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Chris :
Hi there guys, and welcome to the latest edition of the Weiss Crypto Sunday Special, with me, your host, Chris Coney.
Chris :
My guest today, once again, is Juan, and today's macro economic topic that we will be discussing is Juan's number one specialty, it's market cycles. But we're going to talk about crypto market cycles, and... Well, market cycles in general.
Chris :
First of all, Juan, welcome back to the Sunday Special.
Juan:
Thanks for having me, Chris.
Chris :
Welcome back, sir. What we'll do, I'll make sure we hit all levels of sophistication. So, what we'll do is to start off with just cycles in general, and then, we'll drill down into how they apply to traditional markets, crypto markets, do they differ, the nuances, and then, dig into more detail as we go. You're all right with that?
Juan:
Yeah, absolutely.
Chris :
Okay.
Juan:
Like I said, it's my favorite topic, so let's do it.
Chris :
Yeah, yes you do.
Juan:
Yeah.
Chris :
Can you give us the basic components of a market cycle to begin with, and then, we can apply that to different markets.
Juan:
Okay. Let me see where I can begin. So, a cycle, in my own work, I've seen several definitions of cycle. Let me start with what, according to my model, is a cycle.
Chris :
Okay.
Juan:
A cycle is basically a wave, like a sine wave. Think of something that starts at point A, peaks at point B, and it ends at point C. So, it typically... Not typically. A cycle in my work refers to two lows that are a certain distance apart. For example, if I say we have 90-day cycle, I mean, that we're going to start on a low. We're going to peak somewhere, ideally, 45 days from that low. And then, 45 days later, we're going to have another low. So, in total, it's low number one, 45 days, we have a high, 45 days after that high, we have another low. In total, this is 90 days and this is called a full cycle because it starts from a low, peaks at a high, bottoms out at a low.
Juan:
Now, ideally again, these are the lowest halfway between... The high is halfway between the two lows, this is ideal.
Chris :
Give or take, yeah.
Juan:
But it doesn't... Give or take, it doesn't usually work that way because these cycles are combined. So, the aspect of these cycles is that they're all aligned at the lows. So, again, going back to this 90-day cycle, if I say we also have a 45-day cycle. What that means is that when the 90-day cycle starts, a 90-day cycle... Sorry, when a 90-day cycle starts, a 45-day cycle is also starting.
Chris :
Okay.
Juan:
Okay. They're aligned. If I say we also have a 22 and a half day cycle, then, I know that every 90-day low is also a 22 and a half day low and 45-day low. That's called... what's it called? Synchronicity.
Chris :
Synchronicity. Yeah, exactly. It's synchronized.
Juan:
It's called synchronicity. They're synchronized at the lows. In other words, the highest, they don't have to be aligned. So a 90-day high is not necessarily a 45 or a 22 and a half day high, but a 90-day low is necessarily a 22 and a half and a 45-day low. This is how the model is built. It results in some pretty interesting outcomes.
Juan:
For example, again, like I said, the lows are aligned, but the highs are not. So, what that means is that I can have a series of tops. We saw that recently with Bitcoin where you can have, you start from a 80-day low on Bitcoin. We also have a 20-day cycle. We have an 80-day cycle. There's basically three cycles that I track in cryptos, 320 days, 80 days and 20 days.
Juan:
And recently, we saw a 320-day cycle top out, and that was lining up with 80 days. But then, immediately, thereafter, we saw a 20-day high. So usually, what that looks like is you can see markets making several tops, and each of them corresponds to a different cycle. And then, when they all point down, you have a big crash, which is something we had recently. When all the cycles, the 320-day, the 80-day, and the 20-day pointed down, big crash took place.
Juan:
So, there are some interesting things that happen when you say, well, the lows need to be aligned, but the highs don't necessarily have to be. And this is a core of how this model works, is you have these... think of them as waves, sine waves, if you're familiar with them. And so, you start from a low, you peak in a high, and then, come back to a low, and then, you start another cycle. It goes up to a high, it comes down to a low, that ends another cycle. And when a cycle ends, another one begins. So, there's a rhythm there. Yeah, I don't know. I don't know if that explains it or not.
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