Bitcoin in Deep Value: $60,000 probable, $45,000 PossibleConviction is getting tested again, but the data says be offensive near the bottom
Red candles are back. Red candles make you question things, and they will test your conviction. One thing is for sure: bitcoin is a conviction-testing machine. It has this never-ending way of throwing curveballs at the market. The moment you think it is safe to deploy more capital, it tanks 20% in two weeks.
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It is harsh. There are no circuit breakers, no cooling-down periods where the market closes and people can sleep on it. This is the jungle, not the golden cage. This is the free market, and you had better be mentally prepared for it. Otherwise, it will eat you up and spit you out. In the Wednesday bitcoin letter called “Bears are worried“, I started with how a stoic mindset can help you in investing. Please take two minutes to read the “Stoic” paragraph from the beginning of that letter if you cannot recall it: “So when bitcoin price is rising 26% in 40 days, the hodler in me is making backflips and popping bottles of champagne. But the stoic in me knows from experience that when that happens, often we’re at local highs.” What Jocko told Andrew about the psychology of the mob is what I am seeing on X. Michael Sullivan did an awesome collaboration with James Check where they compared on-chain analysis with sentiment data from X. When bitcoin was at $82,000, people were talking about new all-time highs. Yesterday, sentiment hit peak bearishness. It felt like people had given up on bitcoin and saw it as a failed project. That was the reason I took the time to write about stoicism in investing back then. As Jocko pointed out, as a leader you need to be the anchor for the team. When the team gets overconfident, you need to bring them back to earth. When morale is down, you need to get it back up and relight the fire. We need to show leadership to you, our appreciated members. You need to show leadership to your capital. That is a lot of text for saying: Be defensive at local tops and offensive at local bottoms. I hear you think: “Yeah, no shit Sherlock. Thanks Captain Obvious.” But that is the hard job in investing: checking yourself and your surroundings for those signals, and learning to identify them in the moment. The hardest part is that there will always be mixed signals, and there is never certainty. So you need to take an educated stand at some point, fully knowing you could be wrong. We are here to help you take that stand, using data, experience, and a healthy portion of reasoning. But we could end up with the wrong take too, and that is why you need to show leadership to your own capital.
The arc on the chart shows the full roundtrip: bitcoin is now exactly where the rally started. This aligns with the base case we wrote about, where price could run into the low $80,000s and probably get rejected on its first try. TL;DR Summary...Continue reading this post for free in the Substack app
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