➡ The expectation of a 43% average return for Bitcoin in the last quarter of this year might be misleading. While historical data shows that the last quarter often brings good returns, it also reveals a hidden volatility signal indicating a potential shakeout. It’s important to understand this volatility and not make investment decisions based on the expected average return alone. By looking at the data month by month, we can prepare for potential fluctuations and navigate the market with confidence.
➡ The main idea is to focus on the long-term trends rather than short-term fluctuations when investing, especially in assets like Bitcoin. This is because the value of fiat currencies, like the US dollar, is decreasing over time, which pushes up the value of assets like Bitcoin. The ‘power law’ predicts that as the value of fiat currencies goes down, the value of Bitcoin goes up. So, even though Bitcoin’s value can be volatile in the short term, it’s predicted to reach a million dollars by 2030 if you look at the bigger picture.

A 43% average return for Bitcoin that everyone is expecting for a quarter four of this year, but it could be an illusion. Now, falling for it could be the single biggest mistake that investors will make this year. Now, most people, they see this number as a green light for a massive rally, but the real data reveals a hidden volatility signal that almost guarantees there will be a massive shakeout. Now, as a partner at a leading Bitcoin venture fund, as an officer of my own publicly traded Bitcoin treasury company, we would never use that number to make decisions.

So I’m about to show you the framework we actually use to see the trap before it springs so you can navigate what’s coming with confidence. So let’s go. All right. So we’re going to jump in right now. We’re going to take a look at Bitcoin’s price performance historically for the last three months of the year, the last quarter. Now, I want to show you the bull case, the medium case, what you can expect. And of course, there’s something hidden in there that most people aren’t expecting, but I do want to just warn you really quickly.

These are moving targets. Okay. So it’s really hard for us to predict the future. These are moving, so we have to be paying attention to them. So don’t miss out on the updates. Go ahead and hit the subscribe button right now so you don’t get caught off guard when Bitcoin moves really fast. Okay. Now, Bitcoin’s Q4 performance. So I want to take a look at it from the quarter and then we’ll break it down by month. We’ll do the bull case, the bear case, and I’ll let you know where we, I think we end up.

Okay. So first of all, for the quarter, as I said, historically, looking back to over a decade of data, we can see Q4, quarter four, is the best performance return. As a matter of fact, the median quarter four return is 31%. From here, that’d be pretty amazing. The average Q4 return is actually much better, 141%. Imagine if we got that. Let’s just break this down real quickly so you can see, you know, I love to show you the charts and the graphs. You can see this for yourself. Q4 has the most green. So historically, this is where all the money’s made.

So will this time be different? And more importantly, how should we be thinking through the individual months October, November, December, because if you’re only looking at the quarter and not understanding the months, you could get faked out of what’s happening. All right, let’s break this down. Now, October is historically the very best month. As a matter of fact, it’s such a good month, historically, that it’s not October. It’s called up tober. You ever heard that term before? Well, that’s what people call it in the Bitcoin space, because historically, this is where we see the biggest gains.

It’s the most reliable month for returns. And then as a matter of fact, the average return just for October is about 20%. The win rate, 83%. That means 10 of the last 12 years have been positive gains. Pretty amazing. Especially considering that Bitcoin does have down years, right? About every fourth year. So 10 out of 12 positive years. Now, the worst performance isn’t that bad. The worst performance we’ve seen to date was negative 13%. That was back in 2014. Now, if we look at this again, just with a little bit of graphics and colors, you can kind of see, again, we don’t know where these are going to end up, but you can see historically how much green we have across the board.

So it’s been historically a really good month, but let’s get into some of the numbers and some of the data so we can understand some of the dangers that there could be. Now, let’s go and take a look at November. So October up to October is pretty good, but November is where you need to be paying attention. You see, November is kind of better, kind of, but let’s dig into the data. The average turn is 43% pretty good. But here’s the thing with averages. The averages means there’s better months. There’s also worse months.

We should be prepared for that. The averages, the averages lie. In 2013, we had a 449% return. 449%. The problem with that is it’s a massive outlier. And so this really distorts the averages. So if we remove the outlier, so a lot of times you want to throw out the top, throw out the bottom, we’re down to about 6% return. The median only being 3.6%. The reason why I’m showing you this is because if you’re thinking that Q4 is going to be just straight up parabolic, you could be mistaken. And what happens is a lot of people get shaken out when they see this volatility and they’re not prepared for what comes next.

Let’s take a look at what comes next. So here we have December. Now, if we look at December, we can see the average returns much smaller, only 6.5%. The median return only being 1.27 and the win rate is only about a 50 50. Now the end of the year, there’s people maneuvering for taxes. There’s people closing positions to harvest the tax losses, things like that. The best performance was in 2013 plus 65, the worst performance in 2017. That’s when Bitcoin had run from 1000 to historic 20,000 in one single year. The month of December alone, I forget, I didn’t look it up, but it probably went from about 5,000 to 20,000, something like that.

And then it crashed back down. All right. So the reason why I’m showing you this is because Q4 historically is going to be really good. However, there could be some volatility I want you to be prepared for, because if you don’t zoom out, understand the bigger picture, a lot of times people get shaken out, they get scared of their positions. Now the framework, what I want to do is I want to have a mental model for what I’m expecting so I can have a framework. All right. We want to understand how we’re going to deal with these situations before we get there.

If we understand them, then we don’t have as much fear. All right. We don’t understand better. So the real signal here that we want to be paying attention to in Q4 is yes, I’m expecting a good quarter, but the real signal is the volatility that’s going to be happening. So things are going to be moving fast and so don’t be shaken out. Right now, today, Bitcoin at the time of this video is about $112,000. So let’s look at what some potential realistic scenarios could be for Bitcoin by the end of Q4 based off some of these historical numbers.

All right. Let’s pull this up. So depending on what happens using some of the averages in October, a realistic scenario using the median would put October at a plus 21% or bring it up to 136,000. By November, only 3.6%, not as good, bring it up to 141,000. And by December, bring it up another 1.3% puts us at about 143,000 from the 112 we are today. That’d be a total gain of about 27%. Okay. That’s on the low end. Now, if we go for an adjusted realistic scenario, so this means we’re going to get rid of those extreme outliers.

Let’s just get rid of those and let’s look at an adjusted realistic number. Then we’d have a 21% gain that’d put us to 136 November, bring us to 145 and December to 147. That’s a 30% gain. I’ll take it. Now, if we look at more of an optimistic scenario, so maybe we could argue that August and September sort of front run it. So we’ve sort of seen some of the damage come from there, not to mention the Fed just lowered rates and they expect, I think two more rate cuts just this year alone.

So we could see a lot of acceleration going into the end of the year. So if we look at some of that outside factors, we’d look at October going up 33% to 150, November going up by 20%, 182 and December up to 225. They put 100% gain. All right. So these are all within the average. Remember, the problem with the average is there’s better cases and there’s worse cases. And so I’m giving you the bull and the bear case here, and we could be somewhere in this line. But again, if we understand what’s going on, it’s much easier to stomach what’s coming.

Now, I do want to leave you with a message though, maybe one of the most often asked questions I get, I’ve just spoken to thousands and thousands of people in the last couple of weeks. I went to Tokyo, Hong Kong, Beijing, London, and New York City, spoke to thousands and thousands of Bitcoin investors. And one of the most often asked questions is, what will the price of Bitcoin be by the end of the year? Now, I typically say it doesn’t matter, but I’m trying to answer it for you here, but I want you to take this away.

There are a massive range of outcomes that could potentially happen. The goal is not to predict it perfectly because we can’t. The goal is to be prepared for it. So what we want to do is zoom out. What we do want to do is understand the directionality, and we’re looking at the data to try to help us determine if we’re still on track, if we’re still going in the right direction or not. So what I would actually like to tell you is to look at the bigger picture. What we want to do is we want to zoom out.

You see, volatility is the entire game. You don’t go from zero to a million dollars without volatility. You don’t shove the entire crash, the entire destruction of the fiat monetary system into a fixed supply asset like Bitcoin without volatility. All right. Now, if you’re too zoomed in, then you’ll never make it through. I tell people all the time, if you’re looking at your portfolio on a weekly or monthly or quarterly basis, you’re never going to make it. These are longer term assets. So what we want to do is we want to understand that all that is short term noise and the real price here, the ultimate game, is the continuing debasement of fiat currencies.

Let me show you what I mean. So if we take a look at this chart, I’m sure you’ve seen this before, and then we’re going to look at where Bitcoin goes. I’m sure you’ve seen this chart before. This is the US dollar. This is the reserve currency of the entire world. As a matter of fact, this is the longest lasting fiat currency ever in history. That means this is the best fiat currency that’s ever been around. And we can see that it has fallen 99%. Now, something can fall 90%, and then it can fall another 90%, and then it can fall another 90%.

All right. That’s how these things go. So we had $100 of purchasing power back here in 1912, the year before the creation of the Federal Reserve, $100 of purchasing power. In 2020, that purchased only $3 worth of goods. So as this goes down, it pushes asset prices up. And if we use something called the power law, this can kind of help us understand that as fiat goes down, Bitcoin goes up. So the way the power law works is it predicts this channel. And as you can see, Bitcoin’s price stays within this channel.

Yes, it’s volatile. And if you zoom in too close, you freak out from here to here. But if you zoom out, you can see this range. Now, what this tells us is by 2030, or actually, this is by 2028. Sorry, 2028. If we kind of get in here and kind of come back up to the top, that’s a million dollars. My prediction is a million dollars by 2030. The power law says potentially they’re by 2028. So while most people are zoomed in in November, if it only does 1%, let’s say it goes down by 5%, a lot of people are going to freak out.

I thought it was supposed to go up and they sell. But if you zoom out and realize that money printing is a function of the fiat monetary system and will never end. And as the money supplies, the dollar goes down, the power law takes over and this is where we’re going. So when in doubt, zoom out. And if you really want to know the mathematical equation for how Bitcoin gets here in 2030, 2040 and 2050, you probably want to watch this video right here. And I’ll see you over there. [tr:trw].

See more of Mark Moss on their Public Channel and the MPN Mark Moss channel.