The Global Wealth Rotation Just Started

All right. So, there is a battle for the

new monetary order between gold and

Bitcoin. Right now, it's not really

looking good for Bitcoin. If

>> if Bitcoin falls 90% for the next four

years, we'll refinance the debt.

>> You refinance where, Michael?

>> We'll just roll it forward. I mean,

again,

>> but you you you think banks would lend

to you at that point?

Yeah, because because

>> Okay, so let me explain what's

happening. For the past several decades,

the world worked with a very specific

monetary structure. In order to grow the

economy and expand something called the

GDP, we had to expand the debt. And in

order to expand the debt, we had to grow

the money.

And as that system got bigger and

bigger, most of the world's capital

flowed through the US dollar and into

financial assets like the US stock

market. That's also why stocks have

outperformed almost every other

investment. And Bitcoin was born into

this world during this expansionary

period of time, all this endless money

printing. And now that system is sort of

coming to a breaking point because debt

isn't just growing, it is now exploded

and it's starting to outgrow the

economies that are supposed to support

it. And so something called the global

old rules-based order is coming to an

end.

>> The international order based on rights

and rules

>> no longer exists. Now, throughout

history, when this happens, money looks

for something called the safest neutral

asset. And what does that mean? A

neutral asset is something that's not

tied to a specific country or a

government. It's outside the system. And

historically, those have been assets

with a finite supply. And for thousands

of years, that was mostly gold. And in

the modern era, a lot of people believed

that Bitcoin, it was supposed to be the

digital equivalent, right? So the world

thought, okay, well, if we don't know

what's going to happen and we don't know

what the new system is going to look

like, then the hardest asset is usually

the safest bet. And because Bitcoin is

digital and portable and finite, a lot

of people also thought it would

outperform everything else, including

gold. Except that's not what's happening

right now. Gold is breaking out to new

highs. Central banks are buying physical

gold at the fastest pace in decades. And

at the same time, Bitcoin has actually

lost value relative to gold. So the

question is, well, if we're really going

into this new multi-olar world, and if

countries and people are really losing

confidence in US treasuries and the

dollar, and maybe even the stock

markets, then why is gold leading right

now? Why is it that the asset that was

to represent the future monetary

standard getting left behind? And if

this keeps going, how low is Bitcoin

going to go? Maybe the most important

question, is this temporary or is this

the start of what some people call a

capital rotation event which could last

for more than a decade? Now, these are

all very interesting questions and I'm

going to try to answer some of them

using the latest data and analytics and

hopefully at the end you'll be able to

better understand what's happening in

this crazy world. So with that said,

let's get into it. Hi, my name is Enri

Jick. Hope you're doing well. Come for

the finance and stay for the gold and

for the bitcoins. So I want to explain

what's happening to gold and bitcoin

through the lens of two big forces. This

will get extra nerdy, but we're going to

use the macro force and something called

the technical force. And the easiest way

to understand what they are is to

compare them and give you an analogy to

physics. Now in physics you have

something called the theory of general

relativity which explains gravity and

the curvature of space and time.

Basically it explains the movements of

big objects like planets and galaxies. I

think of this as sort of like the macro

force. It's very slow and it sort of

guides the general direction of things

over a long period of time. Well then

you have something called quantum

mechanics which explains the movements

of tiny particles and atoms. It's very

chaotic and it doesn't make any sense

when you compare it to how the big

things move. And when I think of quantum

mechanics, I think of how investment

markets sometimes work. Like they're

completely unpredictable in the short

term and they don't make any sense at

all to me. So the macro is the big

picture stuff like the monetary order,

sovereign debt levels, geopolitical

changes, right? All those kinds of

things that Ray Dalio talks about when

he explains economics. Now on the other

side of that though is the technical

side of the force which is what people

like Benjamin Cowan and Northstar charts

show us. That's the moving averages, the

support levels, the ratio of Bitcoin

versus gold, right? That's the particle

physics inside the system. Now in this

nerdy framework of ours, gold can be

explained using the macro force, the big

picture stuff. What's happening to gold

right now? It's gone up significantly.

And what is the macro evidence of that?

Well, we know that government debt

relative to the GDP is now higher than

almost any point in US history outside

of World War II. and global sovereign

debt at the same time has exploded

faster than economic growth itself. Now

also thanks to the changing world order,

central banks around the world have been

buying physical gold at the fastest pace

in modern history. In a lot of

countries, gold also now makes up a

bigger share of official reserves than

it has in years, which means the

sovereigns or tier one nations with

nuclear weapons are choosing gold over

other assets like US treasuries. So

there's a lot of structural gravity

that's pulling money toward gold, which

is this neutral hard asset. It's outside

of any government or currency. That

gravity says gold should be strong, and

it is. But based on this force, Bitcoin

should be going up as well, but it's

not. So, Bitcoin, I think, is better

explained using the technical side of

the force. Now, either some of that made

sense or none of it did. So, let me

explain it a little easier. One force is

saying hard assets should be winning in

this environment, and one of them is

gold is winning. The other force, the

technical one, is saying Bitcoin might

not be done correcting yet. And that

leaves us with a couple of different

outcomes. Either Bitcoin is about to go

onto a super cycle and form a new high

and follow gold to go way higher, or

we're seeing the early stages of a much

bigger capital rotation event that I

think most people are probably not ready

for. And this is where it gets extra

nerdy. And let me start with gold. But

it's important to remember that when you

look at all this stuff, it's not exact

science. One chart that I show you is

not going to show you what's going to

happen to any one asset. Instead, it's

better to look at as much information as

we can to get a more accurate

understanding of what might be

happening. And a really good example of

what I'm talking about is this chart I

came across from Northstar Charts. By

the way, credit to Natalie Bernell and

her podcast with Northstar Charts. I'll

leave all the links down below for you

to go to the source material and check

this out yourself. But the chart you're

looking at right now measures a concept

called CRA or capital rotation evidence.

What does that mean? It's in the name.

It's a time of money rotating from one

thing into another. Now, capital

rotation is this idea that money goes

through different cycles and phases of

how and where it gets invested. And

where it goes depends on a couple

different things. Now, this specific

chart measures the capital rotation

evidence for gold. So, it compares a lot

of economic metrics to the price of

gold. And on this chart, everything is

in a bare market relative to gold. It's

all in red, which means this is

favorable or really good for gold. So,

for example, the S&P 500, aka the stock

market versus gold. Gold is winning

right now. The NASDAQ versus gold, gold

is also winning. The dollar versus gold,

gold is winning. M2 money supply versus

gold, the consumer price index, aka

inflation versus gold. Even market

indexes like the Russell or the

Wilshshire versus gold. You get the

idea. Gold is going up faster than any

of these indexes. Now, by themselves,

any one of these squares turning red,

not that big of a deal. Doesn't tell us

much. But Northstar argues that when we

have a lot of these coincidences, in

this case, all the squares have gone red

against gold, that means we are now most

likely in the middle of a major capital

rotation event. In this case, this is

when stock markets go down and

potentially spend 10 or more years

trying to get back to the level they

were at before this event started. Now,

there have been a couple times

throughout history when this has

happened before. And here's a few

examples. During the early 1930s, when

the stock market collapsed and the

dollar wasn't stable, the US went

through a gold re-evaluation thanks to

FDR confiscating it. Gold repriced

higher and outperformed just about

everything. Gold dominated for about 5

to 7 years and the stock market didn't

recover to its all-time high of 1929

until 1954.

That's a capital rotation event. Now, it

happened again in the 1970s. That was

the big one, which is when the US had

huge amounts of inflation. The stock

market was basically flat for a decade

in what's called real terms, right? Aka

relative to inflation. And during that

time, gold went up over 2,000%.

That lasted from 1971 to about 1980.

So gold dominated for about 9 years.

That was a capital rotation event. It

happened again in 2002 when the US went

through the.com bust. Gold went from the

mid200s in 2001 to over $1,900 by 2011.

That lasted more than a decade. And

commodities went on to what people call

the super cycle. So that's a capital

rotation event. Now these rotations

typically last between 5 to 10 years.

And during those times, the stock market

can either collapse or go sideways in

real terms. while hard assets got the

real returns. Now, what Northstar is

suggesting right now is that just about

every major financial metric is going

down relative to gold all at the same

time. And when money starts rotating

like that, it shows us that there might

be a really big change in investor

confidence. And when these investors

prefer neutrality over financial

productive assets aka stocks, that

usually means the system is absorbing

the stress somewhere else, right? Like

the debt levels, inflation, currency

debasement, geopolitical fragmentation,

all these things are going somewhere.

Now, in those times of uncertainty,

markets can still go up and what

economists call nominally, meaning the

overall number goes up, but they can

also have a hard time with getting

what's called a real return, right? The

real purchasing power gains. And I know

it sounds kind of complicated, but for

example, if you get a 10% raise in your

income this year, that is your nominal

number. But oops, life is now 11% more

expensive this year, which means your

real income is actually -1%. It's a

loss. Same thing in the markets. Markets

can go up 10%, no problem. But they can

still lose purchasing power in real

terms. So anyway, this chart says if

this rotation continues, that doesn't

mean there's going to be a stock market

crash necessarily. It just means that

real returns get compressed relative to

hard or scarce assets. So the takeaway

is that investors go through different

periods of how they like to invest their

money. Like for example, some eras the

stocks might win and in other eras hard

assets might win and they tend to

alternate. Okay, so that's gold. But

then the question is what about Bitcoin?

And before I show you that, I want to

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let's get back to it. All right. So, if

gold is strong right now and the big

macro force says that Bitcoin should

also be strong, then why isn't it? And

this is where the technical force I

think is more useful in explaining it. A

lot of this framework comes from

Benjamin Cowan. I'll link his work down

below for Into the Cryptoverse where you

can see all of this yourself. But what

really helps explain where Bitcoin is at

right now are a couple things.

Historically, Bitcoin has reached the

top or the peak sometime in Q4 of the

posth having year, meaning the year

after the having, which happens every

four years. So, for example, the 2013

cycle reached a peak in November. The

2017 cycle reached a peak in December.

The 2021 cycle reached a peak in

November. that Q4 timing has been super

consistent. Now, what's also interesting

is that the year following the Q4 price

peak a lot of times overlaps with the US

midterm election cycle. It's

historically been the start of a bare

market. Now, here's where it really does

start to look like we're living in some

kind of a simulation because the pattern

kind of repeats. In the last two full

cycles, Bitcoin took roughly 1,50

to 1,60 days to go from major cycle lows

to the next high. For example, from the

2015 low to the 2017 high, it took

Bitcoin about 1,50 days. From the 2018

low to the 2021 high, it took Bitcoin

about 1,60 days. And on the way down,

the bare market has historically lasted

about 1 year. For example, from the 2017

high to the 2018 low was exactly 364

days. from the 2021 high to the 2022 low

was about 371 days. So, Bitcoinists

tended to spend about 3 years going up

and then roughly one year going down in

a bare market. Now, let me show you

something that's also interesting.

There's two specific indicators that

technical analysts like to look at,

which are the 50week moving averages and

the 200week moving averages. and they're

exactly what they sound like. They're a

rolling average price over the last 50

weeks and last 200 weeks. Now,

historically, Bitcoin has been in a bull

market when the price holds above the

50week moving average price. But once it

closes a few weeks below that level

several times in a row, that is marked

the end of the bull market and the

beginning of the bare market. Now, for

us this cycle, we peaked at around

$126,000.

After that peak, the most important

price point to have maintained was the

50we moving average, which was sitting

at around 102 to $13,000.

Now, once Bitcoin went below that level

for a few weeks, that's when we started

the bare market. But wait, there's more.

Once Bitcoin historically goes below

that 50week moving average, this is

where Benjamin Cowan says, quote, "A

date with destiny starts to happen."

Right? That's when we inevitably go

toward the 200E moving average, which is

much lower than the 50week moving

average. The 200 week represents roughly

four years of price history, and it's

always been Bitcoin's kind of long-term

baseline, so to speak. It's not an exact

science, but it's been very close every

single time. So, historically, once

Bitcoin loses that 50week moving

average, which again for us was about

$13,000,

the price compresses toward the 200E

moving average. That means for us around

$58,000.

However, we could go as low as the 40s

or depending on what happens maybe even

the high30s. Now, if we use what we

learned from the prior cycles, which is

that it takes Bitcoin about 1 year to go

from peak to bottom, that would put us

at around October of this year to reach

our bottom. But it could also happen as

early as May. Now, if none of what I

said made any sense, here's an easier

way to understand all of this. This

right here shows how far Bitcoin has

dropped at the end of every peak. Right?

You can see every cycle we go down a

little bit less each time. So, let's say

this cycle we go down 7% less than the

previous. So, let's say we go down 70%

from our all-time high, which is about

$126,000.

That would put us at roughly $37,800,

which also kind of lines up with

everything else that we just looked at.

Now, again, none of this is guaranteed

science, but I think it's something

really important to keep in mind. Okay,

so if you made it this far, let me sort

of put it all together. Also, don't

forget to subscribe because a lot of

people that watch my videos are not

subscribed, which is kind of crazy. So,

if you like this kind of content, let me

know by subscribing and hitting that

bell notification. Now, in this capital

rotation theory we talked about, I think

that's a very real possibility that hard

assets like gold and eventually

commodities like oil could outperform

the stock market and that could last a

while. What if we are actually in one of

those 5 to 10 year scenarios where this

capital rotation happens like the 1970s

or the early 2000s where hard assets

structurally outperform the rest of the

financial market. That's a very real

possibility. And maybe even Bitcoin

falls behind because Bitcoin today is

way more financialized or securitized

than it was in 2015 or 2018, right?

because now it's inside an ETF. It's

used as a collateral, right? It's tied

to these crazy derivatives markets.

There's products built on top of these

ETFs. There's companies borrowing

against them. There's miners financing

their operations against it, right? That

just means Bitcoin doesn't necessarily

trade on scarcity. The price discovery

happens because of all these paper

products. So in the short term, the

price of Bitcoin can be suppressed and

it probably is to some degree right now.

Now what's interesting is gold was also

securitized but in 2004

and after 2004 you could buy paper gold

through the ETFs. So it was also

suppressed but remember that in the long

term price suppression using derivatives

can only last so long. Eventually, the

asset breaks out and it goes up. Now,

for gold, the macro reasons were there's

a lot of them, right? There's

geopolitical uncertainty, banks

accumulating, technical analysis. Maybe

now it's gold's turn to dominate the

markets. I think the same thing will

happen to Bitcoin someday, but I don't

know how long we'll have to wait to get

there. Hopefully, the next cycle takes

us to those new highs, but it's not a

guarantee. And so there's also something

to be said about Bitcoin's technical

analysis. It seems like, at least for

now, the bull cycle is over and we're

now in the part of the cycle where all

this leverage is getting flushed out,

right? And we might just go sideways for

a while, maybe for the rest of the year.

One thing that I'm going to keep in mind

is the wisdom in what Ben said in one of

his videos, which is that bull markets

make everyone a genius. Bare markets

make fools of both bears and bulls.

Meaning there could be a point in time

this year when Bitcoin might go up,

maybe even close to that 50week moving

average, close to six figures. That's

when the bears are going to look silly.

But then there could be a reversal and

by Q4 we get a huge move down and the

bulls are going to look silly. So bare

markets can make everyone look foolish.

That is a very possible scenario. Now,

at this point, you might be like, "Okay,

well, Andre, if gold is breaking out,

and if Bitcoin is going to go lower, and

if there's a capital rotation in the

markets, then why don't you just sell

everything and put it in gold or

something, right?" I think it's a very

fair question. And here's how I think

about it. I think there's a difference

between recognizing there's probably a

rotation happening and then trying to

perfectly time it because capital

rotations

are not happening in a straight line

even in the 1970s or the early 2000s.

There were violent counter rallies.

There were fake breakdowns. There was

massive whipsaws. Right? And if Bitcoin

is still in its long-term adoption

phase, if ETFs and sovereign interest

and bank custody is still expanding,

then selling everything into this

technical weakness could be the same

mistake that people made in the last few

cycles. So for me, the better question

is not should I sell everything, the

better question for me is how do I

invest this money so that I survive no

matter what the outcome is. Like if

Bitcoin goes up, I don't want to be left

behind if gold continues to outperform.

I don't I don't want to be blind to it.

I want to know why it's happening. Maybe

I'll own some of it. That's why instead

of selling everything I have, I've been

diversified. I hold Bitcoin. I've got my

S&P 500. I've got my dividend stocks,

which could do really well in a sideways

market. I'd love to own more tech stocks

than I currently do. Now, I've also sold

my rental because I don't want any debt.

I don't want the headache and the

liability. So, I have more cash than I'm

usually comfortable with, but I'll keep

dollar cost averaging across the assets

that I think could be undervalued and

then reinvesting all my dividends back

into the market. Now, if you want to see

my full portfolio, you can go to

funvest.com. I'll leave a link down

below where you can see all of it and

track your own investments. But, I don't

think there's a right answer. So, I'll

leave all the sources down below for you

to look at as well. And I'd love to hear

your thoughts. As always, I hope you

have a wonderful rest of your day. Smash

the like button, subscribe if you

haven't already. I'd love to see you

back here next week. I'll see you soon.