Bitcoin and the End of Quantitative Tightening

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Today we're going to talk about Bitcoin and the end of quantitative tightening.

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Let's go ahead and jump in. So, Bitcoin

right now is coming in at around $87,000.

Now, a lot of people are perplexed, right? They're like, "Well, quantitative

right? They're like, "Well, quantitative tightening is coming to an end on December 1st. Why are we seeing Bitcoin

December 1st. Why are we seeing Bitcoin drop into that?" Well, first of all, you should know that actually the exact same thing happened back last cycle when QT

ended. The other thing that people

ended. The other thing that people should remember is that the announcement date that QT ends is not actually necessarily

the same date that the balance sheet of the Fed starts going up. Now, that might seem confusing. You might say, well, if

seem confusing. You might say, well, if you look at 2019, you can see the balance sheet of the Fed started to go up in September. Now, you might be led to believe that because the balance

sheet of the Fed went up in September, you might be led to believe that because of that, you might think, "Oh, well, that means QT ended then." But in reality, if you

dig into the mechanics, the Fed announced the end of quantitative tightening. They announced it on July

tightening. They announced it on July 31st, 2019, and said on August 1st, QT comes to an end. So, they announced it

on July 30th. So, let's look at what Bitcoin did on July 30th right here.

You can see Bitcoin dumped into the announcement.

It then rallied, but then Bitcoin continued to not really go anywhere. Even though the balance

go anywhere. Even though the balance sheet eventually started to go up, Bitcoin continued to bleed.

Even though the balance sheet was going up. This is what I've tried to

up. This is what I've tried to communicate to people for years, right?

For years, that just because you had the transition from QT to QE doesn't necessarily mean anything.

What did mean something was when you had a panic and then the balance sheet really started to explode. Right? That

is where things change. So right now we're not even in the phase where the balance sheet goes up.

There's a good chance going into December that the same thing that happened in 2019 is going to happen again where essentially back then in August 2019, it took until you know mid

August for that last batch of Treasury maturities to settle and maybe the same thing's going to happen again now, right? Like it seems like a likely scenario where it could

take a few weeks. You could argue that we might not even notice the balance sheet starting to go up

until 2026, but by then it might be more obvious to people that we're in a bare market. You

know, now that doesn't mean that nothing can put in new all-time highs.

Obviously, some cryptocurrencies are putting in new all-time highs. But the

hard part with Bitcoin right now is that, you know, it's been dropping throughout the last couple of months.

And we know that while it might drop back down and then get a nice rally back up, there is still a decent chance that until the Fed really starts to increase

the balance sheet more. And when they really start to drop those interest rates more, it might not have the desired effect, right? Like it doesn't mean you're not going to have counter

trend rallies. But the reality is that

trend rallies. But the reality is that what I'm saying I think is the most likely scenario right now is I'm saying that this

2019 bare market that happened as quantitative tightening ended and QE began and as interest rates came down.

That I think is what's happening right now, right? Like I think that same thing

now, right? Like I think that same thing is happening right now. And so you're going to have some rallies by Bitcoin.

Absolutely. And I've said many times like you will likely have a rally back up to the 200 day moving average.

I I think that will happen, but that doesn't mean it has to happen today, right? Like it could still be a few

right? Like it could still be a few weeks away. Who knows exactly when it's

weeks away. Who knows exactly when it's going to happen. I could see a scenario where this bleed continues for a little bit longer and then you have three

months in a row potentially that are red. I mean, I hope December is green in

red. I mean, I hope December is green in honest. I mean, honestly, I hope

honest. I mean, honestly, I hope December is green. I mean, it would be nice to have some relief here, but there does exist a scenario where you have these monthly returns, kind of like

2021, where you had three red months in a row, November, December, and January, and then February, and March were green.

What if we're front running that, and October, November, December are red in preparation for the 2026 bare market?

But you could argue that this initial drop already potentially gets you halfway through the bare market. And

usually what happens halfway through the bare market is you get a counter trend rally just like Bitcoin got in February and March of 2022. So maybe that's what

happens, right? Like maybe Bitcoin just

happens, right? Like maybe Bitcoin just continues to not go up and maybe either goes sideways or down for the rest of

the year. a lot of people pricing in the

the year. a lot of people pricing in the 2026 bare market and then potentially in early 2026 you get that counter trend

rally and people are like oh what if 2025 was the bare market year like what if what if that's the red year and 2026

can be green now unfortunately I think 2026 will be red but there might be a brief period where people think it will

end up being green. Now, what I think is to to watch for is that if this is like the 2019 bare market, you'll notice that

it took about what how many weeks about 6 months or so until we broke through that downtrend

line. About 6 months. You could argue we

line. About 6 months. You could argue we haven't even established the downtrend line yet. I mean, who knows? Like I mean

line yet. I mean, who knows? Like I mean it's going to depend on whenever we get that move back up hopefully before we go below these lows cuz that's what happened last time right there was a low Bitcoin dropped got a counter trend

rally and then that's what ultimately set that sort of that macro lower high then it eventually broke through in the next bull market. You can see it did that here as well and then we got the

recession right the pandemic induced recession. So because of that and if you

recession. So because of that and if you again get if you look at like monthly returns in 2022 you can see that February, March were green, April, May, June were red. So if it follows that

means you know maybe January, February are green and then March, April and May are red and that might get you through most of the bare market. You know

there's a chance it could end as early as May. I wouldn't say it's my base

as May. I wouldn't say it's my base case, but if you look at Micro Strategy last cycle, the bottom essentially was in May of 2022 and then it essentially

wicked below it uh later on, but the bottom came a lot quicker than people thought. And this is playing out a lot

thought. And this is playing out a lot in a lot of similar ways, but you have this micro strategy, you know, did not hold support there, right? It went down further, then got a counter trend rally

back up and then the final leg of the bare market happened, right? So you

could argue that people are just kind of hoping waiting for that that move back up by Micro Strategy and if it comes back up here it's still you still might then get the final drop of the you know

of that that happens in 2026 right that 2026 bare market but again usually at the end of the post having year is where you kind of establish that the bare

market in the midterm year is occurring right you drop you break support and then things roll over more clearly in the midterm year, right? Like if you look at 2021, you can see structural,

you know, we sort of broke down, we came back up, but because we had gone through this entire phase without going anywhere, by the time we got to the midterm year, investors finally accepted the bare market. I'm saying like I think

something like that could happen again where investors finally accept a bare market. Now, there does exist a slight

market. Now, there does exist a slight chance that Bitcoin could go back up to an all-time high, but it's not my base case. It's something to maybe just keep

case. It's something to maybe just keep in the back of your mind of like, okay, if you're going to hold anything in crypto, Bitcoin is a better hold than essentially everything else. If you look at like the weekly RSI, you can see that

it has in fact broken down. And normally

when it breaks down, that's confirmation of the bare market, right? like many

times where you get these more sustained breakdowns. It's, you know, the bare

breakdowns. It's, you know, the bare market is in. But I mean, if you look at Ethereum, you can see that it technically broke down and then it still somehow put in a higher high on the USD

valuation even though the the RSI was much lower. Um, I will say this. I mean,

much lower. Um, I will say this. I mean,

you know, if if there is a higher high, I I don't think it would be much higher and um it would just be a final divergence, but who knows if that's actually going to happen. I feel like

what the most likely outcome is right now is that just like 2019, Bitcoin topped a few months before um you know before QT ended, right? So if you if we

overlay here total assets held by the Federal Reserve and you look here, you can see that Bitcoin topped out a few months before the balance sheet started to go up, right? So it topped in June,

the balance sheet started to go up in September. So July, August, and then

September. So July, August, and then September.

this time. What if Bitcoin just tops here October and then you have November, December, and then you start noticing the balance sheet going up in January of 2026, and then therefore you have the

same thing where Bitcoin tops 3 months or so before the balance sheet really starts to go up. Now, I've had a lot of people be like, well, what about Bitcoin dominance? Because, you know, you're

dominance? Because, you know, you're still bullish on Bitcoin dominance and maybe you're staying bullish on it too long and you know, which they have a point, right? Like they have a point.

point, right? Like they have a point.

Maybe maybe it's time to to retire it.

But remember, I I I will remind people that I I think there's a reality.

There's a lot of people waiting for the end of QT um in the hopes that it'll finally pump their altcoin bags. And the

the the reality is like, what if it doesn't? Like what if what if it's the

doesn't? Like what if what if it's the same type of people that were waiting for it right here and then they the Fed the Fed ended QT right there where all

Bitcoin pairs were like.35 and then they still dropped down into September even though the Fed had said QT's over but the balance sheet still continued to go

down for about one more month. So, I

think that's kind of how you might get the final unwind, right? Is you have everyone who's waiting for QE to save them in December. What if it doesn't?

And then they capitulate. You get this drop by all Bitcoin pairs back down here into January. Then QE starts. Then all

into January. Then QE starts. Then all

Bitcoin pairs start to go back up. But

it could still be while Bitcoin is not in a bull market, right? I mean, when when all Bitcoin pairs were going up over here, Bitcoin was actually in a bare market. So, you could have the same

bare market. So, you could have the same thing where like they drop down and then they start to go back up, but it just means that, you know, you could be in a bare market. It just might be that alts

bare market. It just might be that alts are rallying against Bitcoin because they already got annihilated for the last four years. So, you know, that they're just not dropping as much

because they already dropped like 99.9% against the king.

So, that's kind of what I see happening right now. like I I see, you know,

right now. like I I see, you know, Bitcoin bouncing here and there on on certain headlines about QE and and lower interest rates and whatnot, but I I think it's going to take some time for

the Fed to really lower rates and and to really ramp up printing where it needs to be to sort of justify things, especially given all this macro uncertainty, especially if you think about things like, you know, the

unemployment rate and whatnot continuing to head higher, you know. So these are all and by the way that was something that also went up back over here but again it went up due to a pandemic induced recession but it still

nevertheless did go up regardless of what the the reason for it was. Um, so I just wanted to like kind of clear things up there that like yeah, you know, QT is

ending, but because that final batch of Treasury Treasury maturities like won't actually um uh finalize until potentially a few weeks from now, you might not see the balance sheet of the

Fed go up right away. And and that could be one of those moments to be like, "Oh, okay. Maybe QE isn't going to save

okay. Maybe QE isn't going to save everyone else's altcoin. not theirs, of course, everyone else's. Um, and and then those people decide to capitulate

and then all Bitcoin pairs drop down.

Um, and then finally, we get sort of a transition in the market cycle in 2026 where alts start to behave differently against Bitcoin because QT is clearly

over and and money printing has begun.

But maybe it's not quite enough to justify a move like this. doesn't mean

you won't eventually get one, but what if it's reserved for next cycle, right?

I mean, like, what if this phase of that 2019 move just ends up being the 2026, you know, the bare market that kind of

starts in Q4 but continues into 2026.

And then everyone sits around scratching their head like, you know, thinking this time is going to be different, but in reality, you know, we got the same bare market that we always get. And if you look at the ROI of Bitcoin after the

cycle peak and compare, you know, the current one to the last two, it's not like it looks that different, right? I mean, it looks kind of the same

right? I mean, it looks kind of the same so far. If anything, it's doing better

so far. If anything, it's doing better than the last two at this point in the bare market. So, I just wanted to throw

bare market. So, I just wanted to throw that, you know, throw that you guys' way. Just something to think about with

way. Just something to think about with quantitative tightening. Again, trade

quantitative tightening. Again, trade the market you have, not the market you want. Right? If we're in a bare market,

want. Right? If we're in a bare market, we're in a bare market. Like if you're an investor, you're going to experience multiple bare markets uh throughout your lifetime. Multiple bare markets. If

lifetime. Multiple bare markets. If

anything, they just create opportunities, right? That that's what

opportunities, right? That that's what they create. They create opportunities

they create. They create opportunities for those who are patient um and and and stick around and for those who panic and leave. I mean, obviously that they don't

leave. I mean, obviously that they don't create opportunities for those people, but um trade the market you have, not the market you want, right? I mean, all of us want Bitcoin to rally to 200k, but that doesn't mean it's going to happen.

doesn't mean it won't ever happen. I do

believe it will eventually happen. It

just, you know, I think people tend to overestimate what Bitcoin can do in the short term and then they underestimate what it does over the long term, right?

We get so worked up on what happens like on a on a monthly basis, you know, that we forget about like, you know, this overall trend that happens, you know,

and so what, right? If if we go through a bare market, it happens every four years, you know, and you know, this time doesn't have to be different just because we want it to be. So, I think

that you could look at the QT narrative and the interest rate environment narrative and justify a similar type of bare market as the one we got in 2019. I

think you can justify it. I think a lot of people are going to sit around and try to explain why it's different. But

at the end of the day, the odds that we look back on 2025 and then going into 2026, the odds that we look back on it and we're like, "Yeah, it was just a bare market, like all the bare markets,

I think they're really high, you know, and I mean, yeah, there's a chance I'm wrong and and and maybe maybe Bitcoin does go to a new all-time high before

things truly end for a year. But the

good news is if we are in a bare market, we're already, you know, 2 months into it, you know, and normally they're about a year, right? So look at the look at the positive positive way. Anyways,

guys, we'll wrap it up there. Thank you

guys for tuning in. Make sure you subscribe, give the video a thumbs up, and again, check out the sale on into the cryptoverse premium at into the cryptoverse.com. I'll see you guys next

cryptoverse.com. I'll see you guys next time. Bye.

time. Bye.