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JIM ARMSTRONG: What is going on with crypto today? What forces are behind the enormous price volatility we’ve been seeing? And how should we as investors be thinking about the future of digital assets right now.
Hey there. Welcome to the Covering Crypto Livestream. I’m Jim Armstrong with Fidelity. Today, we’re going to spend our full episode answering those questions and plenty more. We’ll be talking about what has made news during the first quarter of 2026, why, and what the next few months could have in store.
And to do that, we are joined by a pair of fantastic guests, no strangers to the Livestream. Thank you both for taking time to be here. Before we get started, it would be great if you could just both introduce yourselves briefly. Talk a little bit about the perspective you’ll bring to today’s show. And Jurrien, we’d love to start with you.
JURRIEN TIMMER: So I’m the TradFi macro guy. My name is Jurrien. I’ve been with Fidelity for 31 years.
I work in asset allocation and I have been looking at crypto, especially bitcoin, through the lens of a traditional investor looking to diversify a stocks and bonds portfolio, and how to do that. And where does bitcoin and other crypto assets fit into that? So that’s my lens of looking at the world.
JIM: Excellent. And Max.
MAX WADINGTON: Yeah. Hey, guys. I’m Max. Thank you so much for having me. I’m on the FDA research team. That’s Fidelity Digital Assets®. We provide custody and trading for our institutional clients, and really support the broader business as they serve their clients.
And really, my day to day is a lot of education. I personally focus a lot on ethereum, solana, and other smart contract platforms. So I really encourage anyone listening to submit those questions, and looks like we have good coverage across the board.
JIM: Yeah, that was our goal. So before we get started taking live customer questions and questions that came in during registration, I would like to start by just picking both of your brains about what you think the biggest newsmaking crypto-related events were in the first quarter of the year. And Jurrien, we’ll start with you.
JURRIEN: Well, I think we were on the show in December, and I was talking about bitcoin losing some of its oomph and where it might go. And was another four-year halving cycle coming to an end? And I think in that show, I actually mentioned that $65,000 was a number—for the lack of any scientific rigor, that to me sounded like it would be a good place for bitcoin to go. And Lo and behold—
JIM: You did. I went back and checked the transcript. And that was what you said.
JURRIEN: So we’ve gone down to $60,000. Obviously, a lot of conversation about the four-year cycle. Is it still alive? And I know we’re going to talk about that. But what it’s doing now at this level—and it’s doing a lot of backing and filling, to me, is a very exciting time.
And I’m not here to call tops or bottoms or to do market timing. But to me, bitcoin is an asset. It’s on the menu of many assets. And I’m not super religious about it. It’s not like bitcoin is going to eat the world.
But it’s an asset. It’s on the menu. And the price, the valuation matters. And at $65,000, the valuation is different than it was at $125,000. So to me, this is an exciting time to be having this conversation.
JIM: Excellent. And Max, how about you?
MAX: Yeah, definitely exciting. I would mark Q1, end of Q4 as the time when really the only discussion was, hey, will the four-year cycle end? I think a lot of that reasoning behind that was because people didn’t want it to continue. They wanted it to maybe just proceed a bit longer. So there’s a little bit of hope in there.
But what I think we did at least confirm personally is the timing component. The previous all-time high was November of 2021. And that lines up almost as close to four years as you can get with October of 2025.
So in my view, Q1 confirmed the timing component. But I definitely agree with a lot of the data to support that thesis of the four-year cycle at least being different. We’ll talk about this more, but there’s a bunch of data points and signs that aren’t naturally intuitive that would showcase why maybe bitcoin swings up and drawdowns might be less pronounced than historically.
JIM: Got it. We’re going to start off the conversation with a viewer question that came in during registration. So first, it’s Howard, who wrote in, and is asking for us to weigh in, on the probability of a crypto winter in 2026.
JURRIEN: I would say we’re in a mild winter, unlike what we’re having in Boston, which is a fairly harsh winter, although not today. It’s 70 degrees outside. But coming back to the four-year cycle, and, again, there are reasons to think that the halving cycle has less power as bitcoin’s evolution matures.
But I think it makes a lot of sense. If you think about a halving, where you’re cutting the production in half, when you get closer to 20 or 21 million, the increment is going to be very, very small. Whereas in the first few years it was very, very large. So it makes sense that the halving cycle has less impact as bitcoin becomes more mature.
Having said that, every asset goes through bull and bear markets. And bitcoin—and we’ll talk about this later, is in my mind, it’s hard money. But it’s also an asset that people like to speculate in. And it goes with the ups and downs of tech stocks and other speculative impulses.
And things get overdone at the top. They get overdone at the bottom. And we put in a high at $126,000—I think it was in October or December. I can’t remember. And we got down to $60,000. So that’s more than a 50% drawdown. That is less than previous drawdowns.
But if you do the math—and actually, this is a real interesting nerd project that I did. But if you look at the exponential curve of bitcoin since its inception, and you measure all the up and down moves in terms of the duration and the magnitude, on a linear scale, there is no relationship.
But on an exponential scale, there’s almost a perfect relationship between the timing and the magnitude of each successive wave compared to the previous waves. And in that sense, it would make sense that the ups become less up and the downs become less down.
So in that sense, I’m not looking for an 80% drawdown, which would be a pretty harsh winter. I think a 50% to 60% drawdown, which is what we’ve had, is probably as much as it needs to go. Again, not market timing here, but I think we’re in the zone. So yes, a mild winter, but maybe spring is around the corner.
JIM: Max, I’d love your perspective as well on the mild winter, but also through the lens of a question that came in from Octavio, who wants to know if, in our opinion, there are more headwinds for crypto in 2026. That question takes it, obviously, beyond just bitcoin and thinks about crypto in general. But what’s your take on both of those?
MAX: Yeah, I mean, I think context here is important. I completely agree with Jurrien that we definitely are in a mini winter. It’s crazy to say, given that we are 50%, roughly, down. But that’s, by all means, a mini winter. And the context here that I think is important is, if we look back at one of the key themes in 2025, it was, at least from a sentiment perspective, maybe not as data-driven.
But you had a lot of people almost believe that digital assets couldn’t go down because you had digital asset treasury companies almost just buying these assets at a massive clip. And what I think that caused was, across the board, just a historic degree of crowded bullish positioning. Whatever your target allocation is as an investor, you were probably leaning towards the max long position across risk assets, not just crypto.
When you combine that with the liquidations that we saw in October that marked the highs, that’s how you get, a 30%, 40%, 50% drawdown pretty quickly in bitcoin. So I think that’s the context going forward. Answering the question here is, we’re seeing that open interest on derivatives and futures products having been reset to healthier levels. And naturally, with the large drawdown—the mini winter drawdown we’ve seen, the crowded bullish position naturally resets to healthier levels as well, I think.
JURRIEN: I would just add to that that at the tops you have the maxis, the perma bulls say “I told you so.” And at the bottom, you have the perma bear say “I told you so.” So you can actually learn a lot sentiment-wise from just following the social media, the crypto Twitter—or X as it’s now called, and you get a sense of where the sentiment is just from what people are posting and how much conviction they have.
JIM: We get a question of frequently that I want to give to you now, Jurrien. It’s a macro-ish question, comes from Mark. He wants to know how or if regulation has added protection to investing in cryptocurrency.
Now, Mark uses the word “protection.” I’d be scared for that word. Maybe “stability” is a good possible synonym. But generally speaking, what’s your take on this, for the past year or so, recent interest and uptake in the regulatory environment taking shape around cryptocurrency?
JURRIEN: It’s obviously very important. We don’t want to be overregulated, but we don’t want to be underregulated because investors do need to know where the safeguards are, where the guardrails are, I should say. And of course, we’ve had legislation on—we had the approval of the ETPs. That is a form of regulation.
It’s a stamp of approval. We have the GENIUS Act. Now maybe the CLARITY Act. And it just provides guardrails so that investors have some sense of what regulatory body even oversees this.
Is it the SEC? Is it a security? Is it the CFTC? Is it a commodity currency? And so the more we have that, even though it doesn’t protect you from losing all your money, it at least gives you a sense of where to go if there’s fraud, for instance, or something like that. So it is a good thing.
JIM: You both also mentioned, of course, price volatility. And so I want to get another question that came in during registration from Aman, who wants to ask us, what are the main drivers behind today’s crypto price movements? How much of the movement is macro versus crypto-specific news? What indicators matter most, short-term versus long-term?
I’m going to head that to you, Jurrien, in just a second. But first, we’re curious what people watching live think are the most relevant or most pertinent factors or factor. So head on over just to the right of where you’re seeing us talk right now, there’s another poll that should have just opened up. And it’s going to ask you for your opinion to vote on what factor you think is most likely to be moving crypto prices.
Is it interest rates and regulations? Is industry news and developments? Perhaps influencers and social posts? International events? Or you want to say all of the above, equal impact?
While you’re voting, just a quick reminder that we did spend a full episode of the Covering Crypto Livestream back in January talking very specifically about what factors can, in fact, influence crypto prices. And if you want to watch that replay on demand—or in fact, any on-demand replays of any of our existing Covering Crypto Livestreams, you can head to Fidelity.com/CoveringCryptoLivestream.
All right, Jurrien, I don’t know if this helps or hurts your answer. But all else being equal, about 49% again, roughly half of the folks who responded to the poll said all factors contribute equally. You’re nodding. Does that make sense to you?
JURRIEN: I think there are two primary factors. And we can bring up the chart here.
Not to compare bitcoin and gold too much, but I see them both as alternative investors as diversifiers, if you will, in what would otherwise be like a 60/40 type portfolio. So in this chart, I show a bunch of different asset classes. That’s the menu I mentioned earlier. And on the vertical axis is the correlation to the S&P 500 from minus 100% to plus 100%. On the horizontal axis is the correlation to long-term Treasury bonds.
And you can see there’s three buckets. The green bucket is equity-like assets, so the S&P, global stocks, et cetera. The blue bucket are bond assets, which obviously correlated to bond prices.
But then the yellow bucket, the yellow circle is the one that’s of interest to me, especially, because I see those as diversifiers. And that could include commodities. It can include hedge funds or managed futures, other sorts of alternatives. And I would put bitcoin in there.
Now, to me, the two main drivers for bitcoin are, it’s a store of value or an aspirational store of value. So it’s hard money. It tries to be on that hard money team, just like gold and silver and other commodities.
But it is also a speculative asset. It is something that people like to dabble in when numbers go up type of thing. And so the correlation can evolve. It can become more correlated to stocks or less correlated. But I would put it in that bucket as something other than stocks and bonds.
But again, it can change its stripes, depending on which way the winds are blowing in terms of speculative juices in the market or the need for hard money when there’s too much money printing or the money supply is growing too fast. So it’s a little bit of a Dr. Jekyll/Mr. Hyde, where you’re never quite sure which trend it’s going to jump on. But to me, that’s what bitcoin mostly is.
JIM: And if you’ve seen Jurrien on either this show, or any other webinars or podcasts or webcasts that Fidelity puts out, you know he is a champion of excellent charts, a builder of charts that tell a million stories. So we’ve got a couple of them now. Just walk us through what to take out of the bitcoin power law slides that you have.
JURRIEN: The bitcoin power law is a mathematical equation that is an exponential price structure. So in this chart, I show the vertical scale is the exponential scale for bitcoin’s price. And the horizontal is time.
And if you wanted to be a real purist on power law, you would actually show the timeline also as an exponential curve. And then bitcoin’s price becomes a straight line. That’s the power law concept, if you will.
So what you can see is that bitcoin has followed this perfectly—and actually doing the math, it’s really interesting. It’s been very robust. So if you calculated the power law five years ago, as of then versus as of now, the price action would look almost identical.
So it’s not something that becomes a victim of curve fitting, as we call in our business, where, yeah, of course it looks great because you’re entirely in-sample. So it does hold up to some scrutiny there, which doesn’t mean that the power law will always remain in force. We’ve had other technological innovations that started as a power law but then got disrupted and the power law ends.
So this is by no means a guarantee that the chart will go up and to the right forever. But you can see that power law. And if you run a deviation below the trend line itself, you get what I would call a power loss support line, which is the orange line there. And every bottom, every winter in bitcoin has ended near that level.
Now, if we add to that, in this chart, we also show the gold-to-bitcoin ratio. Again, if gold and bitcoin are different players on the same team, which is hard money at a time when fiat money is growing too fast—and history shows that gold has followed that pattern very, very closely. If bitcoin is a player on that team, we should look at the gold-to-bitcoin ratio, which is there in the orange bars at the bottom. And you can see, given that gold has stolen the show here over the last few years, that gold is now as over—I don’t want to say overvalued, but overextended versus bitcoin as it’s ever been. And so when I combine that support line at around $60,000 and the gold-to-bitcoin ratio, again, this is a good time to be having this conversation because we’re in an interesting part of that curve now.
JIM: Excellent. All right, and if viewers have questions about what you just walked through, we can take them in just a few minutes. But first, Max, I want to turn to you and broaden the conversation out a little bit beyond just bitcoin, although you can certainly speak about it. In general, what signals do you think crypto investors should be looking at in the macro or other environments right now?
MAX: Sure, yeah, that’s actually a big part of what I do every quarter. Our research team at FDA puts out a Signals Report—actually, that’s what it’s called every quarter. And we’ve recently revamped the Signals Report to try to be as high signal and little noise as possible, because there’s so many metrics, so many signals that you could be looking at.
Really, the goal was to answer two questions. And I think these are the overarching signals that investors should revisit when looking for opportunity or when things get volatile or extreme. And the first question we try to answer in this report is, has the investment thesis changed for bitcoins?
For the answer to bitcoins question, it would be, hey, is it being adopted as an aspirational store of value, and any metrics that would support that type of analysis. And for ETH and solana, it would look very different. A lot of the metrics we use would be like usage and stablecoin supply to support its value as a utility, or a platform that is designed and derives its value from people using it. So that’s the first question. And as I mentioned, it would vary, depending on which asset you’re looking for in terms of the signals you would use.
The second question is, where are we at in the cycle? And Jurrien does a lot of work on this. So aside from reading everything Jurrien says, what we like to use is MVRV, or just generally cost-basis analysis.
JIM: What’s MVRV stand for?
MAX: Yeah, MVRV—MV stands for the market value or the market cap of the asset, and RV stands for the realized value, the cost basis of all the investors on the network. So what it’ll look like is, when you have a period of overextension, you’ll see the market cap of the asset become very extended from the cost basis. And all that means is, investors, generally, are in pretty deep profits. And they’ll typically have an incentive maybe to lock in those profits. And that’s typically telling you that you’re towards the end of the cycle—closer to the end than to the beginning.
And the reverse is true. When the market cap is close to the cost basis, generally that suggests you’re in earlier innings. Most of the investors in the asset or the network have acquired that asset at that price. So that would signify you’re maybe in the earlier innings of that cycle. And that seems to apply generally across many assets.
And really, we did a lot of data analysis to really hone in on the signals that have the strongest relationship to forward returns. And as Jurrien said, with the power law, these relationships aren’t guaranteed to hold into the future. But we used all the historical data that we could to try to give some of the simplest and clearest, yet strongest, signals.
So I would recommend all of our listeners check out that new Signals Report. It should come out in April. You can go to FidelityDigitalAssets.com.
JIM: Cool. So when you said FDA earlier, just a good reminder to folks, that’s Fidelity Digital Assets®. And that’s where that research will be posted.
MAX: Exactly.
JIM: Cool. Jurrien, I want to go back to Aman’s question for a second. And I know you’ve got one final chart that can help continue to answer that question. But I’m curious, your sense of how much of the ongoing price volatility that we’ve seen for the past half a year or so is, in fact, due to macro factors. Or is it crypto-specific?
JURRIEN: Yeah, so I would say it’s a little bit of both. But macro factors are definitely playing a role. So if we look at this chart—that’s the chart of bitcoin.
The red line is the global money supply, which is running at about $120 trillion and has grown by about 12% year over year. So there’s a lot of money being created, if you will. The bottom panel in the blue is the yearly rate of change of the money supply. And if you were to show this purely as a chart of gold, for instance, you would see that the price of gold would move completely in tandem with that money supply chart.
We look at bitcoin, and it follows it over the long term. But over the near term—for instance right now, bitcoin is at $65,000, $70,000. Money supply is making new highs. So it has disconnected from something that would be a specific variable to bitcoin, which is fiat money growth. So if it’s hard money, it should be following fiat money because it keeps up the market share.
But that has not happened. And that brings me to the pink bars in the chart, which is the rate of change for software stocks. Which you would ask, well, what does bitcoin have to do with that? But as you know, with the AI boom, software has been at the epicenter of speculation and any of the excitement about AI. But of course, software is under the gun right now because of the pressure on the commoditization of expertise, as we’re calling it.
So software stocks are down. Bitcoin is down. Money supply is up. And that shows you that bitcoin is playing to a different drummer right now—homage to our audio, Jim, the drummer in the background.
And it shows you that bitcoin—again, that Dr. Jekyll/Mr. Hyde—it is not just one thing, it is several things. And of course, when the money supply is growing and speculative juices are flowing, then bitcoin goes to the moon.
If it’s the opposite, you have a winter. Right now, it is in between. And that tells me that the mild winter is getting milder because you don’t have at least both variables pushing it down anymore.
JIM: Excellent. All right, let’s continue the conversation about Q2 and beyond. And we’re going to actually do that by asking and answering a couple of specific questions about stablecoins, which continue to be a big part of the conversation, especially here at Fidelity over the past quarter. As you may have heard, Fidelity Digital Assets launched the Fidelity Digital DollarSM—F-I-D-D, FIDDSM, as we call it. It’s a US-dollar-backed stablecoin.
Viewers have, of course, asked us in past episodes if we will ever launch such a stablecoin, like this question from Robyn. “Will Fidelity create its own stablecoin?” We will, and we did. It’s called FIDDSM. But now let’s talk more about what that means. Ji asks us if stablecoins have long-term potential as an investment.
But Max, let’s give a little teaser for that. I mean, what is your, I guess, cocktail-party answer for what stablecoins are, the function they serve, and FIDD in specific, if you could? There’s a lot there.
MAX: Like any cocktail party, you’d have to start off with a big congratulations. So congratulations to the folks in FDA that put this together. It was a long time coming, and it’s a great accomplishment. So I’m proud to be part of FDA for that reason, among many others.
And honestly, I want to skip right to Ji’s question. It’s something I get really often. It makes total sense—
JIM: About whether or not I should be investing in stablecoins.
MAX: Exactly. What type of investment are they? What are their use cases? And it’s a really good question. I get it all the time.
The reason I mention the GENIUS Act compliance is that those stablecoins in particular, they’re required to be backed 1 to 1 by dollars and/or short-term US Treasurys. So that’s the core of what it is. And to answer Ji’s question, US investors in particular don’t necessarily view dollars as a long-term investment, like we would typically speak of other investments.
Instead of this dollar in your bank using ACH or wires, it’s now on the blockchain that’s running 24/7. And it’s naturally a global network. So specifically for our clients, if they’re a multinational company, if they have employees, or even family members across the world, these stablecoins that can be transferred 24/7 across the world for little to no cost can be pretty useful.
JIM: Darin has a question for you, Jurrien, asking about whether or not the increased popularity of stablecoins could affect bitcoin. Bitcoin’s the OG, the one and only. Everything else is an altcoin. But with more and more people talking about stablecoins, is there a connection? What could it do?
JURRIEN: There shouldn’t be, because bitcoin and stablecoins are on the same blockchain, but they’re different asset classes. Bitcoin, again, is an aspirational hard money. Stablecoins is on-chain cash. It doesn’t pay interest. But that was one of the stipulations of the GENIUS Act, that the banks lobbied very hard to make sure that they couldn’t disrupt the banks.
So they’re different asset classes. One is just cash on hand. It just lives on a different rail as your cash at a bank.
And bitcoin is bitcoin. Bitcoin is a long-term asset. Stablecoins are short-term cash. I guess that’s how I would describe it.
JIM: And that’s great. That’s a perfect segue into a trio of questions that we got that are going to ask you both to look forward and offer a long-range outlook in Harry’s question here. But in general, we get a lot of questions about what the rest of 2026 will bring for bitcoin. Specifically, someone asked about bitcoin and ETH, specifically.
A third person asked about crypto in general. And I can see the live questions coming in now. Just curiosity for our outlook, your outlook, and what’s to come. And Max, we’ll start with you.
MAX: OK.
JIM: It’s a big one.
MAX: It’s a big one. I’ll honestly leave a lot of the bitcoin analysis to Jurrien. He’s who I’ll be looking for my outlook, generally speaking.
My thoughts initially though on bitcoin is looking for confirmation of the four-year cycle timing. And then to Jurrien’s point, what are the drawdowns look like? And does that confirm or deny our current thoughts? A lot of the data would support what we think now. But that obviously could change.
I think personally, a lot of the interesting developments are on the ETH and smart contract platform side of things. There’s been a number of partnerships, just general progress in tokenization. That’s been a big discussion point. Stablecoins naturally was the talk of 2025, and just DeFi in general.
So what I’m hoping for, being cautiously optimistic, is that maybe one of these trends that I’m seeing picks up so much steam that it maybe mutes or even ends the four-year cycle altogether. But we’ll see. But that’s what I’m looking forward to.
JURRIEN: And I’m not an expert on ETH and solana, but I did want to chime in that a compelling case is being made, now that ETH is sitting at the epicenter of stablecoins, and maybe it plays a role in AI, that maybe ETH is becoming money as well, as opposed to just a smart token. Because bitcoin is seen as money. But that’s as far as I’ll take it. But I think it’s a very interesting argument.
On bitcoin, we’re in that testing mode. So for me $60,000, $65,000 is a line in the sand. My guess is it’s going to sit around here and test the waters between, let’s say, $60,000 and $70,000, not to be too precise about it.
Build a base. In the stock market, when a stock or an index makes a bottom, it doesn’t generally just go down and go back up. Sometimes it does. But it’ll retest. Bitcoin needs a new narrative. We’ve done the hard money narrative. Gold is running that show right now. We had the speculative narrative.
And so I think it’s sitting here waiting for a new storyline, if you will. And it’ll still be related to those two. But something needs to happen, like maybe gold extends so far above bitcoin that the smart money starts to substitute, just like they would between gold and silver or gold and the gold miners. And so I think bitcoin is in that discovery phase.
If it were to really strongly break down below $60,000, I would get concerned that the power law trend that has been in place since ‘08 might be changing. As long as that does not happen, I think we’re in a sweet spot here where a lot of things are converging. Again, the gold-to-bitcoin ratio is converging. The power law support line is converging.
And so I don’t think we’re going to be at $100,000 tomorrow. But I think over the next few months, there’s going to be backing and filling. And if you’re a long-term investor and you are interested in valuation and price discovery, this is a good time to be looking at it.
JIM: We have some live questions coming in. But before we get to those—and you both kind of pre-answered it already—but I just always like to end these quarterly shows by asking our guests to look ahead through Q2, maybe even a little bit deeper, stopping well short of making a prediction. But what might be a newsmaking event or what headline might you foresee late spring, early summer, mid-summer?
JURRIEN: For me, the big one will be the new leadership at the Fed. Because if bitcoin is a store of value that is driven by the quantity of fiat currency, the money supply—and this is not a prediction by any means. But we have potentially—well, not potentially. We’re going to have a new leadership at the Fed.
It’s likely to be Kevin Warsh, who is certainly well respected. He’s not out there. He’s not going to want to push rates to 0 when there’s no justification for that.
But I do have a sense that the next Fed is going to work much closer with Treasury to manage the debt and to maybe lower rates in order to entice, soon-to-be deregulated banks to buy more Treasurys. And so in this era of fiscal school dominance, you could see if they take that too far, and the market worries that the Fed is losing its independence somewhat, that could be a catalyst for, again, hard money to make a play again. And gold has already done that, of course.
But with bitcoin having not participated in that story, that could be a catalyst for bitcoin. So that is a big macro, a very large macro thing, that I’m looking at. That could happen in the second half of the year.
JIM: Excellent. And Max, how about you?
MAX: Yeah, that’s super interesting, Jurrien. I think to add some coverage here—and maybe something we haven’t discussed is, on the smart contract platform side, a lot of the maybe future outlook of the potential success—a lot of the thesis has been around like the impact of AI on these crypto networks. And basically, the argument, the only discussion I’ve really heard is, hey, in the future, a greater percentage of all of our everyday transactions will be done by these agents. And these agents will prefer digital asset networks because they’re up all the time and low cost and what have you—easy to run through an agent.
What I haven’t heard and what I’m mostly interested in—and I think it’s more of what we could see in the short term, is just the direct impact on the utility of, say, ETH or solana as a result of crypto developers becoming more productive. I think that’s something we could probably all agree with. And it’s been in the news associated with the software stocks, where AI can make even non-developers more productive in various ways.
So what I’m looking for are any signs or signals that shows the thousands of crypto developers getting marginally or incrementally more productive. And I think that’ll have a direct impact on the underlying value of these assets. And I personally don’t think it’s something that’s been talked about much that we could see come up in the metrics pretty shortly here. So I’ll be looking for that.
JIM: Cool, two very different answers to the question. That’s a lot to watch. I love it.
And before we move on to live Q&A, we do have another quick live poll. We like to keep you busy on the Covering Crypto Livestream, so head on over to the Polls tab. These are four questions that came in during registration, and we thought it would help us give some initial shape to the live Q&A discussion. If you voted on which of these you want Max and Jurrien to answer first.
So you can click on Jason’s question. How does someone judge the relative value between bitcoin and ETH? Renee wants to know, as crypto becomes more mainstream, will high volatility and big gains slow down?
Third question is, are we seeing early signs of a new crypto cycle, or is the market still in, what Matt calls, a consolidation phase? And then Mark wants to know, if we’re in a crypto winter—we said mini winter, how long do those bad boys usually last? So we will let those continue to those votes come in.
And I have one more shameless plug as the votes are coming in. There’s a survey, if you’re watching live on Fidelity’s website right now, just to the bottom of the video player—where, by the way, you can also download the slides that Jurrien was walking us through. You can take them away and study them yourself. That button is right down there too, next to the Survey tab.
If you could fill out the survey, that would be amazing. It takes about 90 seconds, only about six questions. And it is incredibly valuable to us as we plan for future livestreams.
Looks like the first question that the audience would like you to answer is Matt’s question, with 34% of the vote? Are we seeing early signs of a new crypto cycle? Or is the market still in a consolidation phase?
JURRIEN: I think it’s in a price discovery phase, or what we in the stock market might call an accumulation phase. Hopefully, that takes a little bit of time. And I say “hopefully” because when you create a strong base, it’s like a foundation or a root system. You can launch a better bull market from there. A plant grows better with a strong root. And so I think that is the phase that we’re in for bitcoin right now.
JIM: Would you add anything?
MAX: That’s a really interesting analogy. I love it. And I think that’s what we’ve seen historically. I can even answer the other question we had there.
Typically, these accumulation phases, right after the drawdown part of the cycle, they’ll last typically around one year, maybe six to 18 months to be generous. And all of that root building is occurring as you mentioned. So I love that analogy. And glad we could knock out two questions there.
JIM: And Renee’s question also came in a very close second. The question there is, as crypto becomes more mainstream, will high volatility and big gains slow down? And you alluded to this right off the top of the show. But expand upon that, this idea of maybe it leveling out over time.
JURRIEN: That’s the power law nature. And again, with my geeky project of lining up all the bull and bear markets and how far they went and how long it took, there is a clear pattern that every successive bull and bear market becomes—or for the bull markets, the CAGR, the compound annual growth rate, reduces for every successive bull market. And the length gets actually a little bit longer.
For the last one, we had a CAGR of 105%. So bitcoin would go up basically a double every year. And it lasted about 145 weeks, so almost three years. So the next one would have a lower CAGR and a longer shelf life. And the same applies to the bear markets.
So mathematically, the ups should be—that there should be less volatility as bitcoin matures. And we saw that with gold in the ‘70s. It was the Wild West during the ‘70s, massive moonshots and drawdowns. And then it matures because more institutions or more investors hold it and it proves itself.
And I think bitcoin will do the same. And it already is doing the same. Like if this mild winter ends up being only 50%, instead of 80%, that’s already a win.
JIM: And there’s learnings from all of that as the asset matures and as those who study it—which that takes me to John’s question that came in live. And again, we talked a little bit, just tangentially, about the halving. But what now—as again, more time goes by—what now can we say about, to John’s question, whether or not there’s correlation between the halving cycle and bitcoin’s performance and its price. That was a very popular question in April of ‘24. But it continues to be a popular question.
JURRIEN: And again, the halving cycle in the early days, when you’re halving the production or the growth by some massive percentage, that has a huge impact. But we are so far along the curve. Are we about to mine 20 million. Or have we gotten there.
MAX: We just passed it actually, yesterday, I believe.
JURRIEN: Yeah, so just the increment of a halving and what it means for how many new coins are minted, it’s just much, much less than it used to be. So it would make sense that the halving cycle would lose some of its power. Again, that doesn’t mean you don’t have bull and bear markets.
But this is one reason why, when I went down the rabbit hole of six years ago, and I looked at the stock-to-flow model, that well, that’s not really going to work forever. Because you can’t assume—or at least I’m not going to assume, that the next halving is going to have anywhere near the impact of the first halving. But the S2F model assumes that they are all the same. And so that’s where I come from.
MAX: Yeah, the only thing I would add, maybe to listeners who aren’t as familiar with these models, is really, it’s all supply and demand. And how the network was constructed is historically, in its early days, the change in supply was often the cause of these big price swings. And now our view—and I completely agree with Jurrien—the metrics or signals to look at is more on the demand side, because the changes in supply aren’t really driving the changes in price as much as we’ve seen. So what we look for in terms of maybe our outlooks or our signals, what do we think going forward, we would often look at the demand side going forward.
JIM: Excellent. All right, that takes us to 45 minutes. And there are several other questions that came in that you answered along the way during the conversation, so well done. You anticipated and pre-answered them. Thank you guys both for taking time out of your day to be with us. I really appreciate it.
JURRIEN: Thank you.
MAX: It’s lovely.
JIM: Thanks also to everybody watching right now. Thank you for the time you invested with us. We really appreciate it.
All of the questions that you sent in, we take note of. We add them to the consideration for future episodes. If we didn’t have a chance to answer them today, there’s a chance they could very heavily influence a topic that we cover next on the Covering Crypto Livestream.
If you have immediate questions that you want some help with, you can head over to Reddit. I’m not sure if you’re aware that there is a Fidelity Crypto® subreddit that you can visit and ask your questions and join the conversation there. It’s r/FidelityCrypto. So by all means, head there and engage in the conversation that’s happening there.
On behalf of everybody working behind the scenes here at the Covering Crypto Livestream, thank you again for taking time to be with us. And we hope to see you again real soon.
