Using OnChain Data To Predict Bitcoin Pricing With Philip Swift

Disruptors podcast. Today I am joined by Philip Swift and we are going to be talking about bitcoin on chain analytics, what they're looking like, how we can look at them, and what they tell us. Uh, super super interesting conversations that I've already had. I can't wait to jump in. So Philip, welcome to the show. Hey man, thanks very much for having me on the show. It's great to be here. And yeah, things are looking good at the market right now and it's great chatsy great right. So,

you know, I know we've had some conversations. I've been watching some of the work that you've been doing UM online and on your website. But for those that don't know, why don't you just kind of fill us in on UM you know who, what you've been doing, how you got here, and what you're doing right now. Cool, thank you. So I am a full time bitcoin trader and investor.

I have been for about two and a half years now, very passionate about bitcoin for a number of reasons, so not only from an investment opportunity, but also I believe it's probably one of the most important tools for human rights in the world right now in the coming years, as we see governments have more and more issues with their monetary and physical policies. Um. So yeah, full time trader, investor.

But in addition to that, I also build valuation models for bitcoin, so indicators and tools that helped to identify when bitcoin is under or values. That's a pretty new and emerging space within bitcoin. It's probably been in existence for a couple of years now because obviously bitcoin itself is only ten coming up to eleven years old, so we haven't really had enough data until recently to be

able to start to build valuation models for bitcoin. And because it's a unique asset class, so it has characteristics that are quite different to traditional finance instruments. Um, you can't use tools from the transitional finance world and just try and directly apply them to bitcoins, try and value it so you can't. So in traditional finance, for stocks and shares, you have things like price to earnings ratios and discarded cash flows. You can't really apply those to bitcoin.

But what we can do is try and come up with some new tools and metrics to understand when bitcoin is under or overvalued. And that's what I do, and I launched, as you mentioned, a website last month called looking too bitcoin dot com and that has a hard bunch of these different valuation models and tools all for for uh choy to make them as user friendly and nice to look at as possible and kind of live chart data form. And yeah, it's all free and one

can go and check them out. Yeah. Now, as you said, right, like typically when we're looking at trying to value financial stocks and we look at fundamentals, and the fundamentals are kind of like what you said, right, which are earnings ratios and things like that. Um, and a lot of people have always criticized cryptocurrencies because they don't have those fundamentals.

You're talking about looking at different metrics that can give us the fundamentals because they're different, right, I get that, But um, that's an interesting way to look at it and I'm just curious. I I kind of know, but why don't you fill us in a little bit on your background and how maybe what shaped you? How did you get to the point to start looking at like this. Yes, so my book is probably a little bit different to a lot of other traders and investors in the space.

Um So, I studied economics university, uh which was great in terms of giving me a good grounding in terms of how markets work. Um some macro principles around economics and maths. But like I think many of the people who studied economics, you kind of get to the end of it and think, man, this is so theoretical you kind of want to throw all your textbooks out of the the window because it's quite hard to apply a lot

of it to the real world. So I kind of left university feeling a little bit jaded, but I was still very interested in the behavior economic side of things, so understanding what makes markets work. And so I then got a career actually working for major global dricks brands, uh so, companies that own brands like Jack Daniels, Gray, Goose Bug, Hendrix, gen Ster, Artoire. So if you like a drink, you've probably had one of those brands, Um, and I. She works in a unit within these companies

which was really a strategic marketing function of thoughts. And unless you work for one of these big companies, you probably don't realize that these functions even exist. It's called Consumer Insight team and the role of these guys is to understand the psychology of your potential consumers and your consumers, right, so you're you're trying to segment them, understand their reasons for choosing your brand or for not choosing your brand.

And that goes beyond just why they think about the sector. It's around their hopes and dreams and their fears and all that sort of stuff. So it deep goes quite deep in terms of market psychology. And really that's how these brands get so big is because they have a very sophisticated understanding of market psychology. Now, if I can

just jump in at the rate there real quick. So, Um, you studied market psychology working for the big brands, and the economics was also um, trying to understand what markets are market psychology, you said, what makes markets work? Right? Yeah, I'm curious. Um, you said that a lot of is theoretical, which I think that theoretical part probably helps you today because trying to new ways to capture analytics, you have

to be theoretical. I'm curious though, Uh, you know, from everyone that I've talked to, I didn't major in economics, but I I know a lot of people who did, and uh, you know they do not teach Austrian economics, which everybody basically ends up at after they've been studying bitcoin. It seems like yea, and sometimes the university training you had can can keep you from really understanding bitcoin because you've been trained maybe with blinders on right, And you said,

what makes markets work? And it seems like what whatever you wanna call it, traditional or conventional economics versus like an Austrian is that traditional find economics thinks the market is something too understand how it works and manage and and and manipulate, versus Austroan economics understands that there is no such thing as a market. All we have as individuals wants, needs and desires. Yeah, what do you think about that? And and how does that relate to studying

the market, especially for a brand? Yeah, I mean I think I think that's a that's a fair summary, and I think a lot of frustrations come from, uh, the need if you if you were trying to focus in on a specific area, you have to make compromises and sacrifices. And often in economics the compromises and sacrifices around are around uh, recognizing that or that we're not recognizing that we are all emotional beasts right where you have emotions,

we're not rational players. And as soon as you start to assume that we're rational players, then then you start to lose understanding of how how the markets move and how the more his work. So that's why I think behavior economics is so much more relevant, particularly to the world room today, and particularly to assets like bitcoin, which

are very retail market driven. So you have therefore, you know, to your point, millions of individuals, all with their own emotions, and when they are trying to determine what they should do with their investments, they are often can be lit by consensus. It's kind of like it's kind of like, um, you say they're not rational, which I kind of agree. Misses from Austrian school. He says that, um, it's always rational.

So I might look like I'm acting irrationally, but it's rational to me because I have my own set of circumstances. So even though bitcoin is gonna go to a million dollars next year, I might sell it today for no reason that looks irround national, but maybe my kid got sick any of the money, right, So there's always national to me. But you can't manage that because it's millions

of inputs exactly. And that's really a point around context, right, which which going back to my previous employment, that that's something we focused on a lot. You have to understand people's context to really understand if you want to fully

understand their decision making process. But yeah, super interesting stuff. Yeah, anyway, Okay, so your understanding market psychology, I think, like we said, like the I think I could I could imagine that the theory that you've learned in in economic school probably helped you to start theorizing what kind of new metrics

we could look at in bitcoint. Yeah, yeah, absolutely, And really is the combination the two, right, So you have economic theory plus market psychology, and for a market like bitcoin, that that is very useful because what we're seeing is bigcoin is going through an adoption process, and on top of that adoption process we have market cycles, and so combining those two fields has been very useful um to me as as a training investor in to try and build some of these these valuation tools as well. A

couple of years. Yeah, so then you started trading bitcoin on your own, and then you started realizing that we don't really have any good metrics, and so you've decided to dig in and started to try to see what was available and what else you could come up with. Yeah, yeah, that's right. So I've been trading for probably a couple of years and that was all going well, but I found that I wasn't really that passionate about becoming a super techy technical analysis geek, and I was more drawn

to understanding the macro cycles of a bitcoin. And I started playing around with different types of data, one of which was someone chained data. So I was on, you know, using sites like blockchain dot info which posts some pretty basic on chain data, and probably late two thousand and seventeen, I think, and I started to notice that on a macro level, there was a relationship between volume running through the blockchain on a daily basis and then also bitcoin price. So, uh,

when volume through the blockchain was hitting sufficient levels. It was kind of a leading indicator to price moving up. And um, I posted a chart on it on Twitter, I think on tone vases Twitter channel, and a guy called Willie Woo, who I imagine a lot of your viewers have probably heard of. Willy Woo is like probably the godfather of on chain analysis. He's pretty amazing and I've learned a huge tone of stuff from him over over the years. And he picked it up and he

was like, hey, you love this view. I hadn't seen it before. I'd like to put it on my site and you should write a pay for about it. And so I did a called it Bitcoin network Momentum, and yeah, it kind of so I probably at the time like the first and followers on Twitter or something, and then within a week I had like two thousand followers stars like, Okay, clearly there's some interest in this, you know, clearly people

are interested in this sort of analysis. And then it really went from there, you know, because I then just started speaking to other people who are also looking at this sort of analysis and trying to build these types of indicators, and and then yeah, and that that whole space now of valuing bitcoin is really exploded. And now it is like you know, crypto funds with teams of guys doing this types of analysis. So it's just going to get bigger and bigger. So let's let's talk about that.

So first of all, um, you talk about on chain data and indicators to help us understand bitcoin and maybe identify where bitcoin is going. So what are what are the indicators? What I mean and not specifically, but what is generally? What is an indicator? What does that mean to the average person? So an indicator area is really so as an investor in its most simple form, as an investor, a long term investor. So we're not talking about trade short term trading here. I want to know

when is a good time for me to buy? When is a good time for me to sell? And these indicators show you on a historical level. So looking back in bitcoins history, um, you know when this bitcoin being extremely over oversold or other board and therefore when is it When is a good time for me to buy ourselves? And that's pretty much it. You know, when you dig into the side, is a bit more there, but in

its essence, that's kind of it really. So it's you're looking through data and basically it gives it tells you something. That's the indicator, and it's indicating here I should either buy or its indicating aations maybe sell or I should watch it. And then you also talked about using on chain data, So what does that mean? What what what is on chain data? So on chain data is essentially

transactions that happened on the blockchain. So if you send me some bitcoin tomorrow, which is more than welcome to do it, will you know, have most your public address there You're right, that will be recorded on the blockchain. And that has happened ever since bitcoin started, and so there is a huge amount of data available on the blockchain to look at in terms of size of transactions, the time that the transaction took place, the wallets that

it moved from, and too. And so you can use that data and aggregated level to look at trends over time really and those trends can give you clues as we alluded to, as to when bitcoin is sold or overbought and therefore what as you should action You could take it as an investor. Yeah, I want to jump into some of the indicators and tools, and so we'll talk specifically about some of the arm chained data, because

I know there's a ton of n chained data. And it's curious though, um you mentioned, um look at macro cycles and and and having them be like leading indicators. And I know one that has been used for for many years was Google search data, and that's not on chaine data. I understand what people would look at like Google search and you could see how the volume of bitcoin being searched on Google correlated with the price of bitcoin. Yeah, and you know a lot of people think that's a

leading indicator. I've often thought it was a lagging indicator. So leading means that, um, it tells us before the move happens, and lagging tells us it happens after. And it's kind of like a chicken or the egg argument where um, because the bitcoin price went from seven thousand to twenty thousand, everybody's searching it to figure out what the heck it is that that would be after or are they searching it and then they buy, which then

is a leading What do you think? Uh? So, I have some friends You've done a fair beatter than analysis on that, and the conclusion is that it's a pretty lagging indicator. Actually, So I wouldn't. I wouldn't put too much weight on it. Um. But you know, as with there any of these things, right, it's just one tool, and and it's something I talk about a lot, is how even all the charts I'm looking to bitcoin. I mean, the purpose of the site is really to help regular people,

not just large institutions, invest better in bitcoin. And it does despite providing a range of tools, because I believe that you shouldn't just try and hang your hat on one metric. You've got to use a range of tools, whether it's these sorts of indicators, whether it's technical analysis, Google search trends to kind of join the dots and build up your thesis. So definitely, So yeah, I think

it is a bit of a lugging an indicator. But yeah, sure, all this stuff confused, so you think you think there's other on chain data that is more of a leading indicator. So you think there is some good stuff without getting to the specifics of the actual specific indicators you have. I mean, there are a couple of metrics that you think could be good as leading. Yes, so I think you can look at well, well we'll come on to talk about them. But yeah, so on chained data specifically

like Bitcoin days destroyed. Uh that that is very useful in terms of looking at um all guys who have helped the kind of a long amount of time, like are they are they moving funds from there? While it's that can give you clues, essentially, you're constantly looking for clues and hints as to what may be coming in the market and so on. Chained data can do that,

but so can actually UM like price analysis analysis. So you know, half the charts on the site are looking at price data using moving averages to show you the broad trend of the market where and whether we get to points where the market might get ourtherheated or whereveryone might actually be very fearful, you know, because a large part about understanding the bitcoin market from an investment point

of view is about understanding it's market cycles. So it's about understanding when is the general consensus of market participants, When are they broadly over optimistic and that might be a good time to take some profit of the table, and when are they overly pessimistic? You know, when is everyone really fearful? I think what is it? Warren Buffett,

he said, you know, be greedy when everyone else is fearful. Right, If you fundamentally believe in the long term prospects of big point, then I'm being able to identify those periods can be very valuable to use an investor intend to know when to invest. Yeah, and so um, somehow the data can tell us when it's overpriced or when the market psychology, the market as a whole is greedy or is is that now? Uh? In investing, we've always said that past performance is no guarantee of future. So I'm

guessing you have to take that into account. How do you look at that? I agree with that one, you know, And what would say is that, you know, history doesn't always repeat, but it does influence the future. And we've got like tend nearly eleven years worth of data now and bitcoin, and so it does allow us to forecast what may play out in the coming months or years. But yeah, I mean, all of these tools, you know,

they none of them may work going forwards. But I think there's such an array of different types of tools that people are using now that again going back to my point before, if you if you use a cross section of them, all from different sources and kind of join the dots and they can help you forecast what may play out going forwards. Um. You know, which which a lot of funds are doing now as well as individuals with it with pretty high degree of success. So

I think there's a lot in it. But yeah, absolutely, you know none of this is investment advice. And also you know all of these tools are literally just educational tools to try and help you out. So let's talk about a couple of them. I know on your website, I think you have ten or twelve different indicators. And again I want to just impress on everybody that, uh,

one indicator by itself doesn't mean anything. Um. You want to look at all of them, like like a good example in the traditional markets might be everyone thought, oh, when the yield curve inverts, when the bond yield curve inverts, then the market's going to crash. Well that's one indicator, all right, But when you look at all the other indicators of the market, to me, it was telling me that the market wasn't gonna crash. And I've been pretty

up now we're starting to geet rallied um. And so you can't just look at one indicator like that, um. And so that's kind of what we're talking about. And and there's ten or twelve here, but there's other things, right that you want to look at. I look at also, like external things not on chain, like, um, what are companies doing? Like, Uh, we've just seen in the last couple of weeks, uh, close to a billion dollars get raised for bitcoin mining. That's a serious investment for long

term and that tells me something. We saw, you know, most of the the big elite in Wall Street jump into bitcoin just in the last month or two, um, you know, from fidality and back finally launched. And so that's fundamental. I just want to impress on everybody you want to look at all these things and what are

they telling you? But um, if we can, let's talk about maybe just a couple of the indicators that you have that we can explain without the need of charts and whatnot, And and tell me what do you think are maybe like your most powerful or most easy to use ones. Yeah, sure, let's start with We'll, like you say, given the we're not in front of the you know, the website it self right now, let's start with one

of the simpler charts on the site. Uh. And in fact, I kind of designed it to be as simple as possible because I wanted this side to be useful for anyone, whether they are you know, Omega on chain analytics geek. There's some stuff on there for like people like that, like charts I reserve risk. Uh, there's plumb stuff to flow model, which I'm sure most people have probably heard of now, and then mind your mind through some more simple stuff. So let's start with arguably one of the

more simple ones. It's just called the Bitcoin Investor Tool, and it uses a two year moving average line of bitcoins price. So on the chart, you've got the price a bitcoin, so you can see the price line, and then you also have a two year moving average line of bitcoins price. So for anyone who doesn't know what I'm moving average line is, it's simply taking an average of the daily closed prices over any given period of time. So you could have a ten day moving average line,

which shows average price of the past ten days. You could have a two day moving average line, which shows average price over the past two in days. The result is a smooth line versus the more erratic daily price line because you're taking an average price over a number of days and moving averages that are useful in markets that tend to trend or have market cycles. Because the moving average you can highlight when prices moving with or against the trend. So in the market life, bitcoin is

actually super useful using moving averages. And here we used the two year moving average because whenever price dips below that line, it has historically been an excellent time to buy bitcoin. So in bitcoin's now nearly eleven year history, price has only dipped below the two year moving average

line three times, and it does. When it does it, it does it for a few weeks or months, and if you bought during that period, you would have achieved outsized returns over the years because you would effectively be buying the bottom. Right when when price dip below the two year moving average, that is like the bottom of the bear market. Um. So it's a as a as a an investor who's able to remove their emotions a little bit. You can see when price goes blurw it

to you moving average line, it's an excellent time. Did it recently? Did it recently like in the last six months, like that maybe November December? Did it did below that line exactly exactly? So we saw it dip below the line um in December, and obviously we bottomed out what was it, three thousand dollars around there else around there,

and then it came back up above the line. And I think March time, April time, I should have the chart in front of me when we crossed about five thousand dollars and then then shut up above the two years moving average line. And interestingly we've actually just come back to retest it, which we've done in previous sides as well, and that tends to indicate we're about to kick off now a new ball rumber when you when you test the line exactly, yeah, which we've just done

literally a couple of weeks ago. And I know you said you don't have the chart in front of you, but maybe you can guess or approximate, uh if if if it said to buy right around there, when Win would have told us to sell, if you were to back up, you know, yeah, yeah, well exactly. So as an investor, you we talked about Earlione, you want to know when to buying, went to sell, and so the two year moving average line can tell you when to buy, because when price goes beneath it, that's went to buy.

And what the other line on the chart does is it simply is multiplying that two year moving average by five, So the values of that two year moving average multiplied by five. And what that does is it actually catches

the tops of bitcoins price cycles. So, for example, back in December two thousand and seventeen, when we were, you know, at the top of the last cycle, I think price went from like, what was it, twelve thousand dollars to like nearly twenty thousand dollars in the space of like three weeks, wasn't it right, We saw using this indicator that price moved above that time's five multiple moving average line, and so that was indicating that actually, that's pretty good

time to be taking some profit off off the table if you're a long term investor. And it has done that for each of bitcoins market cycles going back eight years now. So it's a very simple, very effective tool to indicate when is the market overly pessimistic and where is when is the market becoming overheated, And so then as a long term investor, I mean it's going back eight years, it would have it's been effective so far.

We don't know that hit in the future. But it's been effective, and it would have told me to sell that at the top in December of sen or January and then buy back in at the bottom of December, basically sat out of the market for a year, which correctly. I mean if you if you're only using that one tool, which that that one is not using on chain data, right, that one's usually price action exactly exactly. And so now

what do you think about price action? Um, I know some of the best technical analysts the market today, they really believe that technical analysis, even though it's a math um meaning like Fibernacci lines mathematical lines, it really works off market psychology. And so do you think somehow this moving average and the five times top lines somehow works with market psychology. Having been someone that's that's studied that, yeah,

I think it is. I think it is because all those moving averages are doing really is recognizing the bitcoins on an adoption curve, so it's moving up. But on top of that adoption curve you have we are experiencing these very clear market cycles, right, and if you've been in bitcoin for more than a couple of years, you

kind of know what we're talking about. We there are times when the market is feeling pretty dad about the prospects of it, quite like arguing we were back in December and then this period where everyone's super excited piling in, you know, like it was back in December two doesn't sound seen. You know, you had all your friends coming up to your gun. What's this bigcoin thing? How can

I get involved? And that is pure market psychology, and that is just people becoming either overly pessimistic or over optimistic. And and all the moving average lines do in this instance is kind of cut through prices. It is, it's doing those huge swings, and say, if you really step back as like a long term bitcoin you opened up with saying that you really believe bitcoin is this technology that can really free us from the banking system and

really revolutionist everything. Um, as it gets bigger, the volatility should go down. And eventually if it's so, do you think this model would be adjusted? So right now it's at a five times after two hundred, but maybe eventually goes to four times and three times and two times. Yeah, yeah,

I mean I think you're right. I think it will and I think a lot of these valuation tools that um, all of us are working on at the moment, will have to be adapted and some of them will just out right stop working, right, And I think I think a lot of these valuation models are effective whilst we're in this early adoption phase for bit point and there's very clear aggressive growth. But I suspect in the next kind of couple of market cycles will then move into

a more mature market phase. As you mentioned, red volativity will drop die down, the market cap will be you know, over a couple of trillion dollars, and um, yeah, there will need to be new metrics, and who knows those those new metrics maybe more in line with you know,

some of the stuff you see in traditional markets. Because I suspect, and this is just a theory, that bitcoin will if it's still around, right, if it's still around in ten years, I suspect it will start to be more in sync with with global other global macro macro assets, because by that time it will be pretty big. Yeah, So that's the two year moving average. You call it the bitcoin investor tour, and then one can check that out a look into bitcoin dot com. Let's let's talk

about another one. Maybe you have one that actually uses our chained data. Yep. So another one we can talk about the users on chained data would be envy are the Z school sounds a bit of a funny name, But I love this chart. I didn't come up with the matter behind it. It's not my idea. I just created the visual you can see on the site to try and make it easy for investors to use. But I think the thinking behind it and the methodology is genius.

Mv r V Z school uses on chain analysis and uh it was the original idea behind it came from a couple of guys. Murad Mahmudov and David Kule came up for the idea is behind NDRV school, and then Z School was added on top of it. But essentially

it's pretty straightforward. So it uses three metrics. So if you look at the chart, there's gonna be three lines on the chart, and the first is market cap and market cap, just like you have in traditional markets for stocks and shares, where the market cap is the share price multiplied by the number of shares. In the case a bitcoin, market cap is the current price of bitcoin

multiplied by the number of coins in circulation. So that gets you to market cap, right and the market capoin is supplied on a chart looks pretty similar to price because price is a cool component of it. The second metric we use is slightly different, and this is where we use the on chained data. So rather than taking the current price of bitcoin, which market cap does, realized value, takes the price of each bitcoin when it was last moved, I the last time it was sent from one wallet

to another wallet. So it's like it's like a cast basis. Yeah, yeah, exactly. You can think about it trying it, trying to guess like what that person acquired that bitcoin for. So um I I last moved it at five thousand. Today it's at ten thousand, So my cast basis or whatever, I only owe five thousand on that coin. Exactly. For calculating realized value, it would use the five thousand dollar value

rather than today's past value. In doing so, what that does is it strips out a lot of the short term market sentiment that we have with the market cap metric, and so it can give them will give a more true long term measure of bitcoins of value. Why do you think it strips that out? Because if I'm in the money, if I'm in profit, I'm less likely to capitulate or less likely to sell out, versus if I'm

upside down a negative more likely to sell out. Well, the reason being is that all those considerations come into play in more short term market market thinking, right, and so realize value it can be registered recording values from like last week or a year ago or five years ago, and so it just takes out a lot of the short term market sentiments. So when we're seeing in the short term people might be an overly person this thing, like we said, or over the optimistic, realized value doesn't

really capture that. So if you look at the chart too much smoother, more steady line on the chart versus market cap, which because prices are involved in it, is very volatile and goes to the extremes of overpessimism and

over optimism. So that that's that's what realized value is, and where we are interested in is looking at the divergence between the two, so when market cap is much much higher or much much lower, because that is when the short term market is either over excited or over pessimistic, and we can therefore use the next metric, which is Z score, which is simply a standard deviation test that pulls out the extremes in the data between market cap

and realized value. And essentially what it does to cut to the chase, is that it's able to pick out the tops in big point cycles and also the lows. And it's actually so effective in doing it that it can pick out the market cycle tops too within two weeks. So back in December two thousand and eighteen, one week before we peeked in price, m v RVs score indicated actually the market was overheated and it was time to

take profit. Um. So, yeah, it's very valuable tool in terms of being able to determine when as an investor should I be taking money off the table or investing? Yeah, and does that line up with that other tool we just talked about, the Bitcoin Investor tool that it both they both kind of line up and where they saw

the market cup. Yeah, they did, and you know that that's where you know it's it's useful to use a range of metrics, right like we were talking about, because they actually both think the top in that instance, and they also align with when the market bottoms earlier this year. Okay, yeah, so so so we're seeing some good uh, good on chain data with that, I mean I would think that uh somewhat complex and probably the average person would never

be able to figure that out. Is trying to figure out all the bitcoins that are owned and held out there, what is the actual like realized value, what's what was the cost basis of that? So that's that's some good on chain data. I like. I like the use of that good job on that. Um, do you have any other ones that may use some good on chain data? We could talk about one, maybe one more that that

would be easy for us to discuss. Uh. So the on chain data stuff is probably the sort of stuff you want to sit down and uh read about on the on the site. So UM, underneath each live data chart is a really sure clear explanation as to how they work. UM, in the interests of us being on a podcast and not having the charts in front of us. Uh. Probably one of easy you want to talk about and and to visualize is one called the Pice cycle top indicator, and uh that uses price data and it uses two

very specific moving averages. So at shorter timeframe moving average, the dred eleven day moving average, and then at times to multiple of the three fifty day moving average, which is pretty much a one year moving average. And the really interesting thing about this chart is that when the shorter time frame moving average crosses the other moving average, it actually captures the tops of bitcoins price cycles to

within three days. So really really effective tool in terms of identifying when is the market topping, when is the market really overheated? And yeah it's I've yet to find another tool that can pick those market tops as accurately, So so that interests. That's our sell price action. That's not really exactly exactly about just a couple of other

metrics that maybe you're digging enough of our chain. One I know, and I think I think maybe we mentioned about is maybe it was in one of our earlier conversations. But it's a like average days or days destroyed, right, so you can see like how long the bitcoin has

been sitting there? What's that one? Yes, so that that is So there's a chart and the cycle reserve risk, which was developed by the guys that Ikey Guy Fund, which is a a crypto fund based out in l A. G. Yeah, yeah, yeah, Travis and those guys and um, they did a lot of analysis around bitcoin days destroyed and the concept around Bitcoin days destroyed is simply, as you alluded to, UM if looking at coins that haven't moved for a very

long time. So let's say a coin hasn't moved for five years and then I decided to send it to you today. When I send it to you, it would be destroying in invert commerce five years worth of days,

if you like. And the reason why that is important when we do certain types of one chain analysis is it's because it's kind of telling you that um coins that haven't moved for a long time are now being moved, and that that is quite important because what we tend to see is that participants have been in the market for a long time. So like old guys O G, s UM, they tend to understand bitcoin price movement very well, especially when you compare it to a new entrance coming

into the market. And so people like Travis Kling and other guys who do this sort of one chained data, they give a lot of importance towards those guys. So when they're seeing lots of Bitcoin days destroyed, they're sitting up and paying attention. And actually they've built tools that show you when there's a high level of bitcoin days destroyed and you want to be sitting up with paying attention in terms of whether people are buying and selling,

So yeah, there aren't. Chaine is destroyed. I mean it kind of shows the Hardler's right, that shows like who's whole thing, And when that number goes down, it means those hoddlers, those o g s are starting to sell. And then basically that would tell us like, oh shoot, if these guys are starting to sell, then maybe the markets starting to soften. Is that kind of how that how that works? Yeah, yeah, exactly, it can work in

that way. Um. They actually then take it a couple of steps further to show you, um, the sentiment therefore of those old guys, those hoddlers, and where prices relatively at this moment in time, and so therefore whether the market is under all overvalued based on the sentiment of those old guys. So they get pretty sophisticated with it. Um, but yeah, really interesting stuff. So basically for everyone listening that's not really following along, it basically looks at how

long the bitcoin has been sitting still. So if I bought bitcoin and threw it into a hardware wallet and it's been there, for five years. It knows that hey, he's been hanging onto this for a really long time and he only has a small, small amoun out, but this guy has a lot of it, and it's been sitting for a really long time. So it's kind of the days that it's been sitting still, right, And then it takes into some sort of a weight at score based off of how much I have or how much

has been sitting in for how long. I'm curious using that tool and looking backwards back to November of last year. Um, you know, everyone in the market kept saying, oh, we need capitulation, We need capitulation. The bottom won't be in until we have capitulation. And and that means that there's that final just sell off where one she says, all right, enough,

screw it, I'm out of here right um. And in November, after the market had seemingly found its bottom, um in November it dropped in half fift I mean it was a message of from six thousand and three thousand approximately, what did the what did what did that indicator show during that time? Do you know so reserved risk? Uh you can check it out on the site. Uh that actually, yeah,

we we just had further down to go. So it was the issue around that time was that it was price was kind of entering uh over over sould levels. And that's why even a lot of the big funds we're thinking on maybe the bottoms in, maybe the bottoms in, and then the realities we just crashed down even further. Um. So yeah, that metric, um, you know, we did go down further and it did actually highlight the yeah, the

bottoms in. Now, I think tools that are even more sensitive than that are ones like m v r VS score. So that kind of that played out perfectly that and that called it perfectly back in November December. Arguably that's

a more sensitive tool for picking the market bottoms. Um. So yeah, going back to our point earlier, you always want to be using a range of these tools because Bitcoin days destroying that gave you some indication, but actually wouldn't it wouldn't have been able to to highlight the absolute bottom in that instance. All right, So interesting stuff, interesting stuff, and I think, uh, let's move on to

something else that everybody is dying to know. So being someone who studied economic studied market behavior, has been studying on chain data, building models, building charts and so forth. Just tell us what it means. Where where? Where? Where do you think we are in the market cycle? Uh, you're the you're the expert here, right Uh. I know we used to look at each one individually. What are you seeing in the market cycle today? Um? And where do you think we are I don't know, twelve months,

twenty four months, etcetera. Cool? Uh, well, things are looking pretty good good right now. I gotta say, you know, I mean, if if you've been in the market for a couple of years and you're still here like congrass, because I think I think we've got some good times coming up the next year or two. Um. So yeah. I mean one of the childs we talked about earlier

one was the two and maybe an average multiplier. And you know, as we said, we've seen price burst out of that accumulation zone and retested, and now we're in what I would call the first growth phase of the coming bull market, and that is really where we have this slow, steady rise. It will feel like a bit of a choppy period when we're in it, but typically we're grinding up more than we are popping down. They'll

be the odd little scare along the way. But then there's also going to be a couple of big jumps up UM and and that that's gonna last probably a few months, I would imagine, into the start of next year. And then stage two will probably be when we're a fair way into UM next year. And if you use one of the other tools on the website, actually it's called golden ratio multiplier. When price breaks above the red line on that chart, that's historically when we've seen Bitcoin

enter it's more aggressive second growth phase. And that's when things get really exciting and people will start kind of people from outside and start coming in saying, what the hell is all this about? Tell me about it, tell me out of by us. That's when we will be into that phase. UM. But yeah, I mean so yeah, I think I see those two phases coming up. We're just in the start of the first phase. I think it's gonna last a few more months. I suspect, you know,

the harving is going to have an impact. We are going to see price rise and yeah, well I think we'll be above the previous all time high Q one Q two next year and then and then we're off to the races and then and then obviously and then and then obviously you know, we'll have hopefully some indication as to when the market starts to top out towards the end of that second growth phase, when we see it start to see a range of these metrics shown

over sold, right, a combination of on trained metrics, in quest analysis metrics, and you know, I'm sure there'll be various sentiment metrics as well when people are going crazier out there about to say, well, okay, now is maybe a good time take some profit? Yeah. You know. The one thing that I always trying to impress on people with trying to do any kind of forecast. I don't like to call them forecasts, I mean their guesses, right,

I like to talk about them in probabilities. Um, so if this happens, then this happens kind of thing, and so um. The one thing to keep in mind is kind of what you're saying, You're not trying to project when the next top is. Um, it's more like, hey, let's keep an eye on the indicators and it will tell us. So it's something that should be managed or monitored right and watched. And it's kind of like driving a car, right, you can't just close your eyes and

open when you get there. You need to be watching the signs along the way exactly, and you want to be managing your risk along the way as well. Right, It's so important, Like even if if if what I just described plays are then like you say, it might do might not. Um, there's there's a decent chance it won't, right, and so always be managing your race. Take some profit, leaves to fight another day, man, because you know this, this this market should be around for a while. So

always take some profit, managing risk and um yeah, enjoy it. Yeah, switching gears just a minute. Um, Now, are you're over in England? Is that right? I am? Yeah, yeah, you can probably tell from the accident. I'm not from your neck of the woods. I'm based in London in the UK. What what do you what? You're just what what are you picking up? As like market sentiment? Like what are what are people thinking? What are what are people? Are?

Are people actually buying it? Young people? Old people? What are um? You know, what are the stores thinking? What is the government thinking? Give us an analysis for England and maybe even what you're picking up in Europe? Sure you're in the market psychology. You know, I would say it's it's kind of it's really sleepy right in terms if if I'm trying to gauge general market sentiments, I'm not talking about people who are in crypto right now.

I'm talking about general market sentiment towards crypto. It's it's super sleepy. I mean the same we are price wise, where we are, you know, around ten thousand dollars um. Yeah, interest just isn't there. People are, People are far more interested in other things at the moment right Brexit is obviously a huge talking point here. Just got a general

election coming up. That is what everyone is focused on it, and you know, the issues behind that may you know, drive a need for bitcoin for the majority, like further down the line, but right now everyone's focused on on on those issues, and I don't think people like kind of Joe Public, it's really going to pay much attention towards bitcoin until we are past the previous all time high. So I think once we're above twenty k thirty k, I think that's when it's going to start turning heads

again and when people will start to get interested. So that's that's general public. I actually know I have some friends who work in traditional finance and work for some pretty big funds, traditional hedge funds, and so I talked to them time to time kind of say how, you know, asked them how their stuffs go, and ask me how my stuffs going, and it's it's you know, it's interesting to see their level of interesting Bitcoin, and I would

I would say it's still absolutely minimal, absolutely minimal. It's it's not like you know, I think, because we we live and breathing stuff every day, we think, oh, you know, everyone's going to be in, like you know, in the next few weeks, you know, when government's lower interest rates by a court percent, then you know the big institution is going to come in. I still think most of the institutions are a long way off. And the reason, the reason why is a lot of it is not

because they don't see the potential. Most of the reason is because it's so tiny that they can't pay attention to it. So that stuff in the you know, hundreds of billions or even trillions of dollars markets and so something with a hundred billion dollar market cap is just too small for them. They can't they can't, they can't move in enough or out. So I think there's a

lot of it there. UM. I'm curious though, because you know, understanding the macroeconomic, the market cycle is happening in a lot of countries is super important, so I study them a lot. And and you said Brexit is at the top of everyone's conversation. Um. Are people worried about the damage that Brexit is going to cause to um? I mean obviously a lot of damage to trade and whatnot, but even just the currency, just your money, uh, witching from the Euro back to the Sterling, and what's going

to happen with the money? I mean, does anybody think about that? Or what are they what are they worried about? I mean, I think again going back to Joe Public, that they're they're all concerned about, uh, what does it

mean in terms of job prospects? And also what does it mean in terms of our relationships with other market with with other countries the trade right, in terms of trade, uh, and also in terms of you know, I think people who want to remain in Europe, they're quite fearful around what does it mean socially in terms of how we interact with other democratic markets and countries and cultures like you know, those of you have in Europe. So I think those are some of the concerns for most people.

M But you right, you obsolutely right. While so this is going going, you know, the time is being devalued, and he's allowing needs to continue whilst there's all this uncertainty, and obviously people in traditional finds are much more concerned

about that. Yeah, you know, Um, it's unfortunate. And I'm I'm imagining all over the world and and probably the same in England as it is in the US is they don't teach anybody about money, and I think almost purposely right, they don't want you to know about money,

banking and whatnot. And actually, Henry Ford, the godfather of the you know, automobile assembly line whatever, he was famously quoted back in the early nineteen hundred saying that if the average person understood the banking system, there would be a revolution overnight. That was back then. Imagine how much

it's worse, how much worse it's gotten over a hundred years. Dalio, who's one of the biggest fund managers in the world, Bridgewater Capital, doing the dollars, he's been pretty outspoken recently and I just retweeted one of he put out a new paper yesterday and uh, quote from Ray Dalio said, well that the name of the title is the world has gone mad and the system is broken. Um and he says, quote, money is almost free for those who have money and credit worthiness. It is unavailable to those

who don't have money and credit worthiness. This contributes to the rising wealth opportunity and political gaps, and everyone's mad about the rich getting richer, and and in the US we have Bernie Standers calling out to make billionaires being illegal and right, and so everyone's kind of missing it that the banks are ruining the money and that is what's causing your purchasing power to fall and whatnot. So

that's what I was just curious. I mean, with Brexit happening, there's a real risk of what can happen with your money, both both the Sterling if you go back to that, or the Euro. But probably I guess, as you're saying,

probably nobody knows that nobody's paying attention to that. Yeah, unfortunately, not right, And I think people won't really start thinking about it until they really really really have to, kind of when it's almost becoming too late and you know you're you're seeing that pop up around various countries around the world. Right, all these issues like in Lebanon, Chile, Venezuela, Turkey, you know, the least is just getting longer and longer

and longer. Um. All these issues in terms of government debt, um, managing like I mentioned that, in monetary fiscal policies, um. And yet just how wealthy and quality gaps. It's really concerning in terms of the growth rate of a lot of that stuff. Cool. Well, we won't get too far into that. I just like to get a boots on the ground viewpoint, especially with someone with your background of market psychologies and whatnot. So I appreciate you jumping into that.

That ended the pool with me just for a little bit. But all really really good, good information. I love these indicators. I love having more tools at my disposal to put all this together. Um, where can people learn more about you and your work and follow you well? And you can head to look into big line dot com to check out all the live dates charts and there's a whole bunch of learning materials there as well. Um, if you're kind of new to that sort of stuff and

it's all tightly free, go and check it. Out and then if people want to follow me on Twitter because I tweet out a lot of my sort of analysis on there, you can search at positive Crypto um. But my name is Philip Swift, so you can probably find me either way. I'm on there. Cool. Well, Philip, I appreciate you taking the time to talk today. It was it was awesome and hopefull everybody enjoyed it. Thanks very much.

Has been an absolute pleasure. Okay, hey, if you like this episode of the Market Disruptors podcast, please help us take this to the top of the podcast charts. Just please do me a favor and rate, review and subscribe. Taking fifteen seconds to just leave a quick review goes a long way in helping us reach more people and disrupt more markets. I really appreciate you listening and I'll see you next time on the Market Instructors Podcast