What's really happening with crypto cycles

Summary

In this video, Van Dell, co-founder of Black Swan Capitalists, explains the current state of the crypto market, addressing confusion around whether we're in a bear market or a bull run. He debunks the myth that the four-year crypto cycle is over, asserting that cycles are still in play, evolving with global liquidity and debt markets. Van highlights the relationship between crypto prices and global money supply, arguing that a major bull run is still ahead once liquidity injections from central banks occur. The video emphasizes the importance of macroeconomic factors and how they shape the market, reassuring viewers that the best is yet to come.

Takeaways

• 😀 The four-year crypto cycle is not dead. While some believe it has been disrupted, it’s actually evolving and remains a reliable framework for understanding market trends.
• 😀 Crypto, especially Bitcoin, is heavily tied to global liquidity and debt markets. It moves in sync with the expansion and contraction of global M2 money supply.
• 😀 When global M2 liquidity increases, crypto markets respond positively. Conversely, when liquidity contracts, crypto markets tend to crash.
• 😀 The relationship between liquidity cycles and crypto markets has remained consistent for over nine years. These cycles often lead crypto trends with a delay of about 8-10 weeks.
• 😀 Crypto markets are waiting for a significant increase in global liquidity. The real altcoin season and bull run will occur once liquidity flows into the market, triggered by central banks' actions.
• 😀 Central banks typically inject liquidity only after economic downturns or recessions, not during periods of economic strength. This means that the next major liquidity event will follow an economic slowdown.
• 😀 The debt markets and refinancing cycles are key to understanding the crypto cycle. Crypto’s value is directly impacted by the global debt markets and their expansion or contraction.
• 😀 The US government’s policies, especially under the current administration, aim to reduce spending, which is setting up the economy for a major liquidity injection later.
• 😀 While the market may seem slow or weak now, this is typical in a bull market as it’s a cooling-off phase before central banks intervene and trigger the next phase of the cycle.
• 😀 The next phase of the bull market will likely come after central banks step in, expand liquidity, and stimulate the economy. This will lead to a major bull run, especially for risk-on assets like crypto.

Q & A

What is the main misconception about the crypto market discussed in the video?

The main misconception is about whether we are currently in a bear market or a bull run, and whether the expected bull run is over. The speaker aims to clarify that the cycle isn't dead and that the market is still in a bull market, just in a temporary correction phase.

What is the concept of the four-year crypto cycle?

The four-year crypto cycle is a pattern in crypto markets where there is a bear market accumulation phase, followed by an expansion phase, leading into a euphoric bull run. This cycle then resets. It has been the backbone of crypto investing for over a decade.

Why do some people claim the four-year cycle is dead?

Some people claim the four-year cycle is dead due to institutional money, macroeconomic shifts, and changes in regulations that have disrupted the historical pattern. They argue that the old rules don't apply anymore.

Is the four-year cycle really dead according to the video?

No, the speaker argues that the four-year cycle is not dead but rather evolving. The cycle remains reliable and continues to follow global liquidity and debt market cycles.

How is crypto tied to the global liquidity and debt markets?

Crypto, particularly Bitcoin, is closely tied to global liquidity and debt markets. When the M2 money supply (global liquidity) increases, crypto prices rise. Conversely, when liquidity contracts, crypto prices fall. This relationship has been consistent for over nine years.

What is the significance of global M2 liquidity in crypto markets?

Global M2 liquidity, or money supply, directly impacts crypto markets. When liquidity expands, crypto prices tend to rise, and when liquidity contracts, crypto markets tend to crash. This relationship is a crucial factor in predicting market trends.

What role does debt refinancing play in the market cycles?

Debt refinancing, especially government debt, plays a significant role in market cycles. The debt markets, which need to be refinanced approximately every four years, affect liquidity. This cycle drives the crypto market's growth and contraction phases.

Why is the current market not experiencing a full bull run?

The full bull run has not yet occurred because the global liquidity, which triggers altcoin seasons and bull runs, has not fully entered the market. The current market movement is driven by short-term factors like ETF inflows and political sentiment rather than substantial liquidity expansion.

What event is expected to trigger the next major bull run in crypto?

The next major bull run in crypto is expected to happen after a global liquidity expansion, triggered by central banks intervening in response to economic downturns or market stress. This will lead to more money being printed, which will flow into the crypto markets.

What is the 'pressure valve' analogy referring to in the context of economic cycles?

The 'pressure valve' analogy refers to the central banks' actions in managing the economy. When economic conditions worsen, they ease off the pressure (tightening policies) to cool things down. Later, when conditions improve, they apply the pressure again (through stimulus), which fuels the next phase of market expansion.