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👀 Is crypto going lower?

👀 Is crypto going lower?

PLUS: Binance cuts 1/3 of staff

Alex M.
September 13, 2023

GM everyone. This is 2036, the crypto newsletter that pays you.

Here’s what we’re serving up today 🍲: despite a lot of good news, the crypto market is down -20% in the last two months. Yesterday, bitcoin briefly dipped below $25K. Is this a short-term correction or are we heading lower from here?

Let’s dig in.

🥔 Today’s meat and potatoes

Get smarter on crypto in 2 minutes

Crypto moves in 4-year cycles.

Most people believe this is due to the bitcoin halving - an event that occurs every ∼4 years in which the rewards received by bitcoin miners are cut in half.

Every bitcoin halving has been preceded and followed by a bull market that ends ∼480 days after the halving.

📉 supply + steady demand = 📈 in prices

Not everyone agrees that the 4-year cycle is due to the halving.

The halving cycle also coincides with the global debt refinancing cycle. There’s $350 TRILLION of debt worldwide with an average maturity period of 4 years.

If interest rates are too high, governments drown under the cost of the interest.

So when the bill comes due and debt needs to be refinanced, governments employ quantitative easing to lower interest rates and refinance their debt at lower rates.

interest costs if nothing changes

Whichever theory you believe, there’s general consensus that:

the 4-year cycle is real
the current cycle started in November 2022

Cycles are marked by a) a bottom b) a cautiously rising market, and c) a full-on bull market after the halving.

Eventually, the optimism wears out, things begin the break, leverage gets washed out, and we find a bottom.

That’s what happened in 2022. Terra LUNA imploded in April, but it wasn’t until November that FTX came tumbling down. Bitcoin hit $15,400.

Since then, however, crypto has been on an uptrend. It’s up nearly +55% this year.

But over the last two months, it’s down -20%.

“I thought it was only supposed to go up after the bottom!”

Well - on its way to a new all-time high, bitcoin falls -30% on average 8 times.

Bitcoin failed to move meaningfully higher after a bunch of good news (like Graysale’s victory over the SEC) - so it’s possible we go even lower from here.

But none of that matters because the 4-year cycle has officially started.

What happens tomorrow - or next month - is impossible to predict.

Sure - if you’re trading crypto day to day, it matters (though you probably shouldn’t).

But as long-term investors, we know that the fundamentals of bitcoin have never been better:

The halving is coming. Miners are the biggest sellers of bitcoin, and their selling pressure will be cut in half.
The bitcoin ETF is coming. It’s the only ETF on a commodity that’s scarce. And every large bank is looking to onboard its clients into it.
Bitcoin has become substantially easier to own for companies with new fair-value accounting rules. If bitcoin becomes an alternative to bonds and cash - companies will up gradually load up over time (1%, 2%, 5%, etc.)

Michael Saylor, the founder of Microstrategy, said it best:

“If my holding period was more than a year - I would: