Conversation with Former Glassnode Chief Analyst: Bitcoin Bull Market Has Restarted, but a Long Consolidation Period Must Be Endured

Original Source: 《What Bitcoin Did》

Compiled by: Felix, PANews

Checkmate, former lead analyst at Glassnode, appeared on the "What Bitcoin Did" podcast, explaining why the crash to $60,000 looks like a genuine capitulation event, and stating that the probability of a bottom being in is 80%, placing us in the bull phase, albeit requiring a lengthy consolidation period. He also discussed rising bond yields, the collapsing fiscal system, the end of trust in government debt, ETF flows, and finally, proposed capital gains tax reforms in Australia. PANews has compiled the podcast highlights.

Host: Are we in a bull market or a bear market right now? Because it seems to me that the worst day of a bear market is often the start of a bull market. But is it too early to say we're already in a bull market? Or do you think we are already in one?

Checkmate: That's the right framework to think about this. The worst day of a bear market is often the beginning of a bull market. As I've always described, you often don't know when the bottom is for months or longer. We spoke in February when Bitcoin hit $60,000, and I called that the "price pain capitulation" phase. In this phase, everyone sensitive to price despairs and gives up almost simultaneously. You could see massive losses, token transfers, and market panic at the time. My inbox was flooded. It felt exactly like the crash in June 2022.

Looking back at past bear markets, after bottoming in 2015 and 2018, we saw slow, multi-month climbs. During the FTX collapse in 2022, that was the only time we broke below the previous "pain capitulation" low. Many people, due to recency bias, think we must make a new low, but that's not necessarily the case. We could retrace to $65,000 and bounce, or make a higher low at $75,000. So from my perspective, I think the probability of a bottom being formed is about 80%. That means we are in a bull market. But consolidation will take a long time, like in 2016 and 2023, when it took a whole year to break through $30,000. A whole year of boring consolidation, with everyone scared that every sell-off would drive prices lower. You need to build confidence. Unless Bitcoin goes to zero, we have to affirm that at some point, we'll be back in a bull market.

Host: If you're 80% sure, what specific indicators give you that confidence? Are institutional investors really looking at these technical indicators?

Checkmate: First, look at the technicals. I'm not a technician, but I know what institutional traders using Bloomberg terminals look at. Bitcoin's weekly RSI hit 26, an all-time low. Historically, every time this indicator has been below 30, it was the bottom. Many institutional traders only look at Bitcoin's position relative to the 200-day moving average; when the indicator turns from red to green, they pay attention, completely ignoring daily noise. I have my own mean reversion model, combining 9 models from on-chain, technical, and trend factors. The drop to $60,000 is a "Q10 event," meaning only 10% of days in history have prices below this relative level. I've seen many bears say it could drop to $45,000, but in my model, that only happened in 2011 when Bitcoin was $2, so I wouldn't use that as a baseline prediction.

Host: You often mention "realized price." Why is it one of the most important indicators right now?

Checkmate: "Realized Cap" values each coin at its price when it last moved, not the current spot price. This measures holder cost basis. For example, Satoshi's coins are large in quantity but have zero dollar value in realized cap calculation. To more accurately reflect human investor behavior, Dave Puell and I developed the "Real Market Price" framework. Excluding lost and dormant coins, looking only at active investors, their average cost is currently around $78,000. Meanwhile, the average inflow cost for entities like Strategy and ETFs, as well as miners' production costs, are all between $75,000 and $82,000. $85,000 is a major midpoint of the supply density cluster. Once broken, market sentiment flips, and people start "buying the dip." Before that, $78,000 is the first resistance on the upside (short-term cost basis, Real Market Price), $85,000 is the second (200-day MA, large cost cluster), and the third resistance is $95,000 (near the 50-week MA).

Host: How long do you think it will take to break through $85,000 and $95,000? Who is driving the market price now?

Checkmate: Currently, my Mean Reversion Index is at 33, still in the bottom third of the range. It's still a good price, but we're not in that blind-buying frenzy anymore. We've hit a ceiling around $80,000 and need a pullback. The market needs to transition to a full "buy the dip" mode.

Driving price upwards ultimately relies on sustained incremental capital inflows, either from people buying more as they age and earn more, or from companies growing larger. Institutionally, my old research (though dated) showed that institutions make up 20-25% of ETF holders, many being small institutions or Bitcoin hedge funds. Large institutions have very low allocations. Even moving from 0.001% to 0.002% represents hundreds of millions in capital. Once we break $100,000, institutions that currently lack the courage will enter. In terms of capital flows, ETF buying and Strategy buying are roughly equal right now. They are very strong buyers relative to the selling pressure. On-chain realized profits and losses are both very low right now, a classic characteristic of late bear/early bull markets – the market is in a phase of "extreme apathy."

Host: Speaking of Strategy, if Saylor has some Bitcoin custodied at Coinbase, doesn't that add risk? Shouldn't he self-custody? What if Coinbase gets hacked?

Checkmate: There's definitely tail risk there. Any bet involving this strategy is essentially a leveraged long on Bitcoin. If Coinbase goes down, it would be devastating for the whole industry; everyone would be affected. But regarding Strategy, there's another often-overlooked serious risk: when Bitcoin's price falls, if you subtract its debt and preferred stock, its stock's net asset value could go to zero much sooner. The liquidation price threshold for this asset value to hit zero is actually much higher than Saylor himself claims (probably in the $50,000 range). Although the probability is very low, it's one of the most apparent risks specific to Bitcoin.

Host: Let's talk about the macroeconomy. Government bonds seem to be the bedrock signal for all assets. Now, 30-year bond yields in the US, UK, and Australia are all above 5%, with the UK even approaching 6%. With yields rising and the value of the collateral underpinning the entire system falling, is the market saying the system is broken? Or is it worried about runaway inflation and deficits?

Checkmate: All of the above. The market is basically declaring they no longer trust the government. Interestingly, many assets aren't trading as people expected. For example, oil prices are surprisingly stable despite geopolitical conflicts; gold, a geopolitical safe haven, has been lackluster recently, of course, because it was heavily overbought before. Similarly, the Dollar Index (DXY), which should have broken 100 on safe-haven flows, is now floating between 98 and 99.

Host: Does this mean a crisis is coming, forcing governments to print money heavily? How would Bitcoin perform in that environment?

Checkmate: The current trend is towards higher inflation and higher interest rates, and this process will be painful. When you realize that the debt obligations of the fiat system exceed its assets, you want to move your assets outside the system, seeking assets that cannot be debased, like gold and Bitcoin. We are in an era of monumental change in the monetary system. The world will be fundamentally different after this transformation. Globally, there's a separation of "global reserve currency" and "global reserve asset." The US dollar will continue as a medium of exchange (like a stablecoin), while Bitcoin and gold will serve as stores of value. When the system's debt and obligations become too large, people want to own hard assets outside the system that cannot be debased.

Host: I've never quite understood your reason for holding gold. If you think Bitcoin has more upside, why not just hold Bitcoin?

Checkmate: This is mainly about asset duration. Gold has lower short-term volatility. If you plan to save for a house down payment in the next one to three years, gold is a suitable tool. But Bitcoin offers a longer-term growth dividend, suitable for long-term expenses 10 years out, like my son's tuition or paying off a 30-year mortgage. Having both allows you to find your balance while enduring volatility across different timeframes. After all, besides pursuing investment returns, we also need to live our lives.

Host: Recently, Iran started using Bitcoin for payments to bypass sanctions. Do you think this could be a peak moment in historical shift?

Checkmate: That's not the real peak moment. The true turning point was in 2022 when the US froze Russia's foreign exchange reserves. Everything shifted towards the pursuit of hard money after that. Bitcoin perfectly solves the problems of transporting physical gold and settling cross-border payments inefficiently. Digital Bitcoin is highly liquid and can be protected by multi-signature, much better than hoarding tons of immobile metal.

Host: Let's talk about those policies in Australia. You looked very upset when you came in today. Can you explain to the listeners what exactly happened?

Checkmate: The past two weeks have been terrible. Since 1999, Australia has had a Capital Gains Tax (CGT) rule: a 50% discount for assets held for over a year. This accounts for inflation over the holding period and helps ordinary people build wealth. Recently, the Labor government proposed a reform in the budget: under the guise of "helping young people save for a house," they are actually abolishing this 50% CGT discount for all assets (including ETFs, stocks, Bitcoin, etc.).

They are replacing it with an "indexation method." This means your cost base only floats upwards based on roughly 3% CPI inflation. Australia's real estate bubble is currently extremely severe. The median house price is 1 million AUD (approx. $720,000 USD), while the median annual salary is only 74,000 AUD. An ordinary person would need 40 years of saving in a bank to afford a down payment. To catch up with this bubble, young people must invest in high-growth assets (like Bitcoin or startups).

Host: What does this specifically mean?

Checkmate: It's essentially a scam, a disguised debasement of national savings. They make your asset cost base rise by 3% CPI, but the remaining large gain is directly added to your income, taxed at your highest marginal rate, and they don't index your tax brackets simultaneously. The result is that your effective tax rate, which might have been around 25%, will skyrocket to 40% or even 47%. Imagine founding a startup and selling it successfully. Since your initial cost is zero, you get zero benefit from indexation. The government takes 47% of your profit, bears no risk, and becomes your largest shareholder.

Host: Do they think people save for a house by just putting money in the bank instead of investing? These politicians are so out of touch.

Checkmate: Exactly right. Australia has the most absurd real estate bubble in the world, with a median house price of 1 million AUD and a median wage of 74,000 AUD. If a young person saves money in a bank earning 5% interest, it takes 40 years to save a down payment. To buy a house, they must invest in assets to outpace inflation. The government claims this policy helps young people buy homes, but it actually severely penalizes those saving through high-growth assets like Bitcoin. I used a large language model to calculate that this tax reform policy would not only delay an ordinary person's home-buying goal by 2 to 5 years but also effectively rob 1 to 2 years of private school tuition savings for their children. This is not about helping young people.

Host: This is absurd. If you hold Bitcoin now, are previous gains still covered by the old policy? What should people who don't plan to leave Australia do now?

Checkmate: They are using a so-called "Partial Grandfathering" clause, which is also a rogue move. Before July 1, 2027, your unrealized gains can still enjoy the 50% discount under the old policy. But any asset growth after that will be fully forced into the new indexation policy with high tax rates. For those who don't want to leave Australia, first, find a good accountant. The tax system is complex; knowledgeable people often find new tax avoidance opportunities within system changes. Second, go to the Australian Bitcoin industry body's website, download the protest letter template, and write to your local MP. Just because you don't want to move abroad doesn't mean you have to take this lying down.

Host: Does this mean the government is trying to steer the economy towards some kind of austerity?

Checkmate: Yes, that's why I call it a "trial balloon" thrown to the world (PANews note: meaning an action to test public reaction). Real austerity shouldn't look like this. The current approach is an equalization that makes everyone poorer, a pure scam targeting ordinary people's wealth. They want to test the tolerance of the Australian people for such predatory policies. If there isn't a strong backlash, this policy will spread worldwide. Young people must understand that to climb the property ladder, you first need to climb the asset accumulation ladder, and the government just doubled your asset tax. This is absolutely unacceptable.