, then Ethereum will probably be right there with it. You know, I mean, even at, even if it's still at a fraction of Bitcoin's market cap.

• 52:26Speaker 00

  And then the other thing too, is, you know, the ETH Bitcoin pair is great to look at, but it's not even probably the best thing to look at. Market cap might be a better thing to look at, right? I mean, because you guys know, I mean Ethereum's, you know, well theoretically it's deflationary. Recently it hasn't been, but I think that's more so a reflection of monetary policy than anything else. If you look at the market cap ratios, look at ETH market cap divided by Bitcoin market cap, and you can kind of see like it, it, it might just be an oscillator. And, and you can even see last cycle around the end of 2017, it actually, it went a little bit lower and then it whipped down and then it went right back up. So I'm kind of of the belief that in order for an altcoin to become a blue chip,

• 53:09Speaker 00

  first of all, it, it needs to get to the top and stay at the top for, for multiple cycles, right? Multiple cycles. And, you know, to go back to, um, just to give an example, XRP, right? That was one that you got, I mean, what it flipped it in 2019, it flipped it in, um, or it was number two. I mean, I don't think we can say it flipped Ethereum in 2016. I mean Ethereum just came onto the market in 2015. So it was sort of, you know, it was Ethereum flipping XRP. But if you look at, at other charts, right? Like if you look at like XRP dominance, right? I mean, it just, you know, once upon a time in, in 2017, XRP dominance was like 30%. Today it's one and a half percent, right? This, this is the way a lot of these charts eventually go.

• 53:52Speaker 00

  Um, and that's why you have to be really careful with, with individual altcoins.

• 53:56David Hoffman?

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• 55:26David Hoffman?

  So go and download the Uniswap extension today by clicking the link in the show notes. Just another way Uniswap is helping you swap smarter. Okay, so I really like this interpretation of ETH. I think it's like not even, it's not even a ETH bear or ETH bull take. It's just like an ETH discovering framework of value is like not something I've actually ever considered for Ethereum versus Bitcoin. I've always assumed that it would trend upwards over time. And I think some people will have taken the opposite position where they always think it's going to trend downwards over time, like Bitcoin maxies. Bitcoin, Bitcoin maxies just think that ETH is like the best shitcoin chart in crypto. Going to zero, baby. It's just going to zero over the longest possible time horizons in which all the other shitcoins have already gone to zero. Ether is just like holding out until the very end.

• 56:11David Hoffman?

  Me and Ryan, of course, are in the camp that like the Ethereum roadmap and Ether productivity ETH is like one of the most productive assets of all time. Not only can you stake and get yield, but you can use it in DeFi at the same time, blah, blah, blah. All this great stuff. And that productivity is going to like increase in utility and value as a network becomes more valuable and therefore it's going to go up over time. But I've never actually considered that like ETH hits like. .7, .6, .8, hopefully higher. And then like that's it's just equilibrium and it just like warps and bends around that randomly.

• 56:43Ryan Sean Adams?

  Always destined to be the little brother forever.

• 56:46David Hoffman?

  Always destined to be the little brother. That's an interesting perspective. And that's what that's what you believe, right? You you believe in like a final a final equilibrium of the Bitcoin ETH ratio that never really goes too far away from that.

• 56:59Speaker 00

  Yeah, I mean, there's it's a market, right? There's always going to be changes and who knows what happens like 20 years from now. I'm not going to say that it can't eat. I'm not going to say that ETH can never go back up to higher levels against Bitcoin. It could. I think one thing to think about too is that the longer that we're in crypto theoretically, the more mature everyone becomes because I think a lot of the people in crypto for the last, you know, decade, a lot, we're all, we're, we've all been relatively young, right? We're sort of growing up into our young adulthood and our, you know, like our 20s, our 30s, sort of exploring crypto. And I think we all came into it honestly somewhat immature. And then we're sort of learning about things as we go. We're learning about the markets. We're learning about sort of like the business cycles and that sort of stuff.

• 57:43Speaker 00

  And so maybe one of the bull cases for the ETH Bitcoin pair eventually could be if, if a lot of the scams out there eventually go away and people sort of focus more capital on on just the the projects that are actually doing something. You know, I've gotten into a lot of trouble with ETH Maxis over the last few years because, you know, they didn't like my views on ETH Bitcoin because of, you know, they're like, well, the proof of stake, the deflationary aspect, all that other stuff. That stuff does matter. I do think it matters. I just, I don't really think Ethereum has had a chance to shine in that way just because of monetary policy. Right? I think that's what's been holding Ethereum back is is monetary policy.

• 58:23Speaker 00

  I sincerely hope that that the Fed can pivot soon enough to help us avoid a bad recession. And and honestly, my my base case is not that we get like a 50% drop in the stock market. You know, I think a lot of people look back like, well, look at the dot com crash. Look at the financial crisis. This is what happens when you get recessions. That's what happened during those two recessions, but if you look. At the 1990s, early 1990s, early 1980s, there were recessions where the stock market only dropped 20%, right? And so that, I mean, that could be enough to send Ethereum back to its regression band, right? If the stock market were to show some weakness. And by the way, I know we're getting a little off topic here, but a lot of times in, in election years, where you have an open field, where the incumbent's not running, risk assets tend to do kind of poorly in September and October,

• 59:08Speaker 00

  just because of the heightened uncertainty. And that might be spilling over into, into crypto. So you might, you might get a situation here where people think that a recession is what's happening because the prices are going down. But it could just be due to seasonal uncertainty, due to, you know, the election. And that why, that, that could be where people start to falter, you know, by the end of the year, if it plays out like I think it might.

• 59:33Speaker 00

  But yeah, I, I think that there's a good case to be made that the ETH Bitcoin pair is converging to whatever the fair value is, right? And, and that people get in trouble both ways, right? They, they get in trouble thinking it's going to flip Bitcoin. And then they also get in trouble calling for it to go to zero against Bitcoin. Because again, if you're, if you're just an unbiased person looking at this chart, if you don't know what it is, you, you, you immediately notice two things. You, you immediately notice lower highs, but you also immediately notice higher lows, right? I mean, you know, these are higher lows and lower highs. And, and so for me, that just means it's, it's converging to whatever the fair value is. It's the same thing, right?

• 1:00:12Speaker 00

  I mean, if you look at, even if you look at Bitcoin USD, you can come up with a, a very similar regression band. And, and see how, you know, over a long enough period of time, it's just sort of converging to whatever the fair value is. And, and the reason I say that, I mean, like asset prices generally go up, that's true. But regression bands, more of the gains come earlier on in its, in its cycle, right? In its life, right? I mean, the, the more explosive gains, because the market cap's lower. And then as it goes on and on and on, the, uh, the explosiveness sort of wanes some, it doesn't. Go up as much because it takes exponentially more money to move the market cap. So it's not that it can't keep going up. It's just that the rate at which it goes up goes down.

• 1:00:57Speaker 00

  And I think you could be seeing something, you know, very similar happening with ETH Bitcoin. But again, I'm not, I'm not in the camp that it's going to flip Bitcoin. I don't think it will, but that doesn't mean you can't. You know, that doesn't mean it's not a good asset to hold long term.

• 1:01:11David Hoffman?

  Ben, I really like that there, there's like an elegance in your analysis in which it's just like the shape of blue chip charts and macro forces. And as a result of those two things, like you get a lot of different permutations of things that you can talk about, but some things that while we were going through, you were like drawing the wedge on the ETH USD ratio in the 2019 upswing. And then you were also, you know, comparing that same wedge to what we're going through now. But one thing that wasn't contained in that data was the 2019 plus token Ponzi. So like this idiosyncratic market event that like, isn't really like relevant to either macro forces or the ETH USD price, except for the fact that this like massive Ponzi scheme was going on in China that like impacted the markets.

• 1:01:55David Hoffman?

  And then also you talked about, well, there's, there's the burn that happened that was relevant for the, for Ethereum 2022 and beyond, but not, but not for any of the charts before 2022 and same thing with the merge. So there are things in the like, the actual fundamentals of this asset that are only relevant for like, you know, the tail ends of the chart, the most recent years of the chart. So how do you consider like this idiosyncratic events that don't really actually have data in the shape of this ETH chart that are, are relevant, in my opinion, are relevant? Or, or do you think that they're not, not so relevant? How do you incorporate these things into your analysis?

• 1:02:30Speaker 00

  Yeah, no, I think they absolutely are relevant. I actually do. And I wish, I wish more ETH Maxies like realize that I actually do think they're relevant. I just think, I think that none of that has been able to get priced in. Because of monetary policy and because of the weakening in the labor market, right? I think that, you know, I mean, look, guys, when we go to the grocery store today, right? You're spending what 200 bucks to get what you used to get for like 80 bucks, you know? It just means like people don't have as, you know, it's harder to, to, to, to put money, I think, in, in, you know, risky assets like, like stocks and crypto. It's harder to put money, as much money now into it, at least as a percentage as perhaps in 2019. I mean, I, I remember the good old days of 2019.

• 1:03:13Speaker 00

  Those were some, some great times because there was no, nowhere near the amount of froth, right, back then, not that there wasn't 10, I mean, you just identified some. But I, I think that's the issue. It, it does matter, like all that stuff does matter. It's just that it hasn't been able to come to the surface and get priced in because it's just where we've been in the cycle, right? We've been in the phase of the cycle, like here's the chart. We have to show the Bitcoin dominance chart, right? If you look at, at Bitcoin dominance, like just look at 12 year candles, or sorry, 12 year candles, 12 month candles, right? 12 month candles, look at last cycle, right? I mean, it was just, it was, look, 2017 Bitcoin dominance went down. 2021 Bitcoin dominance went down and you can see three green, you know, three green years in between.

• 1:03:58Speaker 00

  I think that's just what's happening, right? We're, we're getting, we're in the Bitcoin dominance rally. It's probably going to end within, you know, within the next three to four months. And, and then next year, ETH, you know, ETH Bitcoin will probably go up, meaning Bitcoin dominance will likely go down. And the reason is, I mean, ETH is number two by market cap. So if ETH Bitcoin goes up, Bitcoin dominance is likely going to go down because, you know, just ETH takes up a, a large percentage of the market cap, especially compared to, to altcoins or any individual altcoin. So yeah, I mean, I think it matters. I just think that until we get sufficiently loose monetary policy, it's not going to. And, and really what I think we should look at on, uh, what, you know, whenever, whenever

• 1:04:40Speaker 00

  they cut rates, I, I guess it's going to be what, like September 18th? I think the, the bigger story that I'm interested in, I know a lot of people looking at, is it going to be 25 basis points? It's going to be 50 basis points? I think the more relevant story is, is what are they going to do with their balance sheet? Because Powell has been asked before, you know, like, is there a chance you could continue reducing the size of your balance sheet even after rate cuts began? And he said he would. He said they, they could end up doing that. So that might be the bigger story because remember it was when they pivoted. And they started expanding their balance sheet. That's when ETH Bitcoin bottomed last cycle. So that's what I'm interested in, more so than, you know, how much they cut rates by. So that's what I'm, that's what I'm looking at. I think that a lot of what you guys, what you said about ETH, you know, the proof of stake, the deflationary component,

• 1:05:25Speaker 00

  all that will matter. It's just that it can't matter when people don't care. And by the way, the proof, right? The proof that people don't care is this chart right here. I love looking at this chart. This is the, the social risk, right? I don't know if, I don't know if you guys are familiar with this chart that I've, I've shown a few times.

• 1:05:42David Hoffman?

  No, what is this?

• 1:05:43Speaker 00

  Yeah, so let me, let me show you what, what goes into it. Right? So what goes into it are things like interest in cryptos. Like look at, at YouTube views to a lot of different crypto YouTube channels. By the way, you guys are on the list, right? You can see Bank Close is right.

• 1:05:58David Hoffman?

  There's us. We're in the index.

• 1:06:01Speaker 00

  Yeah, yeah. So I've actually been tracking this for a while. It takes a little while to load just because it's so many different channels. But look at the mania phase in 2021. So this is views to these crypto YouTube channels. The main, this is the mania phase in 2021.

• 1:06:13David Hoffman?

  Yeah, when we got 1 million views on our Mark Hart Cuban interview, just like randomly.

• 1:06:19Speaker 00

  This is when, this is when these channels collectively were averaging 4 million views a day.

• 1:06:25David Hoffman?

  A day.

• 1:06:26Speaker 00

  What? Again, it's like, it's like 20 to 25 channels. So it's a lot of channels, right? That was like, but you can see like, you know, back in early 2021, at the top there was about 4 million views. Today, these channels are averaging 700,000 views a day.

• 1:06:41David Hoffman?

  Well, yeah.

• 1:06:42Speaker 00

  So the reason why that stuff hasn't been able to get priced in is because people collectively have been leaving the crypto space, or at least leaving the YouTube side of it, right? Also, the Twitter side, right? If you look at Twitter and you look, or X as they call it today, right? And you just look at, at, you know, followers to people on Twitter. By the way, you're on this chart as well. Bank Close is right there. If you, it just takes a while to load, but you can see whenever it does load, there is some pretty major tops that you'll see occur in 2021. And actually, that major spike here, it basically caught the top. It was when everyone started to follow everyone on Twitter and crypto. That's actually what marked the top for Bitcoin.

• 1:07:25Speaker 00

  But you can see that this time around, we're nowhere near that, right? We're nowhere near that. So in order for Bitcoin dominance to go up, right? In order for it to go up, you have to have new people coming in, right? You have to have new people because there's, you know, there's, there's so many different cryptocurrencies. And if you overlay, if you overlay Bitcoin dominance, right? If we overlay Bitcoin dominance, and I'm just going to look at it without stable coins. And then you overlay on here, the social risk. If the social risk is going down, so if the yellow line is going down or relatively low, Bitcoin dominance is going up. But when the social risk goes up, that's when Bitcoin dominance goes down.

• 1:08:08Speaker 00

  Now, last cycle, last cycle, the social risk did not really start to move up. And so, look right here, right? December of 2019 or so, which was after rate cuts. So again, the best chance for people to eventually come back would be sometime after rate cuts. If the Fed has not induced a recession, right? And it, look, if there is a recession, so be it, right? I mean, we just have to wait a little while longer. I honestly think that if there is one, which, I mean, honestly, at some point, we are going to get a recession, right? In our investing careers, like there will be one. My, my base case for it though, is that it'll just make these assets stronger. Cause I actually do think, or at least the, the useful ones.

• 1:08:52Speaker 00

  I do think that there's a lot of people out there that will say that a recession would kill off, you know, the, you know, the cryptocurrencies and whatnot. But I actually think it would, it would, if, if we can go through that and survive it, which I think we would, I think it would just make the case stronger, that it's actually an asset class that's here to stay for the long term and not just a fluke that occurred. When you know, when we had sort of like a decade-long bull market in the S and P 500. So my base case right now is I don't really see people coming back for the rest of this year, which is why I still think the market's not going to really go much of anywhere for at least a few more months. But after you get a few rate cuts in, hopefully next year.

• 1:09:32Speaker 00

  And I mean, it doesn't have to be like, you know, January, but I do think that sometime next year, the market, the market actually could pick back, pick back up. One more thing, really, really quickly, before I forget, this year, it actually does look a lot like a combination of 2016 and 2019 for Ethereum. If you look at, I showed the wedge earlier, right? So the wedge looks a lot like 2019, right? But look at the monthly candles. The monthly candles for 2024, every green month in 2024 was a green month in 2016, and every red month in 2024 was a red month in 2016. So you can look at it, right? So January, February, March were green in 2016. Same thing in 2024. January, February, March

• 1:10:17Speaker 00

  were green. And then April was red. April was red. And then, yeah, and then May was green. May was green. And then June, July, and August were red, just like we just had. What's really interesting is that in 2016, September was actually green, which, you know, maybe it's starting to deviate now because Ethereum's down 7%. But if September does close green for Ethereum, like let's say if Ethereum can rally back up to like 2,500 or something, then, and then in Q4 ends up being red, then you almost wonder, is this the same pattern that's playing out over here in 2016? The reason it's slightly

• 1:10:59Speaker 00

  different is because in 2016, it always held these range lows, right? Except for the last week, whereas this time it is not, right? It's actually gone below it. And the reason I think it's because it's a combination. It sort of looks like 2019 as well. I think it's a combination of 2019 and 2016. And in both cases, January, February of the following year were green. And normally Ethereum, when it does outperform Bitcoin,

• 1:11:24Speaker 00

  And it's typically in Q1 and Q2 because we know normally Bitcoin outperforms the rest of the market in Q4, right? If you think about every major top, 2013, 2017 and 2021 is the end of the year. So I could see that. I absolutely could see that playing out where there's just kind of some weakness like you were talking about earlier, a boring market, a crab could still go lower and then next year the market picks back up.

• 1:11:48Ryan Sean Adams?

  It's so funny, Ben, just from a like a vibes perspective, like we're obviously we're very plugged into the Ethereum community. I just put a, I tweeted this out last week, which is like, I have not seen, I've seen ETH sentiment this bad in crypto two other times. And the one time was after the DAO hack in 2016 and the other time was like 2019, like December. It felt like they're just like ETH would never recover. ETH was just gas. It was just like destined to fall to zero, like in comparison to Bitcoin. And like now, now in 2024. So the vibes line up with that as well.

• 1:12:28Speaker 00

  I just want people to know, like, you know, if you've been holding on to Ethereum and you're looking at the analysis, like, don't pretend like I know what the market's gonna do. I don't, right? And again, I'm, it's more of like a, if this happens, then just know it's what happened last cycle. It's not, this has to happen because me, me saying this has to happen has got me into trouble many, many times. So I'm not saying it has to happen. I'm just saying, look, if by the end of the year ETH USD falls below this, you know, kind of like it did right there, then it would really just be playing out like it did in 2019. Furthermore, one thing to consider, right? We've, we've seen ETH Bitcoin dropping basically every month for how long now, like every quarter for how long now?

• 1:13:09Ryan Sean Adams?

  Right.

• 1:13:10Speaker 00

  ETH Bitcoin last cycle, it bottomed right here, right after ETH USD fell below that trend line. So if ETH USD does fall below this trend line, right? And it occurred after rate cuts, right? It occurred right after rate cuts. If it does, that might be the ETH Bitcoin bottom, right after it falls below there. And then it could pick back up as soon as, as soon as Bitcoin does.

• 1:13:34David Hoffman?

  Ben, I want to cross-reference something that you said and tie a bow on the conversation. Going back to the idea of like the ETH BTC ratio discovering some equilibrium and kind of just like staying there. And then also about like proof of stake, the merge, you know, ETH productivity also being more new in the chart than rather than being part of the chart as a whole. How do those things actually square up? Because we have the the lower highs and the higher lows, but we also have these two new like functions in the ETH value accrual mechanism that actually are not related to the previous highs. And so I'm just wondering how you kind of can square those things because we have the the converging triangle,

• 1:14:17David Hoffman?

  but we only have so much data about the actual strengthening of the Ethereum fundamentals in like the last 18 months or so. Do you think that that means that we could set higher highs than what the actual like wedge is alluding to? That is my hope.

• 1:14:33Speaker 00

  I mean, like, anything's possible. I mean, you're not gonna hear me say it's not possible because I've seen some crazy things. I mean, I I remember seeing when ETH almost flipped Bitcoin in in in 2017. It was actually in mid 2017. I think a lot of people think it was back in in January 2018, but it was actually in the summer of 2017 Ethereum almost flipped Bitcoin. It came really close. And that was why that was actually where the flipping came from because it actually almost flipped it.

• 1:14:59David Hoffman?

  Right.

• 1:14:59Speaker 00

  And ever since then, it has, it was actually this top right here, right? It was this top right here in June 2017 is where it almost happened.

• 1:15:06Speaker 00

  Look, my my base case is is gonna be that it it like that it's convergent to a fair value. I get the argument that, you know, it's deflationary now and it didn't used to be and it's proof of stake now and it didn't used to be. But I think maybe the biggest counterpoint to that thinking, and I'm not saying you're wrong, right? But I would say the biggest counterpoint could just be that it's not like, like, there has been also improvements with Bitcoin, right? Like the Bitcoin from 2019, when there were no ETFs and and there was really no, I mean, there weren't even, I mean, now there's also ordinals and, you know, there's other stuff going on in Bitcoin. That stuff.

• 1:15:46Speaker 00

  In 2019, Bitcoin in 2019 is a lot different than Bitcoin in 2024, right? So you're not comparing the fundamental improvements in Ethereum to what Bitcoin was in 2019. We're comparing it to what Bitcoin is today. And the reality is, is you know, the ETF flows for Bitcoin were a lot better than the Ethereum ETF flows. And now that might be because it was just a risk on environment when they were launched as opposed to Ethereum. It was kind of a risk off environment. I don't know, but my only comment would just be that it could just be simply that there's also things that have improved Bitcoin over the last few years. So you're not comparing Ethereum to Bitcoin in 2019, you're comparing it to what it is today.

• 1:16:23Ryan Sean Adams?

  Ben, if you are a maxi of any type, you're definitely a chart maximalist. I'll say that, and I think that is a very valuable lens on the world. You know, David and I kind of like look at your fundamentals, the community, the projects. We don't often look at charts in the in-depth way that you do. And I think that provides some great value to the analysis. We spent most of the conversation so far talking about like where we are currently in the cycle and where we have been. Let's talk about the second half of the bull market. So let's say we get monetary policy in our favor. What happens with the quantitative easing phase of the bull market to these prices?

• 1:17:01Speaker 00

  Yeah, so my thinking here is that, so here's the logarithmic regression band, right? My base case is that if it, if, if, you know, I was assuming it's going to stay around 2K for a little bit longer. But if it does drop down here, my base case is that it will get a big bounce out of it in 2025.

• 1:17:24Ryan Sean Adams?

  We're talking about Ether here, ETH price, yes.

• 1:17:26Speaker 00

  ETH USD, yeah, ETH USD.

• 1:17:30Speaker 00

  That would be my base case at this point. I know some people are calling for it to go, you know, to just go to zero, right? But I'm still in the camp that it's like, you know, it could be like that 2016 move, that, you know, that 2015 move. This, by the way, the 2015 move was also in Q4, right? So it was in Q4 2015, Q4 2016, Q4 of 2019, also Q4 of 2018, right? So a lot of times when it goes down here, it's in Q4 of whatever year it's going to. So base case is that it will come down here. I don't know how low, okay? So don't like squint on here and try to see like where it's going to go. Again, I don't know. And also, by the way, the regression line is moving up.

• 1:18:13Speaker 00

  So like what it is today is going to be different than what it is a month from now, two months from now, three months from now, et cetera. And so my base case is that it'll, it'll come down here and then it'll get a, a, a move out of it. And look, the optimist.

• 1:18:28David Hoffman?

  That's pretty low.

• 1:18:30Speaker 00

  Yeah, again, I don't know if it's going to go that low. Actually, my base case right now is that it, it just goes home. Home is the, the, the middle part of this trend line. So it would, it would actually technically be like, okay, look at, look at 2019. Ignore the hard landing for a minute, right? Ignore the hard landing. This low here was a higher low or is a higher low than what it had in the bear market year. So it was a higher low. So you, so you could have something similar, right? Where it ends up putting in a, a higher low. And a lot of people think it might go to a, a lower low, but it might just be like 2019, where it ends up being a higher low. And everyone could be like, oh, well, now you have a recession and a hard landing. But you know, there's, there are, there's a chance you get a, a soft landing. So again, I don't know exactly where it's going to go.

• 1:19:15Speaker 00

  I would say that if it goes down there, it probably wouldn't spend very long down there. Right? I mean, um, the last.

• 1:19:21David Hoffman?

  Liquidate some people and get out of there.

• 1:19:24Speaker 00

  Right? I mean, the last two times it went there, I was only there for like a month, if not even that, right? A couple of weeks, if, if that. So if it does, I, I think it would be relatively short-lived. And then I would guess that it would get a big bounce out of it in early 2025. Kind of like, kind of like it did over here in 2016, kind of like it did right here in, in early 2020. That would be my, my base case. And look, it, it could certainly go to all-time highs in, in 2025. My, the only, the only way that it wouldn't, in my opinion, is if there's a, a nasty recession. But I would actually contend that you could even have a recession. And still theoretically go to all time highs.

• 1:20:08Speaker 00

  So that sort of stuff is possible. As far as exactly where it's going to go, I have absolutely no idea. You know, absolutely no idea. I'm not going to just put out a price prediction on how high it could theoretically go. I would just say, well, let's see if that plays out first. Right, let's see. Like, there's a chance that it might not even go below this trend line, you know? And it might play out differently than it did last cycle. I mean, the market always likes to keep us on our toes. So I would say if it comes down here and it looks like the Fed's turning the money printer back on and it looks like ETH Bitcoin is in an uptrend, then I would say, I don't know where the high, I don't know where the top's going to be, but I would certainly want to

• 1:20:53Speaker 00

  be bullish on Ethereum at that point. And no idea where it actually tops out.

• 1:20:58Ryan Sean Adams?

  Okay, so say we have a bullish 2025. Let's say the recession is either delayed or just like not so bad or something like that. What does 2026 look like? Is that, you know, like, how does that analog to the four year cycle? Are we in this 2026, you know, 2021 or something like this? I guess it's not really four years apart, but yeah, what does that look like?

• 1:21:21Speaker 00

  My guess is that 2026 would be a bear market, honestly.

• 1:21:24Ryan Sean Adams?

  Oh, we're back to the bear. Okay. Full cycle. Too soon.

• 1:21:29Speaker 00

  But I don't know. Look, I don't know. I really don't. I mean, look, 2014, 2018, 2022, all midterm years, all bear markets. There's actually one, there's two analogues that might be relevant in thinking about how this could play out. One of which is actually what happened with the S and P in 1980 and 1981, and the other one's from 1946 to 1949. So just briefly, in 1981, and the reason why the 1980 to 1981, I'm bringing it up is because it was also coming out of a period of high inflation. Right, it was, there was a high inflation back then. And what happened was the market, right here, you see the sell off, the sell off right here in the election year?

• 1:22:13Speaker 00

  It was, it was a recession, right? It was a recession, but you see, it was very short-lived, right? It was very short-lived. And actually, the better way to look at it would probably be over here. So I'm going to pull up this chart, or actually, let me pull up.

• 1:22:29Speaker 00

  Let me pull up a, I want to get it with recessions and everything like that. So let me just go to, let me just add it really quick. Just give me a second. So I'm just going to go to the macro side. We're going to overlay recessions. And you can see with Bitcoin, there's only really ever been one. But if we go over here and we add in the S and P 500. And then what we're going to do is we're going to get rid of Bitcoin's price. You can see that in 1980 to 1981, like you see that little, that little recession right there. And then there was a, there was a longer recession later on.

• 1:23:09Speaker 00

  So you could get something like that where like, you know, Ethereum does this, like it sort of drops into the end of the year, rallies up, sets new all time highs in 2025. And then I, you know, I don't, I'm just sort of going to the end of 2025 and then sort of bleeds again into a recession, right? Kind of like 1981 and then, and then sort of keeps going up from there. And that would be a way that it could continue to follow, right? The logarithmic regression trend line, right? Where it just, you know, it checks back in with it every so often, but it's still generally trends higher. The other analog is 1946 to 1949. And the only reason I bring that up is because that was also during a period of high inflation,

• 1:23:54Speaker 00

  all the money printing that followed, that was in World War II. And you know what this reminds me of? This chart right here, it reminds me of, of the altcoin market, actually. Because if you, if you actually, again, if you, if you take a bar pattern here and, and then just overlay that, this would be the more optimistic view. Because, you know, instead of getting a recession in, say, 2026, if there is a sort of a, a one here at the end of 2024, if you look at the altcoin market.

• 1:24:23Speaker 00

  And this is the 1940, this yellow line here is 1946, 1949 S and P. You can kind of see like how similar it is, right? It is really similar. And so, you know, if there is, and I'm not, I've not lined it up perfectly, but you know, I think you could kind of see it, right? If it does follow suit, you could see the altcoin market sort of sell off, you know, like into the, into sort of the end of the year, and then bounce into, into 2025, and then that just is the low, right? That is the low.

• 1:24:54Speaker 00

  And, and, and then you go up from there. So that's also, I think, a, a relevant, a relevant comparison.

• 1:25:00David Hoffman?

  Ben, you frequently bring up the monetary policy of the Fed and QE and money stuff. What, how do you weigh the presidential election? Much less related to the value of the dollar, but still it kind of seems to be every, everyone's focus in the moment. Like, what are you thinking about with the US election as it relates to the charts?

• 1:25:20Speaker 00

  Yeah, well, I mean, normally, as I said earlier, right? If, if the incumbent is not running, the, the stock market normally does poorly in September and October. And actually, this is going back a long time. If the incumbent is running, the market generally trends up into the election. So market, so basically incumbent not running, market goes down into the election. If the incumbent is running, market goes up into the election.

• 1:25:43David Hoffman?

  Why is that?

• 1:25:44Speaker 00

  Because of uncertainty, right? When the incumbent is running, it normally, the incumbent usually wins. Except for when there's like, you know, if there's a recession, the incumbent can lose. But normally, the incumbent wins just because,

• 1:25:57David Hoffman?

  Right.

• 1:25:57Speaker 00

  You know, as long as the economy is not absolutely crap, right? Then the incumbent can often win. And so when the incumbent is expected to win, it's not that that incumbent is necessarily better or worse for markets. It's just the markets don't like uncertainty, right? So like, if you look at, at sort of prediction markets for who's going to win this election, it seems like it's flip flopping every couple of weeks or so, right? And so I think the markets just don't like the uncertainty of is it going to be this person? Is it going to be that person? So what, and by the way, 2016 was an open field election, right? I mean, you know, it was Donald Trump versus Hillary Clinton running back then. And if you actually go look at, at monthly returns by the, by the stock market.

• 1:26:43Speaker 00

  In in 2016, you can see that August and September were red, right? I mean, and also October, right? So you can see that the S and P actually trended down into the election. And then in November, after the election, the markets picked back up, right? After we knew who the president was going to be. So I think my my base case is that, you know, there's this weakness going into the election because of uncertainty. And then following the election, and especially out in 2025, once there's more certainty, that's perhaps when when the markets can can start to pick back up. But that's kind of one of the reasons why I just think that, you know, when you when you don't have, when you when the markets are extremely uncertain about as to who's

• 1:27:27Speaker 00

  actually going to win, there's more, you know, there's more volatility in the markets.

• 1:27:30David Hoffman?

  Ben, your portfolio, what are you holding these days, man?

• 1:27:34Speaker 00

  So as far as crypto, I've basically just been holding Bitcoin.

• 1:27:37David Hoffman?

  Hundred percent?

• 1:27:38Speaker 00

  For my crypto portfolio, yeah, well, not 100%. It's like 99%.

• 1:27:43David Hoffman?

  I'll call it 100%.

• 1:27:45Speaker 00

  Yeah. Basically, what I did was in early 2022, I converted all of my alts to Bitcoin in like January, February. So I it took me a couple of months to really recognize that it was over, you know, from November of 2021. And then I traded my ETH to Bitcoin. It was actually really funny. I traded my ETH to Bitcoin right here. And I felt like

• 1:28:16David Hoffman?

  Right before 3O's capital got liquidated?

• 1:28:19Speaker 00

  Yeah, so I I felt like an absolute genius because I was like, all right, I'm trading my I'm trading my ETH to Bitcoin at 0.0749. I remember like, you know, putting that out 0.0749 and not all of it, but a lot of it. And I felt like a genius because it came down here. And I was like, I was like bragging, and I was like, oh, look at me. And then and then it ripped my, you know, had this face ripping rally back up. And and it really humbled me, you know? I mean, I think alone, the markets were like, yeah, the markets humble everyone. But, you know, basically, what I did was I think I converted a little bit here. I also converted a little bit here and then a little bit more up there. Sort of going into the merge and the reason why was because it just looked like a sort of like

• 1:29:00Speaker 00

  a secondary distribution phase almost. But now I think we're, you know, we're getting into sort of this phase over here where it's just trying to find the bottom and it's just waiting. So yeah, I traded my alt to Bitcoin, traded ETH to Bitcoin back then, and I've just been riding the Bitcoin dominance rally. Now, I do have some other things besides crypto. Are you curious in that? Are you just mostly interested in crypto?

• 1:29:20David Hoffman?

  I would say mostly interested in crypto. I have further crypto portfolio related questions.

• 1:29:27Speaker 00

  Sure. Yeah. I mean, it's basically just, uh, just, um, just Bitcoin and I have some stuff. I mean, I do have some ETH. Uh, you know, I, as bearish as I have been on Ethereum, I think it's foolish to not have at least a little bit in case you're wrong.

• 1:29:42Ryan Sean Adams?

  Well, but you have been bearish, but you're actually bullish on the ratio in the future.

• 1:29:46David Hoffman?

  Or at least soonish.

• 1:29:47Ryan Sean Adams?

  Yeah. I was gonna ask you, Ben, are you gonna get back to kind of the, the modern portfolio theory construction of the optimal ETH, which is 20%? Plus you have some catch up to do, my friend.

• 1:29:56David Hoffman?

  Only 20%?

• 1:29:56Ryan Sean Adams?

  You should get to at least 30 or 40%, I would say.

• 1:29:59Speaker 00

  Let me, uh, let me, let me help out here for a second with the, with the modern portfolio theory stuff. So back in, um, a couple of years ago, it would have called for higher Ethereum allocation. So basically if ETH Bitcoin does bottom out in Q4 or even, you know, even in September, right? It's possible bottoms out in September. In fact, it bottomed in September of 2019, right? So it's possible this bottoms in September 2024. Um, then a year from now, this number might actually be higher than 20% if Ethereum starts to outperform Bitcoin. But this number has just been continuing to trend down because ETH just keeps going down against Bitcoin, right?

• 1:30:38David Hoffman?

  Oh, I see.

• 1:30:38Speaker 00

  So, so, and so back then, I think it was closer to like 70, 30. Like if you had looked at this two years ago, it would have said 70, 30, and it's just slowly changed to 80, 20. My guess is a year from now, or maybe a year and a half from now, it'll probably say 70, 30 again. My, my guess though, for me is I'm probably not gonna go above 20% just because I'm, I, that's just where I feel comfortable.

• 1:31:02Ryan Sean Adams?

  Well, there's also, there's also pain in like exchanging one asset for another, at least in the US. Like you have, um, tax, uh, you know, taxes to consider in the analysis as well, right? So you have to pay cap gains on, on whatever. So that's a confounding factor.

• 1:31:15Speaker 00

  That's why I said, you know, if you haven't, you know, if people are looking at the ETH Bitcoin chart and trying to figure out if they should trade their ETH for Bitcoin now, I'm like, look, Even if it does go down a little bit more, you're probably going to eat all your gains in taxes, you know?

• 1:31:29David Hoffman?

  Right.

• 1:31:30Speaker 00

  So it probably, you know, I wouldn't, I personally, I wouldn't make the trade now. I would have made it, you know, I made it two years ago. Now I think it's time to sort of look for the reverse trade. And some people have a hard time with that because they don't want to, they don't want to trade in their Bitcoin. And I don't, I don't necessarily fault them for that. You can also accumulate Ethereum if it does go to the regression money. You want to accumulate, you can always just accumulate it with good old fashioned US dollars, right? And that way you're hedged either way. So yeah, those are my views. I mean, I think 80 20 is, and by the way, there's, there's two of them. That's the sortino ratio. If you look at the sharp ratio, it's actually 76 24. So it'd actually be a little bit more ETH.

• 1:32:08Ryan Sean Adams?

  Ben, this has been great. A lot of the charts you showed us are actually part of the, your ecosystem that you built today into the crypto verse, right? Which is like fantastic. I think there's a subscriber product for that too, which we'll include a link in the show notes.

• 1:32:21David Hoffman?

  People are into it. There's, if you guys haven't like gone on to the YouTube and started watching the video by now, then you must clearly just love podcasts. But there is, there's been this like dashboard that's been, has been just like cruising through, which he built a company at his company into the crypto verse. And if you want access to that, there's a discount code so you can get access to it in the show notes.

• 1:32:45Speaker 00

  Actually, one last thing, this is the Ethereum risk metric. And actually what's really cool is, is you can see like in 2016 and in 2019, when ETH Bitcoin broke down, it bottomed out between 0.3 to 0.4 risk, right? So right there, 0.3 to 0.4, and then in 2019, 0.3 to 0.4. So that's where it ultimately bottomed out. Right now it's a 0.5, 0.5 risk. So if in Q4 you see it between 0.3 to 0.4, that could be the low.

• 1:33:11David Hoffman?

  You're here to hear.

• 1:33:12Ryan Sean Adams?

  This has been great. Thank you so much for guiding us through the charts today. We appreciate your work and we'll see you around. Thanks for having me. Guys, we'll gotta let you know, of course, in an episode like this, none of these were price predictions. None of this is financial advice. It's all vibes. It's all vibes. It's vibes, but there are charts backing those vibes, as always, in crypto. You gotta know crypto is risky. You could lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot.