Bankless Podcast Summary Episode: Why This Crypto Cycle is Over | Michael Nadeau’s DeFi Report #7
Date: October 21, 2025
Host: Ryan (A), with Michael Nadeau (B) from The DeFi Report

Overview

This episode is an in-depth exploration of where we stand in the crypto market cycle, featuring repeated Bankless guest Michael Nadeau, writer of The DeFi Report. The discussion centers on whether the current crypto bull cycle is over, Michael’s recent shift to a "risk off" posture, and what on-chain and macroeconomic data say about the present moment. The episode also explores counterarguments for a possible cycle extension, scrutinizes common bull market sentiments, and unpacks why this cycle feels different from prior ones.

The Investor Profiles & Current Market Sentiment

Michael Nadeau's Approach

• Focuses on a small set of high-quality, fundamentally driven assets
• Uses cycles to rotate into and out of the market, deploying cash in bears, risk-on in bullish periods
• Inspired by Warren Buffett's philosophy: buy when others are fearful, be disciplined with entry points, and focus on fundamentals ([04:29]-[05:40])

"The goal is to exit the cycle with more cash than you started so you can be greedy when others are fearful."
— Michael Nadeau [04:14]

Market Position

• Michael has shifted to a majority cash, “risk off” posture for the first time since 2022
• Hosts and guest discuss divergent strategies—some investors buy & hold, while others try to play cycles
• Both agree that different risk appetites suit different approaches ([05:40]-[08:00])

Timeline: The Call and the Flash Crash

Cycle Expectation (Q4 2025)

• By end of September, Michael identifies cycle as "late-stage" ([07:00])
• Historical symmetry: this cycle is at 1,065 days, similar in length to the 2017 and 2021 expansion phases ([07:50])
• October is historically bullish but some warning signs are emerging ([08:01])

"We are definitely late cycle here, but there is also this right tail risk of a melt up."
— Michael Nadeau [09:02]

Shift to Risk-Off — Before the Crash

• Before the “Friday flash crash,” Michael moved from ~20-25% to 50-60% cash, based on indicators such as:
  • Dropping trading volumes
  • Slowing ETF flows for BTC and ETH
  • Extreme leverage build-up in the system ([12:30])
• Flash crash confirmed his caution; further trimmed to 70% cash after the event ([17:20])

"I was not predicting a flash crash... my conviction was starting to lean towards things are getting riskier."
— Michael Nadeau [14:55]

Key On-chain and Macro Indicators

Leverage in ETH/BTC

• ETH futures leveraged ratio reached an all-time high; for every ETH on exchange, nearly one ETH worth of leverage ([19:04]-[20:18])
• The excess in leverage shows traders’ overconfidence, spurred on by institutional and ETF buyers
• This structure poses risk for large-scale liquidations

"When you see that hitting up towards one, it means... there’s another ETH of leverage in the market... this is how you get the crazy liquidations."
— Michael Nadeau [19:40]

Stages of the Cycle

• Michael divides the cycle into Early Bull, Wealth Creation, Wealth Distribution, and (forthcoming) Wealth Destruction
• Most new buyers, selling by long term holders, and speculative activity peaked Q4 2024–Q1 2025
• Currently, the market is in a prolonged Wealth Distribution phase; next would be Wealth Destruction ([22:01]-[26:32])

Realized Profits: Bitcoin vs. ETH

• Bitcoin: Long-term holders already realized $900B in this cycle (vs. $500B last cycle). The lack of new buyers makes “cycle extension” unlikely ([26:39]-[27:53])
• ETH: Underperformed previous cycle ($206B vs. $220B last cycle); ETH never “repriced” versus BTC; feels like the ETH bull never started ([28:16]-[28:51])

"If ETH had just done what it typically does relative to bitcoin, this would look different... ETH/BTC ratio still hasn’t been able to get up to the levels we've seen in the past."
— Michael Nadeau [28:51]

Market Capital Base vs. Valuation

• Realized cap of top 7 assets: $1.73T vs. $3.1T market value. Leverage and premium will compress in a bear
• In bear markets, this premium collapses, creating the best entry opportunities ([34:13]-[36:27])

Macro & Structural Considerations

Global Liquidity, The AI Bubble, and Rate Cuts

• Raoul Pal's extended-cycle thesis: "This cycle is delayed—expect a top in 2026 as global liquidity peaks"
• Michael is skeptical: acknowledges global liquidity isn’t a perfect predictor and worries about new buyers ([45:05]-[46:37])

"You can’t just say global liquidity goes up, therefore crypto asset prices go up."
— Michael Nadeau [46:37]

• SOFR rates surpassing Fed Funds Rate signal bank sector strain, adding volatility ([46:37]-[49:04])
• Even with anticipated Fed rate cuts, lack of direct liquidity injection and uncertain policy impact prevent Michael from confidently turning bullish

Fiscal Policy and Tariffs

• Emphasizes that fiscal spending, not just monetary policy, has supported this cycle. Tariffs are seen as liquidity-draining and deflationary over time ([54:33]-[56:37])

Gold's Record-Highs and the "Catch-Up" Trade

• Gold at ATH, but Bitcoin remains uncorrelated
• Without clear flows from gold to BTC, Michael is cautious about "catch up" hopium ([58:18]-[61:46])

Why the Cycle Feels Different

No Euphoria, No "Blow-Off" Top

• Compared to previous cycles, this one lacked retail mania and a final euphoric surge. Many altcoins never saw a true “alt season” ([61:40]-[63:33])
• Most major indicators (pie cycle top, MVRV ratio, ETH/BTC ratio) were never triggered. Michael labels it a “stock pickers market," with top-performing assets outside core crypto (e.g., Coinbase, Robinhood stocks) ([64:37]-[65:31])

"This was the shittiest bull market ever... Every pump was sold into, every breakout got front run. Retail never really entered in size."
— Ryan [61:46]

Counterpoints: The Case For More Upside

• Ben Cowen and others argue that the classical “top” indicators haven’t triggered and a Q4 melt-up is plausible ([65:31]-[68:20])
• Michael doesn't rule out more upside but stresses the need for a concrete new catalyst, not just historical analogs:
  • "You still have to say, OK, all of these metrics haven’t hit, so what is the catalyst?” [68:20]

What Would Change Michael’s Mind?

• A significant bear correction: e.g., Bitcoin at $60-80k would bring him risk-on
• OR: If Bitcoin consolidates above the 50-week moving average (currently ~$102k) while sentiment is bearish, suggesting strong hands are accumulating ([68:47]-[70:08])
• A major liquidity catalyst—e.g., government policy interventions, unexpected fiscal or QE actions
• He aims to remain unbiased and open to new data, but currently favors the odds for risk-off

"If I continue to see more and more sentiment that the cycle’s over, yet bitcoin continues to show strength... that’s interesting."
— Michael Nadeau [68:47]

Investor Psychology & Chosen Asset

• Discusses the emotional difficulty of holding cash in a debased fiat environment versus high-conviction crypto assets ([75:05]-[77:09])
• Michael prefers to preserve capital for the next bear, rather than chase last gains at cycle peaks

"You can't lose money taking profits."
— Michael Nadeau [74:08]

Notable Quotes & Timestamps

• "We are late cycle and the base case is that you’re going to have a Q4 top." — Michael Nadeau [08:01]
• "The market’s tilted towards risk... but I’m seeing weakness underneath; that's when the house of cards can get a little bit wobbly." — Michael Nadeau [14:59]
• "The goal is to exit the cycle with more cash than you started with so that you can be greedy when others are fearful." — Michael Nadeau [04:29]
• "You can’t just say global liquidity go up, therefore crypto asset prices go up." — Michael Nadeau [46:37]
• "This was the shittiest bull market ever." — Ryan [61:46]

Key Segments & Timestamps

• [00:03] – Opening: The risk-off call and investor profiles
• [07:00]-[09:00] – Late-cycle signals & historical symmetry
• [12:30]-[17:20] – Moving risk-off before the flash crash; rationale and data behind the call
• [19:04]-[21:44] – On-chain leverage, futures, and systemic fragility
• [22:01]-[28:51] – The cycle’s phases, realized profits, and ETH’s underperformance
• [34:13]-[36:27] – Market capital base, valuation, and why bear markets provide best entries
• [41:43]-[46:37] – Macro counterpoints (Raoul Pal) and the global liquidity debate
• [58:18]-[61:46] – Gold’s rally, Bitcoin’s uncorrelated movement, and the “catch-up” trade
• [61:40]-[64:37] – Why this cycle has been disappointing; lack of retail and blow-off top
• [65:31]-[68:20] – Ben Cowen’s “melt-up” scenario and Michael’s caution on missing catalysts
• [68:47]-[72:16] – What would change Michael’s mind; key technical and macro signals
• [73:01]-[77:09] – The emotional cost and psychology of going risk-off in crypto
• [77:40]-end – Michael’s view on monitoring, value in bear markets, and closing remarks

Final Thoughts

• Michael is majority risk-off, consolidating into high-conviction assets and cash, believing the odds favor an end to this cycle, but he’s open to re-entering if key data or macro conditions change.
• The episode offers a data-driven, risk-conscious perspective for investors considering whether to keep fighting for this cycle’s last gains or prepare for the next opportunity.
• The mood is cautiously realistic: bull market euphoria is absent, signals are mixed, and the market is a "stock pickers environment."
• The conversation is a must-listen (or read) for anyone exploring whether to level up or take chips off the table in late 2025’s very uncertain crypto landscape.