Before we get started, I want to welcome the +71 subscribers who signed up for the “Let’s Analyze” newsletter in the past week! If you would like to join our community, make sure to sign up here:
The crypto market is on an absolute tear.
But this shouldn’t be a huge surprise to anyone who reads this newsletter.
Back in April 2023, I wrote that crypto was at the start of a new market cycle.
At the time, Bitcoin was trading at ~$23,000 per coin. Since then, the world’s largest cryptocurrency has surged +178% back near all-time highs:
But if my analysis is correct, Bitcoin - and the entire crypto market - is poised to rip much higher.
And I’ll explain why now.
This Isn’t My First Rodeo
I published my first book on investing in crypto with Simon & Schuster in 2022, aptly titled A Beginner’s Guide to High Risk, High Reward Investing.
This couldn’t have been worse timing to release a book on crypto, as it was right in the middle of a deep bear market.
However, at the time I was telling anyone who would listen that they should buy speculative assets… particularly bitcoin.
And there were a few reasons for that. First, I have been investing in crypto since 2017, mostly in Bitcoin and Ethereum. In fact, I still hold bitcoin today that was bought for less than $8,000 per coin (for reference it’s up to $64,000 today for a +700% gain).
And because I’d been in the crypto game for a few cycles, I knew crypto was defined by painful market cycles, typified by unbelievable euphoric highs during the bull runs…
…along with equally painful lows during bear markets:
Because it’s simply a fact that bitcoin falls -80% and many “altcoins” fall -90% or more during bear markets.
And while 2022 was painful, I didn’t view it as a “crypto is dead” scenario. Rather, I told anyone who would listen - including my 500,000 social media followers - that if you could stomach the volatility, this was the best time to buy in years.
That included this note in my April 2023 post where I said:
“I’ve invested in Bitcoin since 2017. I wrote about my experience investing in the crypto space in my 2022 book A Beginner’s Guide to High-Risk, High-Reward Investing. Based on my background, I’d say we’re currently near the start of a new market cycle.”
But this conviction wasn’t based on a “gut feeling.” Rather, I’d developed a process for identifying where we are in the crypto market cycle using three indicators.
How to Tell Where We Are in the Cycle
The first is the Net Unrealized Profit & Loss Indicator, or NUPL.
NUPL is a measure of how much profit bitcoin investors are sitting on compared to the losses they’re sitting on.
If it’s above zero, more people are in profit, meaning the overall mood is optimistic. If it’s below zero, more people are in the red, and the mood’s likely pessimistic. And as a rule, when NUPL hits 75% it’s time to sell and anything below 0% is in the “strong buy” zone.
And back in late 2022 / early 2023, NUPL was at 0%, meaning it was a great time to buy:
Second, I keep close eye on people’s Google Search data. When lots of people are searching for bitcoin on Google, it’s usually a good sign we’re near a market peak.
For instance, in the previous cycle bitcoin searches peaked in mid-2021 and bottomed in November 2022.
This nearly perfectly coincides with Google searches for bitcoin.
When tons of people are searching for bitcoin on Google, it’s usually a good sign we’re near a market peak. The flip side is true too, as markets typically bottom when searches for “bitcoin is dead” or “crypto is dead” see activity.
The last indicator is something only I can use since I have such a large social media following, as I can get real-time sentiment data.
When crypto is nearing the highs, the comment section of my videos look like this…
But on the flipside, when my comments look like this with no signs of optimism I can tell we’re not near a peak…
…as retail has yet to dump into the market as they ALWAYS do (usually near the top).
When all three of these indicators are screaming “buy,” chances are it’s a good time to at least begin dollar cost averaging into crypto positions.
This is why I had so much conviction on this trade back in April 2023. And as our 800+ Patreon Portfolio members know, I always put my money where my mouth is (if you want to join our community, you can sign up here):
But that begs the question: where are we currently in the market cycle?
This Cycle Has Room to Run
While the price of bitcoin is up nearly 180% since I wrote Bitcoin was a “buy” back in April 2023, my process shows we’re likely heading much higher.
For instance, while bitcoin sits a hair away from all-time highs, NUPL is still only at 60%:
Since we want to start taking profits when NUPL near 75%, this indicator is showing further upside ahead.
As for Google searches, quieries for “bitcoin” and “crypto” have barely budged since April 2023 (although they are picking up steam):
Lastly, the sentiment in my comment sections on any crypto-related post is met with either negativity or “benign neglect”:
Taken as a whole, these three indicators tell me we’re less than halfway through the current market cycle:
While there will be major drawdowns along the way, any investor who can stomach the volatility would be wise to allocate at least a small percentage of their portfolio to high quality crypto projects (if you want to see the ones I invest in, click here).
Because while we’ve already made a lot of money this bull run, we haven’t come close to the “mania phase” that happenes every cycle.
And I want you to be there with me when that happens so we can make tons of money.
Stay safe out there,
Robert