OCTA: Deepest Drawdown Yet… and the Last Hope? 😱📉

Well, hello everybody. It's been a well

since Sunday. We're like $2,000 higher

than we were on Sunday. But boy, did we

sweep the lows today. And uh another big

orchestrated manipulation pushed the

price down. And I'm trying to find out

why because it sure spiked back up. It

looks like around 72,500 was the bottom.

There's a couple of other things that

are kind of scary to look at. We did hit

a 40% draw down and as I said for years,

20% draw down in a traditional market is

considered a bare market. In crypto,

it's 40%. We hit 40%. So, you could say

yes, we are confirmed. Now, in a bare

market, I was 60 to 70% sure a few weeks

ago. Now, it looks like we hit the bear.

But did we hit the bottom? That's what

I'm going to try to figure out today.

And remember, this game is very tricky.

But I'm going to share more data with

you than you will find anywhere else to

see if we can pin our very last hope to

something that sounds like pin. It's PMI

and we'll break it all down. This is

called the deepest draw down. Not

financial advice. Big thank you to every

Patreon too from Jeff Hart. Everyone

join his Patreon. Thanks, Jeff.

Appreciate you. Let's get into the ugly

and warning. There's lots of ugly news

and bad news today. First of all, the

last seven days has been rough against

Bitcoin. You can see ETH got a hit hard.

Fell 6% more than Bitcoin fell. In fact,

Bitcoin fell a lot. You can see we're

down 14% for the week for Bitcoin. A big

hit down to 76,100

after hitting 72 and a half today. 70K

kind of was the expected historic floor.

kind of close to the previous alltime

high from the previous bull market and

the November 4th election date 2024

69K 70K give or take $1,000

that should be a floor but did we get

close and then bounce that's what I'm

going to try and figure out today now

all the stuff is dispersed across

different areas ETH daily ETF flows were

negative but the other ones were were

kind of okay which is not not bad. And

because there's good news and bad news

spread all over, it's just all coming

all at once. Another area of concern and

ugly news is Oracle free cash flow is

tanking. This is tied into the AI bet. I

do have a stock section at the end and

AI of the video under the good news, but

this is the ugly news. So it comes in

from Milk Road free cash flow since

November 2021 13 billion dollars last

quarter four before and zero before

that. And this is a company for 30 or 35

years has managed free cash flow

explicitly well and all of a sudden

they're bleeding out because they have

to invest a lot to get a lot and they've

got these contracts from many big

players mostly open AAI quarter of a

trillion dollars. The question is,

will they have the capex in place? And

will the piper pay or whatever they say,

is open AI going to be there to pay the

big checks to Oracle when the time

comes. Anyway, let's get into the bad

news. Fear and greed for crypto is 17.

Extreme fear and rightly so this time

around. And Bitcoin for the month

is down again. We've had five red months

so far. October was supposed to be

October didn't happen. November blood

red 17% down. December down. January

down. Feb down so far, but it could turn

around. The percentage it is down is

only 2.8%.

It feels a lot worse than it is, but

we'll see where we go from here. Now,

flows by asset last week. Again, another

red week. Uh they dropped $1.7 billion a

week. the outflows and again year-to-

date flows now are down a billion

dollars. That is also not good. That is

the biggest fall as well in quite some

time in AUM. When we look at flows by

asset last week, Messi, Messi across the

board, 1.3 billion out of Bitcoin, 308

million out of ETH, uh 43 million out of

XRP, 31 million out of Salana,

everything bled out and people piled

into short Bitcoin, which means they're

very bearish. And Chainlink had half

million plus in [sighs]

all over the place. uh all season. Nope.

Still Bitcoin is in control and

everything else is bleeding out. Also,

Micro Strategy is getting close to not

making a profit on their Bitcoin buys.

You can see their average cost actually

fell under their average cost today.

Their average cost for Bitcoin 75K. When

it hit to 73K today, they were losing

$2,000 per Bitcoin over over 710,000

Bitcoin. That's a big loss. So, Micro

Strategy is getting hurt, but going by

the chart, I still think they are

ATMing, but they're ATMing at a discount

to the net asset value, which is not a

good thing to do in my opinion. I don't

like that. Anyway, that's Micro

Strategy. And the last piece of bad news

is 22% of Bitcoin holders are now in

loss.

This is the unrealized profit and loss,

and it just hit 22% and that's tripled

since January. And this is an important

number to look at because it kind of

tells you that yeah, we're stepping into

a bear, but could there be less draw

downs than in the past? And that's the

thing we need to figure out as well. But

typically, when we do get to this level,

it means we're getting sometimes close

to the bottom. I have another chart to

show you on this, too. Now, let's get to

the good news. Again, it's all over the

place today. Good news is yesterday, the

ETF flows were positive. Bitcoin sucked

in $562 million. That's the biggest buy

we've had for quite some time for nearly

a month. So,

we'll take it a visual view of what that

looks like. Boom. Big green compared to

a lot of red over the previous couple of

weeks or months. And Salana had a nasty

red day, but it was followed up by a

green day. That was their worst day

ever, by the way, two days ago.

That would have been last Friday by the

way because this is yesterday's data. Uh

that we don't have today's data because

the markets just closed. And if we look

at crypto over the last 90 days, it has

been very painful. Very painful indeed.

If you look at all these names in the

far right, ICP down 57%, ono 56%, TA

52%, Hideera 50%, Aster 50%, Cardano

48%, SUI 46%.

It's just really bad out there. The

winners for the last 90 days are PAXG

and XAT, which are both gold proxy kind

of crypto names. They both did very

well. Bitcoin down 28.3% over the last

90 days. That is a pretty bad hit. ETH

down 36.4%.

And on and on and on. So, it has been a

rough time out there in cryptoland.

Now, let's get into some of the onchain

charts to see if there are any glimmers

of hope or not. Now, this is a Bitcoin

Gold chart, and I know Bitcoin and gold

have gone completely separate

directions, but for only the fifth time

in history

has this Bitcoin gold bounced off the

purple RSI

level at the bottom there.

Doesn't mean anything. I don't know.

It's only happened five times in nearly

15 years of history. And typically it

happens at absolute bare market bottoms.

If you can pin any hope to this, this

says,

you know, if bit if gold holds, Bitcoin

should go up from here. If not, it's

completely broken. But I don't pin a lot

of that because gold is a different

animal. And then we have Bitcoin versus

Global M2.

absolutely broken down like never

before. This should follow, but we're

going to come across a story which shows

you exactly what has happened this run.

This run has been masked in disguise.

We'll come to that in a second. Another

piece of maybe good bottoming news is

Soaper. Uh it just hit 1.13, still above

one. When Soaper falls below one, that

means uh we are getting into the actual

bare market territory. We're not there

yet. Remember, we didn't have a bull

market in the traditional sense and we

might not have a bare market in the

traditional sense. So, this 40% off

could be interesting to look at. Anyway,

if you look back here as well, you can

see in 2019 and 2023, we saw crazy

capitulations where 40 to 60% of the

supply are underwater. But because the

ETFs are in play here and the digital

ass, the treasury companies, it's a

little bit different because when the

Bitcoin goes into those assets, it

doesn't come out. It's not really freely

available for sale like a typical retail

holder. And another interesting angle is

the days between all-time highs. Today,

again, we hit that very low number, but

it's been a long time since we've been

at an all-time high. And this kind of

resets the clock every time it does it,

but we'll see. What is interesting is

the number of all-time highs per year.

In 2018, we had 11. 2011, we had 28.

2013, 35 of them. 2017, 67.

2020, only 11. 2021, we had 23. 2024,

21. And 2025, only 12. So, you can

clearly see that Bitcoin completely ran

out of steam in 2025. is not a

traditional 4-year cycle. In fact, the

four-ear cycle is dead, which we all

know, and it's been 120 days since we

had the last all-time high. And we can

construe a number of things from that,

but we'll get to that in a second. Now,

one other thing which is probably kind

of important, and I put this chart

together going back again 15 years. This

is the PMI. This is the measure of

industrial activity. And typically when

there is large industrial investments,

people go risk on. They invest into

risky assets, things like disruptive

stocks, NASDAQ stocks, and Bitcoin. And

here, although I'll step out for this,

every other historical correlation broke

down for Bitcoin over the last two

years. every single one. The four-year

cycle, the correlation with gold, the

correlation with NASDAQ, the correlation

with Global M2, all broken. Every single

one. This is the last one we can pin our

hopes and dreams to. Just want to share

that and walk you through the history.

So, if we break this down, this PMI is

our last stand. If we go back to 2012,

2013, that's when the PMI broke through

50, the red line I have here on the

chart, and Bitcoin shot up. Next time we

broke through 50 was early 2016 and

Bitcoin shot up. The next time we broke

through 50 was after C19 around June

July 2020. Bitcoin went to the moon.

Since then PMI has been in a recession.

It sucked until it broke through

yesterday. A record climb over 5

percentage points from 48 to nearly 53.

Boom. Now people argue sometimes they

say well Bitcoin bottoms before PMI

bottoms or before PMI breaks through 50

etc. When I look back at this it all

happens within two weeks. So if [snorts]

this holds

going back 14 years 15 years if this

holds this could be a good omen for

Bitcoin. But we don't know if this time

is different. Maybe it's like gold.

Maybe it's like global money. Maybe it's

like all that other good stuff. We shall

see. Anyway, watch this carefully

because other people watch this as well

and they may have taken this as a signal

to go in today to buy Bitcoin. It'll be

interesting for me to see what the ETFs

do tonight as well. I'll post that on

Patreon. Now, we do have that 40% off.

This is the biggest draw down of this

cycle since we emerged from the bare

late 2022.

And there's been some corrections along

the way, but nothing this deep. We had

the tariff tantrums which took us down

to 75K,

but we're deeper. We hit 73 uh this time

around. So, what happens next? We are

not sure. But as I said yesterday on

DCA, if you have no Bitcoin, this level

is not bad for starting a position. The

upside is larger than the downside from

here. And to back me up on that too, we

have Matt Hogan, the CIO of Bitwise. He

says, "A fullblown crypto winter has

been masked by institutional flows now

nearer the end than the beginning."

So basically what he says is the crypto

winter was brutal but we didn't notice

it

because the flows into the ETFs and into

things like Micro Strategy were so high

we didn't feel the true pain of the huge

amount of dumpage by the long-term

holders. This was the thing that tricked

a lot of people including Bitwise chief

investment officer saying now we see

what happened. It was a brutal crypto

winter already. We saw we had no old

season whatsoever. It was a complete

waste of a year for 2025 and Bitcoin got

hammered, but it was masked because we

didn't understand how bad it was behind

the scenes. If, and I said this years

ago, I said if Micro Strategy was not

there and the ETFs weren't there, we'll

probably be around $42,000 now. And

that's where we are. So, they have

helped the space, but they've also

masked the damage that was done this

winter. This time everything is

different and that's another proof point

of that. Now

another interesting angle regarding

timelines if it is the same is from Lei.

The average days of bare market 2013 20

2015 sorry it's 410 days 2017 2018 365

days on the nose one year exactly 2021

to 2022 330 days. Of course these can be

slightly different from where you

measure but it's been 120 days since the

Bitcoin alltime high this cycle. Now, if

you ask me, it says here in this tweet,

you got 250 days to go. That assumes an

average of history, but I interpret it

that the bare market duration will be

shorter than the previous ones because

410, 365, 330, you basically knock off

35 days, 25 days uh each time around and

that leaves us 180 days to go, which is

6 months.

If we are in a bare market, we're 40%

off. That is bare market territory for

sure. But how fast will the recovery be?

And I'll say again for the thousandth

time, that is a function of the money

coming into the space. If retail like me

comes out and buys today and the ETFs

buy and the institutions start stacking,

they find money somewhere. It's a good

time to buy. That's very clear. The

question is is the money there to do the

buying or are they often something else

like gold or silver or AI stocks etc. So

that is the Bitcoin story today. Very

interesting. We are still in a very

manipulated environment. It's you know

we're not we're on a boat on a bus and

we're not in control of exactly what's

happening. But uh either way, Bitcoin's

at 76,300 as we speak. And today it went

as low as exactly

72,600, 72,800 depending on the

exchange. By the way, the spreads on the

exchanges today were all over the place.

Kraken, Coinbase, Bitstamp,

uh CRO, Crypto.com,

it was just amazing. And the fees that

they charge to buy, unreal. Anyway,

moving on to other crypto news. This is

shout out to Vitalik Buran from

Ethereum. He wrote a detailed paper why

he actually criticized the L2s uh pretty

heavily, which I thought was

interesting. And for years, if you know

me, I always called layer 2s on Ethereum

a band-aid for the Ethereum layer 1.

They were never going to be a permanent

fix. They were always centralized. They

were always convoluted to use, expensive

to use. People had to bridge between

back and forth and everything else. But

this is a quick summary of what Vitalik

said. And he said [sighs and gasps] the

biggest reason L2s are criticized is

they shatter the ecosystem. Instead of

one Ethereum, we now have dozens of

silos like arbitrum base and optimism.

And this forces users to constantly move

money across bridges which is slow,

expensive, and risky. Also, security

theater, it's not real. Layer twos

market themselves as being as secure as

Ethereum, but that's complete BS. Most

layer 2s are stage zero or stage one of

decentralization, which means they are

controlled [clears throat] by a single

group of one validator or one person or

one couple of signitories etc.

And he said if layer 2s won't give up

control for regulatory or technical

reasons, they aren't scaling Ethereum.

Very important. So I'm very glad he was

very big on decentralization.

So so important. And he said layer 1 is

the only way. By the way, that's the

same thing that Toi said for years uh at

Salana. He said layer 2s are starting to

look unnecessary because Ethereum's main

layer is getting faster and cheaper on

its own. And in short, as I said, they

were a band-aid 5 years ago, slow

network. And now that network is

beginning to be fixed. Now I have also

been tracking the TPS for Ethereum was

12 and it went to 15. Now it's running

at 30 transactions per second. And they

had record number of transactions as

well on the chain. So people are

beginning to directly transact on

Ethereum itself. No longer using the

L2s. And for the eenth time I will share

from the SCP profiler the actual live

data from the last 24 hours across the

different chains. You can see here if

you add up Ethereum and all the layer 2s

that matter, you can see the number of

transactions over 151 million for

Salana. And you can aggregate all of the

rest for ETH and all the layer twos

doesn't come remotely close. Same thing

with users. Nearly 6 million active

users on Salana. And the highest number

of users on Ethereum is now on the base

layer 1, 833,000,

which is awesome. nearly [clears throat]

a new all-time high at least for a very

long time. So very refreshing for

Vitalic to say that and that's good for

the space because nobody wants to deal

with the layer 2 user experience.

Anyhow, let's move on. Uh stocks fear

and greed 43 which is much higher than

crypto and stocks were mixed. Some up

4%, some up down percent, down 4%. Apple

up four, Nvidia down four, Amazon

basically flat, Tesla down 4%, Microsoft

down 14%. Google up 1%, Meta up 2%,

Broadcom down 4%. It's so weird is every

week I come back, everything's either up

4% or down 3% or all across the board

they all match for some reason. I don't

know why that is, but it has been a

bumpy week. a lot of nerves out there

with the Fed and macro and tariffs and

all that stuff, but uh there are some

bright spots. This is Circle and USDC.

Shout out to

um Artemis [clears throat]

for this chart. But the crazy news here

is the sheer volume that's been

conducted on Circle on Salana for USDC

hit a record amount nearly 10 trillion

in the month of January. And again, if

you look at that and compare that to

about 2 trillion for Tether, it's a lot

lower. So transaction volume is coming

to stable coins, which is good. And when

it comes to transacting a lot, high

frequency, low dollar volumes, etc., all

of the action now is happening on USDC

and Circle, not Tron and Tether, which

was in the past. And I'm hoping this

will continue and this will be good for

Circle the stock as well. Now, uh, a

little bit of cyber cab robo taxi news

is from Sawyer Merritt. Uh Tesla plans

to warn the Senate Commerce Committee

tomorrow that China will be dominant

manufacturer of transportation for the

21st century unless the US government

gets its butt in gear and changes

regulations around autonomous vehicles.

Absolutely critical. I've been crying

from the rooftops now for years too

about how AI will be won by the country

with the most energy and the most

compute and that could be China. So we

could all be

[laughter] under the Chinese thumb

without knowing it unless something

changes. But there are players in the

country that hopefully that will happen.

Now other good news too is Whimo

valuation. I do believe Whimo is

guaranteed to fail. I can't see it

working. It's too expensive. It's a

magical party trick. Who knows? Maybe

they can do something. But with Tesla

around, I don't see it happening. But

that being said, it didn't stop VCs from

nearly tripling the valuation in a year

to $126 billion and they raised $16

billion which is massive. and they want

to expand in other cities, but again,

their cars cost hundreds of thousands of

dollars to make and their fees are very

high and they have no line of sight to

profitability and they can't scale and

there's too many fingers in the pie and

it's not end to end neural networks.

True AI, it's just not going to work. So

anyway, as we [clears throat] see more

companies throwing good money after bad,

don't ever do that in investing. Also,

XAI and X and SpaceX all are now one big

happy family. A big vertically

integrated system combining real time

news from the planet, the world's town

hall, uh the best AI many consider with

Grock and space rockets and Starlink and

communications.

It's going to be a huge very important

organization. And I did tweet something

yesterday that um

I thought maybe the reason for X AI

rolling under SpaceX would be to protect

it from Orwellian governments. But that

didn't stop them because the day after

it happened, there was a huge

orchestrated attack on freedom of

speech. uh France, UK, and Spain all

took coordinated actions against Elon

Musk and X today talking stuff like uh

deep fakes and bad narratives and all

that type of stuff. It's funny they

don't go after other other players.

Anyway, hopefully free speech will

prevail, but definitely the leaders

across Europe do not like free speech.

If you are watching this channel and you

do not like free speech, you probably

shouldn't be watching this channel. That

is the number one way to kill a

democracy. First thing you do is you

cancel freedom of speech. You let your

government leaders control the

narrative. That's what they want. And

that's very bad. I'm probably going to

get pushed out of [laughter]

Google for this anyway. But who cares?

Who cares at this stage of the day? I

was so busy today with trading and other

stuff I didn't put together a meme dour.

Sorry about that. But all these videos

are turned into podcasts and substacks

for all the emails. Big thank you to the

mods in the chat, including our latest

new mod. And uh I hope everybody is

doing well and hanging in there with

this market. Yes, it's volatile.

[laughter] It's very volatile. And a big

thank you to TG Tesla, Shauny, Cipher

Sniper, KH, and everybody else. You guys

rock. Thank you all for being here.

Um, we knew 2026 would be bumpy. Uh,

it's getting bumpier a little earlier

than expected, but the quicker things

fall down, the quicker we recover and be

ready for that recovery. We'll see. Yes.

And Switzerland slider, the rider. Yes,

this is very cool. I'll share this

because I lived there for a long time.

Uh, lucky Swiss, I am the bright spot in

the EU for sure. Same with your currency

and the way you're managed. So, stay

good, Switzerland. And that's what

Europe needs. It needs to be go back to

being independent countries that all

compete against each other like little

tribes. Having one centralized

government that doesn't look out for the

people is not a good thing. Anyway,

enough rant for now. See you all

tomorrow.