11 Million BTC Underwater… Capitulation or Opportunity? #CryptoTownHall

**Scott Melker** (0:00)
Good morning, everybody. Happy Friday. We've got a lot to talk about today, so I think we can dive right in. We've got a great panel. I see a lot of friends up here, so looking forward to getting some insight. The title, you know, we kind of arbitrarily pick these amongst all of them that are available. 11 million Bitcoin underwater, capitulation or opportunity. I'm sure you've all seen the stat that effectively we have the most Bitcoin held underwater in history right now. I kind of dug into that. That's not entirely true, but very close to what we've seen at bear market floors. And on the flip side, long-term holders is actually approaching an all-time high. So you kind of have the people with conviction holding or buying more.
But most of the people who have bought are underwater, right? And I think most of the data when you look at it is not actually including lost coins, which I think makes for a more kind of an interesting argument. But that is the lead story. I would love your guys' opinions first here. If this is meaningful, something that any of you watch. We have a lot of these sort of like things that have happened in past bear markets happening now while sentiment is in the dumps. So maybe just also a constructive conversation about where the market's at.
Please, I know we got some newer people here. Just raise your hands if you have something to say or just jump in. But don't leave me awkwardly on red.

**SPEAKER_2** (1:24)
Yeah, I'll go ahead and jump in on that. So to my understanding, the analysis of underwater Bitcoin versus overwater Bitcoin is entirely blockchain analytics. And I think it's not that meaningful, especially in an era where a lot of coins are held custodially. They're held in ETFs, they're held in Coinbase, they're held in Kraken and whatnot. And those companies could just be transferring money between one wallet and another. And suddenly that transfer starts to peg the price at which an address received the transfer as ownership of the coins at a certain price. And so, maybe in the old days, it was a stat that was a bit more meaningful as a lot of people actually held coins and not that many people would just transfer coins from their left pocket to their right pocket, but transfer actually meant exchanging of ownership.
And this day and age, it's just not as true. And so I don't think it's as meaningful of a stat. Now, there's probably some correlation with respect to what the small percentage that actually does transfer, but otherwise, it's not a meaningful stat. Otherwise, I would say this market, classic bear market, I know you guys had Eden Yago on the show early this year, late last year, and one of his quotes kept coming to mind, which is, hey, this is gonna be the time when we can tell whether or not Bitcoin is in its four-year cycle, or if we've finally broken out. And clearly, we have not broken out. And so given that we haven't really broken out of the four-year cycle, I'm guessing we're gonna stay bear market and still hit lower lows, probably up until classically end of Q3, Q4 timeframe. That's where I'm looking at possibly taking whatever fiat I've got left and backing up the truck.
And so the Bitcoin underwater thing, I think once again, a little meaningless. The cycle ironically still seems to be holding. And that's probably what a lot of people are looking for.

**Scott Melker** (3:04)
I mean, if it goes right back up in October, it's gonna be wild.

**SPEAKER_2** (3:10)
Yeah, it would be wild, but it would be like...
So there was a tweet that I'd saw. I'm gonna dig it up and try to show it to you guys. But something about there being an exact precise number of days between the all-time high and the lowest point in a cycle. Something like a certain number of hundreds of days, and it's been pinpoint accurate over the past three cycles.

**Scott Melker** (3:32)
It's absurd. Yeah, it's been a couple weeks. Yeah, it's very close.

**SPEAKER_2** (3:34)
No, I think it's like down to the day.

**Scott Melker** (3:36)
Really?

**SPEAKER_2** (3:36)
Down to the day. I gotta dig it up. I'll post it and see like, hey, someone can double check it because I don't have access to all the charts and graphs because I'm not one of those guys. But maybe we're still in the cycle.

**Scott Melker** (3:46)
Yeah, Carlo. Good morning, Carlo.

**Carlo** (3:48)
Good morning, Scott.
I'll take the contrarian view. I think, unfortunately, it's frustrating to be in this position and to see this constant shop. Everything in crypto is massively oversold right now. And I think that that trend line is not necessarily a correlation that there is still a four-year cycle, as much as it is that this current crypto cycle has seen tremendous headwinds come from unexpected areas like this war that is, for better or worse, unwinding.