This is a lightly updated version of a note I wrote and circulated privately at the end of August. A few charts and data points have been refreshed, but the core view is unchanged.

Theooorizing a little... where the fuck are we in the bitcoin cycle?

As bitcoin tapped 125k my hunch about this cycle top was reached. This was not based on much else than simple heurestics of top-to-top, bottom-to-top and bottom-to-bottom returns, based on the idea of diminishing returns.

The four year cycle alignment is another typical model that suggests we are near top, if not price wise, at least time wise.

A lot of the old heurestics are derived from experiences in previous crypto cycles suggest we are at final moments before we enter to bear market. The thing is, a lot of previous cycle lessons have not really applied to this cycle.

Post halving bitcoin starts outpeforming. Bitcoin pullbacks and consolidation periods are when liquidity rotates to eth and further down the risk curve. So ALTs play catch-up. Then bitcoin continues up and same dance repeats. Bitcoin pumps, alts bleed in their btc cross. ETH/BTC pumps, finally alts catch up. Risk takings is evident both in increased allocations to alts, which pump heavily, and increased leverage signalled by open interest and funding rates.

Also september is always shit. But that will be followed by a rip in Q4. Not every year but specifically in the final 'parabolic' run marking the end of the four year cycle. Typically this is kicked off by a global macro shock causing liquidity to constaint and marginal bid dissappearing, kicking off a systemic deleveraging which is particularly painful in crypto.

Fundamentally this cycle has differed from previous ones in few key ways.

• BTC bid is institutional: ETFs and DATs. No retail mania evident.

• Return dispersion in alts: ALTs have failed to follow-through on pumps. Total3 market cap is barely at prev cycle peak.

• ETH underperformed all year until recently ETF flows turned on, finally catching a bid.

• Memes have sucked a lot of the retail flows – making the old btc -> eth -> alts rotation play a miss. the extractive mechanics on memes meant alt pump was focused on few proper shitters bundled and marketed by sociopaths with quick extraction. It is likely that no one made any money that could be rotated anywhere

• VC funding is shit. Because liquid comps are trading so cheap, less appetite for private rounds.

• Macro is actually constructive - we are heading into cutting cycle.

Whales think its over. They are vocal about it. They can probably end a cycle as a matter of self fulfilling prophecy. No retail mania in sight and their selling pressure well exceeds the ability of ETFs and Saylor to buy the new supply. Although if I am wrong about this, and we are able to shake out the whales while kicking off further buying, the supply side liquidity gets real thin real fast.

My mental model for timing this cycle is pretty simple. We have three main sources of bitcoin buying

1. ETFs

2. DATs

3. Leverage

Each is rather easy to track. 80% of ETF is IBIT, and 90% DATs is Saylor. We even have pretty neat leading indicators for these two: MRST nav premium, signaling the public market appetite for funding Saylor and idk what for IBIT. Surely something. Leverage is easy to track as well, and is probably lead by global liquidity conditions.

In in fact predict that in hindsight this cycle will have been the easiest to predict.

Let's check where we are currently.

1. ETF Bid: Dead Until January

   ETF flows are negative, accumulation has stalled since August, and that demand pillar is likely dead until post-holiday.

   

   1. DAT Bid: Saylor’s Out of Rope

   DAT accumulation has continued slowly throughout the year, but the Strategy premium is gone, signalling zero appetite from debt/equity markets to fund the next leg.

   

   1. Leverage: No One Wants to Be Long

   The derivatives market is de-risking across the board; leverage is being drained and nobody wants to catch the knife. OI, funding, options skew all signal a profound lack of risk appetite.

Every gut feeling says you should scale out. These is based on learned heurestics that have proved to be tremendously unhelpful in this cycle. I leave the old addage thing unsaid but, you know. History might rhyme.

So lets say 125k was the top and all we get from here is dead cat bounces and liquidity escaping everything.

That would mean this would have been the first cycle where:

• ALTs never pumped. The whole rally was concentrated in ~5 names.

• No new ATH from majors. Basically no significant token apart from BTC made a convincing new ATH.

• VC cycle missed. None of the new VC tokens made anyone rich. A completely missed cycle.

• Stablecoins meh. Stables grew $100B during the cycle. Not even double the previous peak. Underwhelming.

• Sticky BTC Dominance. is at 60%. Like what's gonna happen here? Surely it is not going down if the cycle is over? Is BTC.d is heading to 75%?

• No new narratives stuck. Prediction markets had their breakthrough and validation. For about two months.

And here’s the harrowing part: if that really was it, then the whole industry faces the first real existential questioning since 2018.

• Capital allocators will write off the experiment: “Bitcoin, stablecoins, ETH, maybe Sol – and nothing else.”

• Naysayers will look vindicated: “fifteen years in, still no killer use case.”

• No new cohort got rich, no fresh blood got pulled in. Just the same players recycling chips.

If this was the end, then maybe we don’t get another chance.