Benjamin Cowen - Why Most Crypto Price Predictions Are Wrong: Traders Lose Money Because They Don’t Understand Market Cycles

Full transcript: Benjamin Cowen on London Real

2:40 This is London Real. I am Brian Rose. My guest today is Benjamin Cowen, the former nuclear engineer, researcher, and leading financial analyst in the cryptocurrency space. You are the founder and host of Into the Cryptoverse, a YouTube channel with over 600,000 subscribers, which provides high-quality cryptocurrency education in order to understand the metrics that are driving the market.

3:06 Prior to this, you earn both a master’s and PhD in nuclear engineering before working as a research assistant at NASA. You first discovered Bitcoin back in 2011 after taking a class in cryptography, and in 2017 went all in and started to analyze the data and study the market full-time. Your goal is to help investors, new and old, make sound decisions by taking a long-term investment outlook. Ben, welcome to London Real. It’s a pleasure to be here, and thank you for the, like, for the great intro.

3:35 Hey No problem, Ben. It’s great having you here. I really appreciate you being here. You know, you have a really refreshing and practical way of using the numbers to make, you know, an analysis of a market that honestly can be crazy sometimes. You know, I spent 15 years on Wall Street, Chicago, City of London, and I’ve never seen a market like this in my life.

3:53 Most people, I don’t think, can actually even process the volatility from even a human emotional standpoint, and so today I’m excited to have you here, and for everybody watching, we’re going into the charts today. Ben’s got great chart game and we’re going to be looking into, you know, charts on Bitcoin, on Ethereum, some of the old coins, looking at flipping and all that stuff. So I’m super pumped. Maybe before we jump into it, maybe you can just start by maybe summarizing your approach to kind of technical analysis and market analysis, because it’s quite unique.

4:24 Yeah, so I never really learned a lot of, say, the traditional technical analysis that most people might use. I mean I loosely know how it works, and I understand where it comes from, and whatnot, but I figured, you know, one of the things I like about Bitcoin is it seems like a very mathematical thing, and my undergrad was in math, and I just thought, you know, what if there’s a way to sort of mine data, you know, the data for long-term trends in the market, because the short-term stuff, it really can just get a lot of people, yeah, to say it right. I mean, they can get wrecked, right, if they’re trading things on short-term volatility in crypto.

5:03 So the whole idea was, if crypto can give us these things where we can see 60% drops, 70% drops, but we’re still trending up over time. Is there a method to the madness? Can we sort of deconstruct what’s going on here, and can we use that to try to better identify how you can make a reasonable investment in crypto while making sure you’re doing it at a responsible time, and hopefully not buying the market cycle peak right before a pretty brutal bear market.

5:33 So that was the whole idea behind the start of the channel, and trying to just educate people on, look, it can be scary at times, but if you take a look at the macro picture, we are generally on track, and we’re heading, we’re heading to the place we’ve always been heading Yeah, I really appreciate the fact that you kind of have that refreshing approach to it, because look, you know, I have about 500 students in my T5 Academy, and I put them on an information diet when they start. Benjamin, most of them are consuming way too much information, too many FOMO articles, FUD articles, too many Twitter handles with no real people behind them and forums, and they get lost. I also tell them to get off the damn mobile phones and not stop trading at two in the morning.

6:13 You know, all this stuff, you know, when I started on Wall Street in 1993, I was 22 years old. I just got an engineering degree from MIT, and they stuck me on a trading floor, and I learned how to trade from all these old-school, seasoned, nasty-talking, you know, veterans, and this was back when I don’t think there was an HR department, and they would just break phones, but they also knew what they were doing. And Ben, I’ll be honest, we didn’t have a technical analysis person on the desk back then.

6:38 We had a Bloomberg terminal that we could track maybe the bond future price, but, you know, I didn’t grow up with technical analysis. I grew up, you know, with people trading the market. We had squawk boxes shouting down information. You had a floor with 300 people, you could see the FX guys yelling one day, the equity guys yelling the other day, and the whole point of that floor was to try to make sense of information and then process it. And Ben, I think these days some people, they look at charts and they think they’re a crystal ball, and some people, they think are, like, almost, like, you know, the people that will read their palm for them in the charts, and I don’t think that’s true, and that’s why I find your stuff really refreshing, and I’m telling you, when people spend a couple minutes with Ben and his charts, it all of a sudden it seems very holistic, the way you look at things.

7:23 You also look at, like, these long-term cycles as well, right? And you look at some very simple moving averages to kind of analyze things, and you start with the basics, which is Bitcoin. Right, right. Yeah, because Bitcoin governs the entire asset class, right? I mean, if Bitcoin is generally healthy, then all coins and things like Ethereum can do quite well, and so, yeah, there’s definitely gains to be made other than in Bitcoin, but Bitcoin provides, like, that basis to know whether the market is bullish or bearish.

7:52 What are, before we jump into charts, what are some of the things that we need to talk about, or just even basic assumptions for people? Before we jump into charts, is there anything we should just kind of lay out, or as far as ground rules, or even something like your 21-day simple moving averages and exponential moving averages? Again, it’s easy for people to get super confused and tune out on this stuff, so you don’t want that, right? How do you bring people up to speed?

8:17 Yeah, I mean, I think normally the way I think about it is, do not be deterministic about anything in crypto but if anything you’re going to be deterministic on, it should be that Bitcoin trends up with time, and that you have blue chips in cryptocurrency, and then you have altcoins, and then I would argue the blue chips are Bitcoin and Ethereum those are by far the safest plays when you think about it from, like, a risk-adjusted return standpoint, even if you calculate out, like, your Sharpe ratios, your Sortino ratios, and whatnot. Bitcoin and Ethereum are the blue chips, and so this is sort of the ground rules, right? Like, don’t forsake the blue chips to, you know, go to 100 micro caps And generally get the idea that, look, the asset class is just trending higher with time.

9:03 We know that if we’re above the 20-week estimate of the 21-week EMA, that Bitcoin is bullish, and that all coins can run if we’re below those levels, historically all coins bleed against Bitcoin. Ethereum bleeds against Bitcoin when Bitcoin’s below that level, when it’s above, I think, like, five or six times out of seven, you know, Ethereum outperforms Bitcoin when it’s above the 20 weeks. So it’s really just all about taking a few basic assumptions and then relying on those assumptions, and there’s assuming that the general trend will just continue to play out time and time again.

9:35 Yeah. It’s so refreshing to use that term, blue chip, and I actually just dropped a module in my Academy last week, and I used the same concept. I called Bitcoin and Ethereum, like, the blue chips, then I called kind of all coins maybe those next 20, top 25 market caps, and then I called, like, what I call maybe next 100x coins, those coins that you just don’t know about, that, yes, will have potentially 100x returns but also can go to zero, and then you’ve got stablecoins maybe in your portfolio, and you can break down any portfolio maybe into those four pieces, and it’s kind of a, maybe, a simple way of kind of looking at the market, and again, people don’t know that term, blue chip, it’s a term that they’ve used on, I think, the stock market for, like, 80 years, and it always referred to, like, the IBMs, the Disneys, the AT&Ts.

10:18 What back in the day was something that was almost always pay a dividend, right? Almost always would grow year on year. It wasn’t necessarily a risky piece. Of course, it wasn’t equity. It was something that, you know, your pension fund would invest in over the years, and so for people that don’t know that term, that’s a way of looking at Bitcoin and Ethereum because they have relatively less volatility than the other ones, a little bit more assurance of their network effects going forward, although everything in this space is fundamentally risky.

10:50 Right, right. Yeah, of course. I mean, going forward, everything, everything certainly has its risks behind it, but you could easily make the case that fundamentally Bitcoin and Ethereum are the safest place. And, you know, strangely enough, Ben, almost every single guest I’ve had on, maybe the last 14 guests I’ve had on, and this could be, you know, Dan Morehead from Pantera Capital running three billion, Anthony Scaramucci or maybe a founder of Polygon or AVAX.

11:15 They’re all saying, you know, Bitcoin 10x returns over the next five to seven years. We’re not calling for 100x. We’re not calling for 2x, and they said, you know, again, they’ve almost, to the person, have said that, and that’s what we mean by kind of a blue chip. Now, ETH, they’ve said similar things. Some people are more bullish on ETH, but no one here is sitting here with a straight face, who’s a player in the industry that’s saying it’s going to be 100x in five years.

11:39 If you want those returns, you go smaller. And again, I had Dan Tapiro have 10T Holdings on last week, and he said, Brian, don’t invest in my fund if you want 100x returns. That’s not what we’re doing here. This is a 10x return fund. Therefore, we only pay 10 times revenues and never more.

11:55 I only invest in marketplace, not technology plays. So he owns, like, Ledger and Deribit and, you know, Animoca Brands. He doesn’t do that, and he’s very clear up front, and I thought that’s kind of a refreshing way for people to look at things, when sometimes there’s a meme coin of the day that’s easily it’s easy to lose your attention, I think, in this market. Yeah, I mean, I think the question is, you know, would you rather, would you know, would you rather have, say, like a higher probability of making, like, five or ten X, or would you rather have a very low probability of making more than that, and it all, I think, just all depends on the risk anyone, any specific person, is willing to take on, and, you know, what’s right for someone might not be right for someone else, depending on what their risk tolerance is.

12:41 Yeah, very much so. I’ve got some young, younger kids, like in their mid-20s, in my academies, and they have a huge part of their portfolio in crypto, and I said, you know, that’s very high. You know, some of my other, more senior members have a small percent, and they’re like, yeah, I know that Brian, but I’m willing to take the risk, and that’s what I want to do. I’m like, okay, as long as you have that risk tolerance, but understand you know what’s going on.

13:03 And yeah, it’s a great way just to kind of consider, you know, this market and the way it looks going forward. Lastly, I just want to say, you know, 10x returns are incredible, like when I worked on Wall Street, if you said, oh, this market’s only going to have a 10x return in five years that’s not very interesting, right, Ben? It’s only in crypto where people are like, oh, that’s not good enough, but for any other market, in any of the time in history, that’s an amazing return to get on your money, and so we always have to take a deep breath and realize that even the blue chip coins have pretty stellar projected returns if you can stomach the volatility and get in at the right times Yeah, well, I mean, even Bitcoin put in a 10x, relatively recently, from 3,800 all the way up to well over 38,000, you know, in this kind of about a year.

13:46 So even the blue chips can occasionally surprise you, you know, and still give those types of returns. Yeah, I think Ethereum a year ago was 400 or something like that, you know, and I always tell my students this, and I say it three times with a straight face. I said, can you believe that, you know, something that we now use as a building block? It’s like it was a tenth of the value 12 months ago. Sometimes you’ve got to pinch yourself and remind yourself of where you are and what’s going on.

14:12 So, Ben, how should we get started today? I’m guessing you want to talk about Bitcoin and pull up a chart, but what’s the best way to start this discussion? Now, let me show this screen. So can you see the screen that I’m showing right here? Yes So this actually is the entire cryptocurrency asset class, not just Bitcoin, and the reason I like to use this one is because it more or less just shows where we are on the macro scale.

14:37 You should recognize, though, that this is a logarithmic scale, so the market capitalization over here, this is a one trillion all the way up to 10 trillion. You know, my speculation for this market cycle all along has been that I believe it’ll ultimately go to approximately 10 trillion dollars, but I’ve also been pretty adamant that I don’t think that it’ll hit that this year. I know there’s a lot of people that have kind of assumed that we’ll have a market cycle peak you know, this year, but I would argue there’s a lot of evidence to suggest that we are going, you know, we still have a long ways to go, and I think the basis for that understanding is really looking at things like the market cycle return on investment.

15:20 You know, if you if you sort of subjectively take market cycle bottoms, and you plot out your return on investment as a function of time you normalize them, they all start on day one. You know, there’s a clear pattern here, right? And anyone can see it. Anyone has access to the data. It’s just that the cycles tend to lengthen, and you also get diminishing returns, and you know, it’s really easy to understand why that happens.

15:44 I mean, the cycles should have diminishing returns, because as we all know, as we just discussed, right? It’s easier to see, you know, 100x gains and whatnot on micro cryptocurrencies in a relatively short period of time. Of course, a lot of them do end up going to zero, but for Bitcoin to see, you know, to see a cycle where it goes up 500x, it’s just simply not going to happen anymore. It just takes exponentially more volume to move the market capitalization, just another 10x and another 10x.

16:10 And so the whole argument is that, you know, lengthening cycles and diminishing returns, and diminishing returns comes from what we just said, and then lengthening cycles. You could argue that it comes from the idea that, you know, there’s a lot more people every cycle. Okay, there’s more people speculating, but furthermore, there’s also more things to speculate on every cycle. You know, back in 2011, 2013 it was just sort of like, you know, Bitcoin’s going to be this peer-to-peer cryptocurrency that everyone’s going to use.

16:38 2017 it was more, the narrative was more, okay, it’s just a store of value. You know, we’re not going to really use it as peer-to-peer. But then you also had, in 2017, you had the Ethereum ICO craze and everything that came with that. But then the problem with that back in 2017 was that all the 99 of the ICOs were, you know, just basically outright scams. It’s, to be blunt, right?

17:00 They weren’t actually focused on on building something out that was actually going to, you know, change the space, but you did have a few of them that were, and so people became pretty aware of that pretty quickly, that, all right, all this stuff is, you know, we can only speculate on it for so long before we realize it’s just a lot of fluff. This cycle, you have a lot more than that, right? You have DeFi. Not only that, you have institutions pouring in one after another I mean, Tesla bought 1.5 billion dollars’ worth of Bitcoin.

17:27 MicroStrategy has been pretty adamant they’ve been buying Bitcoin pretty constantly since like nine or ten thousand dollars. I’m furthermore, you’re gonna have more institutions coming in as well, and so from a fundamental perspective, it seems like, you know, it should take longer to reach these higher valuations, but also we would expect the returns to diminish. So we look at a chart like this, and what chart is this? What colors are they, just in case people can’t see this, the legend, the blue line is cycle one.

17:56 Okay. And you can imagine, if you go back to this chart over here, I mean, this is all of crypto, but if you can imagine, this is cycle one, cycle two, cycle three, and then we’re currently in cycle four. Okay. So it looks, it looks like this, and so the whole argument is, look, like a lot of people are assuming that, and I’ve spent a long time debating people about this over the years. A lot of people are assuming that we’re gonna have a major market cycle peak in 2021, because we had one in 2017, we had one in 2013, but my argument is that, you know, that is somewhat cherry-picking data, right?

18:33 Because the first cycle lasted about a year. The second one was two and a half years, that happened to be at the end of November 2013. third cycle happened to be December 2017, but the first cycle peaked in the summer of 2011. So I think the idea that we have to have a market cycle peak in December 2021 is basically just sort of cherry-picking, you know, one data point and saying that that’s what’s going to play out again. But I think, as you know, we’re both fully aware, right?

18:58 I mean, market cycles, or markets, don’t do well generally what everyone expects them to do. So I think you basically look at this chart, and you kind of come to the conclusion that look, like the cycle has lasted about as long as it lasted last cycle, but we should also note that there has been a discrepancy in cycle length. So I look at this and say, look, I think we’re going to keep going on I think we still have pretty clear skies as we head into 2022.

19:27 So these cycles are getting longer each time and this current cycle hasn’t hit the exponential returns of the other cycles. Is that what I’m seeing from that graph, sort of. Yeah, and actually one way to look at it is, look at it on a linear scale. Okay, look at the returns on a linear scale, and it fully depicts the diminishing returns we’re talking about. Cycle one, 700x.

19:45 Cycle two, 500x. Cycle three, over 100x. Everything we’ve experienced this market cycle, all the ups and downs that Bitcoin has had, all the way from $3,100 to $69,000, and now we’re back at 56k. It’s all encapsulated in this little purple line that you can barely distinguish off the x-axis, right? You can barely even distinguish it so what I’m sort of thinking is that at some point later this cycle, not necessarily, you know, it does not necessarily have to play out in the next month, right, but at some point we’re probably going to have another leg, and we’re gonna, we’re gonna move back up and have one of these mania phases where we probably do have a blow-off top, and then we have to, we’re going to have to probably spend a couple years consolidating and building out at those prices, and then we’ll likely just have another cycle after that.

20:36 Okay, let me stop you there and let me get you back on screen, because I just want to ask you, I guess, a fundamental question, Ben. Is that you’re tracking basically almost human behavior with these charts? I mean, you’re tracking the behavior of, I guess, not billions of people. I guess it’s what, 150 million wallets they say, or something, or 200 million. You’re kind of tracking the psychological buying and selling habits of all these people over time, and those go into these data points, and like you said, the markets get bigger and bigger over time, and I think most people, if they took a few minutes, they would say, okay, as the market gets bigger and more players come in, we would expect you know, less of those exponential-type returns, and also maybe longer cycles, or maybe other points.

21:17 But can you just speak on maybe what those charts represent from, like, an actual human psychology perspective? Yeah, I mean, I think basically you’re just sort of seeing fear and greed play out, you know, over and over again, and I think basic human emotion doesn’t change. In bear markets, people don’t want to buy, right, because it’s not the cool time to buy crypto. But in the mania phases, you know, one of the reasons you see that is because people get this idea in their head that, oh, like, this thing’s going to a million dollars, right?

21:46 Like, it’s just going to keep going up, and it’s not coming back down, and every cycle you see that same mentality play out. This is the new paradigm shift. Right? This is the new normal. Crypto cannot fail, it cannot go down, and during those times, that’s when crypto sort of makes its rounds on every single news channel, right?

22:04 Every outlet, you know, there’s crypto everywhere. Everyone, it just seems like everyone’s buying it, and you know, you’re getting calls from all your friends and whatnot, and they’re buying, and that’s typically the time that you have to be scaling out. You know, I mean, it’s sort of like, we sort of got a glimpse of it back in April of this year, in fact when we had that first local top of the cycle, which is very similar to what we saw in 2013. And that, look, you know, when too much money comes in too quickly, a lot of the early investors, during the bear market, right before the exponential phase where prices go up drastically, they take profits, and why shouldn’t they?

22:42 Right? I mean, they’re up 10x, 50x, sometimes 100x on some different cryptocurrencies, and you just get to the point where the market can no longer bear the selling pressure, and so we’re basically just seeing that play out over and over again, and we go through periods of overvaluation and undervaluation, and ultimately we’re sort of coming to a fair value. Eventually we’re gonna, we’re gonna get closer and closer to, I think, the fair value, right? And we’re seeing what we believe is a long-term adoption of a better technology, and that’s why we see maybe a 10x return on Bitcoin in five or seven years, but in the meantime, you’ve got human emotions involved, and I remember when I got on Wall Street, and as I spent my career over there, you saw the Latin American debt crisis, and then the Russian ruble crisis and then the Asian crisis, and then the mortgage crisis.

23:28 After a while I was just like, doesn’t anybody learn here, because every five years they shut the department down, everyone goes back up, and then they start it up again because people forgot and that’s just the cycle, not just of Wall Street. It’s just humans. We’re emotional creatures that think we’re logical, and we try to logically, a lot of times, explain our emotional behavior in retrospect, right? And funny enough, Ben, I was running for mayor of London back in April this year, and we were all into this campaign.

23:55 I mean, it was a war out there. We had a battle bus. I was going after all the candidates, and one of our young videographers was talking about Bitcoin, and it was at 65,000 or something, and everybody was talking about it at lunch, because of course, it was a media event, and I had an old, like, PR guy who was in his 50s, and I joked, I said, when he buys, you know, this thing’s gonna crash, and everyone laughed, and a couple weeks later, of course, it tanked, because it goes into a media cycle, and then your mom hears about it, and then she buys, and then you almost know, almost somewhat predictably, that it’s kind of gotten a little bit of that bubble, and for anybody who doesn’t understand this, this gets reflected on the charts, which are basically charts of human emotion mixed in with real technology advances, and that’s why I love to see the way you just put all this in perspective.

24:41 So correct me if I’m wrong, you said that it’s very possible that, first of all, this cycle is longer. There’s no reason it should stick to four years, because the whole market’s changed drastically. Like you said, we both have Michael Saylor on the show. He’s put seven billion dollars of a public company balance sheet into Bitcoin. It still boggles my mind that he’s done that.

24:59 You’ve got Elon Musk buying, you’ve got institutions buying, and JP Morgan likes it now, Morgan Stanley. You’ve got potentially what, 200 million wallets by the end of the year. So there’s no reason to think that the cycle couldn’t change, and you think there could be another mania peak in this cycle? Oh yeah, I think there will be. I don’t think it has to be this year, though.

25:21 I think it’s probably going to come when people don’t expect it, and it could be one of those things where one of the ways I could see it playing out is you know, because so many people think this cycle is probably going to end, like, or it’s already ended, right? They’re calling for a double top, or, you know, they think it’s going to end next month. I could see, you know, if Bitcoin continues going up in 2022, people could really start to think, like, this time is different, it’s only ever going to go up, and lead into that manic phase, but I would argue that this time is not different.

25:51 It’s the same, and the same, though, is a lengthening cycle, right? That is, the same is that the cycles lengthen See, I do think we probably will have another mania phase and then we’re gonna, we’re probably gonna have a bear market after that, unfortunately, but then that’s the time to build, right? That’s the, I mean, honestly all the real money is made in the bear market. You know, the people that stick around in the bear market, they tend to do the best later on in the bull market.

26:16 So, but yeah, I do think we will have another mania phase. It’s just a matter of time, and mania looks like a $130,000 Bitcoin mid next year. Is that what kind of mania looks like, or $150,000? Yeah, I think I generally think that the market cycle peak is probably between 1 to 200k. That is sort of like that.

26:36 That was the number I gave out back when Bitcoin was trading at like four thousand dollars. I just said, look guys, we’re probably gonna go, you know, my number that I came up with back then, back in 2019 I came up with 140k. Is sort of what I thought, but I also look at some things like risk levels on the asset class and try to figure out what is theoretically possible. If I just share my screen really quick again and show you one more chart here. There’s this chart, which is a chart I use to navigate the asset class, and you can see it basically color-codes the price of Bitcoin from blue to red.

27:13 Blue being low risk, meaning that’s where, you know, that’s where you really should be scaling in, and then the red would mean, yeah, historically that’s where people should probably be taking some profits, right, and recognizing that it’s not sustainable. How do you get these colors? How do you determine these colors based on? Yes, it’s based on price, time, volatility, and basically it’s also assuming we have diminishing returns as a function of time. Okay, I think that’s a common thing that a lot of indicators out there lack and why a lot of indicators missed the sort of the local top back in April is because they assume that what we did last time, we can do this time too, but it’s better to assume, in my opinion, it’s better to assume that the returns as a function of time naturally have to diminish, just because it takes exponentially more volume to move the market cap.

28:04 Certainly, when it was trading at 60k, I was not a popular guy for telling people that wasn’t going to go to 300K this year, but, look, I just stick to these risk levels, and so, you know, when I think about, when I think about, like, okay, what’s going to happen? How high could it go? It depends on when it happens, right? Like, if by some miracle we do have a peak this year and Bitcoin just goes parabolic next month, then I probably would think it’s not going to go nearly as high as it could if we continue slowly moving up for, you know, six more months or something, and then going parabolic.

28:39 So a lot of it depends on when it happens, and the longer we consolidate and sort of build up to it, I think ultimately the higher we go can you explain that concept to maybe people that are new to this market, who want to buy the Lambo for Christmas and explain to him that actually, if we take our time and breathe and allow things to move sideways, a little bit, we actually might see a higher price mid to late next year, as opposed to if we try to get there by New Year’s? Can you just, because it’s a really important concept that’s lost on most of the market? Oh yeah, I mean, a lot of people want to establish a position.

29:12 So, like, institutions right now, I’m assuming a lot of I’m assuming there’s plenty of institutions that have been establishing positions and we know, we know MicroStrategy has been doing it for a long time, and they have no problem buying Bitcoin, it seems, at any price, because they look at it on the macro scale. But the whole idea is that you can look at on-chain metrics to look at this as well, sort of like long-term holders and whatnot, people who buy if it goes up too quickly. If we experience a return that is so attractive in the short term that we cannot pass it up, then a lot of people take profits, right?

29:45 Like, they want to realize those profits, because we recognize that if it goes up too quickly, it’s not sustainable, right? It’s just simply not a sustainable move. It was not sustainable for us to go from 3,800 to 64k without having a very massive pullback that turned out to be 55. You know, so if we go up slowly like, if we could slowly go back to 60 and then 70k, and then we work our way to 80k, then a lot of these long-term holders, we look at it and say, all right, like, this seems like a sustainable move, like you know, it’s an organic move, people are accumulating, but what’s not sustainable is when it goes up, like, like 2x in a month or something, right?

30:24 Like, if we were to wake up in January and Bitcoin’s created for 150k, you know, like, I’m probably running for the hills with my profits, right, at that point, because I don’t, I wouldn’t believe that it’s sustainable in the short term, and then we’re probably going to come back down, and then I would be looking to buy it if it comes back down. So, generally, I think that’s the problem, right? Like, people don’t, people sort of underestimate the selling pressure that comes from the people that bought when it was low.

30:51 These people want to realize those gains and then, you know, book the profits and live to fight another day, rather than risking their entire investment on it continuing to go through this parabolic rally. Yeah, really good points. And when I see markets pull off 10, 20 I actually think this is really good. I keep an eye on it and make sure that it remains some decent support, and Bitcoin stays in, like, those 50,000 ranges. These are really good signs.

31:14 It tests it, it holds, and also I’ve had a bunch of DeFi people on for the past few years, from San Diego, AVAX, and the Polygon people, and they’re like, Brian I built my business in 2017 and ’18 when everyone thought my market was a scam, that’s all it was, and I had to put in all the hard yards. I got the developers then, and they’re all saying, I’m actually looking forward to a bear market so I can actually hire somebody and build something. And again, I was in the dot-com boom, startup in New York City, in ’99 to ’01 and after ’01, nobody wanted to hear about a tech stock, and guess what?

31:45 That’s when Google started building itself. So it’s important for people to realize that this isn’t Monopoly money. It’s not a video game. This is, you know, real money moving to solve problems and create value. When Bitcoin goes to 130,000, that’s a trillion dollars more in that asset class, and that doesn’t just pop in and out.

32:04 Like you said, that comes from institutions, etc., and like you said, Michael Saylor, I think, when he was on the show with me, he’s like, he’s like, Brian, we love Bitcoin up 250,000. Like, we’re just gonna keep buying that thing. And I think this is a good period now to get those institutions involved. So, yeah, some really good points. Wondering if you want to jump into a Bitcoin diagram, because I love it when I look at your moving averages and just your basic candlesticks on Bitcoin.

32:29 I don’t know what else you want to pull up, but yeah, when I watch, even like, a video you did a week ago, and you just talk about just some of the basics. And again, maybe you can explain those averages that you look at, because you don’t look at a lot of other things. You look at a few basic building blocks, right? Right. I mean, I think the most important thing is momentum.

32:48 You know, an asset that’s trending up, or an asset that’s trending higher, is more likely to keep trending higher than an asset that’s not. And I like to keep this simple. I don’t think we need to pull out 100 different indicators to try to make sense of what’s going on, because really, I mean, no one can predict the short term. In my opinion. I mean, I think there are people certainly a lot better at it than I am, because I I’m, I would be very bad at trying to accomplish, predicting what’s going to happen with Bitcoin in the short term.

33:13 This is a common indicator that I use. I mean, it’s just a 20-week SMA. What are we looking at here? This is a candlestick chart of Bitcoin, and what’s the timeline on that access Yeah, I mean, so these are weekly candles. So, like, I mean, like, this capitulation over here was March of 2020.

33:31 Okay, and this was that sort of that distribution phase earlier this year, the accumulation phase, and now we’re looking. I mean, what I look at when I see this is I just see we’re in an uptrend, right? I mean, you know, and, by the way, like, that rich metric that I just showed you, that up here, is when it was flashing that dark red, right? because it basically, we were showing, look, this is not sustainable. We have to go back down, right?

33:55 We have to go back down before we can go up. And then now having these periods down here, what I think it allows it allows, you know, those institutions to buy, right? It allows people to secure a position at a better value. And then one of the things we talk about, the integrity of the bull market, is the bull market, is the integrity, is sustained as long as we hold the bull market support band This is the combination of the 20-week simple moving average and the 21-week exponential moving average, and which colors are those on the screen?

34:28 Those are, yeah, yellow is the simple moving average. Yeah, so the red one is the simple, the 20 week, and then the green, the green-yellow, whatever, is the 21 week EMA. Okay. And you can see, I mean, if we switch this over to the daily time frame, you can see that the 20 week is, and that’s exactly where we held the line, right? I mean, that was the, and that was the point, and this is what we said for years, that, look, until it, like, so back over here, one of the things I said was, look, we’re probably going to break out up here at some point and get above the bobmark Scorpion.

34:59 That’s not the hard part, right? That’s not the hard part. We can break above it all the time. We’ve broken above it before, and we failed to hold it as support. If we fail to hold it as support, we have to kick the can down the road a few months, right?

35:09 We’ve seen that happen many times, right? But if we hold it as support which is what we did, then we should be able to put in a new all-time high. It’s the same thing. It happened back over here in August and September 2020. We moved up, and then we came back down, tested our support, and then we were off to the races.

35:28 Right, right. So I would argue, look, same thing happened today. We came from below. At this time, above it, September historically is a bad month on average. Bitcoin loses approximately six or seven percent of its value in September.

35:40 There is some recency bias to the idea that it always does that in September, but it has done bad in September for the last five years straight, and so, you know, I looked at that and said, look, guys, we need to test this before we move higher, before we can put our new all-time high. We tested it, we put a new all-time high, and now we’re actually getting close to it again, and you could argue that there’s a distinct possibility. I don’t know. I mean, I’m not necessarily counting on it to test it.

36:07 I I have my Bitcoin position regardless, but, you know, you go back and look at 2017, and you can see every single time that Bitcoin came back down to that 20-week moving average, that is where we kept holding the line, and every time we held the line, we would then go put in a new all-time high. Okay, so the whole idea is, as long as we hold it, then we can keep, you know, we hold it, we move higher, we hold it, we move higher. But if we go, look, the short-term risk on this, so this is the extension from the 20 week in 2017.

36:40 We never got too far extended from the 20-week SMA, right? You can see it wasn’t that far extended down here, and we held the line every single time. Once we had this, it went too high. Yeah, we went too high. We could not sustain it, right?

36:52 We just simply could not sustain it. Again, look over here in earlier this year, we went too high. We could not sustain it, but when we only came up, this only came up this far. What happened, right? We held the line for 20 weeks.

37:04 So what I’m looking for is, I’m like there’s no guarantees, right? There’s no guarantees in life. Of course, we could always go back below it, but I would say there’s a much higher probability that we hold it as long as we don’t get too far extended from it, right? If we come back up here, then, you know, we’re likely, it’s just too far extended. We’re not going to be able to sustain it, and then we have to go back down for a while.

37:25 Yeah, that’s very good analysis. And right now where are we with Bitcoin? Are we just hanging near those 21-week averages or not even close to those right now? So they currently Those values currently for Bitcoin are ranging from around 50.7 K up to 52.7K. So basically, just think about it like, you know, 51 to 53k, more or less, is where we would like to stay above.

37:53 Those are weekly time frames. We can always have wicks below, you know. No one’s getting out of bed for a wick. It’s more, so what are the weekly candles doing? Are we holding the line above it?

38:01 And if we are, then we should stay relatively healthy, and that’s why, right, Ethereum has been doing really well, right? I mean, Ethereum continues to do well, and most of the time when Bitcoin’s above the 20-week, Ethereum outperforms Bitcoin until Bitcoin gets back below the 20 weeks, but every single time Bitcoin has been below the 20-week moving average, every time in history, anytime it goes below the 20 week, Bitcoin has always outperformed Ethereum up until it gets back above the 20 weeks later on. So every single time.

38:34 So if historically, every time Bitcoin dropped below the 20 weeks, you just sort of thought to yourself, all right, my expectations are that Bitcoin will temporarily outperform Ethereum. You’d be right, like, six, or six, six out of six or seven out of seven times at this point, right? So should something… it’s something to consider, right? But if we’re above it, if we’re above it, like we are now, then, you know, you’ll see Ethereum is going to continue to do well, and I mean, it still looks incredibly strong.

38:58 It’s almost like that concept, I think they use, called beta, when it comes to, you know, stock markets, where there’s like a bellwether, which is like Bitcoin, and when it’s doing well, you’ve got things that have higher multiples that’ll do well along with it. So in a market rally, back in the day, it was the tech stocks and the dot-coms that would do really well, but if the blue chips were down the better bet was to hold those blue chips, because the high beta stuff was just going to get crushed, and I think you’re saying a similar thing here, right? When Bitcoin’s above its moving average, you can get a leveraged return, maybe, in Ethereum and some of the other altcoins we’ll talk about, but as soon as it goes below, those things are going to start getting magnified losses, so that’s when you potentially want to get your money into Bitcoin, those blue chips, or maybe even stablecoins.

39:41 If it pops as high as, like you said, 150,000 by Christmas, maybe it’s time to run for the hills for a little while because the emotion’s gone a little bit crazy. Am I summarizing that? Okay, yeah, yeah. And yeah, like, I certainly don’t expect 150k by Christmas, but you’re right. If it were there by Christmas, I would be running for the hills.

39:58 This, I think, the better way to navigate crypto is sort of just a bunch of if-then statements, right? If this happens, then that. We all like to make predictions on what’s going to happen, but I think the better way is just that, you know, if x then y, and also the longer we stay lower, the average kind of gets closer to where we are. So if Bitcoin stays now in this mid-50s range for another three months, it’s, that average will be starting to be crossed soon.

40:24 I mean, you also don’t want to stay low too long, right? But we could stay here for, for months, potentially, before it would realistically catch up, because I mean, like, you know, we could probably be here for two months, and we’re still just above it. You know, I mean, because if it’s a function of the last 20 weeks or 21 weeks, for the EMA as well, and so if we’re sort of just hanging out at these prices that are just above it, you know, I mean, historically that’s been really one of the best times to buy Bitcoin.

40:53 If, I mean, obviously there’s a huge if there, and but that’s the risk you take, right? I mean, no one really fully knows if it’s going to hold. We didn’t know that it was going to hold in September, but we did say that if it does hold, and there’s a reasonable chance it does, considering that we think this cycle is going to lengthen, right? I mean, we’re sort of taking this market cycle theory stuff and saying, look, we don’t think this cycle is over. We do think Bitcoin is going to keep trending higher over time, therefore there is a good probability here that we are not heading into a one- to two-year bear market, but that we just had a three- to six-month lull in the market.

41:25 We need to hold the line at the 20- week, and then we should be off to the races. You know, so far this cycle, from what I can tell, the first half of this cycle looks like 2013, the first leg of 2013. It’s certainly possible that the second half of this cycle emulates what happened in 2017, right, where it just sort of goes above the 20 week, 30, 40, and then comes back down to hold it as support, and we just keep doing that for a while, and if it drops below 50 and stays there for a week or two, you become alarmed, because then that’s breaking.

41:52 That’s, yeah, I mean, yeah, the problem with it going below those values is that all coins bleed. We know that all coins bleed against the US dollar if Bitcoin’s going down, but the more important thing is that they’re going to bleed against Bitcoin, right? So at that point, you know, it’s like, do you really want to sit on extremely large altcoin positions? If someone’s like, 90% altcoins, which they shouldn’t be, I don’t think, but if they were, if you were like 100% altcoins or something, you have to look at the data and say, look, when Bitcoin’s below the 20-week estimate, all coins get absolutely destroyed against Bitcoin during that phase.

42:29 We’ve seen it happen plenty of times in the past, and so that’s sort of, that’s sort of like, what the alarming thing you want to look out for. If that happens, then be careful. Without clothes. Yeah. And this is all the way of almost like quantifying group think, as a human psychology species.

42:45 It’s weird that’s kind of what you’re quant trying to quantify and predict and model, really, Ben, and it kind of, might, makes sense when you explain this. Then how come no one else is talking about this stuff? Because this seems like a really great call on the market without overcomplicating it, but with sticking to some real basics that make practical sense. Good stuff. But I think the problem is that a lot of people just want to think about, you know, going to the moon, right, and parabolic rallies, and that’s all, that’s all they ever want to talk about, but really, and I also think people want to assume that they know exactly what’s going to happen, right?

43:28 Like, it gives them a sort of, a, that confidence that they say, all right, it’s going to peak in, you know, December, and then we’re going to go down, then we’re just going to keep rinsing and repeating the same thing every four years for, for forever. You know, I just don’t think that makes a lot of sense. I think one of the things is you know, the more education you get, the more, the more you realize how much stuff there is that you don’t know, right?

43:48 You know, like, it’s not, you know, I feel like the more educated I got, I was just like, all right, like I just feel dumber and dumber, because I just realized all these things in this world that I just don’t have any clues about. I look at crypto, and I kind of, and I look at Bitcoin, I want to respect it right? I don’t want to assume that I know exactly what’s going to happen. I don’t want to assume that it’s going to go parabolic tomorrow, because, you know, you can get, you can get burned if you think that.

44:12 But the point is, you know, recognize some of the key areas of support. You can mine all of this with, you know, just simple science. Technology, engineering, mathematics background, STEM background. You can mine this data and, you know, just figure out, all right, I want to navigate this market in a way that is a bit more rational and not full of crazy predictions, that are ultimately not going to pan out, right? So I don’t know.

44:40 I really don’t know why more people don’t talk about it. I mean, it could just be that they, you know, they look at the market from a completely different perspective, and maybe that works for them, but I think a lot of people are more in tune with the sort of the traditional, more traditional TA and whatnot, and I know a lot of those guys do really well doing it, but it’s just not what I do. Yeah, and what you’re talking about is some really good basics.

45:02 I mean, I think I had Anthony Scaramucci, who runs like $10 billion in SkyBridge, and he said, Brian, you know, I’m really, I feel really sure about this, Pat, you said, but I’ve also been really sure in the past, and I’ve been wrong, and he said that’s why I have a portfolio, that’s why I use portfolio theory, that’s why I have stop losses, because, you know, over the years on Wall Street, I’ve seen myself completely wrong about things, and that’s why we put all these things into play, place, and we check ourselves and allocate percentages and put stop losses in, and all the things I’m trying to teach my students how to do. We’re in a weird market called crypto. A lot of times, Ben, this is the first asset class anyone’s ever traded.

45:38 Maybe they’re trading it on Robinhood. I’ve never seen anything like that in the past in the stock market, in the bond market. Very rarely is it born out of individual investors with maybe no experience, and maybe, you know, and again, I don’t want to generalize, but maybe, you know, you’re somebody on the Robinhood app saying, how come Bitcoin’s not doing anything for the month? It’s like, it is doing something. Institutions are getting involved, technology is being advanced, DeFi is being created.

46:01 You just don’t see the price going to the moon, and so it’s not what you’ve already heard about or been promised. Also, the term hodling doesn’t exist in any other market. It only exists in crypto because it’s tribal, right? It’s emotional. People try to will the market to be what you want to be.

46:17 And I’m here to say nobody knows what’s going to happen tomorrow, nobody, even the smartest people in the world, and I’m sat next to the best traders in the world who made money consistently for 25 years, and then they bought the farm on a position and got stopped out. You know, I’ve watched Long-Term Capital Management happen in 1998. These were the smartest minds in the world, John, good friend, Legend, the Solomon Brothers professors from MIT where I went to school, who wrote the Black-Scholes options pricing formula, and they bet really big, and then the Russian ruble crisis happened and they all got stopped out.

46:48 And guess what? This happens all the time, so that’s why we put in, you know, portfolio theory and stop losses. And again, I’m just trying to get the word out. Ben, you mentioned Ethereum, and I’d love to go a little bit deeper into just your thoughts on Ethereum. I understand what you’re saying, when that, it outperforms Bitcoin when Bitcoin’s above the average.

47:08 Tell me just overall thoughts on Ethereum. Obviously, people were talking about this concept of the flipping on and off, which I guess means the market cap of ETH is above that of Bitcoin right now? I think it’s about half or a little less than half right now. Just your thoughts on ETH. Yeah, let me pull up Ethereum.

47:27 Let me just pull up a couple charts here, and then I will, let me Okay, so with Ethereum, Ethereum is a blue chip in my opinion, as we said before. Like Bitcoin, Ethereum is the other. Ethereum is, I believe it’s pretty far ahead in terms of layer one. Why is it a blue chip? Let me stop you there, Ben.

47:51 First of all, why would you call it a blue chip? If you had to say it in one sentence, what would be that reason? Because the technology is just better, in my opinion, than a lot of the other, than its competition, right? It’s competition. And it’s got a history and network effect and developers, and it’s proven itself over time.

48:09 It’s got a ton of developers, it’s got a huge network, but more importantly, the, you know, the technology, in my opinion, is pretty solid. I mean, look, I know there’s some issues with it. I’m not gonna say there’s not. I mean, who wants to dive into Ethereum DeFi when it costs a hundred dollars to carry out a transaction? But look, you know, a lot of these other chains are going to have similar issues, and we’re already seeing that happen on a lot of the other chains.

48:31 They’re going to have to transition to, you know, other things like rollups and whatnot in order to, in order to scale. And all these chains, as I said before, they can also have low gas fees, but there’s, so, a lot of times, not all the time, there are there are certain cases we can talk about, but look, a lot of times, you know, if you’re gonna have high gas fees, there’s a lot of change to do, or the low gas, because there’s a lot of change to do that, but they’re sacrificing some level of decentralization. I do think the market values decentralization, so I look at it and say, look, a lot of these chains are ultimately going to go the way of Ethereum, right?

49:05 They’re going to ultimately do more or less what Ethereum is already trying to do. They’re going to have some of the same issues, and if they don’t have those if they don’t have those issues, it’s because they’ve decided to take a more centralized route. When they do that, then you have these node operators that have trouble just staying in sync to the blockchain, and that presents an issue as well. All right, we’ll definitely dive into a bunch of those layer ones right after this, and I think you have some really good points on centralization.

49:27 So just so we’re looking at now, what are we looking at right now, and what do you see on this chart? Is this Ethereum weekly candles? This is ETH/USD. And look, I mean, Ethereum is done exceptionally well all the way down from 80 bucks or so, the market cycle bottom. Now it’s trading for $4,200, but I think the important thing, you know, if you think about, like, the idea of the flipping, and can the flipping happen?

49:49 The whole idea is, well, can you, market capitalization of Ethereum, flip Bitcoin? And, you know, it is possible, right? I’m not going to say it’s not possible. If you just go look at the ETH/BTC chart, I drew these lines on this chart in 2019, like these lines, and it’s done pretty well. Like, I mean, it was in that, it was in that for a long time.

50:09 We ultimately came above it. We’re sort of just tracking that trend line that once upon a time acted as some level of resistance. Right now we’re just sort of slowly going up, it look, we know that the market cycles lengthen, right? We already covered that idea. We also see that the Ethereum valuation against Bitcoin is going up, therefore it stands to reason that if the cycle were to last long enough, okay, then Ethereum could flip Bitcoin.

50:36 If it were to last long enough, if the cycle ends in three months, then Ethereum is unlikely to flip it, right? It’s just simply, there’s just not enough time, right? There’s just not enough time for it to have a crazy push like that and flip Bitcoin. But what if, you know, what if the cycle keeps moving on? Like, what if, you know, what if we have a few months of accumulation, we continue trending higher, maybe the Ethereum valuation against Bitcoin comes up to point one.

50:59 We get rejected, and if we just keep on going, right? If the cycle, depending on how long the cycle goes, there is a chance that Ethereum could flip Bitcoin. I would say it’s more likely that Ethereum flips Bitcoin than any altcoin flips Ethereum. And again, you wrote those, you posted those lines two years ago, and, right, you know, these are linear, you know, pieces, you know, linear lines, and yet this is a whole technology play with all sorts of things that are happening in the background.

51:29 When you look at it now, how has Ethereum changed, besides establishing that it really is the dominant player? Is there anything else changed about it that would make you think anything slightly different about it? No, I mean, I, I, I mean, I look at Ethereum and I say it’s basically getting its fingers in every sub-asset class of crypto. I mean, if you, who launches an NFT? I mean, the people that launch NFTs, right?

51:51 They launch them on Ethereum most of the time, right? Most of the time, not all the time. I imagine the metaverse is going to be a big play. A theater is going to have a role in that. Institutions are buying Ethereum.

52:01 I think that, you know, there’s only more and more reasons that Ethereum is showing itself to be a blue chip of the asset class. So that’s why I would say it. Look, portfolio theory would suggest it’s a blue chip. If you, if you run simple Sharpe ratio analysis on Bitcoin Ethereum, it comes out 65% Bitcoin, 35% Ethereum. Like, that’s a pretty good ratio You know, you look at the market capitalization, it’s right up there, it’s number two.

52:29 It’s a blue chip. You look at the fact that it’s trending up against Bitcoin. I just think it, I think it’s a blue chip. I don’t have any reason to think it’s going to turn around anytime soon. I do think it’s going to continue higher.

52:41 I think the only thing, the way that it, the way that it flips Bitcoin is basically if the cycle carries on long enough. Right? And is that even a conversation that makes any sense? The flipping, whether it’s market cap is bigger or not, is that yeah, is it relevant? It’s I mean, I think it is somewhat relevant, because I, and I don’t, honestly, like, I sort of go back and forth on what I think about it, and, you know, sometimes, because a lot of institutions, I imagine, buy Bitcoin because it’s number one, right?

53:10 And it’s been number one for a decade, and, you know, and that’s sort of like one of the big things about it. Look, Bitcoin is the main crypto. It is the one that has stood the test of time, and it will continue to stand the test of time. You know, that narrative could somewhat become a little bit flaky if it’s like, oh, Bitcoin’s number two, you know, that’d be interesting to see how it would change the dynamics of the entire asset class if, you know, the juggernaut that’s been around for for 10 or 11 years is no longer number one.

53:41 I should say this, though. I should say this: if Ethereum flips Bitcoin this cycle, which I’m not sure about. I’m honestly not sure about, but if it does, I don’t think it would hold that position in a bear market. I think Bitcoin would then come back and overtake it. In their market.

53:57 Yeah, there’s a really, really good perspective. I’ll, I’ll get you back on screen here. I was at a conference here in London, and they beamed in, like, Novogratz of Galaxy Digital, and he just broke it down in a really simple way. He said, look, Bitcoin is an asset play. It’s proven itself.

54:12 It’s a digital store of value. It’s a tenth of the cap of gold at 10 trillion, and it will appreciate, and it’s incredible. It’s done the job. He said Ethereum is a technology play, and all these other coins are technology plays, so look at them like you would a technology stock with those types of risks and those type of characteristics. Again, I had Michael Saylor on here.

54:31 I know you had a great conversation with him as well, and he said, Brian, he said, I like Bitcoin because it has low aspirations, that’s what he said, and I love that phrase. You know, Michael’s like, look, I know what it is. It’s not trying to be something else. I know it’ll be tomorrow. It’s also great if you’ve got Gary Gensler from the SEC sniffing around your balance sheet.

54:49 Bitcoin’s a nice safe digital property, as Michael would say, which I think is a great phrase, and it’s going to have people drawn to it for those reasons. That being said, it will never be that technology play, and so if you want to do a technology play like Google, Facebook, Amazon, Apple, which, by the way, you know, 20 years ago, if you look back in 1998, they represented 5% of the total market cap of tech plays, mostly dominated by Microsoft. You fast forward to today, if you’re one of those big returns, they were in those tech plays.

55:23 So, and like I said, as it gets bigger, it shows what more institutions are going in, more people are buying into it, but if it starts going the other way, will people really say, wait a second, we want our digital asset, our digital gold? And that’ll be the real question, and there’s questions around monetary policy of Ethereum and all these things and what they’ve promised with E 2.0, which, you know, people have told me sometime in the next decade, who’ve been in this studio, whose entire platforms are based on Ethereum. Ave They’ve said sometime in the next decade, so we’ll see.

55:55 But I think it’s a great analysis, but before we go on to some other, one of the layer one solutions, any other thoughts on ETH going forward just sort of like, look at it in relation to Bitcoin, and look at that sort of like that market cycle stuff that we talked about. Let me just share one more chart here with you. You know, if we sort of normalize it to that last shakeout we had in March of 2020 and compared what happened back in the last cycle, you know, I look at it and say, look, we’re sort of seeing a similar thing.

56:23 Right, it’s probably going to have some… And what are these two lines, the yellow and the white? Just so the yellow one is sort of like cycle one for Ethereum, like 2015 to 2018. Okay, got it. And then this one is from the final shakeout in March of 2020 until today.

56:36 Okay, nice. And you kind of normalize the price at the beginning of the cycle so we can compare them, and it’s logarithmic scale as well. Yeah, logarithmic scale. You can see the last cycle Ethereum had about a year period where it just went sideways. This cycle, we’ve also, you know, we’re, I mean, you can’t kind of argue what the definition of sideways is, but it does go through those phases during the cycle where it more or less just goes sideways for a while.

56:59 And actually, it’s interesting that you can see that last cycle, it sort of had a double bottom here, at about 20x ROI, like right here, and then again before it started turning higher. Looks like I might have done something similar to that this cycle too, like right here, and then again before starting to turn higher. I speculate that we’re going to continue turning up like this, and ultimately we won’t, we won’t put in returns that are that we saw last cycle, but we still should see somewhat fairly attractive returns.

57:26 So that’s fifteen thousand dollar ETH maybe. Was that high for that cycle? Yeah, I mean, like, if we were to see 100x, 100x if we were to go from 100x up, you know, you’re talking about about a 10K ETH just to get to 100x, and, you know, a 20x would would put it up at You know, 20,000. I mean, it sort of depends on how high, how high we go. But yeah, I mean, over here this was a, or sorry, 200x?

57:55 Yeah, 100 and 200x, not 20. But yeah, we sort of bottomed here at around 20x Okay, that’s fascinating. So if it has a similar cycle, there is some more upside on this piece, and a little bit more time? Yeah, yeah. I think we, I think we have plenty of time to be completely honest.

58:13 Time is on our side, ready, may, I think generally time is on our side here. we should, we should trend higher, but look, I mean, that doesn’t mean we have to go up tomorrow Consolidation for, you know, months here and there, perfectly normal. There’s a period where Ethereum went sideways for a year, and then over here it went sideways for half a year. Okay, so you can still get those phases where it doesn’t really do anything for a while, but then ultimately it breaks out into, entire, yeah, that’s a really good chart.

58:37 Love that you charted, by the way, so thank you, Ben. Yeah, and then again, then also, you think about Ethereum and there’s so many new markets, like you said, the NFTs and the metaverse and DeFi, and again, don’t get me wrong, the number one complaint of all my students in my T5 Academy are gas fees, and they’re like, Brian, why am I paying 100 bucks and 200 bucks? And I usually get them to do small trades so they can learn how to do yield swapping, liquidity pools, even buy options.

59:00 I have them do really small trades just to get the experience, and the gas sometimes is more than the trade, and they’re frustrated, but again, I remember when Uniswap wasn’t here and I had to go find some coin on some, you know, backwoods exchange, like I was going some dark alley to buy the coin, and now Uniswap will find you the best price, and yes, there’s gas fees, but you know, there’s all these use cases we didn’t see coming down the line for Ethereum, which potentially changes that cycle, right? Mm-hmm. Yeah, I mean, I, I think the use cases are only going to grow.

59:33 I mean, I agree look, the gas fees are ridiculous. You know, no one wants to, it basically makes it unusable for, say, like you know, the average new retail investor. You know but you have to imagine eventually it’ll get that stuff worked out, and then at that point, I don’t see, you know, I don’t see what other chain could realistically compete with that, because it’s going to be one of the most massively decentralized protocols out there after Bitcoin, and you have the network effect, you have, I mean, you have everything we talked about, and it’s probably going to be incredibly quick, cheap to use.

1:00:08 We’re not there yet, though, and, you know, it’s possible that the next cycle is what is going to be that for that phase, and right now people are speculating more on what Ethereum is going to become rather than what it is today. Yeah, really, really good, and it’s important to get people used to this concept of the next cycle, but nobody wants to hear that, and again, I got students that they’re 76 years old and ones that are 17 years old, and they don’t want to wait for the next cycle, even though the ones that have been around for a while, who know good things sometimes take time, right? That was an old slogan, I think, for, like, a winemaker or something, but nobody wants to wait for the next cycle, but the truth is, you know, Amazon took a long time to build.

1:00:44 Apple was on the ropes for a long time, right? Barely surviving. you know, people forget that these things do take time, and they need to take time, right? Ben, I mean, you need that consolidation, you need that time, you need that cycle, you need the bear market sometimes where you can actually develop and hire. And so that’s a definite message I want people to get.

1:01:06 The last thing I’ll say about gas fees is I tell my students, you know, back when I worked at Bankers Trust, you could call me up and maybe seven other global financial institutions to get a price on the complicated derivative I was about to sell you. Maybe seven others And that’s why we always scout you on the prices, and we put, made tons of money. But in this market when gas fees are high, everyone and their mother is trying to come in here, in the free market, to try to offer you new solutions.

1:01:30 Now they all got bumps and issues and technology things, and I think we’re going to talk about that right now, but at least there’s competition, and it’s obvious what’s happening with the gas fees. It’s obvious that you’re losing this huge amount of money, and someone wants another solution, and maybe that’s why we’ve seen what I’m calling the layer one wars play out right in front of our eyes, and probably will play out for the next 12 months, and I’d love to get some of your thoughts on the layer one wars. You know, back when Cardano was hitting a PR peak, I’d say a few months ago, I asked every guest again been on London Real, well, is Cardano going to be Ethereum?

1:02:04 And I thought a few would say yes, and every single one of them said no. They said you can’t beat the network effect, the developers, the history of Ethereum, and they said look, we’ve been hearing about Cardano for a long time, but we haven’t seen the actual applications, and I thought it was a great little market survey, and it made some good points, and I’m not saying there’s not a lot of potential there, and I’m a big fan of what Charles is doing, but you have to also see, like, is it actually happening? So let’s jump into some of the layer ones, because I know you look at, at times, AVAX, Cardano, Polkadot, any others that are on your horizon, and how do you look at those?

1:02:43 Yeah, I mean, I think all of them have value. I mean, they’re all sort of doing a different play, right? I mean, Cardano, Polkadot, AVAX. There’s also Solana, who’s done really well There’s other, there’s other solutions. I mean, there’s tons of them, right?

1:02:57 I mean, Binance Smart Chain, Luna. I mean, there’s so many. Tezos, Cosmos. Yeah, there’s a lot of different solutions, but look, a lot of them are, you know, you try to solve the blockchain trilemma, basically, right? And you can’t really solve it.

1:03:11 It’s basically an optimization problem so you want to have security, scalability, decentralization. This is what Vitalik said back in ’15. It was a trilemma, as if it can never be solved, because you’re always sacrificing one for the other, right? Exactly. Yeah, it’s an optimization problem, and you know, you can try to have one thing that’s better than the other, but, and one thing might make it seem like one project is better than another, but if you really pull the, you know, if you pull the layers of the onion back, you can say, all right, well, they’re sacrificing something to enjoy the lower fees, or maybe the fees are lower because the demand isn’t there.

1:03:46 Like, maybe no one uses the chain, and that’s why the fees aren’t high. One of the reasons the fees are high for Ethereum is because the demand is really high on Ethereum. Everyone wants to use Ethereum. And you know, the idea, I’ve said this before, right, the idea that Ethereum can’t solve, I mean, look, they could raise the gas limit and instantly fix the fees if they wanted to. The problem is it would lead to a more centralized blockchain, which is not what they want to do.

1:04:11 You know, again, the Binance Smart Chain started off as a clone of Go Ethereum, right? It’s supposed to start off as a clone of that back in the day, and, you know, they had really low fees, right? It’s extremely low fee, super quick to use. You know, but that doesn’t mean that it’s better than Ethereum. And, you know, you could, there’s, I know there’s some people that have had trouble keeping their nodes in sync at certain times, so everything is a trade-off, right?

1:04:35 And I’m not saying at all that, you know, having cheap or you know, being super quick, obviously Solana has been a great play, and Solana is probably going to continue to do well if I had to speculate on it. But it’s also more centralized than Ethereum, right? That’s the big criticism. Solana, it’s super fast, but it doesn’t seem to be the most centralized. Everything seems to be kind of held with some of its founding members and VC members in a small number of nodes.

1:05:01 Again, I had Emin from AVAX, who also questioned their transactions per second and said that maybe they weren’t right, but they’re all, they all kind of have a new proof-of-stake consensus play that they’re enacting, but like you said, they’re not nowhere near as decentralized as Ethereum, and sometimes we forget that because the speed is, it’s so nice to have, isn’t it? And the cheap, well, yeah. And I think it’s great that, I mean, honestly, I think it’s great that these projects like Solana and all these projects are exploring this, because, look, you know, we’re not just going to sit around and wait for, you know, four years or whatever for Ethereum to get everything figured out.

1:05:38 People want to explore what DeFi is capable of today without having to spend a hundred dollars per transaction. Right? People want to do that, and they should be able to do that, and people should be able to, you know, to explore the space, and look at other ways, because look, there is a case to be made that there are some people in the world that might not care if the project is centralized. Right? I mean, there’s some people that certainly might not care about that and what they want is a product that works today, not a product that’s theoretically going to work five years from now.

1:06:05 Yeah, that’s an important point. I was talking to someone the other day, and I said, Amazon is centralized, but we love it, and it works really well. Right? So again, the theory of Bitcoin was always this, you know, bit of a rebel play. Right?

1:06:16 A bit of a, you know, it’s not the institutions of the government, and I’m a big fan of that, not such a big fan of governments, banks, censors, even tech platforms. But like you said, it doesn’t mean it can’t work. It’s just not what the other things are. It’s a different investment. You could, you could argue that it’s just a different investment, like, you know, if you want to make an investment in a decentralized protocol, like a layer one, Ethereum is the most decentralized one in my opinion.

1:06:42 Right? I mean, of course people would debate that with me, but, you know, if you want to make an investment in something that is maybe a little bit more centralized but has super quick transaction times, has lower gas fees, but there’s so many other blockchains you can go with, and we we see people doing that, and there’s value there. I’m not saying there’s not value there, but I don’t think they’re going to like say flip Ethereum or anything like that, just because I think that Ethereum is pretty far ahead.

1:07:06 So yeah, I mean, look, all these different projects are sacrificing, so, and one of the things with Solana too is that the chain is growing by terabytes per year, and it’s becoming more and more expensive to run a validator, and that’s one of the reasons it’s centralized. I know because I looked into it. I tried running a validator on it, or I wanted to, and it was just going to be, it was just going to be pretty expensive, and so I decided not to. But it becomes like a data problem, doesn’t it?

1:07:31 It becomes almost a data issue well. And Polkadot, Polkadot is another project I like. You know, I like the whole idea of the parachain slot auctions, and why not? But also, I mean, you know, Polkadot is prioritizing security, which is a good, I mean, it’s not a bad thing to prioritize. Right?

1:07:45 It’s not a bad thing to prioritize, but, you know, I wanted to run a validator on Polkadot, but I, I can’t, because they just were not accepting new nominators at the time, so even if I try to launch one, no one could go delegate to me, so it was a little bit, I mean, it was more centralized as well. Cardano is, you know, I think Cardano is more, it’s more decentralized than Polkadot and Solana. But one of the issues with Cardano, of course, as everyone knows, I mean, there are smart contracts that are out, but until they get the Plutus back in deployed, people can’t really build, you know, and pass their beta testing of it.

1:08:17 Of course, people are actually having trouble building things on it. So, you know, all these different projects, they all sort of have their advantages, their disadvantages, And you just kind of have to figure out, like, what do you think the market’s going to value, right? If you think the market’s not going to value decentralization and invest in projects that are focusing on security and scalability over decentralization, if you think market’s only going to care about decentralization, then you know, projects like Ethereum are going to be the best play.

1:08:43 And when you look at the charts on someone like a Solana or an Avax or a DOT, do you see anything you know that maybe you didn’t articulate there, from, you know, kind of a qualitative point of view? I mean, you’re saying quantitatively on those charts. Solana has been an interesting one, and like you said, flipping, I think the closest these things are to ETH is maybe an eighth of the market cap, something like that. Yeah. I mean, Ethereum’s over, it’s like around 500 billion, right?

1:09:12 You know, I mean, I think that by, I think Binance Smart Chain is, like, 80 billion. I mean, it depends on the day you check it, right? Yeah, it’s like 80. So yeah, I think it’s like, yeah, an eighth or something, maybe a 10, a tenth, or an eighth for some of these changes. It’s still, yeah, I mean, it’s still a ways off for sure.

1:09:26 You know, I think one of the, from a quantitative perspective, one of the things I think to think about in terms of all these different chains, I mean, let’s go look at Solana. Solana has done exceptionally well, you know. Yeah, it’s an exceptionally well, and one of the things that I think, yeah, and I do have a small position, but, like, I think one of the things that people should be aware of, right, in a lot of these, in a lot of these altcoins, make sure it doesn’t bleed against Ethereum.

1:09:51 Okay. If it doesn’t bleed against Ethereum, then I think it’s a solid play, right? Make sure it’s at least an oscillator against Ethereum, at the very least. What I mean by that is, if you take the SOL/ETH valuation. So, look, in a bull market, everything goes up, more or less, right?

1:10:06 It’s not hard to pick a cryptocurrency that’s going to go up against the US dollar in a bull market, right? But does it go up against Ethereum? Solana does go up against Ethereum, right? Historically, how, I mean, it’s been range bound here for, you know, a few months now against Ethereum, but it shows that it’s able to hold its own against Ethereum. AVAX is one, you know, that we talk about a lot, and it’s been, it’s at the very least it’s an oscillator against Ethereum, right?

1:10:29 At the very least, and it sort of just has these periods where it comes down, again it goes back up, it comes down, it goes back up again. This is not against the US dollar, this is its valuation against Ethereum. Make sure that it doesn’t just go down. Okay. And to give you an example of things that go down against Ethereum, right, and the reason we talk about this is if you buy, if you buy into the narrative that Ethereum is a blue chip, if you buy into the narrative that the cycle is going to lengthen, right?

1:10:55 If you bind to that, which I feel like we’ve provided the evidence for, then why would you take on more risk to hold an altcoin if it can’t even outperform, or at least give you the same returns as Ethereum throughout the market cycle? Litecoin is a great example of a coin that people, you know, a lot of people like to talk about, but look, look at the Litecoin/Ether valuation. It just goes down, right? I mean, all it does is go down, and you have to look at this and say, look, I mean, you know, since 2019 the Litecoin valuation against Ether is down 91 percent.

1:11:25 You know, so is Litecoin going to trend up in a bull market. Yeah, again, it probably will, right? I mean, it’s hard not to, but you’re taking on more risks with a lot of these different altcoins, and they’re bleeding against Ethereum, so you have to keep that in mind. Does it bleed against the blue chip? If it bleeds against the blue chip, then why do you even bother?

1:11:42 Yeah, that’s a really strong point. I mean, besides things like Litecoin, Ben, are there other examples that come to the frame of mind where people, as humans, we don’t actually have a very quantitative measure, and we just kind of repeat these. Sometimes we get into tribes, and we have these things, and we don’t realize, wow, Litecoin hasn’t done anything in two years, and I really didn’t want to own that. My portfolio, are there any others to just kind of be aware of that you flag?

1:12:05 Obviously, these layer ones and outperforms tons of them? I mean, XRP. Yeah, I mean, XRP is one that did really well last cycle, but look I mean, you can’t deny the fact that since December 2018 it’s down 94% against Ethereum. From me, you know, a 94% drop. So basically, if you had invested in XRP back in 2018, if you’re down 94%, even though the valuation isn’t that different from what it was back then.

1:12:32 I mean, back in December 20 2018, you know, I’m guessing XRP was trading for, what, I don’t even know what it was back in December of 2018. It was, let’s see, it was around 40 cents, so you can see it. Yeah, it’s done at 2x since then, but the problem, right, is that people need to understand that back in December 2018, Ethereum was at 87 and now it’s at over four thousand dollars. So you have to think about opportunity cost, right? I mean, a dollar in Ethereum back then was a lot better than a dollar in Litecoin or XRP.

1:13:03 And there’s other relics from the last cycle. There’s Dash that, you know, a lot of people like. That last cycle, look, it bleeds against Ethereum you mentioned AVAX. You know, AVAX is a coin that I actually do rather like, and I don’t own a position in it. Like, I thought about getting one, and I honestly would like to secure one, but the problem for me right now is that it bleeds, like, it’s just going down against Ethereum, right?

1:13:27 Yeah, so I look at this and, just like, week after week after week, it’s just down 5% against Ethereum, every single week. You know, 3%, 5%, 8%, every single week. So what I’m looking for for coins like this to secure a position, I’m like, look, I’m not gonna try to catch a falling knife. I’m gonna wait, and if I see it start to turn around, then I might, I might consider it, but until then, you know, it looks like it’s just bleeding and disappearing. But look, there’s a lot of coins that do this.

1:13:54 I mean, it’s not, I mean, there’s, you can find tons of different coins that, what they do is they bleed against Ethereum. I mean, you know, there’s some of the, some of the Bitcoin hard forks from last market cycle that, you know, some of the forks that no one cares about anymore, really, but look, I mean, Bitcoin Cash bleeds against Ethereum, right? I mean, think about most, a lot of different cryptocurrencies, even the ones that are doing somewhat relatively okay today, are still bleeding against Ethereum.

1:14:21 So don’t ask yourself, is it going to go up against the US dollar? Ask yourself is it going to outperform Ethereum? If it’s not, then why bother? That’s the point. And if you have other if you have specific ones I can look at, let me know.

1:14:31 I mean, I’m happy to pull more up, but I’m just giving you a brief example of a few different ones. Yeah, that’s super helpful, and most of these are tech plays, so we can compare it to Ethereum as opposed to Bitcoin, because it’s kind of the blue chip tech as opposed to the blue chip asset play. Right, right, right. I mean, I well, I think too, like, you know, if if they cannot perform Bitcoin, then you really should be looking at them, because Bitcoin is.

1:14:53 Yeah, but if, really, hold them hold your altcoins to a high standard. If I see an altcoin bleeding against Ethereum, I don’t necessarily immediately sell that position, because, you know, sometimes they can turn around, right? But what I would say is I’ll stop buying into it like, I’ll stop DCing, and if I just see it going down against Ethereum every week, I’ll just, I’ll just put that money into ETH. Yeah, that’s probably one of the biggest lessons of this whole show: value it against Ethereum and if it’s not doing really well this year, you probably are bleeding against Ethereum, because Ethereum’s outperformed, and you might have legacy positions or emotional positions with some of these currencies, but if you’re being honest with yourself, you’re not getting anywhere near a proper risk-reward return.

1:15:32 So, right, stop yourself out, take a break in cash for a bit, and then get into the intelligent plays, right? Which is, yeah, and tap into some. I mean, some of the coins I hold have experienced that. Like, Chainlink is a coin that I like, and I think it has value. It’s down 84% against Ethereum since August, September 2020.

1:15:52 So, you know, you have to look at these things and be pragmatic and say, well, look, I mean, you’ve got to watch it, but do I want to try to catch the falling knife and bet the family farm when it’s just bleeding? Is Ethereum? No, I’d rather wait for it to turn around, and then kind of see what I think is possible Second, probably most important thing you said today, Ben, is something I heard from the day I got on the training for Wall Street, which is the phrase, the trend is your friend.

1:16:19 The trend is your friend, which, if you look at it, sounds like a nursery rhyme and doesn’t mean anything, and everyone said of course, that’s obvious. You could probably spend 40 years understanding what that phrase really means, right? And then actually acting upon it is another thing, but it’s something that you’ve said to me probably eight different times on the show, Ben, in various chart forms. When you see it going against that moving average, you just are honest enough to say, guess what, I’m smart enough to know, just stay away from it no matter how emotionally or how much I can justify it from a technology standpoint.

1:16:48 Is that how you think? Yeah, I mean, as I said, I don’t necessarily immediately liquidate all those positions if I see them bleeding against Ethereum in the short term, but there are certainly some coins I’ve held that I ultimately sold them back to ETH, you know, and I was just like, look, I can’t justify it anymore, and sometimes you know, I think the one thing to consider is just don’t marry an altcoin, right? Don’t get married to an altcoin. Remember that they’re highly speculative.

1:17:16 Some of them are gonna, you know, do well, most of them won’t, over the long haul, right? Over the long haul, only a few will survive, and make sure you have, like, your allocations in Bitcoin and Ethereum, and then speculate on some altcoins, and be happy if they go up. If they just drop against Ethereum for, you know, a long time, then consider, like, do you really want to allocate more capital to something that is giving you a lower return for more risk?

1:17:42 No, I don’t think so. So, you know, be pragmatic. Don’t fall into this tribalism mentality of, you know, or we’re gonna rally on a specific altcoin no matter what happens. I think, you know, be honest with yourself, and at some point, if you see it bleeding against the blue chips, and not to say you have to sell it, but maybe consider, if you’re putting in more money, maybe put it to the one that it’s bleeding to, right? And see if it, okay, well, if it’s bleeding against it, why don’t I put it to the one that’s bleeding against, and see if that actually gives me a better return.

1:18:10 Yeah. It’s a great point. Everyone needs to chart everything versus ETH going forward. I think it was Dan Morehead at Pantera Capital. He posted something recently, and, Ben, he posted the logos of all of the top three market caps from, like, the last seven years.

1:18:23 I couldn’t, I couldn’t recognize 80% of them. Like, I just couldn’t. Oh yeah, and we all remember well. Currently, what is it? Cardano or Binance or Solana or Tether, depending on what the day is, and we all are used to these names.

1:18:35 We’ve been hearing about them for the last 12 months, but if you go back like, I’d never heard of some of these, and I still haven’t heard of them, and it’s just a good sobering thing to remember. That maybe highlights the blue chip concept: a lot of these come and go, and you shouldn’t get married to them. But, you know, Bitcoin and Ethereum have been here for a while, and there’s a reason there are the blue chips. I mean, it’s completely true. I mean, just go look at a chart from 2013, right?

1:19:03 I’m showing you here right now. Like, the top coins, you’ll recognize Bitcoin, Litecoin and XRP. Most people in the space have never heard of Peercoin, Namecoin, Feathercoin, Novacoin. I mean, look at these, right? And most people have not ever heard of these, BBQ coin, right?

1:19:19 That’s what I like to point out now, a lot of people have never heard of these coins, and you could even go, you know, you could go to say 2016, and look at a chart. You’re probably right, more people will probably recognize these today, but even then there’s going to be people that have no idea what MaidSafeCoin is Lisk, Factom. I mean, a lot of, they just, you know, they come and go, right? They come and go You could argue, you know, I guess the counterpoint for that is you could argue that back then a lot of those coins were just absolute jokes, you know.

1:19:47 They weren’t actually trying to be serious, just because there wasn’t really much around. So I would like to think that there’s probably at least going to be a few of these projects in the top 10 today that will be recognizable in a few years, you know. I imagine they will be Especially because, you know, when you’re getting into a market cap of, say, 50 billion, 100 billion, it’s a lot different from back then, when you had market caps of a few million, right?

1:20:06 But, you know, I still would argue that in five years there’s probably going to be coins in the top ten that don’t even exist today, right? They don’t even exist today, and that’s something you have to keep in mind and that’s why you really should always have an open mind to new projects coming out. But don’t forsake your blue chips, and those are Bitcoin and Ethereum. Yeah, it’s a really good point. And, again, just want to say you mentioned AVAX earlier, and we had Stani Kulechov in studio, and again I’m a huge fan of him his innovation, all the great work they’ve done.

1:20:35 But now it’s a piece of code that kind of exists on the web, and it does what it does really well, but it is kind of this simple protocol, and I know he’s working on Aave Arc and bridging institutions and stuff, but maybe you can kind of see why maybe it hasn’t kept up with Ethereum, because it doesn’t necessarily have all these new use cases and all these new markets around the world, and, you know, Stani said I want to fund NFTs at some point, but it’s also maybe the nature of the beast is that it’s this, you know, beautiful simple protocol, which created DeFi summer and created all these other things, but it doesn’t have these massive aspirations like an AVAX or a Solana, etc. So why would you expect necessarily these outpaced returns? Maybe Uniswap, you’d argue the same thing, although maybe there’s some more upside there, I guess, to be seen.

1:21:16 To be continued. Right, right. On that note, NFTs What’s your take on them? I know it’s a big topic, Ben, but, well, what have you learned about this marketplace you know, I mean, I think NFTs, you know, I mean, obviously they launched mostly in the form of digital art. I honestly think that digital art is probably only scratching the surface of ultimately what NFTs are probably going to be one day I mean, I would like to imagine that one day, you know, I could prove ownership of my house on the blockchain, you know, stuff like that.

1:21:47 I think the NFT space is going to go through bubbles like every other space, you know. It’s not immune to bubbles. We’ve already seen that. You know, it’s already had a couple of these bubbles where it goes up and it comes back down. I think it’s, I mean, honestly, I think it’s promising, especially as, you know, it might get integrated into gaming and whatnot as well.

1:22:07 I don’t personally spend a lot of my time following it. I mainly mainly focus on, you know, actually, like, Bitcoin, Ethereum, and actually momentum plays among those, but I do think that the NFT space is promising, but with that said, I think, like, anything, right? Like the ICO craze, like whatever’s going on today, and whatnot like anything, there are going to be a lot that just go to zero, right? And we cannot discount that most of them are probably going to go to zero, but there will be some that will stand the test of time, and And then I think that the people that continue building out the NFT space are gonna be the ones to figure out what comes next, right?

1:22:55 How do we take this to the next level? And you know, I imagine NFTs are here to stay. I don’t think they’re going anywhere. I think that people are gonna, as I said, I think that some of them, a lot of them, will ultimately go to zero, but there will be a few, kind of a similar thing to the ICO craze back in 2017, right? That’s, I think, a good good example of thinking, like, okay, you have a lot.

1:23:13 They all kind of come up for a while, they go up. Some of them will stick around, you rebuild, and then you continue growing in a more healthy manner that makes you know, it’s a lot more rational than having things just go up every single day just because of whatever reason, you know. Yeah, it’s a fascinating space, and like you said, we saw a pop before with, you know, CryptoKitties and stuff in the past. Have you been around long enough? You’ve seen kind of NFTs pop now They’re back up.

1:23:37 It’s a, they’re a strange being, and I’ll tell you, Ben, if you ever go to my various houses and flats over the years, you would not have seen a lot on the walls, right? And my, you know, my fraternity house at MIT, I had white walls for, like, four years. I’m not exactly an art collector, but when I look at NFTs, I find myself, like, it’s hard to look away. Sometimes you’re kind of captivated by some of this art, and it’s unique, and I’m like, I can see how it captivates the market and doesn’t make humans make irrational decisions.

1:24:06 I guess it makes humans make human decisions, because art reminds us of all the things that candlestick charts don’t remind us of, right? Art. Yeah. I mean, I should say I do think there’s value. I do think there’s a lot of value in NFTs I’ve actually bought NFTs myself, and I find value in some of the NFTs, and it’s kind of cool to like, you know, see them in your wallet, you know, and see, like, these pieces in your wallet.

1:24:28 Yeah, I think that’s a really cool thing. Yeah, I have a 17-year-old daughter, and I had her on the show, and we talked about crypto, and then she got a MetaMask wallet, and again, she’s 17, so it’s very hard for me to be cool I could show her, like, a percentage return on Bitcoin, and she wouldn’t even blink, but when I bought an NFT and showed it to her, like, that, she thought was cool, and when I gave her an NFT that was, like, super cool, and so, you know, these things cut through in a way that it’s hard to ignore. They’re here to stay, but like I said, they’re the first iteration.

1:24:58 They’re probably what. I had Andreas on Sonopus here in 2015, and he said, Brian, he said the first time you experienced the internet was when you sent an email, and that’s what we thought it was for most of the ’80s, and I sent an email in 1989 to my brother, and then I didn’t use the internet for four years, right? And I was at MIT, and there was no internet because no one carried it, because there was no browser, and let alone a Facebook 2.0 and let alone a 3.0.

1:25:24 So again, I think NFTs are in a similar stage. We see it as a JPEG now, where in the future it will be our data, our lives, access, all this crazy stuff, and when I talk to someone like Yatsu of Animoca Brands, and he drops the metaverse on top of that, and he actually credits DeFi to benefiting Sandbox and a bunch of his investments. You see it all kind of coming around and coming back in, and Bitcoin’s a store of value, and then ETH has all the DeFi layers, and then AVAX has the speed, and then you’ve got the metaverse plays and NFTs all rolled up.

1:25:57 I don’t think you could separate these. These are all part of the same piece, and I’m just, all part of the, all part of the Cryptoverse, for sure, and I’m barely understanding this now, and and again, you know, I’ve been doing this six months straight. So, yeah, you can’t focus on all this stuff at once, and I guess you can’t really chart NFTs for now, but I guess it’s kind of part of space Yeah, but I completely agree that NFTs are going to become a lot bigger than they are today.

1:26:24 We’re barely, I think we’re barely scratching the surface of what they’re capable of, and And I think it’s great. I mean, artists are sort of you know, exploring what they can do with NFTs and providing value to people that ultimately, you know, before would have had a hard time finding, you know, navigating that kind of stuff. So I do think you’re right. I completely think NFTs are going to grow. I also think the metaverse play, metaverse play, I think, is going to be a huge play next market cycle as well, as you mentioned, you mentioned the metaverse.

1:26:55 You know, I think we are a little early on some of those, and we’re going to continue. I mean, early, a lot of times, a good thing, right? To be early on things. We’re pretty early, but I imagine the metaverse plays are going to be a big talking point this decade. Are you tracking any of those?

1:27:10 Not yet. Somewhat loosely, you know, I’ve looked into some of them, and I think the main thing that I’m cautious about is just, like, we want to see, you know, these metaverse plays actually encapsulate people, and people, like, want to spend time in them, and whatnot, and right now we’re sort of like at the very beginning, where you can go explore some of them, and some of them are interesting for sure. some of them are like, all right, it’s kind of boring after a few minutes.

1:27:34 You know, like, what is it really to do here? But I think as this decade goes on, you know, there’s going to be some serious prod really serious projects. The projects that already exist are going to grow as well, and as I said, I think there’s going to be a lot of big mega metaverse plays, maybe even for the second half of this cycle, but definitely next market cycle as we rebuild and continue to grow the asset class. I, yeah, I think so. Yeah, and the biggest point of free press ever created was Facebook renaming their company to Meta, right?

1:28:08 So now everyone at least is looking at it. Yeah, I forced myself to go on to Axie Infinity about a month ago, and I bought three axies on ETH. I spent almost a thousand dollars, and then I had them fight some other Axies. One of them died in, like, 20 seconds. I was like, oh my God, I just lost 300 bucks, but he came back to life.

1:28:22 But look, I’m not a gamer, but it wasn’t the most exciting experience. I know it also creates pay-to-play, play-to-pay, and all these other great models for people in all sorts of countries. But I agree, we’re going to see some mind-blowing stuff coming in the future. It’s going to take a little time. So, to be continued.

1:28:38 Ben, I just wanted to finish and find out a little bit more about you I mean, did you ever expect you would be doing this, even a couple years ago, full time, and you’d have so many people that subscribe to your channel and talking about this stuff? What’s that journey been like for you? Yeah, so I graduated with my PhD in 2018, and then I worked at a national lab for a couple years. You mentioned NASA earlier, so I did NASA back in 2010. In fact, I was working at Johnson, NASA Johnson Space Center in Houston.

1:29:09 But yeah, so I graduated in 2018. I, you know, followed the crypto markets extremely closely for a long time, and after learning about it back in my undergrad, and in 2018, 2019, I was a postdoc, and I decided to start my own YouTube channel, not really thinking it was going to go anywhere. You know, I was just like, all right, I’m gonna, like, tinker with some of this data and see if it makes sense. But keep in mind, Bitcoin was trading for, like, four thousand dollars.

1:29:34 You know, like, no one. Ethereum was, like, a hundred bucks. Cardano was at two cents. You know, a lot of this stuff was like, you know, why do you care about crypto? It’s just, it’s not going anywhere, everything’s down 99, 95%.

1:29:46 So I didn’t really expect it to grow this much, especially because at the time, I sort of thought the market was somewhat saturated with YouTube channels and stuff, and it’s like, I don’t know, but one thing it’s taught me is that no, there really is not saturation. There’s definitely a place for all this type of analysis and stuff, because I think it was somewhat lacking back then. And so, yeah, I mean, it took me, it took me six months to get 500 subscribers, six months to get 500, and then after I made my first Bitcoin video on logarithmic regression.

1:30:17 Yeah, I got, like, 10,000 subscribers in the next, like, five weeks, you know, so it was basically just, like, realizing that, and then in 2020 I, you know, the channel continued to grow at, you know, a couple thousand people per month, and I thought that was insane. Like, I was going from, like, 12,000 subscribers to 14,000 subscribers in, like, one month, and now I mean, now I go up by a couple thousand a day. I know it’s been a crazy journey. I actually quit my job in January of 2021.

1:30:50 I was a staff scientist at a national lab, and I was just like, look, I mean, you know, my channel is getting too big for me to do both things, and I sort of recognize that I can’t do both things and do them both. You know, in the way that I want to do them, right? I just simply do not have enough time, therefore I have to quit doing one of them, and I found cryptocurrency, I found blockchain in general, a lot more exciting and decided to go that route.

1:31:16 And so here I am. I’ve been doing this, you know, full time for the last 10, 11 months. I love it, and I love your videos, and you do them almost every day. If you’ve enjoyed any of this stuff, Ben breaks this down into, like, 10- and 15-minute pieces, audio, on a daily basis, and he’s got a whole history where he goes deeper on this chart. It’s a great channel, and we just celebrated our 10-year anniversary two weeks ago, Ben.

1:31:40 So I’ve been there, you know, back in 2011 I started my YouTube channel, and trust me, nobody wanted to hear about me for a long time, and so I’ve been on that journey of just slow, you know, and then I’ve also coached people starting their own podcast as recently as a year or two ago, where they say, Brian, there’s too many podcasts out there, no one cares about another voice, another voice, but there always is room. I always say there’s this concept called your thousand true fans, and it was a blog written many moons ago by, I think, the founder of Wired magazine. It was a guest on our show, and it just says focus on a micro-nation, serve them well, and be you, and you know, if you just do that, don’t focus on the million fans, focus on the thousand fans first, the rest will come.

1:32:22 And so you’ve done that. I think you really, you know, you call it how you see it. You put that stuff out there on a consistent basis, and people are flocking to it. I bet there’s not many people at your research facility that quit that job to become YouTubers full-time, right? No I don’t think, I don’t think so, but, you know, life has a way of throwing curveballs at you, and you just find out, you know, you make the best decision at the time with the information you have and you move on, and I think, you know, that’s just what I do, and, you know, I’ll continue to make the best decisions I can, and at the time it made sense for me to do it, and I don’t honestly, I don’t regret it at all, and I think that, you know, this whole industry offers a lot of opportunities for people to build, you know, become part of build something in the Cryptoverse, right?

1:33:22 You know, there’s the metaverse, there’s gaming, NFTs, like, build something, right? Build something and that, I mean, that could be a great investment in and of itself. Yeah, I met a couple of young kids on the tube the other night, our public transport system here, and they were like, oh, Brian, what do I do? And I’m an entrepreneur on this, and I’m like, broadcast yourself and do it on, do whatever you’re doing, do it on the blockchain. That’s what I told them, and they’re like, what do you mean?

1:33:45 I’m like, just do it on the blockchain, so whatever your passion is first of all, broadcast it, so you know, you’ve got to talk about your ideas and your IP. And I said, do it on the blockchain. And I don’t know if they understood, but, you know, it’s the advice I’m giving to everybody including my daughter. It’s what Dan Morehead of Pantera Capital, the fund, what is it, Pantera Capital, demo right, sorry, he said blockchain is what he says to all the kids these days.

1:34:09 And again, it doesn’t mean you can’t go and major in nuclear science or mechanical engineering, but, you know, keep the side hustle going, keep learning, because this is the next thing. You know, yeah, and what about the next year for you? What’s the biggest challenge for you? What are you trying to do with your channel, business, et cetera? Yeah, I’m trying to, yeah, I’m trying to generally grow the business.

1:34:33 I have about, I have like 10 employees that help me grow the, sort of, the private channels and whatnot, like the business side of things But yeah, I’m trying to, I wanted to become more of, like, a more well-known quantitative type finance company, where we were basically just look at cryptocurrencies but maybe even beyond that, but really, like, look to see what’s going on in the asset class, and how we how we can make sense of what’s going on, mostly from a data science perspective. And so, you know, I’m trying to grow that right now, and we’re, you know, we’re putting together a team of, the best way to grow that, and so that’s sort of the dream It’s just to become a more well-known player in the space. That’s a great idea.

1:35:20 I love that dream. tell me, how can people learn more about your services, follow you, and get some of your other products? Yeah, so I mean, my YouTube channel is a great place to start. We put out daily videos, sometimes twice-daily videos, and I think it’s a great place to start. We mostly cover, you know, the stuff we’ve talked about here occasionally we’ll do a little bit of fundamental analysis, but we mostly leave that for the bear market.

1:35:44 And I have a website, IntotheCryptoverse.com. And then, of course, you know, there’s Twitter and whatnot. You can follow me on as well, and I’m fairly active on all these different platforms, but I’d say the primary thing to take away is, go check out my YouTube channel. Just my name, Benjamin Cowen, and you’ll find all these types of videos on a daily basis. Fantastic stuff, Ben.

1:36:04 I really appreciate your time here. Any final thoughts from anybody watching or tuning in about markets in general or the future, just anything? Yeah, I guess the last thing I’d say, I mean, first of all, thanks for having me on. It’s been a pleasure to be here. If you guys aren’t subscribed and you’re here because, you know, you saw me, make sure you guys subscribe here as well.

1:36:21 But maybe the last thing I would say is, you know, don’t get chopped up. Hopefully people don’t get chopped up by some of these daily movements in the market, because it’s just I, it’s just background volatility, right? It’s just background noise. We’re not getting out of bed for 56,000 Bitcoin or anything like that. Let’s wait, you know, just remember time is on your side.

1:36:40 In the market cycle, I would argue time is on your side, but even outside of the market cycle, even if you don’t trade the peaks, right? Even if you don’t, in general, the cryptocurrency asset class will grow, and you can invest in it, you can help build it, do whatever, but don’t get left behind. Don’t ignore the cryptocurrency asset class. Don’t ignore blockchain. Fantastic advice.

1:37:01 I love it. All right, good stuff. Follow this man, follow his YouTube account and Twitter, et cetera, and go check out his products. I really appreciate your insight. Ben, let’s do it next time in London.

1:37:11 So, let’s see if we can get you over here, and we’ll sit down in the leather chairs next time. Really appreciate what you do you have a really unique perspective, and I’m a big fan of the way you look at these markets. So thank you so much, and thanks everybody for watching. We’ll see you next time on London Real. Take care, everybody.

1:37:24 Bye. Thank you.