Bitcoin Social Risk

[00:00:00]Hey everyone and thanks for jumping back into the cryptoverse.

[00:00:04]Today we're going to talk about Bitcoin and we're going to be discussing the social risk. If you guys like the content, make sure you subscribe to the channel, give the video a thumbs up, and also check out the sale on into the cryptoverse premium at into the cryptoverse.com where you can get access to the social risk metric. Let's go ahead and jump in.

[00:00:26]So the social risk for the cryptoverse continues to drop. And you know, you could argue that the entire industry is sort of having one of these maturing moments where as a whole, the industry is realizing, hey, it can't just simply survive on hype and and sort of speculation forever. you actually have to have products that that deliver something that that people actually need. And you know, this past cycle we and I talked about this many times throughout the past cycle, we had so many memecoin scams and and you know, rugps and whatnot. And for the most part, the industry, you know, in a lot of ways, we lost our way. And now we're sort of experiencing what we started to experience sort of after that 2019 top.

[00:01:23]What's interesting though is, you know, after this 2019 top, social risk is quite low. We came back down. But what ended up happening was we had a crisis that justified loser monetary policy which led to a lot of money printing which brought everyone right back. The problem that crypto has right now is that we keep not having a reason or losser monetary policy. Stock market keeps going to new all-time highs and the AI trade has continued. And so because of that, rate hikes have actually started to get priced back in. Not only because of that, but also because of geopolitical conflict causing inflation expectations or inflation to head back up. But what we're experiencing now, we got a very small glimpse of in 2019. Now, you might say, well, how does this really compare?

[00:02:17]Like, how how can we say it's the same?

[00:02:20]And as I've said previously, I know there's a lot of people that will pretend like this 2025 top and the 2019 top are nothing alike because in this time it was out of the end of a four-year cycle. Even though many of them wouldn't even agree that there was a four-year cycle, but it's at the end of one. and and also because it was at a new all-time high. But if you can suspend disbelief for yet a moment, we can find plenty of similarities. And and some of those similarities include the fact that in 2019, just like in 2025, the Federal Reserve cut interest rates three times. Okay?

[00:02:57]From back then it was from 2 and a half% to 1.75.

[00:03:01]This time it was 4 and a half to 3.75.

[00:03:05]So this is the same thing. Three rate cuts 75 basis points happened in 2019 happened in 2025.

[00:03:15]The other similarity the balance sheet of the Fed back then Bitcoin topped in June quantitative tightening ended in August. two months later in 2025. Bitcoin topped in October. Quantitative tightening ended in December. Okay. So, from a monetary policy perspective, you would be hardressed to find another period that looked as much as this one. What I've said though is that the downturn, right, just happens to correspond to the mid the normal midterm year downturn.

[00:03:50]And it's fascinating how it how it plays out like that. So, when you think about it, not through the lens of like what we normally get at the end of a four-year cycle top where it's a euphoric rally where retail is here like in 2021 and in 2017, we instead had more of a 2019 style top where social interest never really came back. Now, in this case, social interest is made up of a lot of different metrics. uh Google trend searches or Google trends for Bitcoin, uh the ranking of the Coinbase app, subscribers to YouTube channels, views to those crypto YouTube channels, and then followers to analyst exchanges and layer ones on Twitter, and Wikipedia page views. And when you look at all of them, here's the Coinbase app rankings risk, here's Google Trends, you have Wikipedia page views, YouTube subs, YouTube views, Twitter analysts, Twitter exchanges, Twitter layer 1's. You get all that stuff. And what we can do is we can just simply combine them into a single risk metric uh that looks like this. And so the point of this is when social interest is low and trending down, Bitcoin dominance tends to trend up. Now don't lose sight of just what happened recently with Bitcoin dominance because yes, it has taken a hit, but guess what? It also took a hit after the 2019 top as well, right? it it it struggled for a while and then the next euphoric rally dominance went back up to the highs. So when you zoom out though, you'll see that as social interest has remained low since 2021, right? If you look at the social social interest, you can see it's been trending down since 2021. And if you look at Bitcoin dominance, it's been trending up generally speaking since 2021. Now, recently it looks like it's stalled out a little bit, but as I've said previously, if you actually look at um you know at Bitcoin dominance excluding stable coins, so here it is. Here's normal Bitcoin dominance including if you exclude them, you can see dominance continues to head higher. So, a lot of similarities and it's the reason why, you know, this sort of comparison really helps us to understand like why retail is absent. I think there's multiple reasons why why retail is absent. If you need a narrative, number one, people got tired of all the meme coin scams. They got tired of all the speculation in altcoins that never actually delivered anything.

[00:06:23]From a monetary policy perspective, you had high interest rates and you had quantitative tightening and and people were worried more so about paying bills and and going to the grocery store and affording groceries than they were simply about buying the next rugpool in the cryptoverse. So, in some sense, like there's been this like identity problem with the crypto space to some degree. I think presidents launching memecoins sort of exposed the industry for what it had become. That wasn't what it always was in my opinion, but it's what it became. It's what it became where people stopped pretending to build anything, right? They weren't even trying. You know, for a while people tried and then people pretended and then people stopped pretending to build anything at all and they were just like, "Oh, go buy this memecoin." So, there's an identity problem and we're going through a a prolonged downturn in social interest.

[00:07:11]The bare market still is around the same length so far, right? But a prolonged downturn in social interest and we've seen it before. This is just a larger version of what we saw during the last business cycle. And it just happens to be that this four-year cycle top occurred when just before quantitative tightening ended. Now, if you actually try to understand any of the things that go into this metric, one of those would be like subscribers to various YouTube channels. I want you to get an idea like this is why altcoins continue to bleed out. Look at subscribers to YouTube channels. They're actually a lot of them are trending negative right now, right?

[00:07:49]They're actually negative.

[00:07:51]So, if you zoom in over here, you can see there's a lot of channels actually losing subscribers. The same channels, by the way, that we're netting on average, you know, over a week period, netting 40 to 50 to 60,000 new subscribers in a week. On average, a lot of these channels are losing subscribers now. And so I hope people can sort of appreciate why we have spent so much time covering Bitcoin dominance and social interest and all that stuff over the last several years. I know it wasn't the cool thing to do and everyone wanted me to show a lot of random crap, but when you look back and you're like, you know what, there really wasn't a case for that in this past cycle. It it made sense to just stick with Bitcoin in the past crypto market cycle. made sense, right? Retail never came back and normally durable moves in altcoins occur after a year of generally trending higher social interest. So on average these channels 7day moving average are losing about 4 to 500 subscribers a week. That's a lot, you know, and it's it just shows you that a lot of people have, you know, they've matured.

[00:09:09]They're like, "You know what? Maybe they're interested in crypto, but not until it gets its act together." Now, if you look at at a let's let's change this to like a 30-day moving average and see what it looks like. 30 days, it's still barely positive, but it's also trended negative uh for a lot of different channels throughout that time.

[00:09:30]And then if you look at YouTube views, just so you know, back in 2021, these channels were averaging 3 to four million views a week.

[00:09:39]um or the 7-day moving average, right?

[00:09:44]So, I guess no, I guess three to four three to four million views a day, but it was a but sort of get an average. Um we we sort of average it out over those days because if if you take away the average, it's very noisy, right? Okay.

[00:09:57]So if you look at it like this, you can see that okay there are some channels that are getting say even some days where it was over 4 to 5 million but other days it was like 1 or 2 million right so it averages out to be about 3 to 4 million views per day and then the 7-day moving average is is just g gives you that average. Now, if you look at it compared to today, right, you can see very clearly why there there there's just not a bid. There's just not a bid because just no one cares. And that's just the reality of it. And unfortunately, in order for people to care, I could, you know, I could suggest that it has just to do with with the the narratives and whatnot, but to some degree, one of the ways you get people to care again is you go back to much looser monetary policy. But there's no promise of that right now. In fact, we're more worried about rate hikes than rate cuts at this point. So, you know, crypto is the furthest thing up the risk curve uh compared to a lot of these other markets. It just is. And so, when you have prolonged periods of higher interest rates and quantitative tightening, the frothier stuff is going to show weakness first, right? That's why altcoin showed weakness first and then Bitcoin is still further up the risk curve than a lot of other things and that's why it's starting it's been showing weakness for the last eight or nine months. My guess is in the back half of this year especially kind of late Q3 early Q4 you'll see the stock market show weakness and that might get the Fed to pivot on some of their views.

[00:11:36]But until that happens, the entire industry is stuck because as long as the AI trade keeps working, there's no reason to cut rates. There's no reason for any of that stuff. And as long as that happens, crypto continues to bleed out and and people leave because they recognize that, hey, for this stuff to do well, we need a lot looser monetary policy and we're just simply not getting that right now. So those are my views. This is the social risk. If you want to get access to it, you can you can check it out. I do believe that eventually retail interest in crypto will return, but it's going to take a while. You know, it's going to take a while and and I hope the industry is is in a better place once we get to that point where people can come and and actually not be led astray by a lot of influencers blowing smoke, you know, and and getting paid to show random garbage. I know it's it's, you know, I know a lot of them sort of defend it and and and say all sorts of stuff, but the reality is is like a lot of the stuff a lot of the stuff just goes to zero and and you know, if you get paid to promote something and you don't disclose it, especially that's a problem as well. So, I'd like to see the industry mature. I'd like to see, you know, maybe more people start channels uh and and try to have a bit more integrity so that when people do come into the space, they're not immediately led astray by whoever happens to come across their YouTube feed. So, I hope, you know, I hope that this is is can be the future of the cryptoverse.

[00:13:09]Um, but again, this past cycle was was a complete, you know, I I feel like we just focused on all the wrong things. We focused on strategic Bitcoin reserves when they really probably should have been focusing on the oil reserve at the time. Uh we focused on ETFs which are I mean I'm not against the ETFs. I recognize they serve a p purpose but they are antithetical to Bitcoin. And we focused on memecoins. And so you know what did you expect right? If you're going to focus on all the wrong things there's no business getting a a euphoric top because we didn't focus on building and making the tech better. What the industry focused on was products that just would bring more money in. You see the difference? When you focus on the right things, the money will come.

[00:13:56]You know, that's true. I I really believe that if you focus on what matters, the money will come. You don't have to have all these different products. I mean, I I don't think those products are necessarily bad, but you don't have to have a thousand different products for the money to come. if you build something that's worth buying.

[00:14:16]But if you only focus on the thing, the tools to get more money in and not the actual technology of the industry, then that's what causes money to to to be malinvested. This misallocation of capital and it and it doesn't lead to anything good. And I've seen some people say that, you know, a lot of this stuff in the altcoin market, even though it went to zero, was good because then people eventually find Bitcoin. That couldn't be further from the truth. What happens to a lot of people is they come in, they they get shield crap in the space and then they leave thinking that Bitcoin is just like all the other stuff. So, a lot of that stuff is not good for the industry and we probably should stop pretending like it is. Okay.

[00:14:56]It it's just not like printing meme coins and and and putting like a cute mascot and saying that like this is a good investment is just not is not a good thing. And for a long time, I think people sort of believed that, all right, they could just buy this stuff and eventually it would come back. The problem now is that a lot of the altcoins in 2021 are are that put in new that put in lows in 2022 are now below those lows in 2026. That's the problem.

[00:15:26]And there wasn't really a major class of new altcoins that are that are masking that weakness. Right? If you look at at the altcoin market in general like Total 3 in prior um in sort of the prior cycles, you could argue that you had all these fresh altcoins that sort of masked the weakness of the old ones. But now we didn't really have as many new ones because there wasn't at least not that had a large market cap. There were a lot of micro cap meme coins, yes, but they never really durably attracted a lot of money. Um, so I I think the altcoin market right now is sort of in this phase, right? Where it went up, it went up like it did in 2019 and then it's just been fading, right? It's just been fading for a while like it did in the back half of 2019 going into early 2020.

[00:16:19]That's where we are right now in my opinion. That's where the altcoin market is. And and you know it's sort of in this again this postappathetic top digestion phase where people are like oh there's no alt season what gives and then just kind of slowly bleeds out as people give up and coincidentally the four-year cycle just happens to remain intact once again. So you know keep an eye on the social risk again if you guys want access to it check it out into the cryptoverse.com. We still have that sale going on. Make sure you guys check that out uh if you're interested. And um and also we are going to be announcing the conference really really soon, probably within the next few days. So if you want access or if you want to get updates about the conference, go to bjamincount.com and then you can navigate to the conference tab and put in your email and we'll send out that email as soon as we have that information. But yeah, it's an interesting time in the markets. Retail has been leaving for years. There's dozens of us left at this point.

[00:17:14]Hopefully we can come back. I I think there's a good chance we'll see social interest bottom out hopefully later this year. Um, I think there's a good a good case to be made that it could bottom out later this year and and we'll see what was what happens what sort of lies ahead on on the other side of that. But if you guys like the content, make sure you subscribe, give the video a thumbs up, and I'll see you guys next time. Bye.