Where we are in the crypto market cycle, with Lark Davis

Transcript

let's talk about this current cycle we've had um you know a good runup in 2023 we've had a really good runup so far the beginning of 2024 to start things off obviously at all-time highs now and Bitcoin not many other assets at all-time highs any of the big ones anyway but Bitcoin is where do you think that we're at in this current cycle and also as you answer that maybe you can just explain what do you think drives these Cycles as well so what drives the Cycles largely of course liquidity in the markets obviously and we had big liquidity Global liquidity bottomed in October 2022 FTX collapsed a couple weeks later that signal the end of the bare Market essentially which doesn't feel like it it's really weird but essentially if you really start to break

it down the bare Market starts at the top and the bare Market finishes at the bottom doesn't feel like it at the time right but that's realistically kind of what happens hindsight though it's not easy to spot obviously but liquidity really drives these markets and we've seen huge upticks in liquidity of course for cryptocurrencies risk appetites drive a lot of this Market crypto is not immune to macro situations either so this is all something you need to consider as an investor when you're looking at this space that we are definitely cycle driven we have very strongly connected with what's going on global liquidity markets risk attitudes in the markets because look at what happened to tech stocks we we've moved largely along with those because people

got back into a risk attitude right people went risk off for a while they sold tax stocks they sold crypto down risk on came back on in early 2023 because of the AI boom and other factors and everything took off again then of course Very specifically for crypto we were lagging behind tech stocks for quite a while then black rot comes announces the Bitcoin ETF play and everybody realizes because Bitcoin ETF been in application for a very long time lot compan has been trying for a very long time to get them but when Black Rock came the game changed because it is Black Rock now okay so that's what drives markets now where are we in the cycles look I I tend to look at about four approximate phases phase one is really the bottom of the bare Market that's kind of the the most

pessimistic time and the hardest time for people to invest but obviously the highest highest Roi best risk reward time to invest and I was saying this on the channel when Bitcoin was 18 19 20K I saying well guys what's what's the risk reward here okay coin is going to go much higher ethereum's going to go much higher you buy today what's your risk it's going to go down to the 20 30 40 maybe 50% Max Max right worst case scenario okay if you can hold through that then your upside is massive and if you don't buy and start averaging in at least at at these prices you're probably not going to buy lower either you're going to tell yourself you're going to buy lower but the problem is when prices go lower let's say you did get down to 10K like some people were calling for

well guess what as soon as you get to 10K guess what everyone starts doing oh it's going to 3K now and the goal posts keep shifting which is why dollar cost averaging is so effective putting money in on these very pessimistic times there blood in the streets and all that kind of stuff so that's phase one phase two this is when sort sort of broad accumulation starts happening markets are recovering liquidity is coming back into the market people start to make money on stuff again which started happening in sort of early to mid 20 March 2023 Pepe came out and stuff like that people made a bunch of money on that so these start of ear early movers in the space started making a lot of money people started getting interested in crypto again people started showing up again pessimism started to fade PTSD started to fail away a little bit

accumulation was the name of the game at that time so the accumulation phase essentially lasts from then when we started to see this real change in sentiment to when we start hitting new highs so arguably we just entered into what I see as phase three of the market where bitcoin's hit a new all-time high just barely but we're starting to hit back into price Discovery we're heading that direction ethereum still lagging of course a bit behind salana still a bit behind but we'll see these other major coins catching up as time moves on but we're starting to head in that direction so this is actually the phase where the biggest volatility happens the most money making happens and this really lasts until what I like to think of as phase four which is a very short period That's to get the heck out of the market

before everything collapses phase and that's of course typified by all the usual signals we want to look for the social sentiment signals whether it be you know Thai magazine New York Times posting front page articles with H's getting hilariously with crypto coinbase app and number one or number two or three position of all downloaded apps stuff like this a lot of technical things you can look at as well P Cycle top indicator MV rvz score hitting in the pink box a lot of stuff like this there's a lot more we go into maybe we don't need to do it right now but that's the selling phase and the selling phase face is actually short it's maybe 4 to8 weeks Max two to three weeks is a real sweet spot historically that's how it's played out maybe it's different this time of course famous last words but

that's how things generally play out now phase three where we currently are you're going to see huge markups start to happen so a lot of people will have missed the best entries obviously right if you're just coming now you're just buying crypto today for the first time or you're just paying attention again for today you missed out on a lot of the best prices sorry but they're not going to go back down there you're not going to pick up you know link for five bucks anymore you're not going to pick up Bitcoin for 20K anymore it's just not what's happening right now maybe there's a Black Swan event that everything goes to ship but nobody can predict that okay so from what we can see in the market structure-wise it's very very unlikely that you're going to get those kind of price points again however there's also

a time when massive money making happens because yes you can still buy fundamentally interesting coins that are going to have great potential yeah and you're not going to get a a 50x like you could have but you can still get a 10 or 20x which is not bad come on come on that's all right right not bad the one thing the one thing people need understand the crypto space is like 10x is amazing it's not not bad but the problem is a lot of people in crypto haven't really invested outside of crypto even like a 20% increase should be like is really good but in crypto it's like what the markets aren't even moving oh I know my Gold's up like uh you know 20% this year I'm like yeah let's go but one thing I want to say as well

about phase three is that it's the time in the market when very rapidly the risk reward scenario changes every dollar the prices go up is the more risk you're taking when you buy for less reward okay so that's something a lot of people need to understand and unfortunately the vast majority of people will actually enter in phase four which is literally the worst possible time to enter the highest risk time to enter and they basically just make themselves exit liquidity for everybody else who's been here if of course those people were remember to sell but during phase three there's lots of great opportunities still lots of great coins to lots of great gems to find lots of new launches coming lots of airdrops to farm lots of defi coins to farm lots of hot ecosystem plays to find lots of hot new token sales so there's

lots of stuff Market gets very frothy huge volatility it's a great time for making money but we got to remember phase four will come if you don't sell that's the problem phase four is when everyone's the most euphoric and it feels like the time where you want to put the most money in and this you see it all the time this is when all your friends start to come back in and they want to like put everything they have into it and often times people are like it's the hardest time to sell even though it's the time where it makes the most sense but hopefully people can wrap their heads around that let's talk about this cycle a little bit further so you think we're in phase three not the time to sell yet but maybe eventually or soon the time to start thinking about taking

profits still a lot of Roi to be made here at this point how do you think this cycle plays out you talked a little bit about a super cycle before you said that's definitely not the case that doesn't happen and anything really a lot of people have mentioned like an accelerated cycle because the ETF seem we've run up so fast in Bitcoin are you on that side are you on just a normal cycle as per usual is it a super cycle like what are you thinking this time around it's very interesting obviously there's very compelling cases they can be made for all three accelerated fouryear and super cycle essentially if you really want to dive into it crypto has been in what is essentially a giant super cycle just a very very volatile one so it doesn't fit the standard definition of what a super cycle is

because we have these 70 80 90% draw Downs in a lot of assets across the crypto space so it doesn't feel like you're in a super cycle but the reality is if had you bought Bitcoin for basic except if you'd bought that like one week when it was at 73k but basically anybody who's ever bought Bitcoin in the past is in profit right now at the time recording this video and that's pretty crazy to think about so prices just keep going up Fiat keeps being debased all that kind of stuff okay so that's one thing to keep in mind here but if you look at I think where the uh the overall trend is going and how the Market's rolling out I'm not super convinced right now by The Accelerated Cycle Theory I know people are going to like well but you know it happened earlier we

got a new Time new alltime high before the Bitcoin having yeah we did and that might lead to what I think could be a possible scenario which is a double top scenario you might think a double top scenario that sounds ridiculous it's exactly what happened in 2021 and it's exactly what happened in 2013 where we have a huge rally Big Top maybe get up to 90k maybe we get over 100k even that's where the first top for Bitcoin is we talk about Bitcoin as the price indicator because it's where it's going to be a general indicator of where the whole Market's moving right it's an easy guide post for us so maybe we do that happens then we have a huge correction in the market like 30 40 50% correction the kind of Correction makes everybody think it's over exactly like happened in 2021 exactly like happened in 2023 2013

sorry not I around 2013 investing in crypto but you can look back and you can see how the Market's played out so that's I think a real potential scenario where we have this early top and then a much higher top 12 months later or something like that that's a real possibility but my intuition is telling me that until proven otherwise we are still in a fouryear cycle maybe we get a double top scenario playing out but it's still a four-year cycle essentially where late 2024 2025 ah we're in 2024 now late 2025 you either are going to sell or that's going to be it and when that happens and here's the thing here's the thing people need to remember when late 2025 comes assuming again we get a four-year Cycle

Theory which I think is still the most compelling case for me personally I'm ready to be proven wrong and I will adapt my opinion based on what I'm seeing in the markets I don't want to look at the market and see what I want to hear from the market I want to look at the market and see what's actually happening in the market so if I see the signals that markets are looking like things are getting pretty cooked and that could just be the first top signal it's hard to say well it's going to be a tough one to try to analyze later on but late 2025 I think it really becomes that situation where it's time to get out of the market and maybe I will mid curve it and we really are in the Super Cycle and everything's just way more bullish and

all the these things that you're being told are going to come true but chances are it's just the Euphoria that's going to hit everybody and when Bitcoin gets up to I think we could go as high as maybe like 250k the 3.68 Fibonacci line brings us to 215k which is where we hit by the way at 3.68 last cycle so you pay attention to that again maybe we go slightly above it like we did last cycle and maybe we get up to like 250k but the problem is at 250k people aren't going to be saying wow now Now's the Time to be responsible and book some profits now is going to be the time when everybody's saying this is the new paradigm of money you need to bet more go remortgage your house sell your kids buy more Bitcoin go all in right now if you're just getting

here now is when you have to buy everything immediately highest risk time in the market okay so that's going to be the time to sell even though everyone the herd is telling you not to sell but only contrarians really make it in markets and you have to be a bit contrarian because the herd always loses I just read a book I think it was called boom and bust I can't remember but it was all about all the big hype cycles that we've had outside of crypto like it was talking since the I don't know 300 years ago there was one that happened with like Australian land and like I don't know all the different ones and these Cycles are all just human psychology right we just get super greedy and we go through the same sort of motions every single time and so I kind of am the same I think we just have

a similar cycle to what we've always had and really it's because of what you mentioned at the beginning which was these Cycles are controlled by liquidity so it doesn't really matter what happens in terms of like Innovation and things with crypto as soon as liquidity goes the opposite way and there's less money to be put in crypto that means there's less demand there's less people that can buy and so ultimately even if the Innovation is still improving and we all think it's going to be the future there's just really no other option for it to go back down at that point and it seems these liquidity Cycles seem to be every four years so I'm kind of in the same boat that I think it's kind of the same as as all the other Cycles maybe we have a top a double top maybe we don't

doesn't really matter we always kind of have like a 50% dip in the middle of a cycle except for I think 2017 we didn't have one that was 50 but we had a 40% we had like a 41% dip like close enough yeah things I always try to think about though is like what is different this cycle than the last one I mean the first one the obvious one is well we hit alltime highs before the having obviously the ETFs are different there's a big kind of unknown right now what's gonna happen with the EF in about a month from now so like that could make some changes for us or make some differences any other things that are this cycle that you're just like yeah this is completely different than we've seen in any other cycle you know what's interesting about the this time is

different ideology is that this time is always different right history does not repeat right the question is is how fundamentally different are things and the one factor as we just mentioned that never ever changes in markets is the investor human psychology and even like the big institutional funds most hedge funds underperform the S&P 500 because they're susceptible to the same stuff there guys sitting behind desks clicking buttons they are susceptible to the same fear and greed they make the same mistakes on average so if hedge funds can't do it your average investor obviously struggles to try to win in those regards so look the hype Cycles are a very real part of the entire scenario everything is happening here in the cryptocurrency markets and I think

it's important to pay attention to this whole human element in terms of how Cycles repeat and the way Cycles play out and all this sort of stuff so don't bet against people I mean bet against people but you know don't bet against people to not do what they're going to do