How low will Bitcoin go?

Overview

Benjamin Cowen analyzes Bitcoin's historical price action in bare markets, focusing on the realized price (currently $55k) and balance price ($40k) as key levels. He argues that Bitcoin typically drops below both these levels in midterm years before a durable bull market emerges, even when tops are formed on apathy rather than euphoria.

Key takeaways

Bitcoin's terminal price, calculated as 21 times the transfer price, has historically been a reliable top indicator during euphoric phases.
In midterm years, Bitcoin has consistently dropped below both the realized price and the balance price before establishing a durable bull market.
Even when Bitcoin tops on apathy rather than euphoria, it still tends to go below the balance price before a significant recovery.
Benjamin Cowen suggests the potential for a capitulation in the fourth quarter of the midterm year, following a period of sideways price action.
Historically, Bitcoin has underperformed gold during midterm years, suggesting gold may be a better investment during these periods.
Bare markets make fools of both bulls and bears, with significant counter-trend rallies that can mislead investors.

Chapters

0:00 Terminal Price vs. Realized and Balance Prices

The terminal price, calculated as 21 times the transfer price, has historically been a top indicator for Bitcoin.
The realized price and balance price are more important to follow in bare markets.
The balance price is equal to the transferred price minus the realized price.

3:25 Bitcoin Tops and Apathy vs. Euphoria

Bitcoin tends to top above the terminal price during euphoric conditions, signaling caution.
In 2019 and 2021, Bitcoin topped on apathy rather than euphoria, not reaching the terminal price.
Despite topping on apathy, Bitcoin still eventually went below the realized price and the balance price in 2019.

5:33 Historical Bottoms and the Balance Price

Historically, Bitcoin has bottomed when it capitulates below the balance price in midterm years.
In 2022, Bitcoin bottomed when it reached the balance price of $15.65k.
Benjamin Cowen suggests that every midterm year bare market has led to Bitcoin eventually going below the balance price before a durable bull market.

9:14 Inverted Yield Curve and Potential Future Scenarios

Benjamin Cowen notes the inverted yield curve that recently uninverted, drawing parallels to the 2019 scenario before the pandemic crash.
He suggests that Bitcoin will likely drop below the realized price ($55k) and the balance price ($40k) before a durable bull market.
He anticipates a potential capitulation in the fourth quarter of the midterm year.

18:27 Bitcoin vs. Gold in Midterm Years

Benjamin Cowen notes that Bitcoin tends to bleed against gold in midterm years (2014, 2018, 2022, 2026).
He suggests that putting money into Bitcoin in the early part of a midterm year may not be the best idea.
He recommends considering gold as a potentially better investment during this phase of the cycle.

Summary, takeaways, and chapters were generated by AI from the video's transcript and may contain errors. The video belongs to its creator, Benjamin Cowen.