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A
Foreign.
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Welcome to the report. The question today, is the bear market over? Is it almost over? I feel like it's that question the kids asking the back of the car. Are we there yet, Mike? It is July 22, 2026. We are nine and a half months into the bear market. There have been three 30% plus drawdowns. So today's question, is the bear market done? And if not, what can we expect next? There's a few things going on as we enter today's report. The top buyers, they're starting to cough up coins. But is it enough? There's one cohort that refuses to let go. Why Mike has his eyes on that and what they're going to do next. Also we've got some new emerging, let's say macro risks to weigh into the formula. Mike has takes on Iran, Ukraine, tariffs, a hawkish Fed that might turn dovish and also, and this was a spicy take, why the AI trade may have peaked. So I'm going to ask him about that and of course stick around to the end. We'll do some key bitcoin levels to watch from here. Two numbers to remember. We'll come back to 63K and 73K. Okay, remember those numbers, we'll tell you what they mean by the end. Mike, opening question for you. There are people right now who have been calling the end of the four year cycle. They were doing that back in November and December. Many of those same people are now capitulating on that and are now saying, okay, well we just have one more drawdown and then the bear market will be confirmed and then it'll be over. To me it's kind of a weather vane type take. Right. It's just because that's what it looks like at the price point that we're at now. So can you, we get beyond maybe the weather vane take and can you give your opinion based on everything you've seen? What percent of the bear market is behind us now? How far along are we?
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Yeah, you know, I think I like to anchor to the idea that the bear market is probably going to take roughly a year or so as it, as it has in the past. And so that's kind of what I'm anchoring to. And then we've been, you know, tracking the data market structure, all these KPIs we track through that to try to see if that's what's going to line up. And I would say, you know, based on where we're at, sort of time based nine and a half months into this bear market, we're roughly 80% of the way there. When I look at the on chain data, which we'll go through today, it's pretty much lining up with what I would say is roughly 80% of the way there. So that's kind of interesting. And so I just, I kind of want to stay anchored to this. You know, we're at a really interesting part, I think, of this cycle. You know, we've been building out our portfolio, had some nice buy opportunities, we've had some capitulations, we've had a chance to buy up and it's a good time to kind of sit back and say, okay, yeah, a lot of the market that was bullish maybe nine months ago. Now they are bearish. So do we need to start pivoting? Is the, is the risk shifting actually to the upside? I think that's the big question that I'm going to be asking, you know, today and through the next few months is, is the risk shifting to the upside? And what, and what does, does that mean? There's a lot going on in the macro world as well, which I'm sure we'll spend a little bit of time on this week. So. Yeah, excited to get into it today.
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B
All right, let's get into it. We are up a little bit over the last seven days. So I think we are up, I don't know. Well, it's kind of flat, I guess the last seven days. But we are up from some of the lows we saw a couple of weeks ago. 65k, close to 66k bitcoin price. You are more than majority deployed. You make the point that bitcoin has traded at or below your 65k fair value call. That's what you've said historically, since I don't know, the full time we've been doing this, that, that was the fair value of bitcoin and we have seen 47 days where we've traded under that, just above fair value. Going into today's report, let's talk about the main KPIs and what you're seeing there. A cycle awareness update, as you call it. So we're looking at a chart of the high level KPIs coming into buy zone for a lot of these though not all of them. What is this telling us?
- [04:35]
A
This is kind of getting to that 80% figure, I would say. So you mentioned, you know, we've been, we've, we've hit that 65k fair value target. We've actually traded below that for 47 days already this year when I went and looked back at 2022, which if we say fair value is roughly 20k, we were at that level for about 107 days in 2022. So we may have some more time here, potentially an opportunity to get, to get deep value. But yeah, I think all those KPIs are indicating we're in the buy zone, we're in that fair value territory. Maybe we haven't gotten to the extreme levels that we've seen in some of the past bear markets, but it feels to me like we're there, we're 80% there. Is kind of where I keep coming back to the one thing that gives me a little bit of pause is like when you look at the decline in the realized cap and we've talked about this realized cap is really kind of the aggregate capital invested into the, into the network. And we want to be tracking sort of how that increases during a bull market and then how much of that capital gets destroyed in the bear market. And we've only seen about 5.8% of it come out just yet. Back in 2022 we had almost 19% of it come out. So potentially some more losses to be realized. It doesn't mean that bitcoin has to, you know, come into deep value territory for that to play out. It can be more of a time based capitulation type thing. And I think, I think that's kind of what we're seeing on the market structure side as well, is really more of a, you know, time based capitulation. We've been focused on, you know, these top buyers and whether or not they're going to fully rotate their coins to stronger, you know, more long term investors. And we've largely seen that play out. I think when you look at the sort of 108 to 126k cohort of buyers, that's like kind of the peak buyers of the last cycle. They have passed roughly 52% of their coins to new holders. So I feel like that's largely played out. When we go one cost basis cohort below them to the 192 to 108k cohort, they have only passed about 18% of their coins to new holders. And this is where, you know, that number has been creeping up. It was about 10%, you know, a month, six weeks ago. So that's, that number's creeping up. And I think that's the time based capitulation where I'm looking to see that number probably move up into the 20s possibly get into the 30s as people, you know, as this time based capitulation drags on, we see another drawdown. I just think, I just think people start to give up and the, you know, the vision for like what we were talking about last year is just harder to see all of a sudden and it becomes a perfect setup for people with a longer term view. So yeah, I still think, I mean to me on the market structure side and these KPIs, it feels like that 80% number is about right.
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B
Would love to talk to a lot of those 92 to 108k buyers and ask them why they're so diamond hand. Because they have been pretty diamond handed and that's been surprising and that's why they realized cap hasn't gone down in the way that we've seen previously. I wonder what they'd say if you asked them, you know, like why are you still holding on? They, they still have some faith it sounds like. But you think some of that might be broken on the shoals of time based capitulation. Right, so we're nine and a half months into the bear. What about 10 months? What about 11? Maybe 11 and 12. That's when the cough up starts. And it strikes me that there's two types of capitulation we tend to see in these bear markets. The one is the price based capitulation. Just the stomach churner, right? You're going down a roller coaster and just there's this dip and it's fast and it's like whoa, this is too much. But the other is just time based duration. Those are the two types of capitulation and maybe it's that that will get them in the end. There's also though the question that maybe the on chain data is a little bit different this cycle we have spot ETFs, we have DATs, MicroStrategy. I mean the Bitcoin DATs alone, they have about 1 million of Bitcoin. Right? That's a, that's a healthy percent. What's that 5% of supply? Something like that?
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Yep. By 6%. Yep.
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Are you are maybe that's a reason we're not going to see the realized CAP numbers go down in the way that we've seen in previous cycles.
- [09:10]
A
Possibly. Yeah, I think that's a, that's a fair take. I say I think I would expect to see less pain is sort of how I'm referring to it. The market is maturing. Maybe some of those 92 to 108k holders are watching the show. Are reading the defi report and they're just gonna, they're gonna hold on. So I, I don't know. I think the market is becoming more sophisticated over time and I expect the sort of max drawdowns to be, you know, a little more subtle, you know, as we go. And I'm, I'm expecting that. But I still think, you know, there's probably, there's probably a little more pain to come. And I think you, you hit it on the head with just where we've had these periods already in this cycle. We've had the, the sort of deep drawdowns, right? 30, 35% corrections. They happen very fast. It's a, it's a wicked out capitulation. We're now in the part of the cycle where we're not getting those like V shaped recoveries out of it. If we start to see a move up to 70k or so. Some people just want to kind of get out of the market. They feel like, okay, they've recouped some of their losses. We'll see. I think, I think so much of bitcoin and the way that it trades is, is psychological. And we know that a lot of the reason for that is bitcoin doesn't have the fundamentals that you can fall back to. And it just becomes this kind of memetic thing. It's trading on narratives. People get bearish and they just want to sell. It's a psychological thing. It feels, you know, you just feel like you got to get out. And we'll see, we'll see if, if that starts to play out over the next, you know, the next, you know, 60 to 90 days. If, if we see more weakness, you know, in the market, let's project that
- [10:46]
B
forward a little bit. So you have a chart here. Bitcoin realized losses relative to changes in realized cap. This is a ratio. When you track this ratio from 2018 and 2020 at its worst, and then also 287 days into the bear market, which is where we are right now. We're 287 days into the 2025, 2026 bear market. And so right now this number is 27%. Let's say it doesn't get all the way to the highs of previous markets. And that would be the trend. And you're kind of accepting that that is as likely, let's say it gets into what you say in the report is this, from 27 to this 32 to 35% range. Can you convert that into price? What would that realized cap equal from a, just like a price range perspective in bitcoin?
- [11:41]
A
Yeah, I think, you know, and the reason I think it could get into that sort of low 30s range is, is we've seen this, this, this number in past cycles move up about 25%, you know, in the last kind of quarter of the, of the bear market. So I think it is possible that we could see that forecasting the price out of that is a little, little bit trickier because a lot of these holders that bought in at higher levels can be selling, you know, in these, in these ranges where other investors are happy to buy in fair value. And maybe it's not another capitulation move. So it depends on if we see another scare. Right. Does this bear market end with an FTX style thing or another capitulation? I think that's where we get to potentially deep value below 55k BTC maybe, maybe down to 50k. If, if we don't have another capitulation, we've seen the worst and we've seen the worst of the oversold and, and, and the sentiment. Then this could just be something where we bounce around, kind of around fair value, sit between 60, 70k or so. Some people are selling and they want to get out and that realized loss is increasing as a percentage of the prior increase. But we don't get the huge wick down. And that's kind of how the bear market ends. And that is sort of how bear markets ultimately end. It's just a matter of if we do have another one, another correction to come.
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B
One thing that we've been talking about the last few weeks, and this is kind of a light bulb moment for me, is your idea that we don't have a bottom confirmation of the bear until we start to see volume. And we would see that volume in ETF demand for bitcoin in spot volumes in perps. You include a lot of charts here that just like frankly doesn't show volume. It's pretty flat, it's pretty muted. And generally at the bottom of these markets, that coin rotation, the changing hands type aspect that we'd see, we'd see a lot of sellers, but we'd also see some buyers. When you look at the charts, ETF spot perps, what's your explanation for why demand isn't here and how it returns? One thought I might have is well for smart buyers, it's just frankly not cheap enough in the 60s. They need to see 50s, maybe, maybe they need to see the deep value territory before they step in and Say this is a screaming steal, we gotta buy it. Maybe there are other reasons though. Why do you think the demand isn't here and what brings it back?
- [14:17]
A
It's the cycle. You know, it's a cycle. It's, it's kind of everything we, we talk about. There's not a lot of credit in the system right now. There's not a lot of demand to speculate right now. There's, you know, even when you look at sort of what's happened on the AI side and the AI trade, I think a lot of capital left or left the kind of crypto area wanted to, to. To trade AI and you know, maybe that's kind of rolling over when maybe we're heading into a, a period where there's a little bit of a risk off across the board. But I think, I think it's just kind of a natural thing. People chase what the charts that are going up. And the charts have been going down on the crypto side for a while. And so people just kind of forget. They forget about crypto. It is amazing to me how the narratives just all of a sudden turn in bear markets when people get bearish, like there's no use. Like people struggle for, you know, what's the use case of this stuff. And it just amazes me how that happens. And I just think a lot of it's psychology. And when the charts are going up, it's like so easy to see this future for all these things we talk about all the time. And when they go down, people's imagination just, just really dries up. So I think it's just, it's just the nature of human, human behavior and kind of how it plays out in the cycles.
- [15:36]
B
There is a question I want to get to. When we talk about macro, about kind of the AI trade and there's almost an element where it's almost like investors in the world can't focus on multiple asset types at the same time. So do you remember like the end of last year and into early this year, it was all about gold and silver in that trade, and the whole world was focused on that. Then it's just kind of moved into AI. And so you sort of wonder if the AI trade has to go dormant, not necessarily die, but at least go a little sleepy and dormant in order for another asset class to kind of pick up the, the, the animal spirits again. But you have a, you have a take on that too. We'll get to one other thing that's been nagging me. That's just something to tick off the list is minor capitulation. We haven't seen minor capitulation in 2026. We have in all previous markets. Does that. Why, why not? Do you need to see that for a confirmation or is this kind of just how it is now? You don't expect to see capitulation from the miners.
- [16:34]
A
It's. It's something I'm looking for. So we're tracking it. We have a chart here looking at what happened back in 2022 versus kind of what we're seeing today. So I don't know if we. I don't think we have to see it, but I think it would help me develop more conviction if I did see that. You know, miners kind of came under pressure, the hash rate really came under pressure. And we sort of see all the signs that you look for. I mean, really kind of what I'm looking for from the mining space is like you tend to see consolidation right in, in bear markets. The miners that are unable to mine at cheap, at really cheap energy costs end up having to shut off their machines, possibly sell bitcoin to if they want to keep their operations going. Some of them end up being acquired by larger miners who have more resources, are able to finance and get access to capital in a bear market. So I'm looking for some of that to start. Start playing out. I think it is playing out. We've seen the hash rate come down about 15% or so and kind of steady out from there. So we'll see. I mean, I'm definitely something I'm tracking. It's another thing where you have to ask like, are the miners getting a little more sophisticated? Right. Are they selling a little bit? We saw a lot of selling activity, you can see in the middle of that chart and kind of like the beginning of the last bull market and almost looks like they got burned last cycle and they were happy to sell maybe a little early in the last bull market. So potentially, you know, they're. They're capitalized at a level that they can kind of withstand another correction. And we don't see it, but something I'm looking for, you know, regardless, Mike,
- [18:10]
B
there's another reason actually why we may not see it this cycle and why this time it's different is because there is a lot of demand for bitcoin mining and that infrastructure center build out coming from the AI sector. And you wonder if that demand has caused some strength into the market where they're not going to capitulate as hard. So many bitcoin mining companies have even pivoted to AI. They're supplementing some of their infrastructure buildup towards AI as bitcoin goes down. So that might be part of the story that, and that genuinely is different this time. Great strategy. We just have to take a peek at Michael Saylor. You have this in today's report. There've been, there's been some selling, of course, MSDR selling. A couple of weeks ago, there was a big bitcoin sale from Strategy. My only question is, are you concerned with anything that Strategy and Saylor are doing, or is this basically what a graceful unwind of some of his leverage type positions? Is this what it looks like? Is he just gracefully unwinding here?
- [19:16]
A
I, I hope it's, you know, this is what the graceful unwind looks like. I, I've been a little bit surprised that the STRC product hasn't traded up or traded closer to, to par. It's, I want to say it's around 87 or so right now and, you know, 100, par being 100. So it's kind of like these STRC holders or, or future potential holders saying, you know, this, what you're paying, the yield you're paying on this is not compensating us for the risk. And so therefore this thing's going to trade at a discount. It's been there, it's been in this discount range now for the longest period since this product has been in the market, which has been about a year or so. So, you know, again, you know, we've kind of just been bringing this up. We're watching this as a bitcoin holder. To me, this is just more something to watch and to see if Saylor comes under pressure. The board has authorized 1.2 billion of Bitcoin sales, which they've, they've largely been shoring up their balance sheet and ability to pay these dividends by, by, by selling more MSTR shares. He's got about 22 months of Runway now to pay the dividends. And so, you know, if he keeps kind of bringing that up and he's got two and a half years or so, I, I would kind of expect that STRC to start closing towards par. So it's kind of a, maybe a little concerning that. It's not. And then we'll see, you know, if we do have more weakness from Bitcoin, I would expect that to, you know, be expressed in the SCRC chart as well. And, and maybe Saylor gets forced to sell more Bitcoin, you know, at a bad time and maybe that's what, you know, we're going to get into macro risk. You know, you could sort of see this potential collision of macro risk, sailor. You know, people maybe, you know, time based capitulations starting to kind of come together here in the next few months. But yeah, it's not for me. This is more of an issue for MSTR holders who have just continue to be diluted, you know, in this bear market.
- [21:16]
B
So you're kind of yellow light on strategy and Saylor, not green light but also not red light. You're just going to monitor the situation, it sounds like from week to week. Let's talk about some of the risks in the water. And there seem to be a lot when you take a look at macro, starting with Iran, I feel very much like the market keeps oscillating between a couple of narratives. On the one side you get people saying the worst is over, it's like it's going to be fine. On the other side we get people saying this is a forever war, the conflict is never going to end. And sometimes month to month the market will oscillate between these two extremes. Feels very much like that's what you're seeing in the oil charts, which are all over the place. And I can't really understand what's going on here. What do you think?
- [22:08]
A
My view on this really from the beginning is that it's really messy. You know, we're not, I'm not a geopolitical expert or anything, but there's just a lot of competing incentives over there and you know, all the ceasefires and stuff, it just, it, it just, we went through a period there where just markets were just not paying attention to this. And maybe that is the takeaway is like this, the, the AI trade and sort of all of the excitement around that was just basically dwarfed any concerns that they're, you know, that were happening over in Iran with, with, with oil inflation and all this. So really kind of the way I'm thinking about is like, I think it's confirmed to me now that we're in another, like I'm calling it basically round two of the, of the hot war that there's been ten, I think straight days of, of of attacks and counter attacks happening over there. And the way that I'm just trying to think about it moving forward is kind of like, okay, what has played out? You know, basically nothing has been accomplished in terms of actually securing the straight, opening the straight and all that's probably gotten worse since this started February. You know what of the mitigation. What have we done in terms of suppressing oil prices over since February? And if this continues on and the strait remains closed, does it matter that we already took all those mitigation, you know, measures? And do we have a situation where we're actually going to have more oil shortages around the world? You know, I think we've, we've, there's plenty of sort of oil that's in strategic reserves. I think the, you know, around the world. And maybe we have three to six months left of that. But I can sort of foresee a situation where, you know, we're kind of in this, like, deglobalization process right now. And the US Is kind of like, we've seen, you know, shipping rerouted and lots of people coming to the US to fill up tanks, and then that's going to different parts of the world. You know, I could sort of foresee a situation where certain countries have to actually, you know, stop doing exports and then it just becomes a little bit more of a fight. And then, you know, there's probably enough oil to go around, but it's probably not at all in the regions where that needed at the time that they need it. And so things can start to get a little bit messy. And I'm just trying to kind of think about what is, what does this look like, what are the incentives of everybody at play? And I just think it's another risk, you know, it's another risk in the market. I think the market seems to be complacent around this largely because it hasn't really caused a lot of problems and the equity markets so far. But at the same time, you know, the CPI came down to 3.5% in June, which kind of like was a big relief to the market. That was really driven by gasoline prices dropping 9.7% because oil had. Oil has been very volatile. Came all the way down, I think to 67, 68 on WTI. It's now up to 86. So I'm kind of asking, okay, if the reason CPI came down was gas came down, now gas is going back up. Does that mean inflation's coming back up? And then, you know, we've got a Fed who has come in and said they want to get back to 2% target. So this is, these are all the risks that are starting to bubble up.
- [25:29]
B
I see the dots you're connecting here. And one interesting thing that feels like a disparious disparity that you pointed out in the mar in today's report is the, the Energy market. And also maybe we'll add to the story this. You make mention of Ukraine and Russia and Ukraine taking note of the chokehold you can have in energy from Iran when you control the Strait of Hormuz. And they are, they are increasing and ramping up attacks on Russian energy infrastructure in the Black Sea. And you also made note that for the first time, Russia is like actually purchasing energy from India, which seems a little weird. And so you've got this scarcity element that's coming through war the same time you have AI demanding more and more energy. And, and yet, and yet energy is currently 3% of the S&P 500. In 20 and 2008 it was 18%. So we were far higher in, in 2008 when there was no war, when there was not AI demand coming for energy. I was almost wondering if you have a trade on, if you'd like, like to get a trade on the energy market because that seems like a glaring disparity here. Yeah, we were 3%. It was 18% before. There's going to be a wall of energy demand at a time we have shrinking supply. Like, is there something here?
- [26:50]
A
It seems like a pretty obvious setup to me now, you know, as I kind of started to zoom out a little bit and look at all of this. Yeah, that is a number I think probably a lot of people don't realize is, you know, that 3% of the S&P 500 in terms of the energy sector and that being 18% back in 2008. 2008. So, yeah, I mean, I, I think when you zoom out on it, what, what it, what it looks like to me in the setup here is like we are very clearly in a period of deglobalization. We've, we've, we kind of went too far maybe on globalization over the last 20, 30 years. It's very obvious now that this is totally shifting. This is, we are in the middle of a shifting world order. I recommend people check out Ray Dalio put out a pretty, pretty interesting, you know, kind of take on how China is perceiving this situation and what's happening in the Straits and kind of how he's thinking about it moving forward. But yeah, you know, we're in a period of deglobalization that is like very, seems very clear that that's going to create a fight over energy. We have this, this AI build out that's happening, all these, all this demand for energy at the same time. So, yeah, it seems pretty clear that we may be at the very early stages of like a secular bull market for the energy sector. And, you know, what does that mean? What does that mean for asset allocation? And just the way the markets are going to, are going to work, you know, moving forward.
- [28:10]
B
There's other risks in the water here. Of course, you talked about tariffs, you know, new tariffs on Canada. Of course, that's been lingering for a while here, but is ramping up. There's. We've got midterms and political instability and our elections rigged or going to be called rigged. And what's that going to look like in the us? We could talk about all that. Also, the Fed policy is in the water too. But I want to focus on maybe the spiciest take I read on macros here, which is you say this. It's our view that broad speculation in AI may have peaked for a while now. This is on the AI trade. And you think maybe that has peaked for a while, maybe that will go dormant. Give me your reasons for that. Because it still feels like there's a lot of excitement in AI, a lot of things shipping. What's the rationale for why it may have peaked? Why are you saying this?
- [29:03]
A
Yeah, and I've been wrong on this. So I think we probably. I can't remember when we did the episode, but I think earlier in the cycle, I think I was calling for like 25% drawdown and NASDAQ. I think we got about halfway there before the ceasefire in like late March. So I've been wrong on my NASDAQ calls. But yeah, I think this just comes from kind of just the way I've been observing, you know, maybe a little bit from afar, the trade over there. There's been a lot of stuff, you know, trading almost like altcoins, major 5-10x moves in pretty short periods of time. There's a lot of speculation, a lot of like, what's fascinating to me. And I feel like crypto has sort of unearthed, you know, this just like desire to speculate within people. But we sort of see a lot of the same things happening that we see in crypto markets when there's a lot of attention in a certain sector or a certain asset. Like there's almost like this immediate move where there's actually like products being built like levered products that come right in. And so we've seen tons of leverage go into that area. It kind of looks similar to me like, you know, what we saw in the crypto markets back in, you know, August, you know, when the DAT season was going on, that type of thing. So I'm just kind of looking at it from that perspective. The reason I think, you know, if, if, if speculation has ended, the narrative will, will shift and we'll see if this really starts to take hold. But you know, I just saw, I think there was an article in Wall Street Journal about these, the frontier models now approaching government. They want protections. They're concerned about these lower cost models that are coming out of China. Right. We've continued to see newer, newer models that are kind of at the same level as some of these other frontier models and they're like 99% cheaper for the user. So that it looks to me, and this is, we saw this in crypto, right? It looks like the infrastructure is being commoditized. And that's like the big takeaway here for me with what's happening in AI that is particularly concerning with crypto networks. When the infrastructure gets commoditized, you don't have like, you're not building like, you know, building out energy to run crypto networks. You're not, you don't have all these massive fixed capital costs that, that go into this. And so that is what these AI companies have to deal with at a time when they're, their competition's coming in and undercutting them on price. And then, you know, are they going to be able to make up for that on the other side with just rapid usage and more adoption from enterprises? It's kind of like when Ethereum went to the L2 roadmap and said, okay, we're gonna, the, the costs are gonna be cut, but we need to scale up the, the usage so much so that we don't lose the rev. It kind of looks like a similar setup over there. And so, yeah, that's kind of, you know, that's what I'm looking for is like, is this narrative gonna start to get baked into psychology? To me, that would be the thing that sort of, you know, pricks the, the, the top. We'll see if this actually starts to play out. The other thing is just, you know, the enterprise ROI and things like this. There's a lot of corporations spending a lot of money on, on AI right now for good reason. At some point they're going to say, oh, what's the, what's the roi? We spent all this money, we've done all these initiatives. You know, Jack over in the corner there, he's become more productive because he's, he's able to use these AI tools. Do we need to lay jack off now? Because we need to actually start to recoup some of these investments that this investment that we made. You know, I don't exactly know how that starts to ship, but we haven't gone to this place where, okay, the, the technology's been introduced, people are using it now. You know, what's the business use, what's the roi? How are we going to start to, what's our plan to invest going forward? What's the workforce look like? This all has to play out. And then the other thing is just like the, the midterms and you know, there's going to be a big fight over this. I mean, I have a lot of friends that kind of work in corporate world and you know, when I talk to people, it just sounds like a really kind of tough place to be. Right? Yeah, yeah. People are not super happy about being forced to use these models that they think is basically taking their job. And you can just see the setup with politicians that are going to seize on this and there's going to be a fight over this. So, yeah, it's just not a, it's not a great setup. I think that's why I think the likely of the probability points to maybe, you know, we've seen peak speculation on AI.
- [33:32]
B
Let me ask you this. So I guess when you add all of this up and you have kind of macro where you have Iran, you have Ukraine escalating, you have energy inflation, political instability in the US Midterms, you have Fed policy which may be actually hawkish at some point and maybe at first.
- [33:54]
A
Yep.
- [33:55]
B
And so you have all of these risks in the water from macro. But of course, macro is notoriously like hard to predict. Right. It's very uncertain out there. A lot of different catalysts. You know, anything can happen out there when your on chain framework that you've developed and macro disagree or say different things, which do you trust more?
- [34:18]
A
Right.
- [34:18]
B
So like I'm, I'm almost asking what's the weighting of all of the macro analysis in this report? Because when I look at your actual portfolio, you are overweight risk assets right now. You are more than majority deployed into crypto assets. And that's even despite all of the, this macro risk as a backdrop. So I just want to find out how much you actually weight these risks. And when there's a disagreement, are you just back to still trusting the, the cycle and the on chain fundamentals? Is that a higher weighting in your, in your model?
- [34:53]
A
Yeah, great question. I think that the way I think about the macro right now is based on you know, kind of what I'm seeing in the crypto cycle, where we're at nine and a half months in what the onchain data is telling me, that looks to be like, roughly like 80%. And so, you know, once you get to that level, like, I'm trying to figure out is the risk here has the risk shifted off of, like, going downside, and the risk is, is that you're not allocated enough. And so to me, I would probably come to the conclusion that I'm not allocated enough if I. If the macro, to me was a good setup, right? If. If things were looking like the Fed was going to ease and you could see that that could maybe draw capital back into the. Into the crypto space or, you know, the war there. It looked like maybe there was going to be an agreement or tariffs and trade, all of these things. If I kind of had the view that, like, okay, this looks. This looks pretty clean moving forward and there's less uncertainty, I would say maybe I don't. Maybe the risk is, like, actually very much, like, shifted to the, to the upside, and I'd want to be allocated more. So that's kind of how I'm. I'm approaching this. And, you know, the. I think a lot of people have this view that, okay, you know, probably crypto bottoms in October. And I'm trying to figure out, like, is, are there reasons to believe that that is true? You know, separate from just, okay, it's a year, guys, it's gonna. The market's gonna bottom, right? Like, I think that's, you know, you can kind of anchor, and that's kind of how I do it, is I sort of anchor to, like, okay, probably that is what's gonna play out. But there has to be something to shake me out of that, and I'm not really seeing it just yet. So, you know, that's kind of how I think about it. If the macro was good, it probably has me a little more risk on, even though I am, you know, largely, you know, risk on at this stage of. Of a crypto cycle.
- [36:47]
B
Okay, so the macro is. You're using that to sort of tip you over, and the macro is part of the reason why you're maintaining that larger than you would otherwise cash position. If the macro setup looked better, you would be more deployed at this point, even though you believe there are still more dips ahead. Well, let's talk about that as we start to close this out. So, key levels to recap for bitcoin, I mentioned two of them at the beginning this 63k number and a 73k number. So the 63k number in your report, that's the 200 week moving average. The 200 day moving average is the 73k number. What are the key numbers to watch on bitcoin, the numbers that you're watching right now?
- [37:34]
A
Yeah, so I, I would say, you know, if, if bitcoin can maintain itself above that 200 week moving average, that's kind of your sort of downside resistance support. So right now we're above that and that looks pretty, that looks pretty good. The short term holder cost basis is around 70k, same as the 21 week moving average. To me that's kind of like your upside bull market support band is kind of how I would think about that. And so, and then the 200 day moving average is just above that. So I think we're in one of these zones similar to where we were back in the March to April period where bitcoin had kind of wicked down and then you, you traded in a zone again and we, we went all the way back up to what, what at that time was the short term holder cost basis and the, the 200 day moving average. So obviously these are moving numbers and so those have shifted down and now we're in this like different channel that's a little bit lower. And so to me if we break through, if we were to, if we were to push up into 70k, it's kind of the same thing we were looking at back in kind of April, April, May, period. Okay, is it going to establish that as support, is it going to break through the 200 day moving average, 73k, establish a week or two of closes and start to like really show support there. That's to me how the cycle ultimately ends where you show support by breaking through one of those levels that you couldn't get through throughout the entire bear market. So my, my, I think the probability points to like getting maybe, maybe getting closer to those levels and then coming off. I think that's still what I'm anchored to, but we're going to continue to monitor it and, and we'll have you know, weekly updates moving forward.
- [39:19]
B
Now when we last talked about price too, you said There was a 61st 5% probability that we would still see a lower low, that the lows we seen the cycle weren't the lowest that we would see. Is that now price is up since then, that 65% probability, is that still your number today or have you adjusted that?
- [39:39]
A
Yeah, I would say that's still largely what I'm thinking. Probabilities are pointed in that direction. And you know, it's not like a really, really super high conviction. But like again I'm anchored to this idea that's probably going to take a year. 80% there on the on chain data macro. Risks look like they're building a little bit. So I feel like that 65% number is still, still, still probably a pretty good, pretty good number.
- [40:07]
B
Great stuff, Mike. I can't wait to see where you are next week on the report. There have also been some new ads to the website for TDR Pro members. So I noticed this. There's an email that went out. Price performance of the TDR strategy is now live. So for TDR Pro members that now exists. It's fantastic to see that live. And you know, remind folks, the total unrealized P and l is about 17%. Bitcoin return since inception has been negative 43%. So massively outperforming bitcoin and the total realized P&L, 52%. So Mike, you're putting up some pretty great numbers for the first year of this product, the tdr and we hope you're able to, you know, to continue doing that. It's fantastic. I will also say there was a, another alert as, you know, some, every time I get a TDR Pro alert, I definitely look at it. There was an alert on the 17th this week of a purchase that surprised me as well. But some of the calls you've made are doing quite well. I've seen you on Twitter talking a little bit about pump. I know that's something you're, you're very excited about and has been contrary in the past and that is now in a position of starting to outperform. So a lot of exciting things going on. What's next, what's, what's, what's coming out of the tdr, you know, machine in this Friday and in the weeks to come.
- [41:34]
A
Yeah. So just on the website update, this is mostly like an infrastructure, you know, and I want to just thank the people that have had issues with their signups and their accounts have been dealing with me. So this was about really mostly about infrastructure. We have the reporting up there and so everybody can see we've historically had every trade and the assets that we're tracking. Now we're just tracking it from a holistic perspective for the portfolio. So hopefully that's good for people and yeah, moving forward. So we're going to do an update on Athena in the watch list on Friday. So That's a project that's in our
- [42:08]
B
portfolio, 95% down from all time highs. Right.
- [42:12]
A
Really rough bear market which we expected. And there's reasons, there's reasons for this but also a lot of interesting stuff happening there. Some interesting, you know, additions in terms of like how they're building out their distribution network with Tradfi and also some, some crypto native exchanges. So we're going to be covering Athena Friday. We've got, we've got a lot, a lot of stuff coming. So we're going to be covering Circle, which we have not covered just yet in the watch list again, another stablecoin project. We're waiting for a few of these more publicly traded companies to close their books for the quarter and then we'll be updating Robinhood as well. They're closing I believe July 29th. So a lot to come in the watch list and we'll have these, these weekly reports coming as well. So yeah, enjoying it.
- [42:59]
B
Well guys, stay tuned for all of that. If you're liking these episodes, do us a favor this week and subscribe to the various channels so you can subscribe on on Spotify if you're not there. Do cross channel on YouTube if you're not there. Apple podcasts, of course, subscribe. That's how we get these to the top of the charts. And thank you as always for listening. Gotta let you know none of this has been financial advice. This is an investor journal and we're just on the journey alongside you. Until next time, stay curious.