For 10 years Bitcoin lived by a predictable metronome having
pump, dump and repeat. But what if that clock broke
along the way? Smithson with AKA Smitty is back
on Bitcoin for millennials. Our previous episode together
hit 100,000 views. Because Smitty doesn't do hype,
he does data. His latest research on the
ISMPMI suggests the four year cycle many have relied on seems
to have been replaced by something much bigger.
He reveals why the business cycle has hijacked Bitcoin and
what the cost of production tells us about the floor price
for 2026 and beyond. We also dive into the gold
versus Bitcoin rotation and why the recent red signal in
Smitty's charts suggests a massive divergent is right
around the corner. If you were enjoying my content,
it would mean a lot to me if you could subscribe to the channel
and like my video to support my journey.
Thanks a lot. Now let's dive in to this
episode. All right, Smithson Smitty,
welcome back to Bitcoin for Millennials.
I'm back with Bran and it could be happier.
How are you my friend? Very good man Yeah, I'm very
happy you're back. Our first episode is one of my
most watched episodes. I think it's actually #2 / 100 K
views. We went through your Bitcoin
retirement guide, which was an incredible video.
I will also link to it at the end so people can check it out
and in the description because I just think it's really great to
you know, how, how you put the strategy together.
And yeah, I'm happy you're back. I just told you like there's
like 3 people that I call, you know, sometimes I repost on X
and I say, you know, like this is my quant and that's you and
plan C and James Van Stratton. So I'm you're here and yeah, I
thought this this episode could be kind of a, an update to and
maybe you can give a little background, you know, as to what
you're doing with regard to Bitcoin.
But you know, your new insights based on the data and yeah,
let's just go through whatever you found.
I I have no idea. So I'm ready to to be surprised.
I love it. Yeah.
It's, it's so great to reconnect with you again, Brian.
I by the way, it's really high praise to hear that from you,
the the quant nod from you, from the great Brandon Canstein.
I, I have the, the respect is mutual.
So I think few people are intellectually producing as much
as you are out there in the Bitcoin content space.
So thanks a lot for those kind words.
Yeah. And I'm happy.
You know what? I think last time we connected,
we there, the focus was on the retirement stuff.
And there's clearly some other areas of focus that I that I've
been spending time on and I'm happy to walk through the the
most recent stuff. So awesome.
Yeah, can go ahead and kick it off.
And I'm presenting here. I think you connected with our
good mutual friend Plan C He was a collaborator on this, this
work. It was our first.
It was my first and I think Plan CS first X article ever.
And you're no stranger to that, but we called it how the
business cycle quickly became the Bitcoin cycle, which is
right off the bat sounds very contrarian.
Because right now I think you can see in the space you've got
kind of generally 2 schools of thought, right?
Like maybe 2 1/2 schools of thought.
You've got one group who they're four year cycle theorists,
right? And they think that that is
there's something underlying, you know, related to the
halvings, perhaps maybe some people think it's not related to
the Haps. But regardless, there's a four
year cycle periodicity here that is just inherent to the system.
And it comes around around the same seasonality every four,
roughly every four years. And there's a few, few sub
subgroups within that camp. And then the other side are kind
of what I'm sort of going to build out here.
And I think we it gained some traction.
I mean this, this article did pretty well I think and what my
thesis is here and I'm all totally open to data supporting
the opposite end of this. But the idea is that early on in
Bitcoins life, right since Genesis, the halvings were a
substantial drop in the inflation rate huge.
So it actually had an impact on the supply and demand dynamics,
which could we know if you go back to the miners and their
profitability can have a more of a direct impact on price pushing
up those bubbles. And those bubbles are kind of
how people generally measure the four year cycle, so either from
the tops or the bottoms. But basically the nuts and bolts
of this are that there, there is a four year cycle, but it's
actually more, it seems to be more tied to the business cycle,
which there's a variety of different definitions there.
But I use the ISMPMI as a proxy for that as a single, single
indicator. Of course you could make a whole
comprehensive holistic macro indicator out of that.
There's different ways to do it. But in this article we're
saying, OK, in the early days the hat basically the halving
probably had an impact on driving this four year cycle.
But by the 2nd halving the correlation there dropped
substantially and the correlation increased
substantially with the PMI. And so basically brand this is
the. This is probably the most basic
and eye popping way to visualize that.
Could you maybe? And I'm actually not using.
Yeah, go ahead. On the ISM and PMI like a what?
What is it and and what makes it up basically?
Yeah. So it's the Institute for Supply
Managers, right, is what the ISM stands for.
And so this is the manufacturing index that, you know, if you're
looking at the raw PMI index, which I'm sure you've taken a
look at that, but you see a time series data.
So just imagine this green line here is absolute PMI values and
this zero line here is a value of 50.
So it's like a percentage scale. Essentially, if you're below A50
line, it means that supply chain managers and things like that
are being surveyed and answering to that survey.
Overall, on average, they're doing less business if it's
below 50, right? So they're, they're actually the
rate of of, of doing business is decreasing in terms of new, new
order intakes, prices, deliveries, making it on time,
things like this versus if it's above 50, it means they're on a
growth path, means that their business is actually growing
from a, from a manufacturing standpoint.
And so it has. Spending of money from
businesses, basically. Exactly, exactly.
So businesses that make things being able to, to grow the grow
their, that business, right? And so the, I think the idea is
from a theory standpoint, why is this starting to become more
correlated? I mean, you could just see by
the eye test, right? Especially if you look at the
2nd and sorry, just third and 4th bubbles here, 2017 and 2017
into 2021. I mean, it's pretty striking,
right? And it's starting to build a
good amount in 2014. It's not perfect.
The the Bitcoin bubbles kind of live inside the PMI bubbles,
which is interesting. So, but yeah, I guess the theory
there, Bram, to wrap that the theory is that in times of sort
of loose, looser monetary conditions and macro conditions,
like there's more of a risk on environment in general.
And so higher investment is warranted by investors, by VCs,
by, you know, taking out loans for all sorts of different new,
new business. And Bitcoin, Bitcoin can kind of
be looked at at both of a risk on asset as well as a risk off
asset. So that's sort of the risk on
behavior showing still with the in terms of these bubbles.
Yeah. Yeah, what I find interesting I,
I wonder I, I talked with Plan C about I, I think it was the same
slide actually about how does this also correlate to kind of
like the liquidity cycles? Because there's also this theory
and, and I agree, right, Like in the beginning when Bitcoin was
smaller, the halvings probably had a way bigger impact on the
available supply versus, you know, the, the people wanting to
sell. And as Bitcoin grew to a, a, a
bigger asset, it kind of became more correlated to kind of like
these waves of liquidity. And I think there's, I just
tried to Google it, but there's also this, this idea that
Satoshi actually launched Bitcoin, whether it was on
purpose or not, right? That's speculation.
But really almost at a, at the bottom of these larger liquidity
cycles kind of move in like 5 or 6 years.
And I've always been interested in that, but I've never really
seen anyone really like zoom in on that.
But but here you can kind of make the relationship right if
liquidity is higher, if rates are cheaper, more people are
going to borrow and, you know, pay and try to grow their
company basically, right. And although it's a risk on
time, that's the second thing I find super interesting because I
think in, in, in essence, just from the characteristics of
Bitcoin and well, I, I think Bitcoin is the ultimate risk off
assets, right? It's literally a parallel money
system that is totally outside. Of the actual, it's both.
It's actually both. I I totally agree.
Yeah. Yeah.
And well, yeah, so, so I think Plan C said the same like it's
both. But I think you know, it's if
you look at the characteristics or like the fundamentals of
Bitcoin, I would say it is definitely a risk off asset.
But the perception of the majority of people, IE not us,
right? It's, that's, it's a risk on
thing, right? It's an asset, it trades with
the NASDAQ and etcetera, etcetera.
And so I think it's quite logical.
It's very cool to see it in the data, right?
But it's quite logical to still see, you know, with an increase
of liquidity, increase of risk, increase of spending from
companies you know in, in buying of Bitcoin is is also present.
My main argument just to be to be brief when I say I think it's
both the risk on and risk off. I don't think you can see my
cursor in here, but that's OK. If you look at, so if you look
at the price bubbles, well, it's actually Z score here for
Bitcoin. If you draw a straight line from
the left axis all the way across, just cut through
horizontally, that's not actually moving sideways here.
It's it's moving according to that 5.9 exponent power loft,
right? To me, that's the risk off.
If something happened to you tomorrow, could your family
access your Bitcoin? Not probably not.
They'd figure it out, but with certainty.
I thought about this a lot. Whatever custody solution you
are using, inheritance is the piece most people haven't solved
yet. Billions in Bitcoin have already
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You can book a free consultation to learn more at
onlinebitcoin.com/brom. That's onlinebitcoin.com/brom.
Most people stop too early with Bitcoin.
They buy it, maybe move it to a wallet, and think they are done.
But they're not. The real questions are how
you're securing it, how private your setup is, and whether
you're verifying your own transactions or trusting someone
else. And what happens to your Bitcoin
when something happens to you. This is the layer that most
people ignore, and it's the most important one.
That's why I've been working with the Bitcoin way to help you
set up self custody properly, including privacy,
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whether you're a beginner or more advanced.
That's the bitcoinway.com/brom. The way that we perceive time,
you know, and we can't think longer than usually a few months
when we're looking at things like this.
We don't understand that it is risk off because we're paying
attention to the price day-to-day or month to month or
things like that. And so the risk on type of
behavior in, in my view is when you start to see these actual
bubbles. And that's when you get more of
the, the, you know, the FOMO sort of the group, the group
think the piling and, and, and but that's, that's what I mean
when I say it's a, it's at its core, fundamentally it's risk
off, like you said, but I think it has these these bubbles are
sort of risk on times. It's funny, right, like the the
underlying thesis and the fundamentals is, is a long term
outlook, which is risk off. But the short term outlook for
more, more people than Hodler's is risk on, right.
So it's just an it's just an investment basically.
And that's also why or risk on type people, the price of
Bitcoin is most important. They either think it's too high,
so they don't buy it or they think it's it's it's low or it's
going to go lower, right? And and then they also don't
don't buy it basically. So anyone who trades or see sees
it as an investment, fundamentally, I would say it
sees there's a risk on assets, whereas you know, when you
understand the fundamentals and why it exists and when you look
at it over a long enough time frame, That's why this next
slide I think is so interesting. It is risk off, but you need to
be able to zoom out or at least understand the long term
underlying thesis. So yeah, it's super cool to see.
Very well said and I'm a super visual person, so I, you know, I
feel like half of what I do is actual, you know, under the
under the hood sort of coding and, and the mathematics and the
theory and things. But I really like, I like the
messages that we, that we pull out of the data and the
frameworks that we're working the data with and shows what's
actually going on. So I had this idea, Bram, where
I you, you've seen this log log chart, right, with, with the,
the Bitcoin price before. And you see the, we call it the
line that you can Unsee, redraw a line straight through it.
And whatever you think of the power law or whatever, right,
the straight line exists. And so I just wanted to take
that PMI data that we were talking about before and
normalize that to that straight line so that you could see, you
know, you see the price and what it's doing into 20272028 going
that going for projecting ahead. And you see in the last 510 plus
years what the bubbles of PMI have been doing and these price
bubbles living inside of those. And so, yeah, it's just, I think
it's a really interesting perspective to me because it's
it's a little less abstract than looking at like something like
the last slide where you're looking at these two squiggly
lines going up and down here. It's like in log time, this is
what the price is doing and along that same normalized axis
as the X axis, that's exactly what PMI is doing.
So I think it's just a more kind of compelling and what's to me
what it stands out besides the bubbles.
Look at the last three years since really since the bottom of
the the last cycle bottom. So end of 2022 when I think the
price dropped down to like what was it 16,000?
And we've just been, I've been calling it a crab crawl since
then. And there's this sort of another
split camp the, the schools of thought where people are like,
look, dude, we had a, you know, we had a bull run.
We went from 16,000 to was 125,000.
But when you look at it relative to the long term or even, and
then relative to the, the macro cycle, the business cycle, it's,
I think it's been suppressed. So I, me and Clancy have kind of
been using the term pseudo bull run or, or like a faux, I don't
know, I can't remember what he says faux bull run or something.
So to me, it's like I, I, the four year cyclists as of the
last few months have kind of looked pretty good because
they're like 4 year cycle tops going to hit, you know, just
watch and it kind of like it's a little painful, but if you zoom
in to look, we've had three years of contraction and just
since January, it's a relatively short sliver of time.
We peaked above that line. So we hit 52.652 point 452.7 and
you look at the last couple cycles, there's a lag, There's a
significant lag here. And so I'm still like really
bullish right now actually. So what?
What would invalidate? But it's funny, right?
By the way, another one like why is there a lag?
You know, I wonder if you can correlate also to SMP, NASDAQ,
whatever other stuff people invest in and you could follow,
right, Because, you know, my, my assumption for lack would be,
you know, if you've had a significant time where, you
know, we've been below, like you can see here on the on the
chart, you know, when, when you get cheap money, cheaper ish
money or the appetite for, for borrowing money goes up again.
Borrowing and spending money, you know, is investments.
The first thing you're spending it on, or are you actually
spending it on, you know, what, whatever you need to fix that,
you know, happened in this red part basically, right?
So I, what I think is so interesting, like there's like
human behavior and there's just the data and, and I think trying
to find the connection between it is, is very interesting, but
it's really, it's really hard. So I, I just wanted to ask you
like, what would invalidate this?
Because I'm following, I'm following the logic and I mean,
you know, you have a lag now that you're, that you're
showing. So I would, I would, you know,
want to ask like when would you expect it to catch up or like
what would it invalidate it? Because overall, I think it's
pretty compelling what you're sharing.
Yeah. And I just want to say that's a
really good question. I don't think, you know, I'm not
willing to hang my hat on this indefinitely and say like this
is the only, I think a lot of people misconstrue because I've
been posting so much on this because I just think the dating,
the data is really striking. They go, you know what, what's
the there's what's the causative relationship?
You're saying PMI drives, you know, Bitcoin price.
That's nonsense. And I'm like, yeah, you know,
that's not really what I'm saying.
I think what I'm saying is that these two are correlated, that
pretty much I'm saying that there's a correlation here.
And so the question that you're asking there of like, why
mechanistically is there a correlation there?
And then why would there be a lag in there?
I think those are the right questions.
I mean, I think there's a, first of all, what would invalidate a
lot of it? I think if we give it 6, I think
if we go to the end of the year and we still, I think if we
plummet, if the price keeps dropping down to say October and
the PMI stays where it's at or it keeps driving higher.
Like if we do APMI bubble like we did in 2021-2022, I think,
and then the price keeps trickling down to I, I would
say, OK, there's something wrong with the, the understanding
here. But then there's a couple things
in there, right? There are, I think a dozen or so
different questions in the PMI that ultimately get you an
aggregate PMI value that can be between 0 and 100.
So there's some nuance right now what's driving a lot of the PMI
going up is the inflation, the prices and things like that.
So the business is doing well for certain reasons, but in
other areas like new orders. Are still growing, but that the
growth of the new orders is slowing things like that.
So there's some nuances to what causes this to go up and down.
And then the third thing is that I think for the lag, I think
it's a good question. I think it's, it's open for
debate. I like to think that, you know,
businesses and industry are doing real time transactional
supply chain work to get products out and, and, and
products purchased and then they need to see their accounting
fulfilled. I think that by the time the
public, I think these the price bubbles are largely more of a
socio social sort of phenomenon, right when retail or larger
investors or whatever are starting to pile in and pushing
the price up. That I think that there's a
human sentiment lag there that that comes after you start to
see the businesses giving you that earlier signal.
And I think that's that's probably my top explanation, but
there could be other explanations too, I think for
the lag. Interesting.
Yeah. So yeah, I don't know if you had
any other thoughts on on this. No, I like the next one I saw at
the. Time I'm really.
This is, to me an experiment, though.
Just guys, yeah. And and.
Well, and and maybe maybe one thing to add to that, like
that's why I'd like what what you and plan C do, right?
It's, it's again right there, there's like people that buy
Bitcoin based on a fundamental thesis.
There's people that still trade Bitcoin right?
Like there's so many different opinions and levels of
understandings and, and ways that people judge Bitcoin that
it's also interesting and hard at the same time to try to
figure out why is this basically going up in a, in a straight
power law lock line, right? Like, why is that even
happening? And I think just saying that,
you know, as, as I do is it's not enough.
But like the fundamental thesis is, you know, field money will
be printed forever. You will be debased forever,
right? Your purchasing power is, is, is
gone forever. Like you need to move out of
this system. You know, I, I, I, I don't think
that's the best argument for the majority of people or I, I also
don't think that is what actually drives the, the power
law, right? So 100% is there, right?
And, and I think that's just interesting to try to figure
that out because something is apparently happening, right?
It is. The problem with that argument
is. The problem with that argument
is. That applies to pretty much
everything else out there. Any other like, so why would the
why, what was special about Bitcoin giving it this specific
unique exponent, exponent of growth.
So I think, yeah, I think that argument fails.
I agree. But there's a lot more exploring
to do sort of shifting topics a bit.
This is something I've been just noticing because sentiment has
been so bad, bro. I mean, you're on multiple
platforms. I, I tend to, I like to go back
to Google Trends, which is just an available data set for
anybody can tap into this. And what I, I just kind of
hadn't looked at this in a while, I guess.
And I realized that at least for the US, This Is Us data.
The amount of Google searches relative to past years, it's,
it's a little bit higher than what it was in the middle of
2021, which I'm kind of like, that's really interesting,
especially because I have a really old post brim where I
showed the long term Google search data versus the price
data and the power laws of both match really well.
And so I kind of forgot that this is happening in the back
kind of going back to our conversation about kind of risk
off and like the adoption that's going on when you're not
experiencing a FOMO bubble. I mean, it's sort of like, you
know, we are first of all, the price is right around what it
was at the peak from last cycle. And then what I the way I look
at this is sort of a proxy of OK, people are thinking about
this and, and on the, you know, on their search engines,
wondering about the topic of Bitcoin roughly in the same, you
know, in the same amount as what people were thinking right off
the backside of the the last Bitcoin bull run.
But we don't think of it that way.
And you look at the the rates right before the last big bull
run, it was much lower actually. So yeah.
Yeah. Well, I do think it's
interesting that compared to five years ago, we are at
literally 50% of what it was, let's say 2021, right, like the.
At the peak. Peak peak retail.
But that's a decent amount. It's more than you would think
if you wouldn't have pulled this data.
Well, if, well, it's funny, right?
Because it's always like there's a peak and then Bitcoin died
like 1-2 or, you know, 100 times or whatever and people lose
interest. And you know, I, I really like
this idea of, of every cycle, whichever 1 you define as a
cycle, how long, right? There's people that adopt
Bitcoin on the way up, but then it goes down a certain amount of
these new people also drop out, right?
They sell at the loss or whatever.
And there's always like a new. Group of of.
Huddlers that then, you know, make this little step change
basically, and then it goes on and on.
But like the first thing I'm thinking when I'm seeing this is
also there's been a massive amount of FUD as well, right?
So, yeah, you know, you see the peaks here.
Let's say, you know, between 2024 and 25, you have these two
peaks of interest, and that's also where the price goes up.
Funnily enough, it's about halfway through the actual price
movement, right? So gosh.
There's been so much and remember Jane, we're all
forgetting about Jane St. And like all these, all these
sort of negative narratives over the past, you know, 5.
Yeah, but that could also make the spikes, right?
So or like the little spike. Oh, I see what you're saying,
Yeah. Like it could also be that
people are like, oh shit, you know, Bitcoin didn't die, but
there's a new thought. I need to check it out, right?
Because I don't want Bitcoin to win, or I don't want to
understand it or whatever. It's a good point.
Like it's because this doesn't
tell you if it's positive or or negative things, right?
Yeah, but I. Think so?
I don't know. I think when I've zoomed in,
I'll just say, I think the only reason I push back on that is
that the negative stuff, I immediately jump to see what
Syntex doing and it causes these really big spikes like like kind
of what you're what you're alluding to, but I think I like.
This spike after 2021? Sorry.
Like I like the spike after 2021, which is literally the the
the double top right. It's like super interested and
boom like it it just it just. We had that second top despite
yeah like engagement or you know, engagement around the
topic being half yeah, yeah, yeah, yeah, yeah.
So something to watch for sure. Golden macro I I I crowned
myself a a macro analyst in addition to Bitcoin as of last
last year sometime. So I'm being a little tongue in
cheek, but so I think gold, gold there's this idea which is true,
which is that the Bitcoin bull runs tend to follow gold bull
runs. But I think most, what a lot of
people don't see is like it's not obvious when we're having a
gold run. And I don't even know if people
remember when they've been because the one that we've had
since, you know, 2024 has been so gargantuan and historic.
It's, there's been nothing like it in, in especially for
millennials. You know, your podcast is from
millennials. It's like, I don't think most of
us remember anything like this for gold.
So what you can do is normalize it for the moving average.
So the top plot there is again, the residuals.
So you can see the true bubbles of Bitcoin highlighted those,
those bull runs in orange did the same thing for gold.
So you can kind of trace these to each other.
And the interesting thing to me about this is there's been a
change, there's been sort of a lag.
So it's a squishy, this is a squishy narrative, which I
totally admit. But the lag between say the peak
of when, you know, Bitcoin or sorry, gold starts to cool off
and then Bitcoin starts to take off.
The lag there has been shrinking and shrinking.
And this is just something I, I put this might have been a week
and 1/2 or so ago or maybe a little bit more at this point.
But I mean, in the midst of gold having its heyday, it, it
actually took like a 25% drop, which you can see here.
This is what I was trying to highlight in this post.
You see it in the residual plot as well as the raw price plot.
Pretty massive drop relative to what gold's been doing.
Jump ahead to this. You can see it stand out in the
returns, the relative returns. So here I'm showing the relative
returns of gold and Bitcoin the difference between the two.
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I feel sometimes that, you know, the Bitcoin adoption is driven
by an actual fundamental understanding.
A lot of people are not going to like this.
But you know, I, I think you need to do more.
I I think you need to do more work.
Yeah, I think you need to do more work to actually understand
Bitcoin. But once you understand it and
like if if you even understand the point that you know, Bitcoin
is gold with teleportation built in and way more like if that
doesn't interest you, but you're interested in gold, then you
know, I, I don't really know what to tell you.
But anyway, like the, the fundamental understanding of
Bitcoin and in and in its place in the thesis that it has that I
just mentioned, right? Like the infinite debasement of
Fiat money and so on and so on and so on.
I think it takes more time. So Bitcoin is slower, but
Bitcoin holders I think are, are growing also when you look at
the, the hollow waves, right? So I think they're more
steadfast. And when the kind of like the
narrative picks up of, oh, their scales in the world or money
printing or, you know, whatever, many people that haven't done
the work just go to the narrative.
Oh, you know, this is, this is when you need to own gold.
And, and so I think the gold narrative is just, I'm still
going to make a video that is gold is a meme coin, right?
Because I think the gold narrative is way stronger than
the Bitcoin narrative, obviously.
And it's also that Bitcoin is just way harder to, to
understand. So I hope that makes sense, like
the the bar to actually understanding Bitcoin at a deep
level so that you're holding it in cold storage forever.
Basically like a lot of OG gold box are doing as well.
I think that just takes a longer time.
So the the the the bar to get to or how do you say like the the
the hump people need to get over to get into gold.
It's just way, way lower than Bitcoin.
So this is also why I think, you know, gold kind of outperformed
Bitcoin in the in the previous months because, yeah, just more
people know about it and they know, you know, own gold in
times of chaos or whatever the the the narration or the meme
basically basically is. I think it's just way stronger
with way, way, way more people. So that's kind of my fault
around this. But then fundamentally, right,
you know, Bitcoin is leaps beyond a goals, especially in
an, in, in a digital age like 2026, but that's a different
conversation. But I, I just think it's
interesting that there is a kind of understanding of the need for
hard money or a hard asset, but the step from just knowing, you
know, you need to have gold and chaos to let me see why they
call Bitcoin hard money or whatever.
I think it's just too big for the majority of people.
So it's just. Yeah.
Getting into gold is just easier.
Way, way easier. I agree with pretty much
everything you just said there. I mean, I don't even know.
I think I've always sort of thought that there is a
characteristic time delay, right, Like the adoption of
Bitcoin, just talking about adoption, which I think is the
key to Bitcoin price in the long term and that we are seeing that
it's just again in the short term we don't really notice it,
but it is happening. It's still happening.
I agree. And I've always thought that
there's a characteristic human brain rooted time delay to
gaining that understanding of what money means, how to secure
your own money, how to manage the technology.
I mean, there's a lot that goes into it.
I mean, I don't know if you, you've probably tried to train
and, and on board a lot of your friends and family or whatever,
but it's not, it doesn't happen overnight.
And the systems are the, the rails are already in place for
gold. And so it's like you get into it
because you know, that's the hedge against, that's the hedge
of production in, in, in uncertain times.
And that's, that's the narrative.
It's got a, it's got a narrative place.
So it's got the institutions in place.
And we're, we're seeing that transition now.
But I think it with Bitcoin, it always seems to happen around
this. It takes about the same amount
of time per person to get them on board on average.
So I I. But the the gold outperforming
Bitcoin from 2025 like let's say July 25 to now.
Things are all that red, right? So.
Could you go longer back? I think that would be
interesting to be honest. Like could you go back longer
and have like certain relationship to whatever
happened then? Like what?
What does the COVID time look like is something I would.
That's a good question. I don't, I need to pull, I need
to make that chart. So you got.
But it's interesting like that's a.
That's a great point. I don't think you're the first
person to ask. Yeah, I think going back to
COVID times, basically what you and you could sort of infer like
the lassie. Proper chaotic time is more what
I mean. Like, you know where it was
clear to people that something. I think, you know, you know,
Matthew Mesinski's right. Yeah, yeah.
One base money. He's he's excellent.
He's also going to be, we're doing a panel with him at
Prague, by the way. Very cool.
It's going to be awesome. But he had a couple shows,
couple charts or whatever showing the years that gold like
gold actually does about performing a Bitcoin in certain
years. And then other years Bitcoin
just blows gold out of completely out of the water,
right. And so my guess is if I were to
back extrapolate and show the years past COVID and all that,
you probably see some spreckels of of red with a little bit of
dips like this. And then it would go back to
pretty shallow. But relatively speaking, you
would never see anything like down into the drawing down in
the negative 20s or 30s where gold is just kicking, you know,
bitcoins. But.
This is just why I think gold is narrative driven, if I'm
completely honest, Like it is driven in this time of chaos.
Like this is what you need to buy and central banks are buying
and this and that. And I mean, it's, it's not
untrue, but I think there's a different deeper thesis that
Bitcoin plays in well, that people that figure out Bitcoin
figure out, right, that it's a, it's a, it's a longer time frame
than just the XYZ months where something is happening and
there's a global chaos and, and, and, and whatnot.
So that's kind of the, for me, the difference, but I know a lot
of people don't like hear me saying that.
Well, I think a really good whole other podcast we could do
on just like what is going to happen if we have something like
a global financial crisis too, right?
Or people were afraid that oil was going to go up to 200 and
stay up there and we're going to have a complete global economic
meltdown. What does Bitcoin do then,
right? That's a good question.
We could. Well, there's a lot of people
that say, you know, it would go down with everything because
still the majority of people treated as a short term
investment type risk on asset, right?
And so a next global financial crisis would ultimately risk
off. So although you and I might
think all these people would be wrong in not picking Bitcoin,
they might look right. I mean, I, I probably align with
that. Yeah.
Because still the majority of people see it as an investment
or trade. So that's kind of why I think
that is so. But yeah, more, more cheap sets
for us. And then and then later on,
they'll, they'll tell us we got lucky.
So I mean, it's it's if you look back over Bitcoins life to see
the amount of negative narratives that Bitcoin has
looking four years back had completely destroyed and then
moved in order of magnitude higher.
Yeah. It's just it's so I have to
believe it's going to do it again in a situation like that.
It's just it's. Entertaining dude, it's just
fun. Yeah, yeah.
So this is like basically the same data brand, but I, I
actually made it more specific. So I wanted to see when Bitcoin
is outperforming gold, is that because of Bitcoins price moving
or is it because of gold's price tanking and then vice versa.
So underneath, I didn't mean to make these Ukrainian flag colors
by the way, but get the the on the downside, the negative
values here are when gold is outperforming Bitcoin, but it's
split out. If it's yellow, it means that
it's that is due to gold having a surge versus Bitcoin having a
tank, if that makes sense. So I figured if I if I got this
specific and then I zoomed in of course since like beginning of
January. Yeah.
I noticed this right here. If this hodgepodge is sort of
orange and then a lot of red ticking up from the blue.
Yeah, this is interesting to me too.
And you don't really get it from the you don't really get it from
this. You only get it if you do this.
And if you look back at, say, the last three years of data,
you pretty much haven't seen any of that.
And this is around the same time scale that gold has started to
go on an exponential trend, kicking Bitcoin's butt.
And so I again, it's, this is a hypothesis, but I think this
might be the meaning of a gold rotating into Bitcoin signal.
And the reason of that is that while it's not the first time
we've seen Bitcoin having a, a small relative run against gold,
it's the first time that this has happened in the past three
years. That's due specifically to
gold's massive drop. Like that's a first in in a
really long time. And so that's why I think it's
an interesting thing to keep an eye on.
And of course, this also represents a huge drop in what
did gold's market cap do here, right?
And Bitcoin stayed stayed pretty much the same over that.
So I think that's. True.
That would be my question, right?
Like if Bitcoin crabs along sideways and gold drops, would
you see this signal? Or is this really the divergent
between gold going down and Bitcoin going up?
This is basically the what you're seeing here, this rise
from the blue up into the red here, which is unique over the
past three years. This is the impact of Bitcoin.
Let's see, because this is the Bitcoin gold ratio.
Yeah. So Bitcoin staying roughly the
same and gold taking a huge relative drop.
So that's what the that's what the red specifically means.
So gold drop is driving the red. Yeah.
And that's the unique signal that you're really seeing from
the past, from the past month or so.
Let's see. So this is so Speaking of, this
is a new area of research I'm doing, which is looking at the
cost of production. And this specific model is
heavily inspired by an, an analyst on X named Kunta or
Paul. I think he goes by Paul.
I don't know him personally, but pretty much all he's focused on
I think for years is looking at cost of production frameworks.
And so people should definitely go give him a follow if they
haven't already on XI took his framework where you're, you're
basically looking at issuance and difficulty.
And I'm building a model that is essentially fit to the bottoms
of the different cycles here. So I think we do the fitting a
little bit differently between the two of us.
I'd like to have a conversation with him.
So this is a in an approximation, I would say this,
this solid blue line of the cost of production which you can see
traces the bottoms and the price really doesn't like to go below
that very often, but there are periods when it definitely does.
So what I did was I, I think I'm the first to show this, but I
actually fit that cost of production data that was
generated to a power law. And the power law fit is an even
stronger fit than the price itself.
So it's, I think it's like 98, it's like 98 point something.
And so to me, it's like now you've got an average sort of
floor price model, which is kind of cool.
And if you zoom in, there's really only been one time that
the price is falling below that quote UN quote average floor
price, which was the FTX crash the the end of the end of the
bubble from 2020-2021. Yeah.
The other cool thing about this is that if you use the cost of
production data or the proxy to it, at least it's a steeper
incline for the fundamental power law, right?
That it's a it's a higher growth, it's a steeper growth
curve. I guess that's the way to put it
for the support. And keep in mind this all for
the support. So the volatility let's the
price dance all around this, but pretty much solely on top of it
so that the volatility is all to the upside.
But that tells us that, you know, right now we're pretty
much right there for the average cost of production floor,
calling it a floor with air quotes.
But in two years, and that's at 70,000 today, in two years it's
basically double so and that's the bottom floor.
So we're going to be almost, you know, 95% chance we're going to
be well north of that in two years and then in four years
it's going to be 250,000. So anyway, I just love, I love
to look ahead and it kind of it's like it's exciting to look
at long term bullish. I think this is pretty much the
way we can wrap it up. Bram.
I just wanted to tie it back together and let everybody know
that I have not forgotten about my retirement content that I
shared a lot of last year and I knew we, we chatted about.
So I pretty much just updated the numbers.
But 2025 is in the past but the numbers have changed a minuscule
amount. I that it's like not even 2% and
in 20-30 it's looking like at least if you are living off AUS
dollar framework and you are living on the equivalent roughly
of $100,000 a year by 20-30 theoretically according to this
with 7% of just inflation adjusted somewhere between 3 1/2
to to to 4 1/2 seems to be the magic number if you're looking
at a 20-30 timeline for for most ages.
And is this you have to be the age at in that year?
Is that no, that's the, that's the age today.
So that's in 4-4 years you'd be. Yeah, exactly 4 years older,
correct. OK, So, yeah, nice.
Yeah, I love this. So I mean, I would encourage
everyone to to check out our previous podcast where we go
deep on on this and really like lay lay it out and how it works
and also what it's based upon, right.
It's the the, it has the the power laws, the fundamental
basically prediction of where the price goes.
So yeah, I would love for everyone who hasn't seen it to,
to check it out. And yeah, very cool to see you
updated it. I think you should, you know it,
it would probably automatically update, right, with with all the
new data. But you also told me you're
going to make a website, right? Or do you have that on anywhere
where you can do? Yes, yes, long time company.
So Speaking of a live updated versions of this, please keep an
eye out for not to tease again, to tease.
I don't want to over tease. But very, very soon, Bram, that
website will be up smithstonwith.com, and folks can
have various versions and access to something like pretty much
just like this. Yeah.
So I'm excited about that. Yep.
Awesome. Yeah, well, I'll, I'll link to
your ex and also to your YouTube channel.
I think you had a you had a slide with the.
Yeah. Starting to YouTube as well,
yeah. Yeah, awesome.
So I'll link to that so people can follow you and check out,
you know, any new data and stuff that you that you post.
So I think I think it's very interesting and yeah, just a a
cool update. I hope people found it valuable
and I'm going to see you in Prague.
I think you're going to have a a cool talk and then I actually
get to see get to see your face. So I'm looking forward to that.
Yeah, we'll see. My face might start to escape
into the public. So, but I, I'm really looking
forward to, to seeing you in person there, Bram and you,
you're, I got to say, for the amount, you know, I don't do a
ton of these podcasts, but you're absolutely one of my top
favorite personalities to interact with intellectually and
and otherwise. So thank you my friend for
having. Appreciate, appreciate that.
All right, man. See you soon.
Cheers. See you soon.
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