Ben Cowen: One More Bitcoin Crash Before 2027?

you started buying Bitcoin in July when it went just shortly below 60,000. Can you explain a bit of the rationale behind that? Why have you started buying? >> Well, I mean, yeah, I mean, I put out a tweet on July 1st basically saying this is when I normally start. But it it's not This is what I do every midterm year, right? I I start buying in the second half of the midterm year. The reason is because Bitcoin, you know, normally it goes down for the first half pretty consistently. Like everything is is every rally we get in the first half of the midterm year is normally just a bear market rally that gets sold off. And so, in you know, in in some of the prior bear markets, that was what I learned to do, right? So, I made a lot of mistakes way back in the day. Um but I learned my lesson in 2018. You know, I started buying in the second half of the midterm year. In 2022, I started buying in the second half of the midterm year. And then I'm doing the same thing in 2026. Now, that does not mean that the bottom has to be in. Um you know, certainly Bitcoin has a nice rally right now, and and that's now going to be the topic for probably the next several weeks is is the bottom in or not. And you know, it's hard to know for sure. Like no one truly knows whether it's in or not. Um but I will say that in a year, it it probably won't really matter, you know, what like what time you start, whether you start buying at 60k or 70k. What's hard to get right is what happens before we get to next year, right? And and one of the things I realize I've realized before is sometimes it's better to just start DCA'ing and then it takes some of the pressure off, so that when you when you get rallies like this, right? When you get rallies like this, it you don't you're not as likely to FOMO in, right? If you just kind of start buying in the second half of the midterm year. If you don't buy anything, then you run the risk of just simply buying every lower high. You know, I mean, and a lot of people have probably done that this year on the rally we had back to 98k and the rally we had to 82k. Um So, I I think DCAing can help with that. But, again, from an academic exercise, that does not that does not definitively mean that the low has to be in. We'll only know that uh after we get through the midterm year. I absolutely could be wrong, but you know, for the last what, like 9 or 10 months, I've been very bearish on the market. And the reality is is if, you know, if you don't believe that Bitcoin has another drop left in it before the end of the year, you can go buy Bitcoin now, right? I mean, buying Bitcoin at around 70k, give or take, is not a bad entry compared to where it was eight or nine months ago, right? At 120k. And and that's the mistake a lot of people make is they feel like if they don't time the bottom exactly, then they have to just sit out of the entire bull market, right? But, in reality, a bulk of the gains occur, you know, in the middle of the market, right? In the middle of the in the middle of the uptrend. Um and and the same thing to the downside, right? Like, a lot of people feel like if they miss the top, then they can't take profits, period, because they don't want to take profits like 10% down from the top and then they end up watching the whole thing go down, say, 70 or 80% of it. >> Uh just a follow-up question regarding the DCA uh topic. So, are there periods where you wouldn't recommend to DCA? >> So, I I generally don't DCA in the first half of midterm years, right? So, that that tends to be a period where the market's just generally trending down. Um also, you know, buying buying a lot near the end of post-halving years doesn't really make a lot of sense, either, because you're you're normally putting in your your cycle top around that time. Um so, I would say, you know, if you're not going to DCA any particular time, I would say, you know, sitting out from like, you know, sometime in Q4 of the post-halving year through the, you know, to the summer of the midterm year, that would be the window to kind of hold off on doing it because during that period Bitcoin basically bleeds to everything else, right? It like bleeds to uh to stock market, to gold, to energy. It just base it even to the dollar, right? It bleeds to basically everything. And so during the first half of midterm year and maybe the couple of months in the post-halving year uh before you get to midterm year would probably be the time to to to focus on other investments. >> What would you say to those uh holders who are a bit afraid to jump in now because they expect another leg down in October as you were expecting? >> I mean, it doesn't have to be October. I I think there's a good chance there will be uh potentially one more sell-off before the end of the year. And you know, if you're scared to buy, what I do is it cuz I I deal with this all the time, you know, like I'll I buy index funds every single month, regardless of what I think's going to happen. And sometimes I try to time the market, and sometimes I get it right, sometimes you get it wrong. With with Bitcoin, you know, I think the argument is just because you start buying doesn't mean you have to like bet the family farm at this point, right? Like you could you could inch in just to get a little exposure to make yourself feel better in case there isn't a drop later, right? So what I do is I sort of it's like I call it I call it I mean, I started talking about it back in 2019, dynamic DCA, where let's suppose that I want to put in $2,000 into the market over the next 4 months, right? Let's just suppose that. Then the way that I would do it is I would put in 100 in July, 100 in August, you know, and and then if we do get a larger drop later on, then I would weight the buys a little bit heavier, right? So, then it could be 200 in September, like 500 in October, 500 in November, right? And then the rest in in December. So, that's the way I do it is when there's something that I want to buy, but I'm a little nervous that it might go down, I first go ahead and buy a little anyways, right? I'll go ahead and put in about 10 to 15% perhaps of what I want to put in. And that way, if if I'm wrong about it dropping, at least I got something and I don't spend the next like, you know, year or two just kicking myself for being too scared to buy. And then if um if we do go down, that's when I fully, you know, deploy, I fully jump in, and then just be happy with what I got. >> And that's precisely what you have been doing lately with Bitcoin, correct? >> Yeah, I mean, I think it I think it makes sense, but I mean, at the same time, you know, I I'm very big on opportunity cost, like really big on it. And and that was one of the reasons why for so many years I basically and I I still tell people altcoins have been a a completely terrible investment uh collectively. Now, there's some that are doing well, right? There's some this year that are doing fine, and and that's been the case every year, but I primarily focused on Bitcoin for the last say, like 6 years because collectively the altcoin market bleeds to Bitcoin. The problem with Bitcoin, even in the rally that you see, is that it's still bleeding to most other things this year, right? It's still bleeding to gold, it's still bleeding to the stock market. It it's not There's this opportunity cost that's been associated with it, and a lot of Bitcoiners don't really want to admit it, right? But I mean, Bitcoin essentially is at the same valuation against the S&P that it was at five or six years ago, right? Like near the end of 2020, early 2021, Bitcoin was at the same valuation against the S&P 500, and and then you you know, you see that, and you start to question like, well, what's the point of taking on all this extra risk if I'm literally not even going to outperform an index fund, right? And with index funds, too, you get you know, you get dividends because, you know, you're you're investing in a lot of different companies and so, like I look at that and and I don't like the idiosyncratic risk of a lot of different individual assets. I will I will I will endure the idiosyncratic risk of an individual asset as long as the risk-adjusted returns for that asset make it worthwhile, right? But it the minute it doesn't make it worthwhile, it's hard to find it as attractive of an investment. And that was why, you know, from basically the end of 2021 through today, I've just kind of relentlessly told people, if you're going to buy anything in crypto, just go buy Bitcoin because most everything else, if not everything else, is going to bleed against Bitcoin or will eventually bleed to Bitcoin. And so, it's all about opportunity cost. But again, in in essence, you're rolling down the risk curve. First, it was altcoins bleeding to Bitcoin for, you know, from 2023 from 2022 through at least 2025 and still a lot of them continue to bleed. But then this year, we you're seeing Bitcoin bleed to stocks, right? And Bitcoin bleed to gold. So, it's the same idea of like focus on the things that are outperforming. And so, like I I've no problem DCAing Bitcoin, but there is a big part of me that that wonders like, when is it going to start outperforming the index again? Because if it doesn't, then a lot of people are going to question like, why take on the extra risk? Like, why take on the risk of things like a cold card hack, right? Why why take on that risk? You know, people did what they thought was right. They did what they thought what people told them to do. They own the keys to their Bitcoin, and they still lost out. And that that's a tough pill to swallow. And there's going to be a lot of people it's going to be very difficult to convince why that's different than Bitcoin, right? Like the the Coldcard wallet hack is not representative of Bitcoin. Like you know that, I know that. That was a third-party error, but good luck convincing like the person a person on the street that that that's a different thing. And And for them, that's going to be a hard take. So, I I I still believe in in Bitcoin, but I do wonder, you know, are people going to start looking at this and wondering like when are we actually going to start outperforming less risky things? >> Why do you think that the mid-term year is such an important sort of point to take into consideration when it comes to predicting the price of Bitcoin? >> I mean, because that's what it's done. I I mean, it for for all the you know what people have given me this year about talking about the four-year cycle, especially during rallies, we you can't you can't look back at this year and say that it was completely wrong to ignore the the mid-term year weakness. You know, going into this year, a lot of people faded the mid-term year weakness, and they're like, "Oh, no, it's silly to to put any faith in the four-year cycle." And And those would be the same guys that of course would be beating those same drums, you know, on any rally that you have. But the reality is is that's what happened in the past. I came into this year saying, "Look, we have three data points for Bitcoin. And this is what it's done." I got a lot of flak for it, and Bitcoin dropped 50% you know, 50% this year. Um And I would I would push back and say we have more than three data points, because the stock market often will put in major lows approximately every four years as well, right? I mean, we had, you know, a low in 2014. Uh we had a low in 2018. Obviously, we went a little bit lower in the pandemic. And then a low in 2022. And even in the stock market, if you look at the the '50s, and '70s, you know, we had like a low in like around 1958, 1962, 1966, 1970, 74, 78, and 82. Right? So, it's approximately every 4 years. I couldn't tell you why. Like, I don't know exactly why. Uh the the the the the midterm year is the weakest. The strongest year on average is the pre-election year. That's on average the strongest year in the cycle is is after the midterm year. I don't know why. I mean, it's probably a combination of of liquidity, you know, it it could be due to you have a new you have a president that takes power, you know, takes office in the first year that he's in office, he wants to you know, he he wants to do the as much as he can to have the market go up because he wants the market to kind of reflect this is the change that he's doing is a good thing. And and it's a lot easier to have the stock market going up in the years leading into the election year if you have a reset year. I don't really know like what the you know, what the reason is. I'm just respecting what has happened and and and by the way, I mean, the stock market already followed through with the first half of that prediction because in the first half of 2026, the stock market had a had a correction. And it was in that correction that Bitcoin dropped to 60k. So, if there's another correction in stocks at the end of the year, that would be what would what would break, you know, what could break Bitcoin through 60k. And if there's not a correction in stocks, then that would be a way that I would be wrong about that view. >> Has the latest rally made you change your mind about your outlook for the rest of the year or you stay you stick or you stick with your outlook that we're going to see a further low potentially in October? >> It's a good question. I mean, I think first of all, the low does not have to be October. October was the month I threw out a year ago because when we topped in October last year, I just simply pointed out that the prior bear markets have lasted about a year, right? So, I look, I think the the odds of it the low occurring in October are still somewhat high. Um, you know, even in 2022, before Bitcoin fell into November, we had a rally. I like Bitcoin had a nice rally first and and Bitcoin rallied from the lows of of 17K all the way above like what to like 21K or 22. I don't even remember where it was exactly, but it doesn't sound like I mean I don't know it sounds ridiculous now, but back then people were were really getting into it. And then in in 2018 actually, uh Bitcoin had a rally to 98K. Um, in May. Or sorry, 9800 in May. And or around 10,000. And then in in uh in July, Bitcoin rallied to about 8200 in 2018. And then in August, it rallied to about 7300. So, we've seen very similar rallies this year, right? We had the rally to 98,000, we had the rally to 82,000, we're now rallying up into the 70,000s. It's not to say that we have to repeat 2018, but what it is to say is that we've seen rallies like like this in prior midterm years. And and it it didn't even even then it didn't mean that the bear market was necessarily over, right? We still had a big drop that occurred later on. And the other thing as well is that there's so many indicators, right? That you can look at that some suggest the bottom is in and and which is why it's worthwhile to DCA. But there's others, right? Like the MVRV the MVRV Z-score, the the realized price, those sort of things, those tend to get triggered in bear markets where Bitcoin goes below those levels and and that hasn't happened yet. So, you know, I mean, the the the that that don't like the the views, I mean, they can see all the same indicators that I can and it's just basically a matter of of picking and choosing which ones you want to believe in and which ones you don't. >> Okay, but let's say then that Bitcoin stays above 60k for the rest of the year. As far as I understand, you wouldn't you wouldn't recommend people to get into 2027 with a bearish outlook if that happens. It means that basically you were wrong, correct? >> I think time-based capitulation would would kind of come and go and then it would make sense to go ahead and not continue to be bearish. And and then, you know, flip the script and say, "All right." Because, I mean, the later you get in the midterm year, I think a lot of bears will just simply become bulls. Kind of like the end of 2022 and the end of 2018 and the end of 2014, right? So, if if the rest of the year comes and goes and we don't get a drop, then I I think that would be it. Like, I don't think you have to go down. It's just more the window of weakness that typically, like, the the the the time frame for a drop lower, in my opinion, would be, you know, before the end of the year. I mean, maybe the first week or two of January if we follow the 2014-2015, but uh you know, it would be over the next like 3 to 4 months. Not Like, I wouldn't be expecting it to happen in March or April of of next year. Because I think I I think I think there would just be we would have fully played out the the time-based capitulation view. I don't have a crystal ball. Like, it's not like I know for sure what's going to happen. Uh but, I am a believer in in, you know, time-based capitulation and so I I don't think it would make sense to be a bull going in or I don't think it it make sense to be a bear going into 2027. >> And let's talk about gold. We saw that it reached the peak at the beginning of this year and I was listening to Eric Crown. He was basically saying that according to him the that gold put in like a long-term peak which won't be matched for several years from now and that so the rally we are seeing now is not really a continuation to new highs of that previous rally. He was making this point looking at the historical pattern of gold saying that it also follows some cycles that are playing out in not not 4 years like Bitcoin but in 10 years. Do you agree with this outlook or you have your own outlook on gold? >> Yeah, I mean the the rally the gold had in you know in the 2000s I think was around 10 years. I think the one that it had in the in you know a couple decades before that was maybe slightly longer. It's possible that it's a long-term top but I don't think we can definitively know that right now. Um I think there's also plenty of reasons to say that you know it it it easily could go back up potentially to new all-time highs. I do think that you know I mean on average if you look at the average of all midterm years for gold it tends to bottom in the summer which is so far when it's bottomed this year. If you look at the last two midterm years 2018 and 2022 gold didn't bottom until September October time frame. So you know I don't know normally though it bottoms in the midterm year sometime between June and October on average. It's it's sort of like the weakest moment the weakest period for gold and then it starts to head back up. So I I don't really think it's it's not clear to me that that has to be the top for gold. I I certainly could see a future where gold actually goes to new all-time highs and and continues to go higher. And I I would argue I would I would probably lean in the direction that it it actually does go to new highs you know, before the end of the decade. Um but you know, I this is one of those things that it's like a strong opinion loosely held. If if we rally back up and and are unable to really break through 5K by mid-2027 then I would probably agree that the top is done. You know, I think we we because every gold rally that and Eric might be right. I mean every gold rally that had a major top at some point there was a countertrend rally that went back up that made people think we were going to new all-time highs. Um and some of the times we did and some of the times we didn't, right? But the time frame on getting an answer to that would probably would probably be about mid-2027. So not not that long from now uh we should we should know and and if Bitcoin can't really break through 5K by mid-2027, then I would I would agree that the top would be in. >> There a lot of talk about a potential dot-com bubble sort of crash that is awaiting. What is your outlook on the S&P on on the US stock market? >> Normally the stock market gets two corrections in mid-term years, like one at the beginning of the year and then one at the end of the year. So we saw that in 2014. We saw that in 2018 and we also saw it in 2022. And and it's actually in the second correction by the S&P, that's where Bitcoin normally puts in the market cycle bottom, right? And so you know, if if we don't have another drop in the S&P before the end of the year, then I would be less inclined to think that Bitcoin will drop. But if I knew for a fact that the S&P is going to drop 10 to 20% like it has done in uh 2014, 2018, and 2022, that is normally the catalyst that that leads to the market cycle bottom for Bitcoin, right? A larger correction in the stock market. Now, you might argue, "Well, we're running out of time. It's already mid-August." But, in the last three midterm years, that correction, that 10 to 20% drop, in two of those years, it did not even start until mid to late September. And last cycle, it started in in about mid-August. So, about around now is when it started last cycle, last midterm year. So, for the S&P, what I would argue, I'm not looking for a massive 50 to 60% bust right now in in the stock market. I'm I'm more so looking for a 10 to 20% drop, maybe even 10%. Like 10% could be plenty. Uh but I would say somewhere between 10 to 20%. But, before the end of the year, and I I think if we get that, it will certainly make people think that it's akin to the dot-com crash. Uh but I I I don't think we're at that point yet. I I think there's still reason to believe that the business cycle could, you know, easily have another one year left in it, maybe even two years left in it. Um a lot I'll say too, when you look at the the dot-com bubble, that occurred, the the the big drop occurred after, you know, a lot of the major IPOs, and we haven't even seen OpenAI IPO yet. Uh so, I I think that there's probably going to be some more high high-profile IPOs. I think there will likely be a drop in stocks before the end of the year, and that it will scare a lot of people, but I'm not yet convinced that it has to be kind of like the quote-unquote the big one, because the labor market I mean, the unemployment rate's been trending down since November, right? I mean, the it's not like it's clear to me and I don't know the reason for the drop if you need a reason, but in the in the in the 1990s, in I in the mid-1990s, the Fed lowered rates and then that kind of was the start of the dot-com bubble. And then they raised rates by 25 basis points, I believe, in 1997. And when they raised by 25 basis points, the stock market immediately had a 10% drop. And there's there is speculation, right, that the start that the Fed will raise rates before the end of the year. In fact, the markets are leaning in that direction. So, if if the Fed raises rates back up to 4%, I think they would then hold them there and it could lead to a brief drop in stocks, but remember, a rate hike doesn't mean the economy's falling apart. It actually means the economy's doing fine. Uh so, it might spook people, but uh I don't think that's necessarily the end of it. >> That was very interesting. I hope to talk to you before the before the end of the year, actually, to see how old these views uh will have played out. But, yeah, thanks again for joining our show. >> All right, thanks for having me.