Andy Edstrm

Insufferably Accurate Bear Market Caller
Long-Term Bitcoin Bull

[Andy Edstrom @edstromandrew]

Bitcoin Bear Market Post Here. WARNING.

I’ve been having some interesting interactions with people who are in denial of the likelihood that the #Bitcoin bull market is over and that it is now in a bear market. It has helped me sharpen my definitions and, more importantly, revealed a lot of confusion in the community. I hope to clear up a few things here.

First, a lot of people (or bots?) don’t understand probabilities. If you are 100% certain of anything financial in this world, you’re wrong. Nothing is certain. All is probability distributions. When you believe in certainties, you do dangerous things like use leverage on volatile assets like Bitcoin. This road leads to ruin.

When I say that I think there’s about 60% percent chance that we are in a normal Bitcoin bear market, that also means a 40% we are still in a bull market or some other environment. 40% is still “a lot” of probability.

It also helps to define these terms. People will challenge definitions, but I guess I’ll land on “it’s still a bull market if the price hits $130k next year”. I say $130k because that allows for inflation-adjustment. The reason I mention this is because I don’t consider the $72k pop last year after the ETF approval to be an all-time high versus the 2021 peak of $69k because the purchasing power (in terms of stuff people actually consume) lost a lot of value in the period between 2021 and 2024. Purchase power is what matters.

Do my clients and I have Bitcoin price exposure despite my view on probabilities? You betcha.

Why have Bitcoin price exposure if there’s a 60% chance of a bear market? That’s simple math.

If we’re still in a bull market or if 3.8-year cycles are now dead, then my target for Bitcoin next year is $200k. (Note, this will be fully in line with the upside price target of $8 trillion total = $400k per BTC for 2029 that I published in my book, Why Buy Bitcoin).

If we’re in a bear market, my target price for the bottom is in the vicinity of $60k. (Welcome back $58k gang!)

That makes my “expected value” outcome equal to 60% x $60k + 40% x $200k = $36k + $80k = $116k. That’s a 38% positive return from the current price of $84k. Where I come from, that’s a very attractive return.

For all those spewing vitriol about the cycle being over, you’re doing Bitcoin wrong. There are lots of reasons to own Bitcoin that I haven’t even touched on here. But it IS a financial asset, and being overexposed to any financial asset is NEVER a good idea. And being levered to any volatile financial asset using debt that can be called based on market movements is a recipe for REKTAGE.

I do have one piece of “good news”, which is that even if we are in a classic Bitcoin bear market already, there is a good chance that if you are over your skis on BTC, you will get a chance to lighten up your position at or near $100k. That’s where most of the moving averages, and especially the 200-day and 50-week, are converging. It might take a month or two, but in prior bull markets that I’ve lived through, there has been “one last chance” to lighten your load.

If you have no dependents or a two-income household or a bulletproof source of fiat income or an outrageous amount of Bitcoin then I guess none of this matters to you. But if you’re a normie like me then this matters a lot.

One more thing. IF this is a bear market (60% odds), then I expect more “fundamental” bad news (fundamental in terms of short term price action). Each of the last few bears had a multiple negative events. Exchange hacks, frauds, leverage unwinds, etc. This time around we could get another exchange hack or fraud or hotter conflict with China or additional advances in quantum computing (without commensurate advances in mitigation actions within the Bitcoin community) or something else I haven’t thought of. I.e. when (IF) the story of the bear market of 2025/2026 is told someday, it will most likely include more negative “fundamental” events.

The corollary is that an ongoing bull market requires more positive fuel - passage of a market structure bill or major government buying or something significantly positive.

Believe me, I hope we end up in the 40% case instead of the 60% case. That would be wonderful. I wish you all the best.

[Andy Edstrom @edstromandrew]

IYKYK:

[Andy Edstrom @edstromandrew]

This is the nub. Or one of the nubs, anyway.

Today, #Bitcoin is a monetary asset.

I chose those words carefully. Monetary Asset.

Yes, some people and entities transact with it.

But, as with gold, Bitcoin transactions for goods and services (or other assets) probably don't amount to much of the total volume.

So Parker is right that it's money. And Saylor is right that it's an asset. I won't take a view on the specific term "digital capital".

Someday Bitcoin may reach its potential as a transactional money. I hope that happens. In the meantime, many are financializing by putting fiat liabilities on top. Just like with gold. I.e. the struggle is playing out. Nobody knows how it will play out. So far every monetary asset in history has been fiatized. Maybe this time will be different. But it obviously isn't yet.

Also in the meantime more people keep reaching out to me who are in various states of rektage because Bitcoin's purchasing power is too volatile to be monetary savings. I.e. they have adopted it fully as money and it is punishing them for doing so. This has happened every cycle. Again, maybe this time (after this bear market is over?) will be different, but it obviously isn't yet.

So the reality TODAY is that Bitcoin is capital AND it's money. Similar to gold. This is one of the key pillars of Why Buy Bitcoin. So it's good to store SOME of your wealth and its good to use for transactions as much as you are able. But as long as it regularly loses half its purchasing power for months or years at a time, it will be unsuitable as savings. Someday this may change. It hasn't yet.

[Andy Edstrom @edstromandrew]

Kramerica was a better-run enterprise than most BTCTCs.

[Andy Edstrom @edstromandrew]

Unless/until #Bitcoin price stops moving in a 4-year boom/bust cycle, no BTC-backed loan with a maturity of less than 4 years will make sense.

[Andy Edstrom @edstromandrew]

Sigh. This product does not interest me at all.

I have been asking for multi-year term debt against BTC collateral for many years.

It's the only reasonable way to borrow.

6 months is not even close.

Only thing that's even in the ballpark is joint-collateral with real estate. But even that's not widely available as far as I can tell.

Real solutions for borrowing against BTC are always 1 market cycle away.

Meanwhile more people too far out over their skis keep reaching out to me for help.

[Andy Edstrom @edstromandrew]

There were many mistakes, but this might be the biggest one that the BTCTC boosters made:

[Andy Edstrom @edstromandrew]

Always has been:

[Andy Edstrom @edstromandrew]

Ok, I'll bite.

What's a BIP one ten?

[Andy Edstrom @edstromandrew]

Still true:

[Andy Edstrom @edstromandrew]

Which (if any) "on-chain" metrics that might help signal a #Bitcoin price bottom cannot be mostly explained (in a regression/correlation sense) from a model based on the following 2 explanatory factors:

(1) Price from ATH high down hard (>60%)

&

(2) 1 year passing since ATH

[Andy Edstrom @edstromandrew]

On past podcasts including WBD and Preston's pod, I have made the following comparisons repeatedly for BTCTCs:

Closed End Funds. Usually trade at discount to NAV and occasionally at premium. Only premium (against measurable NAV) if exceptionally well-managed or offering unique asset access.

Banks. Levered to gills and mostly government backstopped. Extremely well-managed ones trade at 1.5x-2.0x NAV/Book.

Holding Companies. Poorly-managed ones trade at significant discounts, and extremely-well-managed ones trade at perhaps 1.5x NAV/Book. But NAV and book can be hard to measure.

Obviously, factors listed above depend on the company and, crucially, management.

Management Matters. To deserve a premium, management must manage the capital structure extremely well, including maintaining access to funding AND avoiding blowing up the structure AND avoiding dilution / penalty / rescue capital pricing in downturns.

Does your BTCTC management team have a dependable strategy for managing the foregoing? Do they have a track record of buying the asset well (at attractive prices) and capitalizing the balance sheet well and avoiding paying penalty prices for capital in the downturns? Corollary might be do they have any ability to predict BTC price downturns or at least adjust their balance sheets based on evolving probabilities of outcomes over various time horizons?

BTCTC boosters will tell you that it's early days. They're right about that. Unfortunately it hasn't gone great and VERY few have demonstrated competence or understanding of the foregoing or even basic valuation principles.

Also it's worth asking whether levered corporate structures that primarily just own scarce non-cash-flowing assets have succeeded in the past and ask why or why not.

[Andy Edstrom @edstromandrew]

These are among the things that will appear on my list of bottom signals.

These interest me more than "on chain" data.

Also these things are hard to quantify, which drives many in the space nuts.

"But Andy not all the signs of the top were there when you made your accurate bear market call".

"But Andy you keep saying the bear market's probably not over without providing a clear and comprehensive rubric for drawing that conclusion".

"But Andy there's no reason for the 3.8-year cycle to continue because institutionalization / wider coin distribution / wealth management participating / ETFs...."

If you think you can specifically quantify clear signals to gain real alpha / predictive power then you don't understand financial asset markets.

And #Bitcoin is a financial asset. So you don't understand how to price Bitcoin.

If you can grasp that many of these things are fuzzy and hard to quantify but can (so far) be placed in the context of a repeating pattern of buyer/seller behavior then you might be able to rebalance your asset portfolio, including #Bitcoin and simultaneously increase your returns and reduce your overall risk.

[Andy Edstrom @edstromandrew]

Correction: I started paying attention in August 2018

[Andy Edstrom @edstromandrew]

If insanity is doing the same thing over and over again expecting a different result, then the #Bitcoin Bulltards who thought that the 3.8-year cycle had been broken EVEN AFTER BTC price peaked THE SAME EXACT NUMBER OF DAYS AFTER THE HALVING were insane.

[Alex Thorn @intangiblecoins]

@Ys0Complicated @edstromandrew that's explicitly what i argue in this piece -- worth a read!

https://t.co/kI4eKyGybd

[Andy Edstrom @edstromandrew]

I started tweeting a list of top signals before calling the #Bitcoin bear market last November.

I guess I should probably start my list of bottom signals so that I'm prepared when it's time to call the end of this bear market.

Should I start writing my list yet?

[Andy Edstrom @edstromandrew]

Also will the list be long enough for @john_at_swan ?

[Andy Edstrom @edstromandrew]

Good evening.

BTC/USD price just closed at its lowest level since 2024.

The current #Bitcoin bear market remains ongoing.

It will likely end someday.

That day was not today.

But that day will probably arrive in the next few months.

[Andy Edstrom @edstromandrew]

Good morning. Updated view on #Bitcoin here.

#Bitcoin is currently at $58k, which is the low (so far) for this ONGOING bear market.

Once again, 100% of people who told you the bear market was over were wrong. I know some of you have "rebalanced" your follow list but it's never too late to start and maybe it's worth a second cull.

The $58k gang are tough. But likely not tough enough to keep price above $58k. Last week I put that probability at 60%. I'm revising that upward to 70%. I'd love for the 30% scenario to play out, but obviously that's not my base case.

Bitcoin has been retracing the last several bear markets in terms of timing (pretty much identical) and shape (similar, but with greater variance) and magnitude (less percentage pain each cycle but still a lot of pain).

If you're listening to people telling you that Bitcoin is "hammering out a bottom", you should be careful. Yes, the price is likely within months of bottoming and yes most of the "price damage" has likely been done.

But this Bitcoin price chart is not what any prior price bottom has looked like.

Prior bottoms have found repeated support at a particular level (prior cycles tested and retested $0.3k, then $6k, then $30k) before breaking those levels to the downside and finding the capitulation bottom.

Of course this time could be different, but it hasn't been so far. Put yourself in the shoes of the whales that literally ended the last bull market by dumping their coins in size. (80,000 coin Galaxy BearWhale still out there?)

He's seen this movie several times now. He might want to buy back in. But why be the hero that supports the repeatedly-tested $58k level when he could get significantly lower prices and probably soon.

Also, although Strategy is not the only buyer, it appears to be taking a summer break. Miami gets pretty hot this time of year. The new balance sheet management program opens up the possibility of selling BTC. I'm not saying they will. I'm just saying they're not (for now) a net accumulator.

For anyone waiting for a "specific catalyst" or a "body to float to the surface", it's always fun to speculate who it is but you can't know in advance. Also, some financial bodies don't float to the surface immediately because they have concrete shoes given to them by the long arm of the U.S. Treasury. Pay close attention to @SecScottBessentand listen to / read analysis by @LeveredUSTs and @kanemcgukin.

As I've observed many times now when price has been at/near $60k level, anyone who's UNDERallocated (which is specific to their situation) should be stacking at these levels.

But anyone with leverage on the long side should be soiling their shorts AGAIN and then having ANOTHER long talk with their spouse or best friend or financial advisor.

Nobody knows the future with certainty, as anyone who was paying too much attention to the bulltards last year can painfully attest.

But so far this bear market has played out VERY similarly to prior ones and I will continue to exercise pattern-recognition until proven otherwise. Such pattern recognition has so far yielded enormous alpha compared with most of the personalities in this space.

I have not yet revised my 10-year "success case" $400k target that I set in Why Buy Bitcoin 7 years ago. I probably will have to revise it downward at some point, but I remain long-term bullish for #Bitcoin.

All the best to you.