Coming to you from Station3 in NYC, the next installment of the 4-Year Journey series.
Agenda – 
Short-Term Headwinds
The First Cycle Scare
What’s Your Response?
Looking Ahead – Left or Right?
Has Bitcoin’s Long-Term Proposition Changed?
Narratives Beyond – 
Halvening – FED 2024 – BTC ETF

This is Bob Lucas here on September 7th, 2023, coming to you from Station 3 in New York City.

This is yet another installment of the 4-Year Journey.

Mostly I want to focus on the short-term headwinds we're experiencing and the headwinds I think that may last a little bit longer.

So this really is the first scare in the four-year cycle.

And if you look at all prior cycles, and if you look at Bitcoin's history, these scares are something that we need to embrace.

And therefore, we need to have a response and a preparation for how to respond in different marketing environments.

And then looking ahead, talk about the left or right translated possibility.

But more importantly, again, as is the theme of the four-year cycle journey, we want to focus on the long-term and has the long-term proposition changed in any way?

Are we caught up in the short term narratives or the short term price action that takes us away from that long term view that has worked so well in the past?

So Some of the narratives I want to talk about is, of course, the upcoming halving, which of course, even though I believe it doesn't have a direct impact, it has an impact on sentiment as a whole.

And then the Fed in 2024, likely to be a lot more accommodating and providing a tailwind for this market and risk markets in general.

And then of course, the news more recently about a Bitcoin ETF, the possibility of 1 being approved, I think is at its highest likelihood that it's ever been at and I think it's more of an eventuality at this point not necessarily this year may not even be next year but I believe we are 1 step closer to that being a reality and I think that will be a massive driver of This current four-year cycle.

Thanks for being here and Let's start with a look from the monthly perspective It's always good to look at the monthly first it gives you a better and clearer picture of that long-term view and the 1 thing that really sticks out and makes it very obvious is that the four-year cycle ended the last cycle ended in November here on that month 49 candle.

So there is really 0 doubt in my opinion that this is yet another four-year cycle.

When you look at prior cycles since Bitcoin's evolution, we notice that yes there's a diminishing return as we get into the higher market values for Bitcoin.

But each cycle has been right-translated and has put in pretty significant gains from the prior 4 year cycle.

So the first thing that we say is that there is no evidence here that Bitcoin won't continue this trend at this point.

It is still in a very much long-term secular bull market uptrend that has been disrupted 3 times by these cyclical bear market downtrends.

A reversion back to that rising mean, a means to essentially wipe out excess sentiment that builds up the frothiness and those bear markets serve a function to set the scene for yet another bull market.

The other observation I have here is that yes, we had a good sort of doubling off the bottom, but unlike say the prior cycle, we didn't get into any sort of excessive levels from a sentiment standpoint.

It's been very much controlled and a sort of orderly increase here or rise in this early part of the four-year cycle.

And from a structural standpoint on the monthly chart, at least, we're still at around that 10-month moving average, which is of course rising in this new four-year cycle, in the new bull market.

So from what I can tell, we're of course in a secular bull market and we're also in a cyclical bull market, meaning that we're in the early phase of the four-year cycle.

We're in the rising portion of the four-year cycle.

However, the headwinds I discussed in the start of this video really showed themselves here on the weekly chart.

The weekly chart is where we are seeing some structural damage occur as you can see for the first time since the bottom of the four-year cycle back here in really November and then when it took off here in December, up to a peak in April and then a decline down into what is a weekly cycle, a cycle that is around the 26-week span.

The new cycle from that point made a good quick move back to the 2023 highs, spent 3 or 4 weeks trying to get out of that level and then really failed to break to the upside.

And this structure here, this turning of the 10-week moving average and the 60-day cycle, which is represented by these green arrows, hasn't progressed and continued in a dominant fashion of putting in these higher highs and higher lows.

We have stalled at a time when the market really, I don't think, should have stalled if it was still in a very short-term or intermediate-term bullish uptrend.

And by that, I mean more in particular the grayscale SEC court ruling of recent note.

That ruling should have been extremely bullish for price action and of course we had this 1 day spike in price and then it was reversed and the market has done very little since.

So currently, from a weekly chart perspective, it is sitting near some very key support levels, which by the looks of this chart at the moment, feel as if the break will come to the downside.

I think there's, in the next 3 to 4 months a more or higher chance that this market breaks below the key level that was formed in June and begins to head down to some levels that we saw earlier in the rising portion of the cycle.

And I point this out because we are experiencing headwinds and sentiment is reflecting this price action.

In a time when really again like I said with the SEC court ruling the market should have been much higher by this point.

So what's important, though, to understand from a four-year cycle perspective, if you're taking on the challenge of not adjusting your portfolio on a day-to-day or week-to-week basis, or even a month-to-month basis in response to short and intermediate-term action, you need to focus on not making those changes in a portfolio in an early portion of a bull market.

So even though we have kind of this scare possibility where Bitcoin could easily fall from this point forward into the end of the year where the next weekly cycle is due.

It could easily fall down to sort of this 21, 500 level, possibly this 19, 000 level, and it's not completely out of question that this yearly cycle ends with a complete retrace all the way back down to close to where the bull market began.

And if we know anything about Bitcoin, if we know anything about its history, it tends to do what most people don't expect at a certain time.

And right now, there seems to be a pretty good expectation that Bitcoin is top for the year and that we're heading much lower.

I think this chart is telling us now that we had a great run off the bottom.

It served to confirm the new four-year cycle and the bull market is in.

In my opinion, anybody right now that thinks we're in some type of longer duration bear market and this is a small rally, I think is incorrect.

At least that's my view from a 4 year cycle perspective.

But it doesn't discount the possibility or it doesn't remove the possibility that in the early portion of a four-year cycle that we get in that first year a counter trend move back, a retrace, call it what you want, back down to some key levels that we saw late last year before the bear market Ended that still remains a possibility But at the same time the whole point of the four-year cycle journey is that you don't try and respond to these movements because it often, again, will surprise in the direction that is against your position.

So when you try and make these moves, then you become essentially a position trader or a swing trader.

And that is not the goal of the four-year journey.

The four-year journey's goal is to capture the meat of a four-year cycle move which generally has been the three-year rising portion of the cycle.

The key to making such a strategy successful is to get in as close as possible to the lows of the bear market and of course to exit at the or near the top of that four-year cycle.

We did that of course in the last cycle back in 2018 and we pretty much did it again here around the $17, 000 mark in this cycle.

So once you establish that early position in a four-year cycle, The goal then is to ignore the noise, ignore the FUD, and just appreciate that we're already up around sort of 50% at this current level from those lows, and that we can't time, or we don't want to at least time, not for this strategy, and try to capture the wiggles of a highly volatile asset like Bitcoin.

You have to take the 20 and 30% and 40% declines that seem to come fairly regularly in Bitcoin's four-year cycles.

Most four-year cycles will have approximately 8 periods of selling, of retracement, of 32% on average declines.

And if you are capable of trading those, then you're not following the 4 year journey.

You're following more of an active trading strategy.

I think a lot of people are capable of doing that for the majority of us who want to capture The cycle without the headache without being caught offside The point here is that we need to appreciate that from a long-term standpoint Has anything really changed right has has bitcoins long-term proposition change in any way?

Has there been anything over the last 6 months, from a development standpoint, from a code change, from a regulatory standpoint, from an adoption standpoint, that tells us that this long-term four-year cycle view or this secular bull market view has changed.

And I think the answer, at least for me, is that no, it hasn't.

Nothing has altered my view on the long-term viability and on the long-term secular bull market that we're in.

So when I frame it from that perspective and realize that I'm investing for the long-term, and I don't think there's been any real material change in bitcoins long-term proposition Then I begin to get more more confident again to realize why I am invested in the spot for the long term and that the short-term narratives, although are important for traders and active investors, very active investors, for the long-term folks like you and I here on the four-year journey time frame, They are meaningless.

And it's important that noise and what we hear on social media does not impact and influence our long-term position.

I get so many comments and questions About people following a long-term strategy, but for some reason they got caught up in the day-to-day in the week-to-week They got caught up in some news sound bites Well, they followed somebody that said something that sounded extremely bearish in the short term and they decided to possibly sell their position often at the wrong time often after a significant move lower Because they were afraid They were afraid that it was gonna move much lower.

And it's typically at that point, the market reverses.

Of course, we've gone through this for the last 4 or 5 years.

So the goal here is to appreciate that we have to widen our lens and have that patience, have that discipline to focus on holding that position because we're in early, And if need be, use any headwinds, any downtrends, any scares in the market to possibly add some more.

So if you've had a change in a situation or you've saved some more money or you wanna allocate a little bit more, you wanna use those events, those 30% decline events or those mini panic events that occur as the opportunity.

You wait patiently to add but you certainly don't sell at that point.

The other thing is of course and I mentioned this in most of my videos that position size is really important.

I know the larger position you have the more you can possibly gain by holding to the end but that comes with a danger of having too much at stake for you to be able to handle the ultimate scare that will come in Bitcoin at some point in a four-year cycle.

I don't think there's been any cycle, maybe even any year in Bitcoin's history where we haven't seen a big 40 to 50% decline.

The average is around 30%, but there are a sprinkling of events in even the most bullish Bitcoin environment where it would drop 40, 50%.

And if your position size is not adequate enough to handle those drawdowns, you'll end up really doing some damage to yourself by selling at the very wrong time.

And then having to watch the FOMO develop to a point where you buy back in and again, sort of a double whammy where you end up buying again at the wrong time.

So you're selling at the wrong time and you're buying at the wrong time.

So, I mean, you should know by now over my last 4 to 5 years of recording these videos, that there's not a whole lot of action in this strategy.

It's getting in and out at the right time as best as possible, getting in very early in the four-year cycle and trying to get out near the top of that cycle.

And then the other component of the strategy is sitting on your hands, taking a very long-term view, and ignoring all of that noise that you hear on social media about people making money with leverage, and 20x, 50x, 100x futures, and so on, And realizing that that is a game for professionals and even a lot of the people that you hear online that you think may be making money, I can tell you that most of them are not.

And So unless you're a professional trader that knows what they're doing, which most of you are not, then the best strategy, in my opinion, is to hold these positions and Focus on something else.

Focus on learning more about the technology itself and be more of a better participant.

But like running a node, for example, learning how to better self-custody and spreading the word in general.

But holding that position is paramount and extremely important.

So where do we possibly go from here and is this, could this be a left or a right translated cycle?

I gotta say now the last 3 months the sideways move consolidation and the threat of a scare or downside move to come is really beginning to take the left translated cycle view out of the picture.

This box here would represent a top in the cycle between 12 and 18 months, which is around about where a left translated cycle would peak.

And a move to all-time highs in a left translated cycle manner is becoming far less likely the longer we spend time below this $30, 000 range.

The steepness of a move to a peak is becoming prohibitive, although we have had periods in the past where the market has moved in a similar fashion.

If you look at, for example, the period here from October 2020 up to a high, we will need to have something similar occur from this point for us to have a blow off left translated cycle high.

I think based on the way the market's behaving right now, it just doesn't seem possible.

It seems like we need a few more months moving at best sideways.

I think the only narrative that would form that could occur that could drive a market up to a frenzy in a left translated cycle manner would be an approval, a surprise approval at this point of a Bitcoin ETF.

I think if that were to occur, the market would take off and not look back and probably run to an early four-year cycle high.

I mean, we don't necessarily want a left-translated cycle move.

So people like that idea, that they can see a big all-time high, perhaps in the first quarter of next year.

But it becomes very difficult to position, because you've got this long four-year cycle history where it peaks well after the halving, and in a left-translated cycle scenario, it would peak around about that halving point which goes against prior cycle behavior which means that when you combine that with a level of frenzy the level of bullish sentiment that would be around a Bitcoin market making a firm all-time high at around or before the halving, I think would create such expectations that even us, you know, being disciplined and focused on the long-term view, would find it very difficult to try and exit a position so early in the four-year cycle.

And then you run into a situation where it makes a peak run like that, it turns lower, and you don't know if the market is peaked from a four-year cycle standpoint.

And you probably will hold because you just can't trust it.

You expect possibly it to keep on going to very big numbers and makes it very difficult.

So I'm encouraged by the fact that it's taking its time, that the move off the four-year cycle low has been orderly at this point and I'm prepared to experience a move lower here on the weekly time frame, on the intermediate time frame, down towards the end of the year.

Hopefully not too much further down, of course, but it doesn't ultimately matter at this point because I'm focused for this position and this strategy on what's gonna come around that 3 year mark.

And given the fact that the left translated cycle possibility is now beginning to be reduced and the right translated cycle, the typical 3 years up, 1 year down structure and character that we've seen in the past is looking more likely, then I want to continue to focus on that long-term view.

I am patient enough to realize that I will make my gain if the prior cycles unfold in a very similar way and I have to be there in position to be able to realize that realize those gains.

So I think the most likely path here is that the next 2 or 3 months are probably gonna provide some headwind and we may even in the worst case see a move down to the teens again.

Obviously, I keep emphasizing not a prediction.

I don't know the short-term moves of Bitcoin here.

And this box represents a market historically rising over a 3 year period to a peak in the cycle and then beginning that cyclical bear market decline for that 1 year process.

That is the most likely outcome based on the history and the character of this cycle and of this asset class.

So until I see evidence otherwise, I am positioned for that and will wait patiently as much as possible.

And I will use certain situations where, although I'm not adding to the official model portfolio that we have published on the website, I will use, for me personally, those opportunities, when they come, when there's extreme fear and extreme capitulation in any given environment or in a given time period, I will use those not to run away from Bitcoin, but to go into it and pick up those positions and pick up more Bitcoin.

Of course all done in a reasonable manner, keeping the overall allocation reasonable and respectable so I don't panic when it goes down further in the future.

Now in the short term as well, again, not that it really matters for this strategy, but if we get back on the weekly here, if we get back up towards those highs around that 31, 000 level, it may stay contained in this range that's now developed between around 25, 000 to sort of 31 it could also chop sideways into the end of the year where the next weekly cycle lowers to and form a low by time and that would be very bullish in itself.

Any upside move to a new 2023 high, I believe then has the possibility of quickly running up and making a very significant run towards that $40, 000 level.

And that's again, not a reason to be adjusting your positions, but it's to appreciate that if you expect The more likely path in the short term is to the downside Bitcoin could surprise you and if it gets up to that range it makes it very difficult if you sell this area especially where we are now in support that if it gets back up and then breaks free you may find that you're locked out of buying back in because you just can't get yourself to buy back a position that you sold at 10 to 15 or 20% lower.

And then before you know it, Bitcoin with its historical kind of move or history, there could easily get back up to that $40, 000 range.

So the best path is to ignore the fear Embrace the fear by adding more if that is something that you're capable of doing that fits your allocation strategy but otherwise let it let me be like water in the sense that we can't control the short-term moves and we don't want to get involved at that level, we want to hold that position.

I mean I'm bullish besides the 3 items here on the last item, I'm just bullish that the blocks keep coming.

Every 10 minutes on average the blocks keep generating The miners keep coming they keep throwing significant amount of capital at At mining hash rate keeps going up adoption transactions and volume all seem as if they're still heading in the right direction.

Sure, are we using Bitcoin to buy coffee at Starbucks?

Are we doing any of those micro payments?

And I think we all know now that Bitcoin's main use case here is this digital gold, self-sovereign asset class, a bearer asset class.

I think there is a great place for an asset like that in a digital world and there's value in that.

At the current market cap, it still feels as if it is very early, even though we have this nominal price of $25, 000 for each Bitcoin, which sounds great, sounds huge.

But from a market cap standpoint versus other asset classes, versus just companies listed on the S&P 500, for example, it still is very early.

There's still a lot of upside potential there before this Bitcoin gold sort of narrative possibly has a limit, which I think it does have a limit in that sense.

Of course, what Bitcoin looks like in the future is likely to change and evolve as well.

We can't appreciate its evolution over a decade or so.

But for now, essentially, I'm just excited that it's 15 years in and people have been calling it a scam for 15 years, but it just keeps on going through cycle after cycle and it still attracts significant capital.

And it also has the interest of traditional finance as well.

If you look at the narratives on CNBC, the discussions, it's no longer Them laughing at their guests for talking about Bitcoin They are now embracing it and talking about it positively and talking about it as if it's here to stay which it is in my opinion So I'm excited about that and when I'm excited about that long-term narrative and the fact that it's long-term proposition has not changed and I look at its 15-year history and its growth, I feel as if it's going to keep on moving in that four-year cycle manner.

And there is the halving strategy, sorry, halving narrative that is coming into light now for next year.

And again, even though I've spoken about this, even though I don't think it has a technical dynamic from a supply standpoint anymore, it certainly has a cultural and sentiment play that helps drive price.

And I think that's sort of self-fulfilling.

But more importantly, you know, we still, Bitcoin still is sort of 40 to 50% off the lows in an environment where rates have gone up sharply.

We've come off a period in 2022 of significant fraud and rug pulls and capital that just got locked and burned.

And through all that, Bitcoin still managed since the December lows to to be up 40 or so percent, but that should also from a Fed perspective and a macro perspective I think we're through the the vast You know majority of this rising rate cycle I think we're getting much closer to a point where we at least have clarity on where rates will terminally end, where they will peak.

And I think we're getting very close to that.

And I can see a situation where if the economy slows as the Fed expects and wants, and inflation comes well back under control, that we're going to be looking forward to an environment where rates will be coming down.

And that should be also very bullish for Bitcoin.

But beyond all that, the Bitcoin ETF narrative is growing stronger.

I think the chances now with more traditional players involved make it far more likely that something is going to eventually change and that 1 of these ETFs will be approved and once approved, they'll all be approved and I'm not a fan of the ETF.

I've been very vocal on that from a Bitcoin believer perspective and ETF is not good.

All right, it means that They will be tokenized or sorry, or you know derivative versions paper versions that represent Bitcoin that people will hold, but the Bitcoin itself will be locked away in some institutions wallets and shares and will be issued in their place.

And that's really not what Bitcoin is about in my opinion.

Bitcoin is obviously a distributed technology, a peer-to-peer technology.

It's not something that's locked and vaulted by a few key players that you can then buy paper versions or paper representation of that.

But beyond that, that's my little speech on that as a believer.

But from a price standpoint, which is I think unfortunately what most people really care about only in the end.

From a price standpoint, it's going to be very bullish.

There's no doubt that these ETF players are looking for a new product they can market, something fresh, something different.

And now that Bitcoin's had 15 years to really become ingrained and people aren't talking about it as much as if it's a scam, I can see a situation where portfolio managers and wealth managers push this sort of 5% narrative that you have to have or should have 5% or some small percent of Bitcoin in your wallet or in your portfolio And that's their way to obviously promote a brand new product that is different to the other products and that will then in turn drive A significant amount of flow of capital into to Bitcoin, which means they have to purchase underlying Bitcoin as a one-to-one of the ETF and that should drive the market higher.

And then once the market begins to drive higher in a four-year cycle, in a four-year cycle that's rising, then of course it all becomes self-fulfilling and then Everybody starts to get drunk again on the frenzy and then you know what happens after that.

The market will run and run and run until it can run no more and then it will turn and it will be our job to be there as best as possible to begin this process again, this ebb and flow process of 3 years up and 1 year down Of course eventually that process that structure will change but it doesn't matter for now The goal is like anything in investing by low sell as high as you can and that's the goal We want to avoid the noise.

We want to realize that I don't think Bitcoin's going anywhere.

I think it still looks as strong as it ever has.

And I think the future still looks very bright.

And we're not that far off the low, so this still remains a place where you want to be accumulating and you want to be holding and then you want to see what comes out of it on the other end.

So I think we're gonna have again just to wrap up here, maybe, again I use the word maybe because I don't know and I don't want to know from a longer-term standpoint but we may have a scare, a bigger scare than what we've seen.

People may be tested, their resolve will be tested and how you respond that will be your first test of this cycle.

But I think 2024 is shaping up to be 1 of those years where we really make a lot of progress going up towards those all-time highs in preparation for the year after for that eventual blow-off move that All prior cycles have exhibited as well in the past.

So I want to thank you once more for following along.

This has been Bob Lucas here from Station 3, wishing you a great September.

And I'll have a video out probably maybe towards the end of October, maybe early November.

See all Bob Loukas transcripts on Youtube

The First Cycle Scare