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Our weekly show is hosted by Michael Nadeau (The DeFi Report) and Ryan Sean Adams (Bankless). Each week, we discuss how we approach managing our own portfolio and the data, research, and analytical frameworks that inform those decisions — for educational and informational purposes.
Ryan Sean Adams:
[0:10] Welcome to The Report. The question today, are we in the early bull season or
Ryan Sean Adams:
[0:16] do we have to get through a sad September 1st? We've got Mike Nadeau on the podcast as usual to September 2nd, 2026. We are now two weeks removed from the short squeeze that propelled Bitcoin up 23% in 48 hours. And since then, Bitcoin has helped. It has outperformed NASDAQ. It has outperformed gold. People are starting to take notice. We have on the week, Michael Saylor back buying Bitcoin, something that Mike predicted last week, and it's just happened. Also, coins are switching hands like they did in the early bull market in 2023. So the question today, do we have that confirmation or are we in the 11th month of a bear market? Stick around to the end. There's one number to keep in mind. That is 69.4K.
Ryan Sean Adams:
[1:11] I know you're going to remember that. Why Mike thinks that number is key to confirming the early bull market. Mike, last week, it was our first episode ever on the TDR podcast with full bull Mike. Full bull Mike, risk on Mike arrived in force. And last Last week, you also cut your odds of a lower Bitcoin low from 65% to 40% to 45%. So I got to check in this week. Do we still have Full Bull Mike on the TDR podcast?
Michael Nadeau:
[1:44] We still have Full Bull Mike on a TDR podcast. I'm feeling... The portfolio is in a risk on state. So when we are in a risk on state, we are in full bull. So yeah, I think very interesting spot. We've had the kind of smoke clearing a little bit since we saw the huge 23% rally. And right now we're kind of going through a lot of this cost basis data, trying to see how things look currently, comparing to past bear markets, kind of how we came out of the last bear market into the early bull. And there's some similarities, some differences as well. And still a lot going on in macro as well. So I'm sure we've got plenty to talk about this week.
Ryan Sean Adams:
[2:25] Well, there's a problem facing us, which is now it is September 2nd. And Bitcoin has faced a number of ugly Septembers in the past. Have you said September is actually Bitcoin's worst performing month of all 12 months of the year?
Michael Nadeau:
[2:39] Yeah.
Ryan Sean Adams:
[2:39] September is the worst month to hold Bitcoin.
Michael Nadeau:
[2:42] It is, and particularly in a midterm year, which we are in, and we are going into the heat of midterm season here. So yes, September seasonally, not a great time, but it doesn't mean history has to repeat.
Ryan Sean Adams:
[2:56] Okay, so we got to check in on that. It's the early bull season meeting September and see how this shakes out. Also, near the end, we got to talk about some of your portfolio wins, because that has been very exciting for members of TDR Pro, up big in a number of categories in a number of ways. So I can't wait to discuss that with you
Ryan Sean Adams:
[3:15] because I am very happy as a DDR Pro member. But first, let's talk about the cohorts and the coin rotation because this is happening faster than we have maybe ever seen before. It's certainly happening faster than previous cycles. The cohort ladder has changed yet again. So two weeks ago, It hit that check mark of where you thought things would land at the 56 to 66K cost basis cohort of Bitcoin holding supplies. They became the largest cohort in terms of percent supply. And now and then it moved, I think, to the 66 to 78K last week. And now it's at the 78 to 92K mark. So the coin rotation is happening in the other direction. You point out that in 2022, 2023, it took about, I don't know, over 90 days for this to happen, something like 100 days for this to happen. We just did it in two weeks. And I have to ask the question, like, is that a little too fast? Does that make you nervous here? Like, shouldn't this have taken longer?
Michael Nadeau:
[4:25] It gives me a little pause. That's kind of how I'm describing this, because yes, it is different. And I think the main thing that's different here is once we got to that prior cycle top cohort, the 56 to 66K, when we got to the equivalent space in 2022, which was about 17 to 21K.
Michael Nadeau:
[4:44] We stayed there. And that cohort continued to grow for about two months. So it kind of gives you an idea of sort of the differences here in terms of how much time we spent kind of at the cycle low. If 58.5K is the cycle low, we think the probability still supports that. But if that was the case, then we're sort of speed running that low. So it was about 267 days to get there. It was 376 days in the prior bull market, which was in line with kind of what we saw back in 2018. So we're kind of speed running, you know, getting to the cycle low, and then we're speed running sort of coming out of it into the early bull. We kind of went back and looked at sort of what it looked like when we came out of that early, out of the bear market into early bull. And, you know, we're also kind of making that move faster. So this chart that you pulled up here, this is just showing the 50-week moving average, which historically, once you break that and sort of flip that into support, That's the start of the early bull phase. That has not happened. That has not been confirmed just yet. But in that chart, you can see that we are pushing right into the 50-week moving average, or at least we got very close. And now we're rolling off of it. I think this is kind of what I expected to see was that we would kind of come up to 80K or so, the 50 weeks at about 81.2K, I believe.
Michael Nadeau:
[6:10] And it's rising. But that number, or actually, sorry, it's actually still coming down. We should see it starting to flat out a little bit.
Michael Nadeau:
[6:18] But typically, you'll kind of come up, test that, and then get rejected. Because we made a 36% move over a very brief period of time, I'm sort of expecting mean reversion kind of at that level. Let's see where we land. I think the key thing here is the 200-day moving average is really the key support. So when we kind of moved out of this in early 2023, we came up, got rejected. But when we came down, we held a 200-day moving average. And that's kind of the key level here. That's about 70K. So I'm kind of expecting some chop here. And we'll kind of see. We've got macro. There's still some risks with yields. Oil prices are rising. The war on Iran seems to be heating up a little bit again. So there's kind of like some risks, some messiness on the macro side. Bitcoin, crypto may get caught up in this a little bit here, but the key thing I think that I'm looking at is how do we react if we come down into the mid to low 70s? Do we see lots of buying? Do we see lots of support there? My sense from talking to people, from getting feedback from, readers of the DeFi report is that if anything, you know, investors are probably under allocated right now is kind of the sense that I get. And that gives me. It gives me a little bit more conviction that the lows may be in.
Ryan Sean Adams:
[7:43] Wait, wait, wait. You think most investors kind of think this is another head fake? The sort of head fake that we saw in May of earlier this year?
Michael Nadeau:
[7:52] I think most investors expected, sort of as we were saying, the probabilities were pointing to possibly a lower low even a few weeks ago. I think a lot of people were of a similar mind and maybe did not get fully allocated and are still trying to figure out, do I need to be fully allocated right now? And so I think the, you know, if you just kind of look at the people that wanted to be maybe fully risk on at the lows, I would say less of them are fully risk on at the lows than they want to be. Therefore, it may be harder to see mid-60s or low-60s again. We'll see, but that's just kind of the sense that I get out there.
Ryan Sean Adams:
[8:30] I see. You expect they're not 90% deployed the way the TDR is. They're not full bull, Mike, are they? They're just kind of holding back a little bit, and maybe this move caught them a bit by surprise. Let's talk about some of those numbers because you just hit on one. You said it was near 70K. That's the 200-day moving average, I believe. That's 69.4K. That's one moving average to discuss. The one we have on the screen right now is the 50-week moving average in the Bitcoin price. And you said last time back in 2022, 2023, that once Bitcoin price passed the 50-week moving average, we had confirmation that the early bull phase had begun. And you could see the moving average on this chart were just a tick below it. What is the 50-week moving average right now? What's that price point?
Michael Nadeau:
[9:24] 81.2K, I believe.
Ryan Sean Adams:
[9:26] 81.2K. And we are now actually down on the week, by the way, in the seven-day, 1.4% on Bitcoin. So we're at about 77K. So just a little bit below that. And as you said, ticked off the top of that or the bottom of that 50-week moving average. Can you talk a little bit more again about what happened with that 50-week moving average in late 2022 and in early 2023 and compare that to what we're doing now in kind of the numbers. So because as you said, we did bounce off of it a couple of times before finally getting above it. And then after we were above it, it was just kind of sustained up only from there. So not to say that history will repeat exactly. Let's say if it does kind of rhyme in this same way, how do these episodes compare?
Michael Nadeau:
[10:23] Yeah, I think, yeah, it's good to go back and look at this. And when we're doing this analysis, important to remember, we're sort of assuming here that the 58.5k was the low. And then we're sort of, okay, how does that compare to the last, how this worked in the last cycle?
Ryan Sean Adams:
[10:37] And that was June, that would be June 30th.
Michael Nadeau:
[10:40] So we'd be about 60 days removed if that was the low. Yeah, the way this worked in 22, again, And it took 376 days before we actually bottomed. So that was 11-21-2022. So over a year to actually get to the Bitcoin low. And then we made the first move at the 50-week moving average 92 days after that. So we're about 60 days out. We were 92 days. It took longer to get there. We did get rejected when we made the first attempt at it and actually had a 19% correction. And then that was about over 18 days. The key thing there is when we had that correction, we held the 200-day moving average. So that was at the time, you know, That was an interesting indicator that we probably were going to go back and test that 50 week moving average. And we did. It took four days after that 19 percent correction to actually rally 24 percent, move above the 50 week moving average. And you're kind of off to the races at that point. I mean, even at that time, Bitcoin's trading at 23, 24K. So if you waited for the confirmation, yes, you missed. You didn't buy 15 to 20K Bitcoin when it was at the extreme lows, but that was a really good time. When you look back, obviously, that was a really good time to be buying Bitcoin. I think there's a lot of people that are maybe feeling a little anxious. Maybe they had some cash and they wanted to get in at the lows.
Michael Nadeau:
[12:07] Maybe that's passed. But I think, you know, important to keep that abundance mindset. You know, we're very early in this cycle and there's a lot to come here. There's going to be plenty of opportunities. And I really think mindset is important for investors because it's hard to see opportunities if you're constantly feeling like you're missing everything. So that's kind of how things played out. Like I said, we're speed running this a little bit. 267 days to the lows this cycle. That's 109 days quicker than in 22. Which is a little suspicious.
Ryan Sean Adams:
[12:42] It's a little suspicious.
Michael Nadeau:
[12:43] I agree. I agree. so much quicker to the lows and now we're making the run at the 50 week moving average faster as well so we're like roughly 60 days from the lows so we're, a month sooner that we're kind of making that move into the early bull cycle, about a month quicker than we did after establishing the lows in 2022. So definitely some similarities, but also I think some reasons to have a little bit of pause with how quickly this is kind of moving.
Ryan Sean Adams:
[13:15] But if this compares to the 2022-2023, then you might expect that bounce once we hit the 50 week, once we're creeping up to it. And indeed, we crept up to it. And it seems like we have bounced, at least right now. The previous bounce in 2022, 2023, at the same sort of juncture in the cycle, again, assuming lows were June 30th, wasn't 19% down, right? And so we could see something like that in September. That's why this could be sad September, Mike. That still could be the case. And also, we still could be in an early bull. And so that's why you're looking for confirmation of a, basically a Bitcoin price between two ranges here, right? So you're looking at the 200-day moving average, which is currently that 69.4K. And then you're looking at the 50-week moving average, which you said was what, 81K? 81.2,
Michael Nadeau:
[14:16] Yeah.
Ryan Sean Adams:
[14:16] So if we stay within that range... You could sustain a dip down towards 70K and still have confirmation that this is an early bull. In fact, that kind of would confirm it to you. Is that correct?
Michael Nadeau:
[14:33] Correct. Yeah. If we see that 69.4K break and then we end up in a channel where we're below the 200-day moving average, the 200-week is about 65K. That's a rising moving average right now. So if you end up in that channel, then you start to wonder, are you potentially going to go down below the 200 week, which, you know, now you're potentially looking at establishing another cycle low. So this is and that would throw everybody off. Right. So. So that's that's the key.
Ryan Sean Adams:
[15:04] Which is still a possibility in your mind, because last week you said 40 to 45 percent probability that we would, let's see, would have a lower low, right? So that leaves the possibility. Well, actually, no, the 40 to 45 percent probability you said that we'd have a lower low, which is still a pretty large probability here. It's not like a 10 percent. It's not like a 20 percent.
Michael Nadeau:
[15:31] Right. And when we were on the other side of that, it was 60, 65%. So we weren't super strongly convicted that we were going to see another low. Now we're on the other side of that, but we're still close to 50, 50 here. It's not super clear. At the same time, I think this is the challenge for any investor out there. It's just like, what percent of your portfolio do you want to be allocated in the market? I've kind of been of the mind that we wanted to identify our fair value targets, get into positions. Obviously, we're monitoring the cycle and where we think Bitcoin's going to bottom, but we kind of followed that all the way through. And I think- When I went into the bear market, I was kind of of the mind that I would wait for Bitcoin to bottom and that if you kind of looked back at 2022.
Michael Nadeau:
[16:22] You kind of had an opportunity to buy whatever you wanted after Bitcoin bottomed. This bear market was totally different. We had to adapt pretty early on because of dispersion, because of fundamentals and kind of like what I would say is, the market's maturing a little bit, the investor base maturing a little bit. We've seen a lot of dispersion. It's been more of a sort of stock pickers market throughout the bear market. So I think going through that exercise, having our price targets, bear value ranges really helped just get into some positions with conviction, even as Bitcoin still had more weakness, other alts were outperforming. So it's been a different, definitely a different bear market. And the way that we're, you know, potentially speed running, it does give me a little bit of a little bit of pause. But also, you know, we've been going through all these these cycle metrics, current conditions data, market structure data, and all of that, you know, continues to make me feel like we're 85, 90% of the way there. So it's just it's kind of becomes art it's it's art rather than science you know once you get get to this state and you kind of have to um make a decision and the decision i've made is to be you know pretty much risk on you know at this.
Ryan Sean Adams:
[17:34] Stage so i get it and i think the your non-bitcoin gains in the portfolio really reflect that and uh i bet you're glad you you you shifted that strategy rather than just relying on the pattern from from previous cycles of waiting for bitcoin to like fully
Ryan Sean Adams:
[17:49] bottom before you deploy into non-Bitcoin assets. Anyway, more on that towards the end. Let's take a look at current conditions just for Bitcoin. As I read through this section, I'm going to go through kind of the not good and maybe the good. Okay. So the not good, this kind of makes me a little suspicious that we're in an early bull. We don't have the spot volumes back.
Ryan Sean Adams:
[18:14] The ETF momentum, that was pretty large the last two weeks, but it has waned since August 20th. And we still have miners selling. Last time, 2022, the early bull was confirmed when miners started buying. So that's not good. That makes me a bit suspicious. On the other hand, Bitcoin dominance is rising. And that has previously been a sign of the early bull. That's been pretty consistent. The funding rates are healthy. We have seen life, as you point out, into non-Bitcoin areas of the crypto economy, particularly right now in the last few weeks has been Robinhood chain, meme trading. But through the cycle, we've seen Zcash, we've seen Hyperliquid, we've seen Lit, We've seen all of these things. So that's kind of a early bull type indicator. And this one, which you predicted last week, actually already came to pass, which is Michael Saylor is back in the market. He's buying. He tweeted out, we're back.
Ryan Sean Adams:
[19:21] $370 million of Bitcoin buys on the week. And it seemed like only yesterday when he was selling that Bitcoin. And so returning back to bullish buying Michael Saylor, I feel like that feels like a good fit for him. So when you weigh all of these things together, what do you get? Because to me, it's kind of a mixed signals here. I don't know. The volume doesn't look good. But on the other end, we do have these positive signals.
Michael Nadeau:
[19:48] Yes, I agree. Mixed signals, you know, sailor back in the market. I hope that's, you know, that could be a contra indicator potentially. He was selling the lows. Now he's buying. Are we going to reverse out of that? And then he's selling again at 60. You know, that would be quite the story if that's what's going to play out here. But yeah, you know, him back to buying is interesting. They reported four years of dividend payments now. So you can imagine that there's less anxiety around holding those preferred products, holding SCRC. What is interesting is like, it's still, you know, he's, I think, repurchased hundreds of millions of SCRC as well. And it still hasn't gotten back up to 100, which is par for that product. If that happens, I would say this gets more interesting from the strategy perspective, because there's a chance that if that happens, he's going to be able to then issue more STRC and buy more Bitcoin. And like kind of the way that that has been playing out in the bear market is that the MSTR part of his capital stack, the equity has been getting just killed, getting diluted.
Michael Nadeau:
[20:55] And that's really what he's used issuance of MSTR to defend STRC to shore up his balance sheet. But what's kind of gets interesting here is that structure is going to flip and it's going to be STRC that becomes the funding mechanism for future buys. And that is then accretive to MSTR holders who were getting diluted. But now he's using the other part of the capital stack to fund the Bitcoin purchase and increase Bitcoin per share. So you could potentially see a reflexive move out of MSTR, I think, if STRC gets up to that 100 level, maybe MSTR becomes interesting beta to Bitcoin again, because it's been getting killed so much. It's kind of interesting to me. But I agree with you on the current conditions. There's some kind of mixed signals. Bitcoin dominance, we thought, was potentially going to turn over and go down. That would have been an indicator of you know bitcoin uh weakness and usually you see bitcoin weakness bitcoin in terms of dominance, um heading into cycle lows uh we've since turned up which is more of an indicator of what you would see in the early bull, uh you talked about the miners the miners have been selling a lot this is pretty consistent with like what you tend to see at the cycle lows i don't know exactly what's going on there we know there's some, sort of restructuring happening with some of the large miners or selling some of their energy infrastructure, to AI companies and maybe just.
Michael Nadeau:
[22:24] Getting rid of some of the Bitcoin on their balance sheet as they do that. Looking for that to potentially reverse out. It did reverse out once we hit the early bull stage back in 2022. We've been talking about long-term holder supply. That is also declining. My view on that is... That is mostly the top buyer cohorts, which is the 92 to 108K, 108K to 126K. Those cohorts are still dropping. We didn't mention this earlier, but we have been seeing the consolidation of supply moving up into cohorts, but we are seeing the top cohorts continue to sell into this. And so that looks like time-based capitulation to me, which is pretty consistent with what you would want to see at the lows. We would be looking for that to come up as we go into the early bull here.
Michael Nadeau:
[23:16] And then just, yeah, like volumes activity, very, very low. Not seeing a ton of just kind of like activity on chain with Bitcoin. Also in the derivatives market, I would say, very kind of tame. Um not really seeing like the signs of animal spirits and things like that on bitcoin specifically, but when we go to sort of the broader crypto ecosystem we're seeing lots of signs of life like on robin hood chain, pockets of life on solana um and the sort of pump fun this is mostly around kind of the uh meme coin social trading use cases um this is a sector that we've identified, we're calling it sort of fast DeFi, and part of the reason where we we like this sector is, because of the reflexivity of crypto markets, and when kind of new users come on chain we haven't seen like apps that are doing buybacks that have sort of these fast DeFi use cases where there's tons of velocity tons of revenue tons of fundamentals, they're doing buybacks in sort of these low float tokens and you can get rapid price discovery I think that's we're seeing kind of the early signs of this, um here in the early early bull possibly early bull market, um so that to me like if you go back to 2023 like.
Michael Nadeau:
[24:35] Um after ftx we kind of went through an apathy period it was very quiet, but the first thing that started to kind of pop off was meme coins so like there was a the bonk meme coin sort of revived the solana ecosystem in 2023.
Michael Nadeau:
[24:52] Uh pepe was launched i believe in march or april of 2023 when it was really dead but it kind of ignited the sort of animal spirits and kind of that part of the crypto ecosystem and i'm seeing flashes of that with what's happening on rabbit hood chain right now um.
Michael Nadeau:
[25:07] And this can go on for a few months and what gets interesting in terms of like the reflexivity of what can happen is.
Michael Nadeau:
[25:16] Um we could start to see on-chain wealth effects start to come which i i would say we have not had just yet, but the wealth effects come from you know meme coin rising and people making lots of money and then maybe somebody does an airdrop or or something There's a lot of interesting stuff happening in this social sort of trading, space right now where I could see potential for wealth effects. I can see potential for an airdrop, something to ignite that community that puts a lot of capital into everybody's wallet that then kicks off another wave of speculation. So that didn't come in 23 until kind of later in the year when Gito did their airdrop. And people might remember this. That kind of kicked off things within the solana ecosystem within solana defi, and it kind of propelled solana through the last cycle and it's possible we're going to see something like that, with robin hood chain and just kind of what robin hood i think they're doing a really good job just kind of like guiding this very early on this thing just launched you know a couple months ago and it's doing more rev, than uh solana and ethereum it broke in terms of daily REV, which is really incredible. So something to watch there. We're paying attention to, you know stable coin supply active loans on ethereum dex volumes all these things they're all starting to i would say inflect up not in a super aggressive way.
Michael Nadeau:
[26:40] But things are looking pretty positive i would say when i look at the crypto ecosystem broadly bitcoin looks more subdued you know we haven't really seen,
Michael Nadeau:
[26:50] um the return of like speculation into bitcoin just yet so.
Ryan Sean Adams:
[26:55] Let's blend some of the macro here in a second but first a quick observation so i think this whole rally has been kicked off by the treasury put, sort of the debasement trade is back on. And so obviously that is good for crypto-based store value assets. I wonder if it's also good for the meme coin economy, what you called fast DeFi and social trading. That's almost like a degen debasement trade, isn't it? It is getting tailwinds from debasement as well. It's just like, if the dollar is worth nothing, I may as well buy some meme coins. So I wonder if that's part of the effect here and it's all downstream of macro and debasement. The big question on macro I actually wanted to ask you this week was about Warsh's speech at Jackson Hole because after this speech I noticed crypto prices went down a little bit and have maybe increased
Ryan Sean Adams:
[27:52] Paused or not continued that momentum since we got the treasury put. And here are the words that he said. The market interpreted this as hawkish. You be the judge. We must be confident that underlying inflation is moving to our objective clearly and at sufficient speed. And here's the line. Otherwise, we have work to do. Otherwise, we have work to do. I think the market interpreted that as, okay, he's saying we have work to do to rein in inflation. He's going to be more hawkish with Fed funds policy. And the odds of a September rate hike prior to the speech were at 30 to 40%. Now they're at almost 70%. The market's interpreting that as, well, he's going to raise rates. What's your view?
Michael Nadeau:
[28:39] Yeah, you know, I watched the speech. I thought it was kind of a somewhat of a nothing burger. The market seemed to interpret it as hawkish. It's hard to say. My sort of sense on this is that he does not want to hike rates and he wants the market to sort of do the tightening for him. And we've sort of talked about how what I think is happening here is the Fed would like to see long bonds sort of creep up, maybe take some of the spirit out of the equity market, hopefully crush some of the inflation out there a little bit. But they want that to happen in a sort of controlled way.
Ryan Sean Adams:
[29:19] What do you mean? You mean by letting him let the market do the work for him, you mean he just keeps Fed fund rates the same, doesn't move a thing, and just lets it float on the long end? Of course, now, Besson is trying to- Besson
Michael Nadeau:
[29:33] Doesn't want that, right? And I'm assuming they're coordinated, right? I'm pretty sure Besson was out at Jackson Hole. I know they were together in North Carolina at the G20 meetings, which we'll get to. Um yeah it's it's a little odd like what are they because he's he's sort of saying things that are in conflict with what Besson is is putting out there and the message that he's putting out there um it's like a good.
Ryan Sean Adams:
[29:57] Cop bad cop routine or like but they're just kind of squeezing a balloon here
Michael Nadeau:
[30:02] It feels it feels like that and it feels to me like um Warsh is saying you know the right things and he needs to restore credibility and he has some markets to believe that um they're concerned about inflation and that they might hike. And I think just partly putting that out there has the market a little bit, you know, interpreting that as hawkish. You know, I think NASDAQ's probably down since that speech kind of hovering around probably the level it was at. In my opinion, this is just kind of my sense of it, is that they would like, yields to sort of creep up, but not in a chaotic way. And hopefully that starts to take some of the spirit out of the equity market. It kind of brings down inflation, some of all the speculation out there and growth. Part of the reason yields are rising is because growth is so strong and there's so much fiscal spending, the economy is running hot. So I think they want to take the air out a little bit. Yeah. But not in a chaotic way right before midterms.
Ryan Sean Adams:
[31:02] Well, would you say then it's a bit more, because we do have, you said the 10-year is pushing 4.8%. You said if it moves to 5%, you expect more intervention via buybacks. Do you think it's a bit of, at least at this stage, a bit of volatility control? Like Besant doesn't want the yield on the 10 and 30-year moving too fast, too quickly, but he knows the direction has got to be up. Like he cannot suppress that beach ball below the water for very long. So he can only do slow it down a little bit. And maybe that's the intent is just to slow it down.
Michael Nadeau:
[31:41] I think so. I think so. That's kind of the sense that I get. Obviously, the debt is a major topic right now. And I think he's, you know, they're conducting meetings with G20 nations. I think one of the big messages that he has is that, you know, we need to grow our way out of this, right? we've talked about this in prior episodes and kind of what that really means. But that basically means that you're doing some sort of yield curve control. You're spending a lot behind that. And you call it volatility management, yield curve management, whatever you want to call it. We've seen this in the past. The last time we saw it over a long stretch of time was during World War II and coming out of World War II. The debt is a problem in terms of the interest expense and how to deal with this moving forward there's two options here you can.
Michael Nadeau:
[32:34] Have austerity, right? You can actually get your house in order, get your budget in order and spend less to solve some of these problems.
Michael Nadeau:
[32:42] That is not politically, you know, that's not something policymakers want to do. Policymakers typically get voted out of office when they propose austerity measures. So the only way out of it, in my opinion, is this sort of like we have to grow our way out of it. And I think Besson is kind of corralling everybody to sort of see that that is the reality that has to be dealt with? And then how do they sort of guide the markets through this period?
Michael Nadeau:
[33:10] We can talk about Druckenmiller a little bit more. We mentioned, I think, last week, and I've been just thinking more about why he wrote this op-ed in the Wall Street Journal. And I think there's a few different, ways to think about this, like, you know, maybe he just got caught offside by Besset in the markets and he's upset that the government stepped in. He's trying to, you know, make a trade in a free market and the government stepped in. He's upset about it. That's one possibility. I kind of think that's maybe unlikely. And it's probably more likely that he's concerned about sort of reflexivity. We talk about reflexivity all the time and how that impacts crypto markets. It's really important if you're a crypto investor, to understand how that works. And it feels like there's a chance here that he is just concerned about the messaging that Besson is putting out there. If you're telling bond investors that, hey, we are not going to tolerate a yield that properly compensates you as a holder of our debt, then the rational thing for you to do is to take your money and go somewhere else with it. And so that's sort of the message that Besson...
Ryan Sean Adams:
[34:19] Go where? What? Commodities? Go to store value assets? Go to gold?
Michael Nadeau:
[34:22] It's debasement, non-sovereign things, non-sovereign assets that cannot be printed. And that's Bitcoin, gold, commodities. And so that is kind of, I think, what he is alluding to. He sort of, and my, when I kind of went through this a little bit more, I felt like he was really trying to point the finger more at Congress than Besant specifically. And... Yeah, it just feels like he's possibly concerned about, you know, the messaging and then the reflexivity. Because if you do sort of tell people, hey, we're not going to compensate you, you can buy our debt, but you're going to be the bag holder as we move through this period, then the rational thing is to do is just actually not do that and put your money somewhere else, which means bond yields have less of a bid, which means they're probably going to keep creeping higher, which means there's probably more intervention behind that. And you can see the path. It just leads to the Fed stepping in and buying everything at some point.
Ryan Sean Adams:
[35:16] Yeah, I heard an interesting take on the All In podcast from David Freeberg, who actually said another reason he thinks Druckenmiller wrote this was actually his cover for Besant, right? So basically cover blaming things on Congress, blaming things on fiscal. So you got to do what you need to do because Congress is unable to act. The reason he said this is because he really thinks they're friends. It's like a triumvirate of, you know, Besant, Warsh, and Druckenmiller. They all used to work together. They're all kind of friends. They're all trying to manage the U.S. through this from different lenses, Treasury, Fed, and, you know, like private investor. And so he was doing this for cover for his friend. I don't know to what extent that's true, too, but it's another possibility here. One last word on macro, maybe, about Iran, economic sanctions. You wrote this, and it's the first time I've seen you say this. It's possible that Iran is becoming increasingly desperate and may soon feel greater pressure to seek a ceasefire and a new round of negotiation. You actually think these new economic sanctions and some of the things the U.S. Is doing with Hormuz is taking a piece out of Iran and maybe their will to fight and resist
Michael Nadeau:
[36:36] We'll see. You know, I don't have a great read on this, but yeah, you know, what's interesting is there are new pipelines being built. The U.S. has established a corridor where there is some oil, right? There's still not a lot of oil coming out of Hormuz, but there is basically a path. This is within the strait where the U.S. Military has basically created a way for boats to get out. Iran has tried to disrupt that. I think the U.S. is currently retaliating on that right now. But there's also some pipelines that are being worked on that could be coming online next year and into 28. So you have a situation where this asset for Iran is the strait and their ability to block it. And if they're starting to look forward and seeing like, wait a minute.
Michael Nadeau:
[37:27] We may have much less of a negotiating stance if these pipelines keep being built and oil starts being rerouted then shipping lanes are being rerouted around us, at a point when, you know, Besant is really stepping up this like economic pressure campaign on Iran and things might get interesting. He keeps saying, hey, there's going to be a big bank that gets sanctioned. There's going to be this coming where we know where all this money is. We know where you're hiding it. So that's going to get interesting, especially if there's pressure on China, because we know China is probably the one that he's really talking about. They're the ones that buy most of Iran's oil and support them on the economic side. So we'll see. I think a lot of it will come down to like how China responds to like this like kind of new campaign that's happening. But I think if you're them and things are getting, Worse domestically, you're not bringing in revenues and you have high inflation and possibly, you know, it's hard to figure out what's going on boots on the ground there. But I would imagine the populace is getting a little bit upset and you could have sort of people in the streets and then the regime has to deal with that while there's a war going on. Like, you know, you can kind of see how this could start to unravel. So that's kind of something I think is maybe not being talked about as much,
Michael Nadeau:
[38:45] but it seems to me like we're kind of moving in that direction possibly here.
Ryan Sean Adams:
[38:50] So as we close this out, here's how you summarize it. Macro remains messy, I'll say. But given the treasury put now in the market, we remain of the view that the lows are in for Bitcoin. That said, you say the probability support a cool down period at some point that could be in September. So it could be the case, and it sounds like it's increasingly your base case, that we are in the early bull. Not 100% confirmed, of course. There's still a pretty large probability that we're not. But you think the base case is that we are, but that we may have a cool down period first. And that cool down period might happen in September. So I guess you don't want to be offside in this market. That said, you want to maybe have some limit orders for dips that could happen in the weeks to come. How is the TDR portfolio playing things overall? You've had a lot of runners here recently on your non-Bitcoin assets. In fact, I was looking at one, I think you tweeted about this. Are you up like 7x on something that you just talked about three weeks ago?
Michael Nadeau:
[40:00] It's pretty volatile, but yes, this is part of our Fast DeFi thesis here. And we've talked a lot about Pump. I think we were one of the first research shops that was covering Pump in the bear market. And we built a thesis there. And we've been watching sort of the kind of early signs of how Robinhood chain is coming together. And we've seen kind of a similar kind of ecosystem coming around another asset there. So we actually got into another position, kind of a low cap. It's around this same fast DeFi thesis. And, you know, that ecosystem has really kind of popped off over the last few weeks. Not something, you know, when something like that happens and you get into a position, it just goes up, you know, really fast like that, you know, There can be cases where you just want to get out of it and you're like, wow, the market just gave me a gift and, you know, I'll just take profits.
Michael Nadeau:
[40:54] I'm not really in a position right now where I'm looking to exit any positions, any of our stronger positions. I think you want to ride the winners and the signs that you get in maybe this part of the market cycle are very interesting signs. Like I believe this is telling us what's to come, you know, in the next year, the next few years. So I want to hold these positions. I think it's going to be extremely competitive sector whenever something works and retail investors, you know, come into that type of product.
Michael Nadeau:
[41:26] You're going to see lots of competitors and it's going to get really, you know, the competition will ramp up. So that's we'll be watching this space. But that's been probably the best performing sector for us. We bet in we got into some good positions on on perps and options and things like that that have also been outperforming. Um and generally speaking the non-bitcoin uh part of our portfolio is up over 110 percent which is great because that's really important for me that we're if we're putting capital outside bitcoin um, you know we need to outperform uh bitcoin on that so we're outperforming there we're outperforming, um bitcoin you know we're all doing with the portfolio by quite a bit and then we're outperforming all of our uh benchmarks so um so things are going well like i said i've been saying um, you You know, if you get to the lows and your portfolio is kind of, you know, is above water, you're in a great spot. So I think, you know, for me, I was sort of expecting weakness in the portfolio. We had the reversal. Things are looking good. We may now see the mean reversion and the September weakness before, you know, we kind of go to the next level.
Michael Nadeau:
[42:30] But happy with the way things are shaking out. I think pro members are really happy. We're still giving away one month free. We still have the 20% discount on our annual plan. We'll have the links in the show notes if people want to join.
Ryan Sean Adams:
[42:43] Pro members are absolutely thrilled. I can say that because I am one of them. Well done calling this cycle so far, Mike. You are on a hot streak. You're calling some assets as well. And I think everyone who is subscribed to the TDR Pro is a beneficiary of this. Just a reminder, you can access all of Mike's price alerts. So when he enters a position, that's part of the TDR Pro membership. You get that alert in your inbox. You also get access to the portfolio and what it looks like on a week-to-week basis. There's live, there's real snapshots of this.
Ryan Sean Adams:
[43:17] So you can kind of compare your positions with Mike's. One last question before we tie this all out. Some people at this point in time might be seeing some of this performance and feeling like they missed it. Did they miss it? We missed the upside in crypto?
Michael Nadeau:
[43:32] No, I mean, I'm sort of surprised that things have done as well they've done. And no, I don't think that's the right mindset to have. I think, you know, you want to, we're in a market here where Bitcoin is still down almost 40%, you know, from its highs. ETH is down over 50% from its highs. SOL is down, I think, over 60%. So we still have a lot to come here. And I think I just keep, I'll just keep repeating it. Like mindset is really important. So if you think that you missed everything, then you've like sort of corrupted yourself and you're probably gonna have a hard time seeing opportunities. And so keeping an abundance mindset and doing the work, right? The work pays off. I hope that that's what we've demonstrated and why we're having success, I think, in this cycle so far is we do a ton of work and we're constantly trying to identify where the puck is going and having a plan, right? So when, And I think that was the key thing is having these fair value targets, knowing which sectors we wanted to get into, you know, basically, you know, moving into those positions as as fair value opportunities came and just having conviction, just having a plan and having conviction versus sort of like getting whipsawed by the sort of emotion of the market and where things are going. So I hope that that framework has just helped our pro members kind of get a little bit just kind of tighten the screws on what they're doing.
Ryan Sean Adams:
[44:57] Well, that's what this is. This is an investor journal, as we always say every single week. And got to remind you, none of this has been financial advice. We're on the journey right alongside you. Until next week, stay curious.