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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] Is it time for the next leg up? When's that going to happen? It is October 21st, 2026. Welcome to the report. So let's talk about altcoins for a minute. Three weeks ago, altcoins were at peak greed. We would say today it's fear. Yet still, Bitcoin is hanging in there, hanging strong, still up over 40% from its June lows. It's outperformed just about everything during this time period.
Ryan Sean Adams:
[0:38] We are 113 days into what Mike has been calling the early bull season. And we got to ask the question, when are we going to get the next leg up? A few topics for today. Altcoins, do they have more pain ahead? Or is now a great time to buy, especially those quality altcoins? Bitcoin versus the Nasdaq. Bitcoin versus tech stocks. Some people have historically seen Bitcoin as a levered NASDAQ bet. Mike begs to differ. He thinks that they're wrong. We'll discuss why. Also, we should talk about the AI debt scare that is starting to unfold, where it could lead, what that means for crypto. And of course, always stick around to the end. We'll talk about Bitcoin's next move in the context of some key price indicators. And also, if we have time, I'd love to get Mike's maybe 90-second version of what he thinks about Ether, the asset, and Solana, the asset. There have been two reports that he published the last couple of Fridays. I want to check in on those. All right, Mike, we have so much to cover, as we usually do, on our Wednesday episodes.
Ryan Sean Adams:
[1:48] Three weeks ago, altcoin markets, peak greed. Today, those assets are down significantly. Your portfolio is a bit down as a result. And yet, if I'm reading today's report correctly, you seem unmoved by this. So my question to you is, has anything in the last three weeks changed? If you're unmoved now, what would actually move you from your current state?
Michael Nadeau:
[2:13] Yeah, it's been an interesting little roller coaster over the last few months. Bitcoin made that 25% move or so, surprised everybody back in August. And it's been in a range now for about two months, consolidating between upper 70s, mid 80s or so. We had a big period of speculation in the on-chain space that moved into quality alts in September. A lot of stuff in our portfolio outperformed, sort of surprising to the upside. And we've now sort of mean reverted a lot of that over the last few weeks. And so a lot of that greed that was in the air has flipped to fear. Bitcoin has been the saving grace really kind of holding ADK. And I think sort of anchoring the rest of the space, I've been noticing that.
Michael Nadeau:
[3:00] It does seem like riskier assets, stuff that's farther down the risk curve that's been selling off roughly 30% to 50% or so over the last few weeks is becoming pretty sensitive to Bitcoin moves, I'm noticing. So we had a pretty big relief rally this morning. We'll see if this continues. But I think a good time to step back. We did kind of a cycle awareness update this week going through everything on chain. You mentioned macro. So, you know, things are getting a little wonky in the AI space. We had sort of a leverage reset in crypto this past year and MicroStrategy was sitting sort of at the epicenter of that. And it looks like CoreWeave is sort of sitting at the epicenter of potentially like the same type of turbulence in the AI space. So happy to get into that as well this week.
Ryan Sean Adams:
[3:49] All right. So much to get into. Maybe we'll talk about price at the beginning. You're right. We are up about 4% on the seven day for Bitcoin.
Ryan Sean Adams:
[3:56] So Bitcoin, at the time of recording, just a shade above 84K. So that feels kind of good. Let's start with cycle awareness. And there's maybe two things that you talk about in your cycle awareness update. So I want to check in on both. The first is coin consolidation. So we're seeing coin consolidation. And the second is this term that you've used for a while now to describe the current regime we're in, which is time-based capitulation. Are you seeing both of these things? Are you seeing coin consolidation and time-based capitulation? What's the signal here? What are you looking for next with these indicators?
Michael Nadeau:
[4:36] Yeah, there's kind of like three things sort of going on here. So Bitcoin had that initial move from, you know, 66K or so all the way up into the low 80s back in August. You know, that's a pretty, pretty big move. And that will prompt some traders to take profits, you know, up 20, 30 percent, short term traders.
Michael Nadeau:
[4:58] So we're seeing some selling, you know, during this consolidation period, seeing some selling from short term traders. On the other side of that, I think what's happening is you have the sort of more diamond handed, longer term investor coming in and buying up coins in this 77 to 91 K zone, which is the largest cost basis cohort on chain. So you kind of have short-term money passing hands to long-term money. And then you have sort of the top buyers that came in in the last cycle that are still actually distributing coins in this sort of like consolidated lower 80s zone. People that maybe bought in the hundreds, you know, last year and have been holding on, but still, you know, maybe don't have that longer term view anymore and are still selling their Bitcoin. So I think this is what's causing the compression in Bitcoin over the last couple of months in this, you know, in this upper 70s, low 80s zone. And this is kind of normal. I think it's healthy. When we go back and observe the data from past cycles, we see a similar dynamic. And if you go back to 2023, it took all the way out to about September of 23, before that time-based capitulation had finally stopped. And when that stops and you've sort of exhausted those.
Michael Nadeau:
[6:17] Short-term holders that already wanted to get out of their 20 to 30 percent trade, that's what kind of causes that consolidation and now you're in a much healthier space what move healthier spot for potentially that next next move so I think that's the process that's kind of playing out in some of this data right now and, It's we're getting closer to a point where I think we're we're in a position where we can make a move, you know, higher.
Ryan Sean Adams:
[6:41] OK, let me see if I'm tracking correctly. So you say there's three things at play. One, the first, and this is very healthy. We're seeing accumulation at that. Would you say the 77 to 91 K level of long term holders? So that is healthy. That's exactly what you'd want to see. Two, we're seeing short term traders selling effectively and short term traders are going to be present in any market. On the bullish side, the bearish side. So they're just ever present. And that's some of the pressure. And maybe the big thing that's kind of somewhat unique at this point in the market, which is the early bull phase, is that time-based capitulation. And I think of this as almost like a kind of, we're pumping up the tire, but there's a leak in the tire that hasn't yet been patched. And so there's just this sound of like air coming out of the tire slowly. And that's the time-based capitulation. And unfortunately, or fortunately, I guess, if your buy gives you more time to stack, it does put a cap on how high we can go until the air has really fully leaked out of that tire. The time-based capitulation, that's all the new money. That's all the buyers in 2025. It's their first cycle around.
Ryan Sean Adams:
[7:54] They're looking at this price increase as a time to escape some of the heavy bags that they felt from 2025 buying season. And I'm wondering if that leads to this chart, which is kind of an indicator here, long-term holder supply. That chart is still going down. And I think you said that this process of it going down, does this take typically some period of months? Is this something you're watching when this starts to inflect, this could be a sign that that leaky tire, all the air is out and we've patched it and the time-based capitulation has effectively stopped? Yeah.
Michael Nadeau:
[8:32] That's kind of what I'm looking for here. And part of the reason this is going down, we do have these, I would say, longer term investors coming into the market. And you'd say, well, why is that line coming down? Well, when they're coming into the market, they're buying up those coins. They don't age into that long term holder supply cohort until after over five months of holding and no transfers. So, what's happening is you have the long-term holders, the sort of cohort that came in at the top last cycle, they have aged into this cohort. They're reducing their supply. And we haven't seen the inflection just yet from this sort of longer-term investor. So, I'm expecting this chart to inflect up at some point. It did take about five months for it to move up. And then you can see like kind of on the left side of the chart there a pretty steady rise you know into the early bull after it stopped dropping.
Ryan Sean Adams:
[9:28] So if it took five months last time how many more months because we've already been you know what 113 days
Michael Nadeau:
[9:33] Yeah so we're almost four months into the process so I think we're getting close to this point and another point, point here that like, maybe we don't have this cycle, but kind of interesting to think about when we've had this situation where you've kind of exhausted the short-term holders that want to get out of the market, you've accomplished the time-based capitulation, you've got a stronger base of holders that have come into the market. In past cycles, this has kind of played out as you're getting closer to the halving date, which had more impact. So now you have a supply reduction had more impact on market conditions because of the, just because we were early in that process and we were cutting the half each time was a much bigger impact and it's dwindling a little bit. But you can imagine why that halving had a lot of impact as the sort of market structure is getting into this like much sturdier footing in the past. I'm sort of expecting that halving to be less, you know, impactful moving forward. But the market structure is definitely getting close to that point where we're in a much healthier, healthier spot.
Ryan Sean Adams:
[10:41] When is the halving, by the way? I haven't thought about the next one for a while. I used to keep that Nate in mind.
Michael Nadeau:
[10:47] I think it's spring of 28. I think the last one was like April of 24. And we actually, last cycle, we actually saw an all-time high for the first time before the halving. So I think it's going to have less impact and be just kind of less meaningful. But yeah, no one's talking about the halving anymore.
Ryan Sean Adams:
[11:02] Yeah, no one is talking about the having anymore, and maybe that's healthy, but it does seem we're still on the circadian rhythm of these four-year cycles, whether that initiated with the having and it's just a self-fulfilling prophecy or what.
Ryan Sean Adams:
[11:14] Maybe we don't know, but you're tracking the coin rotation quite closely then. Let's talk about some of the other key indicators. So ETFs had a great explosive September, now down a little bit. Minor capitulation has reversed as well in terms of direction. Maybe the two things I really want to look at are Bitcoin dominance. That is back to rising. And we'll talk about that. And then also micro strategy, because there's an interesting story there, but on Bitcoin dominance. So we are now in a period of rising. I know there was, was it two weeks ago, you push out a report that was titled All Eyes on Bitcoin. It does seem like in the crypto market, all eyes are actually on Bitcoin. So all the other assets are, hey, Bitcoin, what are you doing next? What are you doing next? And during that interim, Bitcoin dominance is rising. What's the story here? And is this something to pay attention to? Or is it just really price we need to be paying attention to on the Bitcoin side?
Michael Nadeau:
[12:20] Yeah, I think we spent a little time on this last week as well. You know, my view on Bitcoin dominance for this cycle is we may not see this like kind of steady uptrend that we saw in the past cycle because we're starting at, we're already at 60% dominance for Bitcoin. And we do have, you know, much more quality projects, token economics, all of these things we talked about last week. Like, so I think big picture, this chart may not look the way it looks from the past cycle. However, like we're in the part of the cycle where I would say it looks like Bitcoin dominance wants to move up. And we're just starting to see that, you know, moving back up to 60%. We'll see how big of a move this makes.
Ryan Sean Adams:
[13:04] That's been true of early bulls, right? Early bulls are always Bitcoin dominance.
Michael Nadeau:
[13:09] Always Bitcoin leads out of these cycles, typically. And so, you know, if we see Bitcoin make a move, it needs to break out. 87K is kind of the resistance that we've been hitting over the last few months. So if we can break through 87K, we may make a move above 90. And I think that's going to, you know, cause Bitcoin dominance to move up. We'll see what happens from there. We may then enter another period of sort of consolidation and maybe the altcoins sort of do a catch up move at that point. Yeah. Typically, it's how the market structure and liquidity kind of rotates. You know, you tend to have a move from Bitcoin, consolidation, and then potentially that move from the altcoins. That's sort of what we saw, back in September to kick this off.
Ryan Sean Adams:
[13:57] Strategy. Now, I think I am understanding their strategy. And let me summarize it. And you tell me if I'm incorrect. But it feels very much like Michael Saylor has hoarded enough cash. It seems to be his main priority is making STRC holders whole. So getting STRC back at par, and he raised, you know, 5.2 billion, 5.3 billion in cash in order to do that and to give STRC certainty. So that seems to be his primary goal. And then once STRC hits par, it gives him a credit facility to continue to increase his Bitcoin buys. So it looks like he is in the process of just reloading the chamber. And if SDRC can hang at par, maybe then there's excess capital to start the Bitcoin buying machine again?
Michael Nadeau:
[14:52] I think so. I think this has quietly been playing out a little bit. I think because strategy hasn't announced any large Bitcoin purchases, they have been buying, but smaller amounts. This is sort of playing out in the background a little bit where we've talked a little bit about how this STRC product can become a vehicle for, say, to raise capital if that STRC product gets back to par, which it basically is. It's at 99. And I think they've sort of put all of their efforts into making that possible with what they've been doing with buybacks. So they've deployed about almost a billion dollars just over the last month. And what they're doing is repurchasing those shares in the open market, trying to get that STRC back to 100. They've also bolstered up their balance sheet. They've got enough cash, I believe, for at least over or almost $5 billion of cash that's available to pay dividends in interest. So I think like from a credit perspective, I think this like fear over micro strategy has basically gone away. And now they're in a position where they've got a strong balance sheet. They've got that SDRC product almost back to par.
Michael Nadeau:
[16:07] And I think if it can get there and stay there for a little bit, the next move here is going to be, we're going to see that they're coming to market and they want to issue more of that SDRC. We'll see how much demand there is for that in a bull market. We saw that there was a good amount of demand for it back in May when they were raising capital. The market was very bullish about this during the last bear market and before we made the fall into the lows in June.
Michael Nadeau:
[16:35] So we'll see if that product has the same demand in a bull market. If it does, this is a bullish catalyst that nobody's really talking about. Actually, Fidelity came out with a report, I think, yesterday... Covering these products, like a bullish sort of view.
Ryan Sean Adams:
[16:50] Covering STRC?
Michael Nadeau:
[16:52] Not specifically on STRC, but just on this idea of like fixed income products, based on around Bitcoin. So they were sort of making this case that like, this is just, this is an innovative product. It's really the first fixed income product we've seen around Bitcoin. And they think that this is like potentially a sign of like more financialization around the asset.
Ryan Sean Adams:
[17:13] Well, I mean, you asked the question of in a bull market, could STRC kind of like perform and compete? And it strikes me that STRC is definitely going after a different group of buyers than Bitcoin or MSCR buyers, right? This is kind of the fixed income crowd. And so you have to look at STRC maybe versus something like AI debt, AI bonds, right? And kind of like treasury interest rates, et cetera. And I know that's a story we're going to talk about later, but I don't know, maybe investors get to decide whether they want CoreWeave AI NeoCloud debt or whether they want STRC and what feels like a better risk return profile.
Michael Nadeau:
[17:51] Yeah.
Ryan Sean Adams:
[17:52] Speaking of which, let's get to macro for a minute. We got credit spreads here and you put up this chart. Credit spreads are on the rise. Refresh, folks. What does this mean when credit spreads are rising? Is that a good thing? Is that a bad thing? And how do you interpret this chart?
Michael Nadeau:
[18:10] It's telling you that the sort of like lower rated companies out there, the triple C rated companies, corporate debts, people that need to go out in the market and get financing to operate their businesses are having a harder time doing that. And this is measuring the gap between what they have to pay in the market versus, treasury rates. So when you see that line moving up, it's basically saying that, the market is getting nervous about sort of higher risk companies' ability to pay back their debts. And it typically can cause liquidity conditions to seize up and people get nervous. I think what's playing out right now and why this is happening, a lot of this falls back onto sort of AI financing. saying, A lot of concerns about CoreWeave. CoreWeave is a neobank that sits kind of at the epicenter. What they do is they buy GPUs from someone like NVIDIA, and then they sell that compute to hyperscalers and the lab. So they're kind of a middleman in the data infrastructure, sort of data center space. And the only way that they can operate their business is if they have financing, because they have a ton of upfront costs to set up that infrastructure.
Ryan Sean Adams:
[19:27] They're building the data centers, right?
Michael Nadeau:
[19:29] Right, right. And there's a connection to Galaxy as well, a big crypto company that leases a lot of their energy infrastructure, which used to be Bitcoin mining infrastructure, to CoreWeave. So Galaxy stock has been getting hit through this as well. Um, so this is like, I think what's happening here and there was a lot of similarities to what your core weave relationship to NVIDIA and sort of the entire tech stack of AI and a lot of the circular financing that's going on there. NVIDIA owns 10% of, uh, core weave, you know, core weave takes their money, you know, it takes that money. Then they go and buy GPUs and it's like the money is kind of circular, circular through there. And I think, um, yeah. You know, we had a similar situation back in the tech boom back in early 2000s with Cisco supplying a lot of equipment to a lot of the large cloud providers at that time. And, you know, that sort of unraveled. And I think that's sort of the big concern.
Michael Nadeau:
[20:30] And why we're seeing these credit spreads spike up. You know, I've kind of looked into this and there's some similarities, I would say, to Cisco and sort of the tech.com. Bubble, I would say there are also some differences. And I think the main difference here is that CoreWeave is contracted. They have substantial contracts with Microsoft, Meta, Anthropic, ChatGBTs, OpenAI. So they have contracted for revenues.
Michael Nadeau:
[21:03] But the issue here is that the bonds that are floating out in the market, and I think they've gone up to 15%, 16%. That's not the rate that Orweave is paying on their debt. They're paying a much, lower rate, but it's basically the market saying, hey, the market price of this debt is riskier. And if they have to come back, which they do, they do need to get more financing to keep building this out. I think they've got, I can't remember the number for next year, but there was a significant amount of refinancing that's going to have to take place next year. And if the market rate is much higher than it was when they financed previously, that's going to pinch their margins. And it's making the market a little nervous about this. Hard to say if this is going to persist. I sort of think we've hit peak fear, on this. I do think because their customers are some of the largest companies in the world, that they sort of have somewhat of a backstop with that. And I think it's just going to be a case of like if the market, if the wall of worry is sort of climbed around this and how this plays out moving forward. But that's kind of the setup here and why credit spreads have been rising.
Ryan Sean Adams:
[22:14] Some of the largest customers in the world with fantastic balance sheets or previously have had fantastic balance sheets. And yet also it's a lot of.
Ryan Sean Adams:
[22:23] Consolidation. I mean, there's very few players here that are paying all the
Ryan Sean Adams:
[22:27] bills. So it's a lot of eggs in one basket. Actually, the most interesting chart that I saw in today's report was this one. And it took me a minute or two to kind of understand the point you were making. So this is a chart of the S&P 500 and 10-year bonds yield. Okay. So yield and S&P 500 and the correlation of S&P 500 and the 10-year yield. And in red, below the 0% line, this is when we have negative correlation, I believe. And in green, we have positive correlation. Now, most of the time, in most conditions, particularly over the last decade or two, we've had mostly positive correlation. And so I suppose, here's me working this out a little bit, and then you can correct maybe Mike, is this means that as yields decrease, let's say, on the 10-year, stocks go up.
Ryan Sean Adams:
[23:31] And this would make sense because yields are going down, cost of capital goes down. So I would rather deploy my assets, if yields are going down in treasuries, into risk-on assets since the correlation is shaped this way. Now the correlation has shifted into the negative territory, which is not necessarily ahistoric. This has happened in the past. We saw this happen during the 90s. But the last time it spiked this much was actually...
Ryan Sean Adams:
[24:00] Around the year 2000. And I think this is maybe indicating, and you can spell out the logic, some kind of a growth slash debt scare or concern. Maybe you can talk about what this chart actually means and this correlation change, how this affects your view in macro.
Michael Nadeau:
[24:21] Yeah, I think that's a good way to segue into this. What's been kind of interesting is we've been seeing the treasury yields, the 10-year rise aggressively. It got all the way up to 5.34% a few weeks ago. I think that was the peak. And stocks were kind of ignoring that for a little bit, rising as yields were rising. We've seen the yields come off. I think all it came down to like 5.1% recently. And as yields are coming off, stocks are selling off at the same time.
Michael Nadeau:
[25:01] We saw stocks and bonds dropping also back in 2023. This is kind of the first move here where actually bonds are... That's good for bonds when the yield drops. But what's kind of interesting, you'd expect, oh, yields are coming down. Maybe the stock market has a little bit of relief. It's not playing out that way because I think there's just too much demand for capital. So I think part of the challenge here and why yields were rising so aggressively, is the government sort of like competing with AI for capital in some ways. Investors can, if you're looking to invest in debt or bonds.
Michael Nadeau:
[25:43] You have an option to go to long-end treasuries or other potentially riskier bets where the yield is going to be higher. And that's been the case with AI firms. These are big companies that have really strong balance sheets. They're pretty trusted, almost like a government-like entity. And so I think that's been sucking up a lot of the capital that otherwise would have been buying treasury bonds. So as the AI trade starts to unwind a little bit, it's almost like the bond market is saying like, oh, okay, like now that risk has played out that we were waiting for this to come where people start to question some of this financing. Okay, NVIDIA stocks down, you know, a lot of memory stocks are down. Okay, the air is coming out of that. There's more risk there now. Okay, now I'll go buy the treasury bonds and then yields dropped there as the stocks dropped. So it's kind of like interesting just from a, when you just think about how much, how demand for capital is out there and how much supply can come in and buy this. You're starting to see these little rotations because there's just not enough supply to mop up all of that demand.
Ryan Sean Adams:
[26:54] So there's like a reshuffling that's happening in debt markets, right? And this explains why the yield is down a little bit. So you're saying that yields have been up on U.S. Treasuries kind of in a secular kind of trend where they just keep marching up. But within that subset of all kind of U.S. Dollar denominated debt, now what's happening as we get the core we scare, you know, investors, debt investors are like, I don't know if we want AI debt so much now. And so they're looking for alternatives. And the risk-free alternative, of course, is always going to be Treasury because the U.S. government can always print. It will always guarantee the yields, a full backstop. And so we're seeing some reshuffling over there. Which is interesting because the last time we saw these red lines of the chart on the chart like this, or the time we saw it the most, was in the 1990s and into 2000, where we had a lot of capital being spent on infrastructure, technology infrastructure. And along the way, you just saw some growth scares that would make kind of yields in the S&P correlate in this way negatively. And I'm wondering if you have a take on the destination of this. It looks like now you did read that Ray Dalio piece and he said, look, 2027, we have 4.4 trillion in debt
Ryan Sean Adams:
[28:17] Supply, essentially token supply of U.S. Dollar denominated debt between corporates, between states, between the Fed that some investors have to buy up. And if the demand is not there, then what happens is yields continue to increase. So we've got a lot of new issuance happening as a backdrop. Where do you think this ends and like how or when?
Michael Nadeau:
[28:45] Yeah, it's a good question. I don't know what's going to cause sort of the fear around AI financing to come down. I think, you know, I think the market probably needs, there's a chance that we're going to have to see NVIDIA. I mean, I think Jensen will probably come out and say that there's plenty of demand and all these contracts are, we're already contracted all these revenues. Maybe Microsoft, maybe some of CoreWeave's customers have to come out and sort of almost give you that backstop, almost like when the Fed comes out and says they're going to do something if something bad happens. I sort of could see that potentially playing out here, and I think that probably will work. We know there's tons of treasury debt that needs to get refinanced. Basically, you have this problem where we've gone too far in terms of the amount of fiscal spending and what we have to do to continue to spend at 6%, budget deficits. So that creates a lot of issuance of treasuries.
Michael Nadeau:
[29:55] And there's a lot of refinancing that needs to come as well. We know there's lots of demand in the AI space. And so we're kind of like doing this re-industrialization thing. A lot of this relies on financing. And so there can be gaps in terms of like when the revenues to support those financing costs come in and periods where the market gets really concerned about the payback viability of all that. And I think we're entering that period or we're in the middle of that period right now, And, you know, historically, when something like this happens, I mean, usually there's two ways it can go. The market can resolve the imbalance itself. The free market can do that. And that's, you know, basically asset prices come down, liquidity conditions come down. You have more winners and losers. You have more creative destruction and you kind of reset that way.
Michael Nadeau:
[30:47] It's harder to imagine like them just sort of letting creative destruction play out and being a little bit taking more of an austerity like approach to this.
Michael Nadeau:
[30:57] What I think is more likely is we're going to see we have the quarterly refunding announcement coming up in a few weeks and it'll be interesting to see if Besant has anything in there in terms of, increased buybacks on the long end whether they make any changes to how many 20-year treasuries, 30-year treasuries that they're planning on coming to the market with. There's a chance they might just say, hey, we're going to fund the government at the short end, you know, moving forward to kind of avoid that issue. That's something that Janet Yellen did during the Biden administration. So there's ways that they can sort of try to smooth this process out. And maybe there needs to be some sort of implicit backstop that gets messaged out into the market.
Michael Nadeau:
[31:43] But I think this is kind of the setup. And to me, it's bullish for Bitcoin because.
Michael Nadeau:
[31:50] This is the problem that Bitcoin is here to solve when there's too much money creation, when things aren't really working. I could almost see a scenario where if all of this was working really well in AI and AI continued to just sort of capture all the capital because it was producing so many revenues and it was so clear the paybacks were going to be there. It might be bearish for Bitcoin, but the fact that this is playing out, I consider this like bullish long term for Bitcoin. There may be some volatility along the way, but I think the setup here is pretty interesting for Bitcoin. Also at a time when I think a lot of capital and AI may start to be looking for a new home with potentially more upside over the next year or two.
Ryan Sean Adams:
[32:30] I do agree. I think the world we've entered into is a world where we're going to continue to get these debt and these credit and growth scarce. And they will feel like, you know, pre-tremors for an earthquake. And everyone will be like, okay, like, oh, core weave news. Is this the big one? Is this the one we have to worry about? I'm not sure. Is this just kind of a pre-earthquake? But at some point, we will probably get the big one, which causes Fed intervention or U.S. government intervention at some level. That seems to be your conclusion as well. You said, after all of this, intervention becomes more likely. We believe intervention is the ultimate outcome. However, the path is uncertain. So are you with Dalio on that? You don't know the path this will take, but ultimately, this will result in some sort of U.S. government intervention of some sort to smooth out markets, and that's going to be a money printing event.
Michael Nadeau:
[33:30] I think so. So, I mean, what's also interesting here, I didn't get into this in the report, but the pressure is like kind of building, I would say, in geopolitics as well. So, Russia, Ukraine, just last week, I think Putin came out and requested a meeting with Xi and Trump.
Michael Nadeau:
[33:49] I don't know if Trump has like accepted that meeting or, you know, what the agenda is there, but I believe Putin wants to discuss ending the war.
Michael Nadeau:
[33:59] I think Russia, you know, had some meetings over in Iran. There's a connection here to what's happening in Iran. So we're getting like the pressure continues to build over there. There's a lot of pressure on Iran, this operation economic fury in combination with what we're doing with the military. Kind of an interesting setup here where as this pressure continues to build geopolitically, I think that could be the forcing function for the deal, you know, some sort of deal that we could see come together here. In the past, we've had these types of situations where... Part of that deal could include security alliances and new security agreements where capital gets actually recycled back into U.S. markets. This is, you know, what happened with the petrodollar back in the 70s where, you know, we pinned, basically, we did an agreement for security with Saudi Arabia. Saudi Arabia, they're recycling a lot of their excess capital from oil back into U.S. markets. So, you know, we could see just something that's not really on everyone's radar in terms of how you solve this AI build out, potentially through geopolitics and new trade and security agreements, which could be coming here. I have no insight into this. I just think the more pressure on that situation, the more meetings and the more like resolutions or at least attempts at resolutions we're going to see.
Ryan Sean Adams:
[35:26] So there could be some new geopolitical buyers of U.S. debt then.
Ryan Sean Adams:
[35:31] That's what you're maybe hinting at is a possibility here. Okay, let's talk about Bitcoin and NASDAQ before we close. So some people in the past have thought about Bitcoin as, oh, it's just a levered NASDAQ bet. And there have been periods of time where that's true. NASDAQ goes up, but Bitcoin goes up in an amplified way and the reverse when it goes down. That has not been true lately. And that has not been true during other periods of history. But since June, we got Bitcoin up 41%, NASDAQ only up 1%. And prior to that, it felt like Bitcoin and crypto kept falling, falling, falling. Meanwhile, everyone who had, you know, normie 401ks continued to see outperformance. What's your take on Bitcoin and NASDAQ correlation? What's going on here?
Michael Nadeau:
[36:19] It's been really strong. You know, it's been looking really good. and, You know, we've looked at a lot of this correlation data with Bitcoin against gold, against real rates. You know, it's hard to sort of say what Bitcoin really is most correlated to. I think historically it has been the NASDAQ. It's more of a moderate correlation. But it does break down, you know, and I think there's sort of this general view. Oh, Bitcoin is just levered NASDAQ. You know, you could just buy the QQQs and put some leverage on it. And you basically have the same trade as holding Bitcoin. I think that can be true during parts of the cycle, but it can also not be true. I think we're in one of those periods where this correlation has been breaking down a little bit. And to be clear.
Ryan Sean Adams:
[37:05] Do you think that's a good thing? Do we want Bitcoin to be correlated to NASDAQ or do we not want it to be? Do we want it to be its own thing?
Michael Nadeau:
[37:13] I want it to be its own thing. I mean, it's always going to be, you know, basically all assets are going to be somewhat correlated to, you know, economic conditions, liquidity conditions, things like this. But I think you want Bitcoin to have these periods where it shows this, where it can break. And we're in one of those right now. And it's kind of weird because you have all these issues with rising yields, rising real rates. Bitcoin tends to be negatively correlated with rising real rates. And so kind of interesting that Bitcoin's separating itself during this period where you think that riskier assets would probably be doing worse than the NASDAQ. You know, why is it happening? I come back to like the most important thing I anchor myself to is the market structure. And like, it makes sense to me that Bitcoin would sort of decorrelate, especially during the early bull periods, because you've kind of gone through this period over the last year where you've had leverage reset. You've had the holder base reset. And so the market structure, we're just in a different part of the cycle in crypto compared to where NASDAQ's at.
Ryan Sean Adams:
[38:22] And over time, we should be clear, looking at this chart, Bitcoin has a far outperformed NASDAQ on this ratio. So some of the big increases in the past, in the 2025 time period, we had a 300% overperformance of Bitcoin versus QQQ. 2021, almost 900%. 2027, 7,000%. So if you zoom out on this chart, Bitcoin looks up only over NASDAQ as the asset to hold.
Michael Nadeau:
[38:53] 2017. That's all good.
Ryan Sean Adams:
[38:56] I'm building the future.
Michael Nadeau:
[38:58] And that's, well, that's also measured across the entire cycle. So yeah, so it's coming down, But yeah, 300% increase last cycle for Bitcoin. We're up almost 40% right now. So I think plenty of room to run here.
Ryan Sean Adams:
[39:11] All right. So let's close this out. Altcoins, do you have a view? Is it holding steady? Are there some dips to buy here? I know you are pretty much fully deployed and that was kind of like how you wanted to play the TDR portfolio. But I think there'll be a lot of listeners who are like, hey, like I'm not as fully deployed. I got some cash on the sidelines. Mike, what should I be doing with this cash? I know you're not giving financial advice to those individuals, but if you had some cash on the sidelines, what would you be doing with it at this point in time?
Michael Nadeau:
[39:44] Great question. Yeah, you know, we shared a little bit about this in the report that went out today. You know, a lot of the assets in our portfolio have had corrections of, you know, 40, 50% or so. I think most of them. A lot of them went up, you know, 5 to 10x off the lows. So now we've kind of reset some of those gains. People that are maybe shorter term traders have come in, they've taken their profits, and we're kind of getting that older base reset, I would say, also in some of these all coin positions that we're in. So I would say, you know, take a look at our price targets. We have the price targets in terms of our bull market targets. We have the price targets in terms of our bear market targets. You can kind of measure where assets are trading today relative to their prior cycle highs and then get a feel for kind of where we think things could go. So I think that's a pretty good resource for people. But I would say we're in the early bull. We're in the part of the cycle where, if you want exposure to crypto, and I think the crypto markets and quality assets, Bitcoin, ETH sold, these assets, I believe, will outperform the major indices. They will outperform major sectors. I think, I can't remember if it was Morgan Stanley or JP Morgan came out with something just a few days ago where they're putting their projections out for.
Michael Nadeau:
[41:10] Different asset classes and what they think the compound annual growth is going to be moving forward. Bitcoin was number one. I saw that. That was JP Morgan. Was that JP Morgan? Yeah.
Ryan Sean Adams:
[41:18] Yeah, which Jamie Dimon in the past, has he called it Rat Poison Squared or is that Munger?
Michael Nadeau:
[41:24] That was Munger.
Ryan Sean Adams:
[41:25] He's been a famous hater of Bitcoin. His own shop is saying it's a top performer.
Michael Nadeau:
[41:30] It's pretty interesting now that they have some products that they want to sell. The views have changed a little bit. But that's interesting, right? I mean, yes, we're off the lows and some of the easy money has been made. But I think moving forward, we still have a lot of upside here. I think we're still going to be in a spot where these assets outperform. I still think the altcoin positions in my portfolio, I still expect them to outperform Bitcoin. And if I didn't, then we would rotate. So still early in this cycle. Yes, some of that easy money has been captured. But now we've kind of had the early bull move. We had the consolidation period. We've had the sort of shift from.
Michael Nadeau:
[42:11] Fear to greed and now back to fear in a lot of the altcoin space. The on-chain trading space has really come off. Um it looks like it wants to come back in my opinion and so i think you know this is a good time to be interested if you haven't sort of you know set up your portfolio yet, um but yeah that's kind of that's kind of how i think about if i if i wasn't in the market right now i would be looking just at the highest quality projects uh best fundamentals and you know we're in a decent spot because we've kind of been oversold here uh almost all the assets on the watch list have like come into, sort of what I would say are close to oversold levels in terms of momentum indicators, liquidity conditions, trading volumes, everything has come off. Open interest has come off on a lot of those positions as well.
Michael Nadeau:
[43:00] So much healthier setup here.
Ryan Sean Adams:
[43:02] So we are not going to have time, I think, because we're at time for today to talk about ETH and SOL. I'll refer listeners to two reports. We'll include them in the show notes. everyone can access though. Mike's thought on the quarter that was for Ether and Solana as well as the asset conclusions moving forward. I'll offer folks an easy button, of course, not financial advice. But if Mike is right, and this is an opportunity to buy quality altcoins on the dip, then I think the thing to do right now is strategize the dip buying in the weeks and months to come. And some resources for you are the price list that Mike was talking about, where he has fair market value prices for the bear market. We're probably not going to get all the way down there. So think about where we are from the price now and maybe timing some dips between price now and maybe a little bit off and the fair market value in Mike's price watch. I think that's kind of an easy button for folks to refer to. And of course, you can access that if you are a TDR Pro member. We will be back next Wednesday for another weekly report.
Ryan Sean Adams:
[44:15] And of course, this podcast is free if you are not subscribed across all channels, make sure you do that. Spotify, YouTube, Apple, engage with this content, like it, send it to a friend, leave a comment, let us know what you're thinking about and how you're planning for the early bull market. Got to end with this. Of course, none of this has been financial advice. This is an investor journal, and we're on the journey right alongside you. So until next time, stay curious.