In an interview I moderated at Real Vision’s “Crypto Gathering,” Peter L Brandt, veteran trader and publisher of the Factor Report, and Willy Woo, prominent on-chain Bitcoin analyst and author of the “The Bitcoin Forecast,” a market intelligence newsletter, discuss Bitcoin charts, trading, and how Bitcoin is evolving as an asset. They cover:

  • why Peter believes that, with Bitcoin, we are watching history in the making and what a “parabolic advance” has to do with that belief (2:02)
  • the differences in trading Bitcoin, which trades 24/7/365, in comparison to a normal asset — like a stock or commodity (6:36 )
  • Willy’s price target for the top of this bull run (8:37)
  • why Willy thinks there is a Bitcoin supply shock (12:12)
  • the reason Peter does not think Bitcoin is a bubble (15:09)
  • why Willy believes we are witnessing the birth of a new monetary system (17:23)
  • the state of Bitcoin adoption and how fast adoption will grow (21:24)
  • Peter’s crypto journey and why he measures wealth in Bitcoin instead of dollars (27:02 )
  • why Peter thinks we are prisoners of war to the fiat system and how Bitcoin fixes this (31:33)
  • what sort of volatility both Peter and Willy expect going forward from Bitcoin (33:43)
  • how Peter feels about the laser eyes trend on Crypto Twitter (39:35)
  • tips for aspiring chartists and traders (41:33)

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Episode Links

Willy Woo

Peter L. Brandt

Transcript

Laura Shin:

Hi everyone. Welcome to Unchained, your no-hype resource for all things crypto. I’m your host Laura Shin. Follow Unchained on Twitter @Unchained_pod where you can find all sorts of content ranging from my weekly newsletter to updates on my upcoming book, and a whole lot more. Today’s episode is a chat I moderated between Peter Brandt and Willy Woo at last month’s Real Vision Crypto Gathering. It’s a fascinating look at the original cryptocurrency from two people steeped in analysis in different ways. It was a great discussion and I am sure you will love it. Now, on to the show!

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Laura Shin:

Hi, everyone. Welcome to our panel, It Starts With the Charts. My name is Laura Shin, and I host the podcast and video series Unchained. I’ve covered crypto for nearly six years and was previously a senior editor at Forbes, where I was the first mainstream media reporter to cover cryptocurrency full time. Our two guests today are Peter L. Brandt, futures and FX trader and author and publisher of the Factor Report, and Willy Woo, on-chain Bitcoin analyst, and writer of the Bitcoin Forecast, a market intelligence newsletter. Welcome, Peter and Willy.

Peter Brandt:

Hey, it’s good to be with you, Laurie. Good to see you again, Willy.

Willy Woo:

Likewise, looking forward to this.

Laura Shin:

Peter, let’s start with you to get the big picture of what is happening with Bitcoin. You recently tweeted that Bitcoin is undergoing its third parabolic advance in the past decade. And I think you have been recently saying it’s even undergoing a fourth now. And you said to see that number of parabolic advances is extremely rare and even historic. Can you explain why it is so historic?

Peter Brandt:

Oh, sure. I’d like to, Laura. Your production folks have a chart that shows the parabolic advances in Bitcoin.

It is an accelerating market that is accelerating the acceleration. I’ve traded for 46 years. I’ve studied charts over, really, centuries. I’m kind of a chart nerd. I love charts. If somebody would have told me that there would be a market during my lifetime that would not only experience a parabolic advance, but experience four parabolic advances, not just on an arithmetic scale, but on a log scale, I would have bet my life against that. This is just unbelievable. People get caught up in the daily motion and the daily moment of Bitcoin without realizing we’re seeing a market advance unlike anything we’ve ever really seen before. To have four parabolic advances on a log scale in the course of a ten-year period is just unheard of.

I would challenge anybody to find a price chart of any asset, or any commodity item, that has gone through this. And so we’re really witnessing history. This is history in the making. This is something that history books will be written on. As a trader, it is just unbelievable that I can participate in a market that is going through a situation like this. This is just spectacular, it’s a spectacular ride. And everybody that’s involved in Bitcoin can know that they’re really taking part in history. Willy will better describe really the underpinning of this and what it really means in terms of real-world finance, and monetary systems, and so forth. That’s not my specialty. I’m a chartist. I’m a trader and a chartist. And as a chartist, this is just something so special that I really can’t even express it.

Laura Shin:

And just briefly, before we turned to Willy, can you also define a parabolic advance for the members of our audience who aren’t familiar with these technical terms?

Peter Brandt:

Sure. I mean, we all know what an uptrend is. A parabolic advance, Laura, is an advance that accelerates over a period of time. Not only does it go up steadily, but it goes up in an accelerating manner. We can find all kinds of stock charts that have had one or maybe two parabolic advances on an arithmetic chart, but to have a parabolic advance on a log chart is just spectacular.

Laura Shin:

And so, Willy, how would you put Bitcoin into a historical context as an asset?

Willy Woo:

Yeah, it’s an interesting one. I see Bitcoin more as a new technology rollout. We have never seen new technology being traded on a live market before. Bitcoin is the first time we’ve had that. The internet exploded onto the scene, and we had a whole lot of new technologies, but you’ll notice those startups that were forging those technologies were not listed on a stock exchange til very much later in their maturity phase. So here in Bitcoin, we’ve got from X number of months into it from 2009, we had the live price of Bitcoin. You just can see the crazy volatility in that market. And that is normal for a burgeoning new technology. Anyone who’s been in a seed-level startup will know how schizophrenic the ups and downs of that ride is. One day you’re on top of the world, and you’re going to conquer the world, and the next day all doom is here, and you’re not going to survive the next month. And we’ve had a number of these dips in Bitcoin, even though the first ten years, many years into it. What we’re seeing here, in my eyes, is this new technology finding price discovery in a phase that we’ve never seen before.

Laura Shin:

And Peter, just to draw out one more comparison between crypto and traditional markets. Much has been made of how crypto trades differently because it trades 24/7/365 across global markets and also because of how the movements are often affected by memes. And I wondered how you would compare the way Bitcoin trades to the way different types of traditional assets trade?

Peter Brandt:

Well, I guess I’d break that down in two ways, Laura. The one way is just from a historical perspective, the magnitude of the advance, the nature of the advance, and Bitcoin really can’t be compared. It is in a class by itself. Of course, we have some other crypto coins that have had a similar move, but I think, in my mind, Bitcoin is the legacy. It is crypto. Crypto is Bitcoin and Bitcoin is crypto. And obviously, we do have some of the other coins and altcoins and so forth. 

So we can’t compare it, but in some sense, we can. You know, it’s interesting, you worked for Forbes. The editor of Forbes in the 1920s was a guy by the name of Richard W. Schabacker. Schabacker, in 1934, published a book that lays out the classical charting principles that chartists use today. He was the author of classical charting. 

And so the types of chart construction that he wrote about 1934, we see on a regular basis in Bitcoin: rectangles, head and shoulders, trend lines. All of those things not only apply to Bitcoin but really characterize Bitcoin. As a classical chartist, I think Bitcoin’s the purest market there is. It complies with what I know to be history in terms of classical charting, but at the same time, from a broader picture, from a historical picture, it’s one unto itself.

Laura Shin:

All right. So now, let’s turn to discuss this current cycle, which I think in some ways has surprised some Bitcoiners, even at the same time that they knew all along it would happen. And Willy, in one of your recent newsletters, you wrote, “Bitcoin is undergoing the largest supply shock in its history. The steepest price rise seen so far in ’21 has been supported by strong fundamentals.” And then you wrote, “my top macro target has now increased to 300K, and previously it was $250K.” Can you elaborate on what you meant there?

Willy Woo:

Going back to the supply shock, we’ve just never seen, in the history of Bitcoin, so much of the coins being scooped up and bought and locked away by very strong holders of the coin. We can see this from tracking the flows of coins out of the exchanges — where typically people speculate or buy and sell their coins. They have a set inventory, some of which is allocated for speculation. We’ve just seen an unprecedented amount of depletion of their inventory. If you look back in the 2017 bull market, we saw like a five-month depletion of inventory, and that was enough to propel the bull market in 2017 right up to the $20,000 from what initially was about $1,000-$1,500 when the inventory depletion ended.

And now we’re kind of in this zone of 11 or 12 months of inventory depletion. We’ve not seen this before. You can look on-chain and look at the holders, and you can see the wallets that the holders… the behavior of the wallets by the holders. And there’s a category that we term illiquid. These guys are just buying and accumulating without any history of selling. And these guys are just hoovering up the coins. So there’s a real supply shock. There are less and less coins each week that goes by that are available to be bought. Obviously, there’s a mismatch between demand and supply that has launched the price vertical. And, for some technical traders that do trade indicators on the price fluctuations, they’re all screaming overbought, overbought, overheated. Whilst if you look into the ledger and see the demand and supply of the coins by fundamental investors, you can see that it’s fully supported.

And so I run a very simple model. It’s a mean reversion model, which is, in simple terms, a moving average on the market cap — an all-time moving average. You can use that to predict tops. It has protected every top in Bitcoin history. Currently, that top target is launching upwards. At the start of this year, January, it was zoning into an area of $200,000 or $300,000 by December. December of this year is typical of what we would expect for the end of a bull market. If we get there — not saying that it will happen this time around — but if we do top out in December, that target now is lifted to above $300,000 because of the trajectory of the upper band of that moving average.

Laura Shin:

Wow, that’s really exciting. And so earlier, when you were talking about all these holders who are buying, moving the Bitcoin off exchanges into wallets that do not really have a history of selling, who do you think those groups or people are?

Willy Woo:

It’s very unusual. Normally, what you expect is as more retail comes in — more moms and pops and ordinary people off the streets — they tend to buy their coins and hold them on their exchange wallet because it’s just a very easy experience. So we’ve had this general trend of more and more coins being stored on exchanges, like the Coinbase’s of this world — it is a very easy user experience. But in this particular cycle, we’re seeing huge amounts of coins move off exchanges and being locked away under their own custody. That’s a sign of institutional players coming in and high net worth individuals. They tend to store their coins under custody and in cold storage. So those clues, and just the sheer size of the purchases, you can see the size of the withdrawals coming out from the exchanges; they just really point to institutions scooping up coins. So it’s very unlikely it’s anything else but the institutions.

Laura Shin:

And by that, you mean like Tesla and MicroStrategy —the corporate treasurers — that are buying Bitcoin, or are there any other institutions you would include in that bucket?

Willy Woo:

Yeah. Institutions are kind of… there’s kind of a menagerie, really. In simple terms, they’re just coins held by a custodian for a whole lot of people, whether that’s you know, Tesla and the shareholders or fund managers. So it’s looking like we’ve got hedge funds coming in. We’ve got the corporate treasury led by Michael Saylor and MicroStrategy. And now, you know, the latest is being Tesla. But you know, we’ve also seen announcements that it’s pension funds. Grayscale, I’ve seen they have had a lot of strong buying from there. I’ve just seen that New Zealand has announced that one of their funds for pensions bought into Bitcoin in October. So yeah, across the gamut, there are all sorts of institutions buying right now. It seems like the word is out that Bitcoin is now a valid investment alternative to gold in these times.

Laura Shin:

And so, then, if we were to zoom out and kind of look at Bitcoin in its trajectory of, let’s say like historical adoption, you know, like if we were to look back 50 years from now and look at this moment in time, then where would you both say Bitcoin kind of like is currently in its historical adoption period? 

Peter Brandt:

Well, I have a question, Laura. I’d like to ask Willy because his comments I found really super interesting because I don’t really dig into what happens to coins as they flow into the blockchain, or they get taken out of exchanges. That’s his expertise, not mine. What I have noticed, looking at the exchanges, in terms of the bid-offer spread: what happens on the bid and what happens on the offer side is. Oftentimes when a market blows up, and we hear some people say, this is a big bubble, we’re blowing up, Bitcoin’s a bubble. There are characteristics of a bubble. One of them is that markets go up fast with bids. There are aggressive bids that take place in the late stages of a bull market that kind of blow it off. And all those bids come in and chase the markets FOMO.

What we know is retail FOMO takes place, but then the whole market. This market is very different. What I’ve noticed is the market’s not necessarily going up on aggressive bids. What’s happening is an offer comes in and just immediately gets taken. And, so, this nature of the bull market is such that, what I see, is whenever something is offered, it’s just taken immediately by somebody who’s willing to take the offer. So rather than going up on bids, it’s going up on higher offer prices, higher and higher offer prices. That may sound like there’s really no difference to people who are unfamiliar with how markets behave. But for me, as a technical trader, that’s really significant because it shows me that there are big names — there are big, deep pockets that are saying, we’re not going to chase the market, but whenever something gets offered, we’re willing to take it. And that kind of resonates very well with what Willy described.

Willy Woo:

Yeah. So you’re saying that whenever there’s a big offer on hand, large enough for a very large purchase to come in, they’ll take it because there’s not a lot of offers that size on the table, and they’re just waiting for whenever there’s an offer, they’ll take it. Yeah. That’s interesting.

Peter Brandt:

I have another question I’d love to ask Willy. Willy refers to Bitcoin as a technology, which it is. But the interesting thing for me is, in those cases, where I have seen an asset or a market or a commodity, have the kind of parabolic advances that we’re seeing, what they have been primarily is currency markets. They’ve represented the destruction of a currency and a monetary system. They have been the currency against the dollar. So, in other words, how many of these currencies can $1 buy. We saw it in the German mark in the 1920s — your production guys may have a quick chart of that. It’s not a very good chart, but it does show it. We’ve seen it in third-world currencies in Africa. (pointing to chart) This is marks per U.S. dollar in the 1920s.

And what it shows is we went from kind of late nineteen-teens of five, six marks per dollar. And then we go into really the destruction of the mark at that point, which was obviously connected with the previous political structure, but we saw the mark become worthless. And we’ve seen that with third world currencies, African countries, Latin American countries. And so, when we look at Bitcoin beyond just being a technology, but being a form of money, the only other charts that I can see when I look back in history that have a similar parabolic move have really been currency charts, that have been the destruction of that currency. I’m just curious as to how Willy relates to Bitcoin also as a form of money — as a monetary system because monetary systems are the only places where I’ve seen charts that have similar parabolic moves.

Willy Woo:

Well, that’s absolutely fascinating, Peter. I look at this chart, and I go, yeah, that’s exactly right. I’ll flip those currencies, and I’ll go U.S. dollars per Bitcoin. And that’s essentially what we’re tracking. This destruction of fiat currency as Bitcoin starts to suck in that monetary base. I think what we’re witnessing here is the birth of a new monetary base — which is no longer based on fiat, it’s based on consensus agreement that this has value, and this thing is a value that can be stored online and digitally moved across borders within seconds. It’s internet-age technology. It’s a new internet-age monetary standard. And it’s one that is going to keep up with the world’s needs into this digital age. If you think about what happened with the industrial age, we moved from essentially commodity money, you know, gold, silver, copper, and we moved into trading currency, like paper, backed by a commodity.

And that was really to keep track of the industrial age economy. Obviously, it’s too slow to ship bars of gold around the world. So now we’re in a digital age. It’s very similar in that fiat is just so slow and broken. If anyone thinks fiat works well, they’re only using it in a local stance within the country. Once you start to make cross-border payments, it’s very slow. It’s very painful. And so we’re in this phase, I think, that we’re moving and crossing deeply into a digital age. 

To go back to the first point that Laura posed, you know, where are we now? If we were to peer into the future and look back, we’re currently just barely above 2% of the world having exposure to Bitcoin. Even fewer are actually using it to transmit funds. Most people are holding it to get exposure, but it’s growing. This thing has been growing for 11 years, non-stop — doubling every 12 months. So that puts us at 4%, then 8%, and so forth. And we’re currently on track for 1 billion people having exposure to Bitcoin as an asset class in the next four years. So by 2025, one-eighth of the world population will have exposure to this monetary base. 

So it’s happening very, very quickly. And in terms of the internet era, like where we are right now, it’s the equivalent of 1994 for the rollout of the internet. And I believe, from memory, someone might be able to pull it up… In the next four years, we’re going to teleport into 2005 for the internet rollout equivalent. Which, you know, if you think about that: like ’94 had very slow, dial-up internet. Very few people used it, but it was growing quickly. And then 2005, we had everybody on Facebook. The iPhone was just around the corner, and the internet was available to everybody on the planet if they needed it. So yeah, the next four years are going to bring a lot of changes to the financial system… that’s for sure.

Laura Shin:

And why do you think that timeline is being sped up for crypto? Is it because we already have the internet built now? Is that why you were saying this leap of 10 years in the internet era is going to be accomplished in five years in crypto?

Willy Woo:

Yeah. New technologies are built on older technologies. The propagation of information goes faster and faster. So, you know, if Bitcoin could be built on sailing ships and we could transmit transactions on a piece of paper, which you can actually do, obviously it would take months for that piece of paper to transmit to another continent. But, now, we can transmit that in milliseconds across the internet. And so that’s speeding things up. You’ll see if you plot the progress and adoption of new technology; we call this S-curves cause that marks the rate of penetration. They are slow at the start, then they go exponential, and then they kind of taper off as you’ve reached saturation. Those S-curves are long and flat and slow for the earlier technologies like radio, then T.V., and then we had like, you know I guess, we have mobile phones and the internet. And so each curve became faster and faster. It’s a natural trend that this technology, Bitcoin, expands faster. It’s probably the biggest thing that’s happened to money since the invention of money, I would say. It’s not just a one and a hundred-year thing. It’s a one in humanity event.

Laura Shin:

Yeah, I would agree. I’ve also heard you make comparisons to the way Bitcoin trades or the way people invest in Bitcoin to shares of internet startups. Can you talk a little bit about how those are similar and/or different?

Willy Woo:

I think I kind of covered it earlier. The trajectory is very, very upward, like a seed investor. I’ll put it this way, when Bitcoin was around, even say four years ago, and the times before that, the first six or seven years, everyone said this thing is not real, it’s a bubble — it’s going to pop. And no one gets 10,000x return in such a compressed amount of years. Like that’s a tulip bubble. But, anyone in technology that has invested in seed level startups with a valuation of maybe, typically a seed level startup is valued at $6 million at the start, and if they go IPO and then become the next, you know, Uber, Amazon, or, so forth, you are now talking in the tens to a hundred billion dollars of valuation.

That journey takes around six to ten years. Right there in new technology, investors at the seed level are very comfortable with the idea of getting 10,000x on a winning technology. And that’s essentially what we’re seeing with Bitcoin. Those types of gains are very, very routine in new technology rollouts. The only difference right now is that Bitcoin just so happened to have a publicly tradable price that everybody could see and retail, anybody in the world, had access to buy that asset right at the get-go. And interestingly, the institutions, the smartest money in the room, they weren’t allowed to because regulatory barriers prevented them from actually directly buying the asset. So it kind of flipped the whole thing on its ends with Bitcoin because it was opened to everybody else except the big money. So I find that very interesting.

Peter Brandt:

The interesting thing for me, Willy, was when I was first involved, and you were involved in Bitcoin long before I was. My involvement began in early 2016, when the founder of Real Vision, Raoul Pal, sent me a chart of Bitcoin. You know, I get an email from Raoul that has a chart of Bitcoin, it’s like February or March 2016, and Raoul says, you’re a chartist, Peter, what do you make of this thing? And I looked at it, and I had heard about Bitcoin kind of in the periphery — I understood it existed, but I didn’t know much about it. I thought it was just currency money that would become another beanie baby or pet rock. And I looked at the chart that he sends. I go, wow, this is crazy. And that’s when he introduced me to his exchange. I opened an account. I get involved in Bitcoin. It’s like March, April of 2016. Initially, for me, Bitcoin was a chart.

Then Bitcoin became just a trade. And, as a trader in the U.S., I’ve always measured wealth based on U.S. dollars. I want to collect U.S. dollars. I want to look and know that my U.S. dollar worth goes up at a steady rate and maybe have some jumps along the way. And so Bitcoin was just a trade. I think, really, within the last year, my mindset has really changed in that Bitcoin is where I would have wanted all my wealth at some point in time. I really look at it very differently because, if my goal as a trader has been doing to accumulate U.S. dollars, what that now tells me is I had a wrong goal because my goal was to accumulate the weakest asset in the world, the most depreciating asset in the world, and that’s U.S. dollars. And so, my mindset really changed within the last year in terms of moving from Bitcoin as a trade to Bitcoin as a measure of wealth.

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Laura Shin:

And Peter, you’ve also kind of been talking about the way that, I think, at least in my mind, what you’re saying is that Bitcoin is maybe maturing a little bit. You tweeted recently about what you were calling an orderly bull trend, saying that the 2015 to 2017 bull cycle saw eight corrections exceeding 30%, two of them exceeding 40%. And then you wrote, “with the exception of the March 2020 smash, the December 2018 to present bull trend has been extraordinarily orderly so far.” So what would you say is the significance of that?

Peter Brandt:

Oh, I think Willy pointed that out. We have major institutions, major trading operations, and investing operations that are just willing to take offers off the table. And, as a result, of course, no market goes straight up day after day, week after week, month after month. So we have volatility. We’ve had close to a 30% or right around a 30% correction at one point. Another correction of 26%. That’s not the end of the world. Markets have corrections. That’s what markets do. They go up. They go down. The important point is which way they are going on a more sustainable basis? 

You know, to me, I’m starting to look at Bitcoin, as we all talk about the evil central banks. You know, everyone’s talking about the central banks destroying the monetary system, and I’m starting to look at Bitcoin as a POW asset. And that could be the money of the people, the people’s money. And so, Bitcoin is really the currency of the world, of the world population. It’s a POW. We’re prisoners of war to the central banks, and all of a sudden, Bitcoin is our own answer to fiat currencies. And I think that’s reflected in the fact that there’s so much interest to actually own that currency.

Laura Shin:

I love that, actually, because there is actually a Bitcoin-specific term PoW, which stands for something very particular to Bitcoin. So at first, I was like, wait, what is he talking about? But we don’t have to get into that. It has to do with mining. But anyway, Willy, what were you going to say?

Willy Woo:

I was just saying that, yeah, it’s like really going back to the first chart of German marks against U.S. dollars. We’ve been trading to stack more German marks in a time of hyperinflation versus stacking more Bitcoin. I think that anyone who’s been in the industry long enough starts to have that sort of mindset shift. Suddenly you realize, wow, this is real. This is the new monetary standard. That’s the measuring stick in which we start to measure everything. And I mean, certainly, when I get U.S. dollars or any kind of fiat, I feel like this thing’s a hot potato. It’s not going to be worth much. So we had like 25%, 30% more U.S. dollars printed in the last year alone. So I think most people are really in a mode of really parking it somewhere, whether it’s real estate, stocks, or Bitcoin.

And to that point, there are about $500 trillion of assets in the world that people are parking money into as a store of value. There’s this scale of capital that Bitcoin’s going to take bites out of. And, you know, we like to call Bitcoin this digital gold, like it’s this really nice to understand a thing that traditional asset managers, traditional investors can grasp. But, really, gold is only at $10 trillion, and only $4 trillion is useful financial means. Bitcoin’s already a quarter of the way there, and it’s not going to stop. You’ve got like stock markets that are near a hundred trillion dollars. You’ve got real estate, which is like $220-$250 trillion. Most people that hold these assets are not looking for a house or two or five to live in. They’re holding it as a store of value.

Once you get a glimpse of something that is easy to access, like Bitcoin, without the trouble of holding assets like real estate, it’s going to take a big chunk out of that. So there’s no way Bitcoin is gonna stop at the market cap of gold, which is $10 trillion. It’s going to go a lot higher, which means that we’re going to be going into the millions of dollars per coin, which is kind of hard to believe right now. But if you look at the sheer fundamentals and stretch it off over the long term, that’s how cheap Bitcoin is today. And that’s why the institutions are buying it, and they’re buying it because they think it’s going to be as good as gold, but it’s going to go a lot higher.

Peter Brandt:

Another question on that, Willy… When I look back at Bitcoin as a student of price, you know, we’ve seen big run-ups follow up by 80% to corrections. We’ve seen that in the previous three parabolic advances that were violated. We saw Bitcoin setback between 80% and 90%. And I guess my own sense is that we’ve seen the last 80% correction. And I’m just curious, let’s say we go to your $300,000, $400,000 mark by the end of this year. What is a big correction in the future as we look forward and might assume that Bitcoin will take a rightful place as a global reserve currency, so to speak, or global reserve asset, so to speak, what kind of volatility do we see five years from now, ten years from now?

Willy Woo:

That’s a really good question. Once we top out, I’m not sure how far we’ll fall back this time under the current situation. We typically see you know, an 80% pullback. $300,000 plus 80% pullback kind of brings us down into the $1 trillion range. And I can see right now the price discovery of Bitcoin is very, very strong in this zone, around $1 trillion. You can look at that in terms of the price in which coins last moved on the network. It’s really clustering strongly in this zone of $1 trillion. And you look at all the past bull markets, you can see as you roll back the clock, you get this very strong cluster at the base of the bull run, which is what we’re forming now.

And then we go really high. And then it’s almost like when we top out, we come back to revisit that very strong cluster, bounce off that as a rejection of that low before we move into the next bull market. If that pattern plays out then, yeah, maybe we go to $300,000, we come back down to this zone here. But I’m not sure. Like I kind of visit this stuff one month at a time, quarter by quarter, sometimes, just on what I’m seeing through demand and supply on the ledger. 

There is a general trend downwards, and it isn’t a crazy predictable trend downwards in volatility. So, I think, actually, you know, like we’re due to start to drop down into the lower volatility range that well, I don’t have the charts right off of hands, but I think it will surprise a lot of people how low the volatility can drop. And beyond a certain size of capital base volatility drops to zero because it becomes the new monetary base. If it does become this unit of account, obviously, there are different variations on that theme. It could be kind of a basket of assets that becomes the new monetary base, but ultimately the velocity will drop very, very low because of the new monetary standard — or part of it. 

Laura Shin:

Peter, I wanted to ask you about something that you wrote on Twitter, where you were criticizing the people who have laser eyes on their Twitter profiles, and you call that the single most bearish factor for Bitcoin. Why is that?

Peter Brandt:

I’m not bearish in terms of all of a sudden we will go into a bear market. What I’m talking about is… there are certain things that, as somebody who is an owner of Bitcoin, I know that people use the word HODLing. I just can’t go there in my mid-seventies. I’m not sure I can adopt the vernacular of the new technology or new monetary system. So I still refer to it as holding, the L before the D instead of after the D. But, yeah, over-enthusiasm on any market is always kind of a warning — not to turn from a bull to a bear, or to liquidate long holdings, or to liquidate an established position — but it indicates that it’s gotten a little frothy. And, all of a sudden, when I saw people who I respect on Twitter, as seasoned reasonable investors, all of a sudden with a new picture with laser eyes, I kind of go, well, let’s step back a moment here.

I even directly tweeted a good friend of mine who is really a fine investor and has been very, very constructive for Bitcoin for a long period of time. And just said, hey, redo your picture, will you please? It’s scary because the more people who put the laser eyes, you know, at least, the market is going to get choppy for a while, and it will stop going straight up. So I think we need to be alert for that type of thing when people start pounding their chest in public, I own Bitcoin, I own Bitcoin, look at me; I have laser eyes. That’s always going to be a sign that the market is going to take a rest.

Laura Shin:

All right. Yeah. I was just so curious because, obviously, that is something all the Bitcoiners are doing. And I thought it was kind of fun that you took a contrarian stance on that. So, to wrap up, I wanted to ask you, for the aspiring chartists in the audience, what particular metrics or trading patterns it is that you think are worth paying attention to and why?

Peter Brandt:

Well, let me start off by saying, I think Bitcoin charts extremely well, but it charts extremely well for somebody that wants to look at the forest and not the trees. Somebody who’s looking at one-minute charts, five-minute charts, ten-minute charts, I’ve noticed those are not really reliable charts. You have to look at Bitcoin, in terms of chart construction, at least on daily charts and not on weekly charts. You can’t look at it every day, every minute. You’ve got to really step back and look at it at a bigger picture. And that’s advice I would give somebody: don’t get so involved that you’re buying and selling Bitcoin ten times a day. Look at Bitcoin from a historical perspective. This is not something to be playing around with. It’s something to be owned. And so I think there’s a danger of people getting too short term in Bitcoin because, at some point in time, they’re going to get shaken out of their position.

And that’s what Bitcoin really has a period of strength. And so I think holding, L before the D, is the thing to do. But, for those who really are interested in charting, I would bring them back to the 1934 book by the senior editor of Forbes magazine, Richard W. Schabacker, who wrote the book “Technical Analysis and Stock Market Profits.” Excellent book, but it’s a great primer on the type of chart instruction I’ve seen in Bitcoin, which is triangles, shakeouts, trend lines, and the shoulders, and that sort of thing. By the way, I do have a chart ready that you have on the current outlook for Bitcoin. I just want to point that out before we end here. On that chart, what I’m really seeing is… I think, currently, Bitcoin, in this current Bitcoin bull market from a charting standpoint, we’re where the 2015 to 2017 bull market was in the April-May period of 2017. That’s kind of where we’re at. And that shows that I think we’re at that midpoint-pause, where, in 2017 ,Bitcoin swirled around for a month or two before we saw the final move up. You’ll note that the midpoint in 2015 to 2017 bull market was at about one-half, 60%, of the total move. If that’s true, really, that points to the type of price level that Willy’s talking about at about $200,000 plus is really where this market would take it… if this chart interpretation is correct.

Willy Woo:

Yeah. I kind of agree with where we are in that market. That’s really interesting to trade Bitcoin on any time cycle. It’s possible, whatever floats your boat, really. You can trade the small-time cycles to get a feel of how the markets work on a micro-level. Bitcoin is interesting because it’s the only asset in the world other than the other cryptos that have a blockchain, but it is actually the only one that has a blockchain that has capital flows that are organic. And so you know, I’ve partnered with Glassnode, and they provide over 300 charts, with 300 metrics, that measure different parts of the network and the whole industry — the capital flows going through it. And so it’s almost like an ECG that’s hooked up to this animal called Bitcoin.

And it’s a kind of a detective story of like, whoa, what’s happening here? Let’s check the whales buying: is it institutions? Whatever’s happening this week or that week, you can come down to a diagnosis, the probable diagnosis. And so that’s the new thing with Bitcoin: it’s that we have this open, transparent ledger where we can visibly see what’s actually happening. And then you can kind of translate that and make predictions or explanations of what’s actually happening with the price chart, which will then sort of express itself through technical trading patterns because traders are trading around these very specific patterns. So there’s fundamental demand and supply on the blockchain that is expressed through these technical trading patterns. If you’re trading Bitcoin, a full picture would be on-chain analysis with the technical and mating the two together. That’s the new thing within cryptocurrencies, really.

Laura Shin:

Yeah. And what I love about the way Willy, you do your analysis, is that you come up with really creative ways to describe it. Like whale spawning season, when you saw the whales coming in and buying up a lot of coins, or recently I noticed you have been tweeting about what you called the Rick Astley score, which I’m sure people can figure that out. But yeah, it’s very fun to follow your analysis for that reason. All right. Well, this has been so fun. Thank you both so much for coming on to the Real Vision Crypto Gathering.

Peter Brandt:

Thank you for having me, Laura. It’s always a pleasure to participate with Willy. I always learned something I didn’t know before, and this has been really different. 

Willy Woo:

Thanks, Laura. And it’s been an absolute pleasure of being on here with Peter. He’s an absolute legend. It’s great to be on here with Peter.

Laura Shin:

Yes, this has been great. All right, well, thank you, everyone.

Laura Shin:

Thank you so much for joining us today. To learn more about Willy and Peter, check out the show notes. This episode of Unchained is produced by me, Laura Shin, with help from Anthony Yoon, Daniel Nuss, Mark Murdock, and Real Vision. Thanks for listening.