How low will Bitcoin go?

Summary

In this video, the host dives deep into Bitcoin’s price action and historical trends during bear markets, focusing on key price levels like the realized price and balance price. The video highlights how Bitcoin has historically bottomed after dropping below these levels in midterm years, often following a period of apathy rather than euphoria. The host also discusses the cyclical nature of Bitcoin markets, the challenges of timing, and the importance of patience during bear markets. Finally, the host touches on Bitcoin's ongoing competition with gold, urging viewers to be cautious with their investments and stay informed.

Takeaways

• 😀 Bitcoin historically drops below two key price levels during bear markets: the realized price and the balance price.
• 😀 The terminal price, which Bitcoin occasionally approaches during euphoric market conditions, is calculated by 21 times the transfer price.
• 😀 Bitcoin's top in 2021 occurred during apathy rather than euphoria, similar to the 2019 top, which led to a different price cycle.
• 😀 Every bear market sees Bitcoin drop below the realized price, then the balance price, which are crucial indicators of market bottoms.
• 😀 Despite topping before the terminal price in 2019 and 2021, Bitcoin still eventually went below the realized and balance prices, signaling a market bottom.
• 😀 Bitcoin's midterm bear markets typically see price declines of 70% or more, with a chance of a final capitulation drop before the next bull market starts.
• 😀 The midterm market cycle usually follows a pattern: an initial price drop, followed by a sideways movement, then a final drop to the bottom.
• 😀 The realized price and balance price are not static; they are moving targets and change over time, meaning their values today may not hold in the future.
• 😀 Altcoins experienced their initial capitalization phase and have stalled, while Bitcoin is still in its own capitalization phase and continues to bleed value to gold.
• 😀 Historical market patterns suggest that Bitcoin will continue to bleed against gold in midterm years, such as 2014, 2018, and 2022, with the same likely occurring in 2026.

Q & A

What is the terminal price, and why is it important in Bitcoin's price analysis?

The terminal price is a key indicator that Bitcoin tends to reach during euphoric market conditions, typically calculated as 21 times the transfer price. It is considered a signal of caution when Bitcoin's price approaches this level, as it often marks the peak of a bull market. Historical data shows that Bitcoin has topped out near or above the terminal price during euphoric phases, such as in 2011, 2013, 2017, and 2021.

What are the realized price and balance price, and why are they important in a bear market?

The realized price is the price at which Bitcoin was last moved on the network, while the balance price is the transferred price minus the realized price. These two prices are seen as more important indicators during a bear market, as Bitcoin often drops below both after euphoric peaks, signaling a potential market bottom. These prices help track market conditions and Bitcoin's price behavior during downturns.

Why did Bitcoin not reach the terminal price in 2025, and how does it compare to past cycles?

Bitcoin did not reach the terminal price in 2025 due to topping on apathy rather than euphoria. This is similar to the situation in 2019, when Bitcoin topped despite a lack of widespread retail FOMO. Historically, Bitcoin has topped on euphoric conditions, but in these two cases, Bitcoin peaked without significant retail enthusiasm, signaling a different market dynamic.

How does Bitcoin's price behavior compare across different market cycles, specifically in midterm years?

In midterm years, Bitcoin has historically dropped below the realized price and balance price. For example, during previous cycles in 2011, 2015, 2018, and 2022, Bitcoin bottomed when it fell below the balance price. This pattern suggests that after reaching euphoric peaks, Bitcoin tends to experience significant corrections and eventually bottoms below these critical price levels.

What are the potential implications of Bitcoin's price drop in the midterm year, and how does it compare to past drops?

The midterm year typically sees Bitcoin experiencing a significant price drop. Historically, Bitcoin's price has fallen by about 70-94% during these bear markets. The drops often occur in two phases: an initial sharp decline followed by a period of consolidation, and then a final drop later in the year. These patterns suggest that a similar price behavior could occur again in the current cycle, potentially leading to another dip below the balance price.

Why is it difficult to predict Bitcoin's exact bottom in this cycle?

Predicting Bitcoin's exact bottom is challenging because the market is influenced by a range of factors, including external events like the pandemic or macroeconomic shifts. The patterns of previous bear markets give some clues, but each cycle can have unique catalysts that change the timing and depth of the bottom. Analysts must rely on historical data, but there’s always uncertainty in predicting specific price levels.

What role does social sentiment play in Bitcoin's market cycles?

Social sentiment plays a significant role in Bitcoin’s price movements. In 2021, Bitcoin topped amid apathy, where there was little social excitement or retail enthusiasm, similar to the 2019 top. This contrasts with previous cycles where euphoria and FOMO drove prices higher. Tracking social sentiment and market psychology is important for understanding Bitcoin's price behavior during different phases of the market cycle.

What happened during the pandemic crash, and how did it affect Bitcoin's price?

The pandemic crash in early 2020 caused a sharp decline in Bitcoin’s price, similar to past bear market cycles. Despite the sharp drop, Bitcoin’s price eventually recovered, and the market bottomed out just below the balance price. The pandemic created unique conditions, but the general market behavior followed historical trends, with Bitcoin eventually finding its footing below the balance price.

How does Bitcoin's price action compare to gold during midterm years?

Historically, Bitcoin has underperformed compared to gold during midterm years. In the script, the speaker highlights how Bitcoin tends to bleed to gold over several cycles (2014, 2018, 2022, and 2026), with Bitcoin's price often being weaker in these years. This suggests that gold has been a better investment during these times, while Bitcoin's value stagnates or drops.

What does the speaker predict for Bitcoin's price in 2026 and beyond?

The speaker predicts that Bitcoin will likely continue to bleed to gold in 2026, much like previous cycles. The initial capitalization phase for Bitcoin is seen as over, and it has found a new normal where it underperforms against gold in midterm years. This is in line with past cycles, where Bitcoin struggles to outperform gold during certain market conditions.