Bitcoin: Realist Vs. Doomer

The speaker discusses the difference between a realistic and a "doomer" view of the Bitcoin bear market. Last year, in Q4 2025, the speaker predicted that Bitcoin had topped at $126,000 and would enter a bear market lasting about a year. A realistic view, according to the speaker, involved a 70% drop (plus or minus 4-5%) from the highs, with a stall after a 50% drop before the larger decline. The speaker emphasizes that a 70% drop prediction should be considered realistic, not "doomer," aligning with historical Bitcoin bear market performance. Previous Bitcoin bear markets saw drops of approximately 94% (not post-halving), 87% (2014), 84% (next cycle), and 77% (next cycle). A 65% drop from the highs would place Bitcoin at around $42,000, while a 75% drop would put it at about $30,000-$31,000. These figures are consistent with prior bear markets, yet some still label such predictions as "doomer." A valid criticism of the 70% drop prediction is that if the market didn't top on euphoria, unlike prior major tops, a 50% drop might be sufficient. While possible, the speaker assigns only a 25% probability to the low already being in. Evidence for a low being in could be drawn from similarities to the 2019 bear market, which saw a 50-52% drop before a rally. However, the speaker anticipates a recession in the United States, not induced by a pandemic, but as a typical end-of-business-cycle event. Real GDP for Q4 2025 was 0.5%, and the labor market, particularly the year-over-year percentage change in the establishment survey, is nearly negative, historically corresponding to recessions. Bitcoin has already demonstrated its capability to drop 70% from a non-euphoric top, as seen in 2019, where a 50% drop occurred from the high, but the recession low was approximately 70% down from the high. The labor market, despite low initial claims and layoffs, shows underlying weakness in hiring and job openings. The speaker expects layoffs to increase once the stock market drops and remains down, as companies seek to reduce costs to please shareholders. The speaker reiterates that a 70% drop (plus or minus 5%) from Bitcoin's highs is not a "doomer" take but an expectation based on historical behavior. The idea that Bitcoin cannot return to its ETF launch price range (around $40,000-$48,000) is challenged by comparing it to the QQQ ETF, which launched in a late business cycle environment in 1999 at around $48, rallied to $120, and then dropped to $19, below its initial launch price. This historical parallel suggests that Bitcoin could similarly retrace significantly. The speaker's current view remains a 70% drop from the highs, acknowledging that a 50% drop has already occurred. This is presented as a realistic, not deterministically bearish, outlook. The speaker clarifies the distinction between this realistic view and a "doomer" view. The "doomer" view involves looking at the stock market against the money supply, a fractal that has played out consistently. This fractal suggests a potential scenario where the stock market could sweep prior highs by September 2026, followed by a significant capitulation in October. In this "doomer" scenario, Bitcoin would continue to struggle, potentially rallying to its bear market resistance band, but eventually dropping 70% from its highs (e.g., to $40,000-$50,000) corresponding to a stock market low in October 2026. This would be a "low before the actual stock market really starts to drop," potentially leading to a prolonged bear market for the stock market, similar to historical two-year bear markets in the 1970s and 80s. The speaker hopes this "doomer" scenario doesn't materialize, preferring a quicker reset and continuation of the bull market. The speaker's base case is still a 70% drop for Bitcoin this year, considering it a realistic view. The "doomer" view is presented as a theoretical possibility if the stock market fractal continues to play out, especially given the current weaker labor market compared to 2018. The speaker believes their 70% drop prediction is optimistic, noting that thematic ETFs often launch near the end of multi-bull markets, implying a potential for significant retracement. Bitcoin has already retraced all its gains since the current administration took office, dropping 35% from $109,000. If Bitcoin can do this, the S&P 500, which was around 6,100 when the administration took office, could also see a further 10% drop to return to those levels. The "doomer" view for Bitcoin would involve not just a 70% drop, but a fall below the ETF launch price of $48,000, potentially to $40,000, without finding support. However, the speaker notes that Bitcoin has already spent considerable time at prices like $20,000 (in 2017, 2020, 2022, 2023), making it different from the QQQ in that regard. The speaker cautions against dismissing the realistic view as "doomer," as this could lead to missing out on buying opportunities if prices drop significantly. Historical data suggests that a 70% drop from the high is generally a good time to buy. Several indicators are presented to support the expectation of further downside for Bitcoin: 1. **Supply in Profit or Loss:** Major Bitcoin lows historically occur after these two metrics cross, which they haven't yet. 2. **Realized Price and Balanced Price:** Major market cycle lows have consistently happened after Bitcoin drops below both its realized price (currently around $54,000) and balanced price (currently around $39,000). Bitcoin is not yet below these levels. 3. **Year-to-Date ROI in Midterm Years:** Bitcoin's performance in midterm years often sees a 50-60% drop from the yearly open by Q3/Q4. 4. **NVRVZ Score:** All major Bitcoin lows have occurred when the NVRVZ score was below zero, which it currently is not. The speaker concludes by emphasizing the importance of distinguishing between a doomer and a realist. A realistic bear case for Bitcoin, involving a 70% drop, is supported by historical patterns and multiple indicators, while the "doomer" view represents a more extreme, though historically plausible, scenario.