If you've ever wondered what really drives bitcoin's price, there's a formula for it, and it's more accurate than most people realize.

Now, this isn't a guess.

It's a framework built on data, global equity leverage, and investor behavior, the same three forces that have quietly driven every bitcoin boom and bus cycle.

Now, once you understand this, you're going to stop reacting to price and start positioning ahead of it, because right now the signals say.

We're entering a new regime real quick.

On Mark Mawson's twenty.

Sixteen, I've helped millions navigate bitcoin cycles using data, not hype.

I'm a partner at a leading bitcoin venture fund.

I advise companies building the future of finance on bitcoin, and in this video, I'm going to walk you through the same systems and the same signals that we use to make decisions.

How you can use them too.

Let's go all right, so we're going to dig into the data here.

Now.

In my companies with my team, I tell them always, look, we're not in the guessing game, We're in the data game, all right.

Now, same with bitcoin.

People ask me all the time, should I buy now?

Is there another dip coming.

I don't know.

I'm not in the guessing game.

Let's look at the data and see what it says.

Now, what most people get wrong is they think there's this illusion of chaos like either one.

They look backwards to the chart and go, wow, bitcoin looks very predictable.

I should just sell here and buy back here, so simple, right, Or they think there's no way to know what's going on.

But what if it's something in the middle.

Now, I have this chart up right here.

By the way, I'm going to be using a lot of charts from Bitcoin magazine Pro, i''ll be using a lot from Jamie Coutz at Real Vision.

I'm gonna be using a lot from a lot of different places to show you that there's a lot of places to get this data.

I'll cover that with you, okay, But we can look at the history of bitcoin since twenty eleven and you can see we have a high right here, and then it goes all the way down low, and then it comes high and goes low again, goes high and comes down low.

Now, of course it always trends up.

So if you just bought here and waited ten years, but nobody can wait ten years.

So they're trying to buy here, sell here, buy here, sell here, etc.

Right, So it looks very chaotic.

So what some people do is they think, well, what about if we use on chain data.

So we're going to go through this.

So there's some on chain indicators that we can look at to help us understand the way bitcoin moves.

We look at technical analysis.

A lot of people think technical analysis is the way to go, and so you know, well, we have to look at the five repeating patterns and have to repeats then it consolidates.

Here it right, So there's like I call it reading the tea leaves.

They think they can do that.

However, for most people this is like technical analysis.

More like this.

Yeah, you can't make sense of that, right.

So maybe it's on chain indicators, maybe it's technical analysis, maybe it's macro trends.

Okay, all of those are important.

We want to be looking at all of those.

Of course I talk about macro topics all the time.

But what if the boom, the bitcoin boom always begins with three different data points.

And if we understand these three data points and how to look at them, then we can figure out how to navigate the bitcoin cycles.

Okay, well do you want to know what those are?

Let's break them down now.

I call this the hidden engine.

Now, the hidden engine is what I'm calling a formula, a formula of how to understand this all right, Now, I'm just gonna stay real quick.

Disclaimer again, nobody knows the tops or the bottoms until you're looking backwards.

What we can figure out.

Is when things get over bought, over sold.

We do know when they're expensive or when they're cheap, and that's what we're going to look at here.

Okay, So the.

First thing is that the old sort of driven model of sort of bitcoin's forecast its future was either network effects from Metcalf's law SOT.

Metcalf's law says that as each node, as we continue to add nodes, we multiply the power of the network.

So like one phone's not very valuable if no one else in the world has a phone, but if everyone has a phone, the phone's more viable.

Read's law is very similar, except for now it's not just the nodes, but it's then the multiplication of those nodes down below, so it's more exponential.

But that's sort of the old model.

The new models we have are a little bit different.

So we're going to break it down to three.

Fuel.

This is the global liquidity, and there's two ways we have to look at this, GLI and GRS.

Okay, I'm gonna break those down.

And this has about moves.

About seventy five percent of bitcoins moves are driven by these two things.

Now, that's the fuel.

Then we have the pedals, the gas and the brake, and that's really the leverage that goes into the system.

And then we have the valves, the blow off valves, the reliefs valves, and this is the profitability behavior.

And we can look at this through on chain data.

All right, we're gonna break all this down.

Buckle up, turn off all your distractions, get a notepad, write this down.

Let's go.

All right, So the first thing is the fuel.

This is what feeds the engine.

All right, we're talking about GLI and GLS.

Now, a lot of people get this wrong, so let me break it down for you.

GLI stands for global liquidity, global equity.

Now where a lot of people get this wrong is they look at USM two.

But we're talking about global.

Bitcoin is a commodity, it's a global asset, and we want to look at the global liquity.

Now, I believe the absolute master in this game is Michael How.

I reference his work all the time.

He writes a newsletter called Capital Wars.

It's a paid subscription.

I'm gonna be referencing a lot of stuff from paid subscriptions that I have because I pay for data.

You might want to pay for data as well Capital Wars Michael How or you can just continue to subscribe it to my channel and I'll break it down for you.

But he talks about the impact of global liquidity.

He says, the biggest and most direct impact comes from global liquity.

It seems like we should be paying attention to it.

Let me let me tell you why.

All right, So we don't want money, We want goods and services.

Goods and services a wealth.

So when the government prints more money sends it out a stemmy, that doesn't make more wealth.

They can't print wealth.

So what we really have is all the money.

Of the world divided by all the goods and services of the world.

As they print more money, the value or the price of those goods and services go up.

So if we look at liquidity.

As they increase it, then we know that it has to go somewhere, and it's going to go into these assets.

They're going to go up.

That's why it's the driver.

Okay, this is the leading indicator, not a lagging indicator.

Okay.

So he says it's the most important thing global equity.

He says that bitcoin is not a substitute for global equity, not a substitute.

But rather it's a barometer.

So it's a way to read it, a way to gauge it right, way to tell us what's going on.

What's more, is it is a truly global asset.

Again, Bitcoin is a global asset, so we can see what's going on with India and China and Japan, not just the United States.

Whether China prints money or the US FED inject's liquidity.

Either way, the price of bitcoin should rise.

It's the most sensitive asset to global liquidity, all right.

It's like a sponge, just soaks it up.

A little bit more from Michael Howe again the king of global equity in my mind.

In this article is a two P series.

He was writing Bitcoin and global liquidity.

He says that debt denominates wh're talking about global equity.

A lot of people want to know what is it and where you go wrong is just looking at M two.

It's a very rough way to look at it.

But because we're in a debt based monetary system, all money is created through debt issuance, debt creation, So we want to be looking at debt.

Okay, So we want to look at the money, Yes, we want to look at the availability of credit, the availability the ability.

For central banks to create more money.

Okay.

So it's that debt dominates.

So what he's saying here is that currently in our system, in this debt based monetary system, debt never gets paid, it never gets extinguished, instead refinancing existing debts.

So we always refinance, if we kick the can down the road, refinancing an existing debt.

With about seventy five percent of transactions now involving debt rollovers, this creates a dependency on collateral.

This is why we can have no deflation when debt is issued.

So money is created through debt issues.

The debt is the asset, The dollars are the liability, the debt.

Is the asset.

So the debt becomes the asset or collateral for more debt.

That's what he's saying right here.

So we have to roll the debt over.

We can't pay the debt off because it's collateral for more debt, so it has to get rolled over.

It creates a dependency on collateral.

We can't have a deflation, it says I e.

Global liquidity.

The financial system is trapped in a debt refinancing loop.

So we're trapped.

We have to.

Continue to roll it over.

And in order to roll it over, we have to create more of it.

Right, we're trapped in the system.

There's two ways out.

We continue forward inflating the system in a debt based monetary system, or we let the whole thing collapse and crash and we start over.

Now, there's no politician in the world, or banker or elite or whoever that may have any controller, say, is going to allow this system to crash and see what happens next.

It's always going to be continued.

That's why we're trapped in the system.

Policy makers need to continually expand liquidity.

Right, so all those doomers.

Out there that are calling for this market crash, they don't understand the basics of the system that we're in.

Okay, let's go a little bit deeper and now Michael Hole uses these charts.

I use them all the time, so you probably recognize these.

This is the global equity going back to twenty twenty one.

So it went up and then.

We had this big crash here in twenty twenty two.

October twenty two was when we were in like that bear market.

Everybody's saying the world's going to end, the markets, we're all crashing down.

I started making videos saying there's no market crash coming.

Here's why, And it was because of this liquidity cycle starting now.

You can see here is just since this year, and we've had a big run up in global equity this year as well.

Again, these charts are from Michael Howe.

Okay, now here's another chart on global equity.

I mean, you can just go Google searches and find any number of charts.

I like this one here because it kind of shows us a couple different levels here.

So in the green right here is the global M two growth.

The blue line is the global M two supply, the money supply, and then we're overlaying it with the orange of the red line, which is the bitcoin price.

And so what the green is is the year over year change.

So you can see We've had this massive print of global equity.

During the pandemic right twenty twenty twenty twenty one, and.

So this pushed the p of these assets sky high.

Global equity went up, the bitcoin price went up because of this massive volume here.

Then we had this big draw down both in global liquidity and in the bitcoin price, coming down as the year over year month over month.

Changed and liquidy drained out.

And you can see here it's starting to pick back up, and of course both of them are turning back up, so you can start to see the correlation of this.

I've done a bunch of videos on this, and you have to understand it's also important to realize it has somewhere between like an eight to twelve week lag.

Most people just consider it three months or ninety days.

Okay, so that's the global liquidity.

Here's the chart on Trading View again.

I just want to show you can get these charts from anywhere.

I like to pay for my information.

It's a much faster, easier way to get it.

But this is just Trading View.

This is my charting software, and you can see the bitcoin price and global liquity, and you can.

See how closely tied they are together.

So these are the leading indicators.

Okay, global equity.

Now the next thing we have to understand.

Remember the fuel is the Global Risk Score, call that GRS.

Now, this is where we start to get into some of the predictive power of what these things tell us, because again we're looking for leading data, not lagging tell us what already happened.

We want leading data tell us what's going to happen.

Okay, Now these charts are from Jamie Counts over at Real Vision.

He's an absolute master in these.

And this is the Global Liquidity Index GLI.

And when he's talking about the GRS or the Global Risk Score.

So the Global Riskcore attracts how far biquin's price deviates from its liquidity.

So if the liquid is driving it up, the risk is when it starts to deviate away from the liquidity.

That's what this tracks.

It's implied fair value based on a regression model regression from the liquidy.

It says here it shifts GLI Global Liquidity from being just a macro backdrop to an actively usable risk management tool.

So for risk.

Management, the most amateur investors just think about how much money can I make?

Tell me the hot crypto to buy right, and they just want to buy it yolo in hopefully you know, aross their fingers.

They make money.

But professional investors always want to think about the risk.

That's the name hedge funds, like hedge hedging, the positions.

It's always about risk, and so we want to use this as a risk management tool.

Even when I'm going long to make money, I need to know how big I should bet, how long I should go based off of the risk of that cycle.

And that's exactly what this is going to break down for.

So let me show you what we're talking about.

Okay, Now, the first thing we have to understand is that liquidity, like most things and moves in cycles.

I talk about cycles all the time, Okay, So what we can see, and in this case we're calling them regimes, is we can see that this liquidity moves up and then it consolidates in a pattern.

Why I've done a bunch of videos on this, but it's because the debt has to get rolled over.

It's about an average of four year cycles of debt.

On year three, we start running out of liquidity until.

The next tron just put in.

Then we're off to the races for the next four year.

So we have this upcycle liquidity, we have a consolidation pattern and.

Here is the breakout.

This breakout puts us into the next super Bowl cycle.

And now we take off, we go into a consolidation right here, and then we break out consolidation right here.

And the reason why I'm showing.

You this is because we're sitting right here, right now on the third breakout.

Now, if you're an elementary kid looking at patterns, we have a consolidation breakout, consolidation breakout.

Here, We've had a consolidation and we're breaking out.

What do you think happens next?

Well, if you see this arrow shooting up, you would be exactly right.

But again we want to understand one.

We're in this breakout of this regime shift, but we want to look at the risk.

Okay, so how does this work?

Again?

This is from Jamie Coutch.

This is a global equity risk score and basically we have five levels level one, level two, level three, level four.

And level five.

You can see that.

And this is overlaid with the price of bitcoin going back here to twenty seventeen, and of course this is current right here.

So what this shows us, right now is that we are currently at level three.

Which is basically neutral.

Basically neutral, right, we're not at the bitcoin lows right here where we're back here when we are.

Only at one.

We've come up a lot in the bitcoin price, but we're only at level three, a neutral score.

We're not at five yet.

What does that tell us, Well, it tells us we're sort of like a medium risk.

We're not the lowest risk ever, but we're nowhere near the top either.

So what this tells us is potentially bitcoin has a lot of room to go up from this one hundred thousand dollars price point that we're in before we start getting into level four level five risk.

Now, even when we get into level five, we can keep going for a long time.

These do not predict absolute tops.

They only know let us know when things are cheap level one or expensive level five.

That's it.

So you can see here we hit level five, but look how long I continue on to that pattern?

So this is one thing.

But again in this risk score, we're only at level three.

Okay, there's a lot more to go over, so let's keep going.

All right.

Now, we talked about the fuel for the engine.

Now we want to talk about the accelerator and the brake pedals.

So now the fuel's in the cars going, how do we control this, How do we speed it up or how do we slow it down?

Okay, this is the leverage or the drs.

Okay, this is the derivative market.

This is all the bets, all the side bets that are happening on bitcoin.

So in the old days, we just looked at bitcoin, look at the network effects, looked at the.

On chain data, the number of addresses growing, the number of walls holding one or more bitcoin, things like that.

But now we have derivatives.

Now, derivatives are again where I can bet on the side of where the price is going.

Leverage bets, leverage, longs, leverage, shorts.

All those things.

The derivatives make up three to five times the total volume of bitcoin.

So just looking at on chain data alone today doesn't really give us the total picture.

It's great, we should definitely be holding bitcoin on chaining in your cold storage, but if we really want to understand price action, we have to go back and look at the derivative market.

Now, what we can see is that in March of twenty twenty four, the derivative market was about seventy five percent of the bitcoin price action.

Now again this goes back to about twenty twenty and it comes to current And what this shows us is these derivatives bets going higher and then the red is going lower, going higher, going lower.

And of course as the derivative action is going higher, what happens to the price action goes up When the derivative market is coming down, then of course we have down action.

We had this long consolidation period when there wasn't a whole lot of derivative action going on.

Here we have the increased derivative action.

You can see we're heading back up.

And is we want to be looking at this because again most of the price action is happening there.

It's what's creating a lot of rallies and crashes.

Why well, very.

Simply, markets stop going up when there's normal buyers, they stop going down those normal sellers.

And what happens with the derivative traders.

They're adding all this leverage under the system.

In a bull market, they're piling on, piling on, piling on, which pushes it up even faster than normally would.

But also when it's going down, not only are people exiting, but they're also starting to pile on the shorts, which pushes it down even further, so it creates a lot more volatility.

But basically, the DRS this score, it quantifies the excess that we have in the system.

Again, this charts from Jamie Coowts over at Real Vision, and this is giving us the same type of a score again level one, level two, level three, level four, level five.

So where are we in the derivvorous score.

Well, let's take a look.

What we can see is right now we're sitting at about a two, not a one, not the lowest, certainly nowhere near a five.

We're only at a level two.

So what this means is that the bitcoin price can run way further up before we start getting too a risky situation, not predicting the top, but getting close to that.

And as you can see, at a level two, we have a long way for the bitcoin price to run up from this risk adjusted model.

All right, that's two.

We can keep going.

Now we have the valves.

What are the blowoffs?

How does the market move when we have these other things?

Well, this is the network profitability, So this is gauging how many people on the bitcoin network are in profit or at a loss, because depending on where they're at with profitability, we can start to guess and gauge what they might do next.

It drives their decision making.

If I'm sitting in a massive profit, I might want to scoop a little cream.

Off the top right, I might want to sell a little bit.

If I'm sitting in a major loss, I might try to hold until I get back into profitability.

And so what this does is we can look at this and here's a couple on chain indicators here.

So these are ones from Bitcoin magazine.

I recently did a video where I talked about the five on chain indicators that I like to watch the most.

We'll link to that and then the show description down below if you want to go watch that video.

But this is the MVRV score.

You've probably heard about this.

It's the market value versus the realized value.

And so what you can see here is the black line is the price of bitcoin and this gold line here is the Z score.

So what you can see is when it shoots really high, that was a bitcoin top shot really high.

That was a bitcoin top shot really high.

That was a bitcoin top But as you.

Can see we're nowhere near shooting all time high.

We're way down here.

So we need to see this go way up to here, and this would go way up to here before that happens.

So again the indicators are telling us we're nowhere near that level.

Here's another on chain indicator that we can look at.

This is the net unrealized profit and loss.

So again this is showing how much profit people are sitting on unrealized right.

And again when this gets high or low, it starts to show.

So this got high here at this top.

This got really high at this top.

But here we are way down here.

So this price needs to come up, and this needs to come back up somewhere right around there.

Hey, don't worry, I'm going to show you some predictions of price if you stick around with me.

Okay, Another one we want to take a look at is the spo R.

Now, the spo R is basically the spent output profit ratio.

And again when we see a high volume, this sort of marks the top of cycles.

But again, look how low that volume is right now.

Again, these don't predict where we're going, but they help us to understand when things are expensive or cheap.

Now, the NPRS is.

Basically taking all of these signals and put them together in a single source to make it much easier.

And again this is from my friend Jamie Couch over at Real Vision.

They do amazing work.

And so what we can see is the network Profitability risk Score, and again sort of same framework.

We have level one, level two, level three, level four, and level five five being the most risky, one being least.

Where are we today on this risk score?

Well, right now we're sitting right around about a two and a half two point seven percent risk, so just below neutral, a little bit less risky the neutral, which again means this needs to run way higher in order for this to run way higher.

And so again we're well below We're not at the lowest price levels ever.

Obviously we've come off this bottom all the way up.

We're obviously not here anymore, but we're nowhere near the top.

Based off of these things, it looks like this market has a long way to go.

You're gonna think of this as like an emotional heartbeat, because again, like if I'm sitting on a lot of profit, I'm probably going to take some profits.

Maybe I'll pay off my house or buy something new, right, or if I'm if I'm at a loss, I want to hold this.

It plays with my emotions and so it sort of gives us that leading indicator of what the market may do.

Okay, So the question is if we combine all these where are we now?

And I've kind of already given that away.

If we add the grs, the drs, and the nprs together.

Where are we?

But what I haven't given away is based off historical returns, where do we go from here?

If we look at past market cycles that we've seen this, what could potentially happen from here on out?

Let's take a look, all right, So if we go back and we put all these together again and combine them, what we can see is we're right here in about two point six two point seven, So that means we need to go a lot higher here for this to come up a lot higher.

Here, we're already up quite a bit off the bottom.

Doesn't mean we're at the top.

You have to understand market cycles, right, So we're above right, we're at new all time highs, but at the midpoint of.

The cycle, not at the top of the cycle like we were last time.

We were there, So based off of the combined score, we can see we're in about a neutral market.

Again, we're not anywhere near caution.

We're not at four, we're not a five, and that sort of tells us that we have a long way to go now based off of past performance, which again is no guarantee of future performance, but based off of past performance when we've seen these levels before, what is bigcoin done?

Now?

If we look at each of these indicators on it own, they all have different data, but if we combine the three we get something different.

Okay.

So Network Profitability Risk Score NPRS performance and basically right now we're sort.

Of in this neutral range.

We're a little bit lower than neutral, but let's just call it neutral for this this exercise.

Okay, So what this says about almost sixty percent of the time this has worked in thirty days, we'll see eleven percent ninety days of forty five percent, one hundred and eighty days a ninety six percent return double.

Okay, it's not guaranteed sixty percent, so that means it's a base case.

So what we want to do is we're always looking at the odds.

Again.

Poor mentality thinks about how much money can I make and they go low end.

But smart money always makes structured strategic bets.

How much should I allocate, Well, depends on what my odds are.

If I have a ninety percent chance of winning the bet, I'm going to bet more.

If I have a ten percent chance ten percent odds of.

Winning the bet, I'm gonna bet a very bit obviously, right, if we want to understand the odds and what the probabilities are, and based off of where we're at right now, we have a long way to go, right, We have a long way to go now.

Understanding this gives us new tools.

But how do we use all this?

How do we use all this?

Again?

So the first thing is this is not a crystal ball.

This doesn't predict the future.

This doesn't tell us exactly what bitcoin's price is going to be on what date and one's.

Going to turn around.

It doesn't tell us if there's another big dip coming that you should wait to buy the dip.

What it does tell us is if it's expensive or if it's cheap.

It does tell us if we're starting to get overbought or over sold.

It does tell us maybe when we should be pressing in harder.

Because the odds are with us, or we might want to pull back a little bit because the odds are against us.

Now, I would strongly advise against trying to time this and sell out and buy back in because what happens.

Let's take twenty seventeen for example.

In twenty seventeen, bitcoin ran from one thousand to twenty thousand in one.

Year, okay, from twenty times.

It's pretty amazing.

But if you were looking at these indicators around I don't know, it was around four to five thousand, it started flashing that it was at the top of the market, it was overbought, it had gone up four or five times.

It's amazing.

If you're a traditional investor, this is the best returns you've ever seen in your life.

And so the indicators were showing it was very expensive, and so if you're following that and trying to time the market, you would have sold out, you would have cashed it, and you would have missed the run from four or five grand up to twenty grand.

Now what happened is, of course it crashed all the way back down, and you were going to try to time the bottom.

But of course nobody wants to catch a falling knife, So you're waiting for something to turn, some sentiment to turn.

The charts are turned to tell you when to start buying.

But bitcoin moved so violently that really quickly it moved higher, and now you're buying back in at six or seven K.

So if you tried to sell out at four or five, you missed this, and then you bought it at six or seven.

You actually got behind.

Now, if you're like you know, whatever your circumstances, maybe you're older, you're on a fixed income, you don't have a long timeframe.

Maybe maybe the four or five times.

On your money was amazing.

It was the best praturny you've ever had in congratulations.

And if you're just trying to get more US dollars, you can trade it from one to four, you can trade it from six to twenty again, and you can.

Make that spread, and that's cool.

But if you're a long term bitcoin hoddler like I am, and you expected to hit one million dollars by twenty thirty, like I do.

Then I'm not trying to time this.

What I'm going to do is I'm gonna start adding aggressively here so when it gets here, I'm not as adding as aggressively.

So I'm buying super heavy.

Right here around here, I start slowing down.

Maybe I'm not going to put any in.

Maybe I'll just kind of wait.

I'm not selling, but I wait.

Then when it starts coming down right around here, I start deploying again.

I'm gonna buy all the.

Way through this dip.

When it gets here, I start waiting again.

That's how I use this Now.

We also that's positioning versus chasing.

I'm not trying to predict.

I'm not trying to time.

I'm positioning myself correctly to take full advantage of this cycle.

Again, we want to use tiered entries.

So again I'm not going to exit, but I'm not going to do massive entries at the top of the market.

I'm going to I'll pause these entries here we're nowhere near that yet, and then I'll start tearing in my entries over here.

We do this based off of conviction weighted allocations.

Remember the percentages, so based off.

Of where we're at.

As we're starting to get more expensive here, as the odds the percentages are coming down, it's less so it's conviction weighted allocations.

Another thing about to take talking about in this video is the treasury stacking.

So now there's this new breed of treasury companies, Bitcoin Treasury companies.

Micro Strategy launched it, Metaplanet, all matatoral these other ones that are blowing up, and you might want to consider stacking into some of these as well.

If you're going to break down a whole video on that, let me know down in the comments.

Okay, so I do want to just press on something here.

This is not static, Okay, these charts the change.

This is dynamic.

It's moving.

So if you're looking at any type of indicator a two hundred moving to average, for example, it's moving with the price.

So you can't go off of what we just said.

That's why we can't predict the top or we can't predict a time because these are moving.

So what we're doing is we're seeing the signs as it developed.

Now the cycles are not random.

They happen in proper sequence, but not to the exact time or date.

But it's always going to be the same thing.

It's always going to be liquidity that's the leading indicator.

It's always going to be leverage built up in this system.

That's the derivatives and it's always going to be the human emotion because we drive humans.

We're driven by pleasure, greed, and fear pain.

That's it.

So we want to look at those three things and again not trying to predict the top or the bottom, but instead measuring the risk and the location of our investments to the cycle.

If you follow this, we're going to have massive success.

And if you want to know the top five on chain indicators that I'm watching to help me understand this, watch this video right here and I'll see you over there.