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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] The early bull is being tested right now as we speak. The question today, will crypto hold? It is October 28th, 2026. Welcome to the report. To answer that question, I think we got to take a look at traditional markets today. And just to drive by, almost 60% of the S&P 500 stocks are already in a bear market. So 41% of those stocks are down more than 30%. People have been calling this a little bit the stealth bear market. We're going to define what that means and ask the question, if stocks are already in a stealth bear market, what does that mean for the crypto cycle? Also, we have midterms just one week away. If the Democrats sweep, what's going to happen to markets? Will it tank markets? And if it's the latter, if we are going down in traditional markets ahead, what does that mean for Mike's early bull calls? Is that something that needs to be revisited? We definitely have a wall of worry to climb here. And the question is, maybe can crypto be our pole vault? Will it vault us over the wall of worry? Stick around to the end. There is one Bitcoin price that Mike believes will hold, needs to hold over the coming weeks. We'll get to that price, of course, near the end of the TDR. And I want to ask you guys at the very beginning of this episode, if you are not subscribed yet on YouTube, Spotify, Bye.
Ryan Sean Adams:
[1:34] Wherever you consume these podcasts, do us a favor. Go hit that subscribe. Make sure it gets populated in your algorithm so you don't miss an episode. Mike, I actually want to open with this. This was a tweet I saw. I don't know if you saw this from Jason Kalkanis over at the All In podcast. He said this, a brutal year for Bitcoin is just getting started. Give me three minutes to explain why you should dump it now. He talks about ETF outflows, their signal, they're going to continue to outflows. He talks about 57K low being revisited in 12 months. He's saying this with such certainty. He says, why would anyone buy Bitcoin? It's just a useless, unproductive store of value. It's a do nothing asset. It's no longer viral. We don't have memes that are popping. We don't have NFTs. And why not get into an AI stock type trade? Why not get back into predictive assets, I should say productive assets, Bitcoin is a complete waste of time. Not the first time Jason has said this, by the way, but I think it marks some of the sentiment maybe on the week. And I don't know, it feels a little cocky for AI investors, but at some level with the Anthropic IPO into the trillions of dollars, maybe they've earned it. Did you see this take on the week and what'd you think?
Michael Nadeau:
[2:54] I did see this. you know, I'm, I'm happy to take the other side of this. And like, I honestly, when I see stuff like this, it's, I kind of like seeing this, right? It's like you want to have these contrarian takes, these opposite views in the market. I think Chamath came out and had some comments on All In Pod as well, sharing a similar sentiment to kind of just what you went through there. And, you know, it's just important to understand everyone's incentives. And, you know, I'm assuming that these guys have lots of bets that have been placed in the AI space. It looks like we're at a part of the cycle where Bitcoin may start to get a little bit more attention than AI. And so I could see, you know, there just being a motivation to put stuff out there like this to have people questioning some of those moves.
Michael Nadeau:
[3:43] So, you know, I think it's a good thing and I'm happy to take the other side of that.
Ryan Sean Adams:
[3:49] Well, then help answer this question, Mike. So we are like range bound and have been for some period of time. We are down about 5% on the week. So Bitcoin at the time of recording is about 80K. So when we're range bound, when we're down 5% on the week and we have to go look at other assets that are outperforming, oh my God, wish some of us had some anthropic stock for certain. When we're in this kind of like sentiment, that's when we get comments like Jason Kalkanis' tweet and that's why it goes viral. Are you concerned about this range boundness? I mean, do we have to break in one direction or another or can we stay here in perpetuity?
Michael Nadeau:
[4:28] It's, you know, we've been in this range now for almost two and a half months. It was kind of like mid-August when Bitcoin kind of repriced out of the bear market really into the early bull. And when you kind of go back and look at periods where Bitcoin consolidates, you know, in bear markets, it consolidates and then it drops. In bull markets, it tends to consolidate and rise. And we've been in this channel now for almost two and a half months or so. And we're getting to the point where Bitcoin's going to make its next move, I think the key question is, are we going to come down and threaten that 50-week moving average, which I think is really the bull market support indicator that I'm watching most closely? Or, you know, are we going to get some catalyst in the market, whether it's, you know, we had the Fed meeting today, whether it's the messaging that comes out of that, whether it's peace talks, you know, that are ongoing in Iran and Russia, Ukraine. You know that's the big question is kind of like we're in a spot where just the next catalyst is probably going to tell us what which direction we ultimately go so definitely a pretty good time to be to be locked in I would say.
Ryan Sean Adams:
[5:42] So some of those catalysts I know you think might come in the macro world in trad 5 markets that's why later in this episode we're going to answer this question about like are we in a stealth bear market in stocks what what does that mean if we are. But before we get there, let's take a peek at market structure. And I'm going to start with the takeaway and then have you maybe justify it with the metrics and the indicators that you're seeing. So this was your takeaway. Significantly more capital has been committed to Bitcoin at this early bull stage than at the same stage in the last cycle, you say. This could be bullish if Bitcoin holds at its current levels, but it also could be bearish if Bitcoin shows further weakness and the capital flowing into Bitcoin at current levels is less diamond handed than we think. Yeah. Okay. So significantly more capital has been committed to Bitcoin at this early bull stage. And that is bullish if we hold, but maybe bearish if we don't. How do you justify this statement?
Michael Nadeau:
[6:42] Yeah, it's really, for me, it's really understanding who is coming into the market at this stage and what the sort of nature of the holder base is at these levels. We've seen kind of a capitulation in the ETFs, right? I think a lot of the hot money that was in the ETF has come out. So there's during bull markets, you have a basis trade that gets put on by hedge funds and macro traders where the future price of Bitcoin is higher than the spot price of Bitcoin. And what you'll see is people will come in and buy the ETFs and then short BTC in the derivatives market and take that spread. That carry spread is pretty much gone when you factor in fees and things like that that are associated with that trade. So that's like a lot of hot money that's out of the market. When we look at, you know, the holder base reset, the derivatives market, everything looks very healthy to me. Um, so my sort of base case here is that a lot of this, uh, buying activity that we've seen between in the 78 to 92 cage, I'm estimating like roughly, you know, 25% of the supply or so has now consolidated in this range, which is significantly higher than what we saw at like the equivalent range, um, which is like 21 to 29 K back in, um, the early bull and in 23. So a lot more capital consolidating in this range.
Michael Nadeau:
[8:09] To me, this is a bullish setup, but I think you have to also acknowledge that, if this holder base is not as diamond handed as we think they are, and we get weakness and we get escalation in Iran or we get something else that's a negative catalyst, that there could be sort of a reflexive move down. And I think that's kind of the assessment that I'm making. We haven't seen, so like when you think about early bull periods, we typically do not see sort of nasty drawdowns in early bull periods. And I think it's because of the sort of nature of the market structure during these periods. We had two 17% drawdowns in 2023. Those took place over about a two-month period each. If we came down to roughly 75k or so or 76k for the for the 50 week moving average, you're looking at like a 12 percent drawdown which would kind of be in that range and i would be looking to hold hold those levels so i think this is you know that's really kind of how i'm looking at it's really more about, understanding the nature of these people. Are these people going to hold through volatility? And then this is ultimately going to become the base that moves us up to 100K or so.
Ryan Sean Adams:
[9:22] And the cohort analysis that you're seeing on chain and the realized profit analysis that you're seeing on chain, that does seem to point in the direction of more diamond hands. And I guess the way I'm coming to that is you say, these numbers suggest that Bitcoin has absorbed more profit-taking at this cycle than in 2023. So if it's already absorbed more of the profit-taking, then by definition, these holders should be more robust, stronger, more diamond-handed than in 2023, which would mean that we won't see quite as much, I guess, volatility to the downside as we saw in 2023. Is that your base conclusion?
Michael Nadeau:
[10:10] That's kind of where I'm at with this is, you know, we've been able to absorb, more selling activity actually in this early bull period than what we saw back in 2023. We're kind of putting that relative to the market cap so that we have kind of a apples to apples comparison there. And then when we look at realized losses, there's been actually less realized losses over the same early bull period so far in this cycle, which the takeaway for me there is that.
Michael Nadeau:
[10:41] Seller exhaustion looks like it may be more complete at this stage. We've been tracking the sort of top buyers from the last cycle and the percentage of coins that they have sold during the bear market. And that looks like it's mostly complete. We've talked about some time-based, capitulation still playing out. But I think when I look at the holder base, when I look at the way Bitcoin's been able to absorb some of these people that want to sell, we've talked about, you know, traders that got into the market. There's always going to be a percentage of the Bitcoin supply that's getting traded by more hot money, short term traders. I think those folks that were buying in the upper 60s, 70s or so in August have taken their profits, you know, with the 30, 40 percent move. So I think that hot money is also out of the market and we've been able to absorb that. So I think from a market structure perspective, I still lean towards, you know, we're firmly in the early bull here and Bitcoin has to prove, like it has to prove to me that we're not, that to me would be a break of the 50 week moving average on a weekly, you know, multiple weekly, time period.
Ryan Sean Adams:
[11:54] So basically, you're saying market structure seems even stronger than last cycle. Last cycle, in 2023, we actually didn't break. Once we hit the early bull, once those indicators were established, we didn't break below the 50-week moving average last cycle. The question is, if we're stronger from a market structure this cycle, then why in the world would we expect to break the 50-week moving average this cycle? We're even stronger this time. And that number is what? What's the 50-week moving average going to this week?
Michael Nadeau:
[12:26] Yeah, 76.3K. So still moving down slightly. And we're also looking to see, you know, that eventually bottom out. It took about five months for the 50-week moving average to bottom out. We're like four months into that process. So it's kind of still moving down, but at a slower pace than it was earlier.
Ryan Sean Adams:
[12:45] You thought maybe, you were projecting this out, maybe it might move down as low as 75K, if I'm recalling correctly, but sort of in that range. And you're expecting this to hold given the market structure. However, here's the thing that could derail it and why it's in today's report is stock markets. What about trad markets, right? That could throw a monkey wrench into this whole setup and make it different than the previous, even if market structure is stronger.
Ryan Sean Adams:
[13:12] So let's get to that in a moment, but a few other things to cover. When I looked at the numbers in today's report around ETFs, around hash rate, around Bitcoin dominance, I see a continuation of what we saw for the previous couple of weeks, which is a healthy reset, which is Bitcoin price kind of just, you know, gently coiling again for the possibility of a next spring load. Is that the right way to interpret ETFs and dominance?
Michael Nadeau:
[13:44] I would say so. The ETFs have been roughly flat. So Bitcoin ETFs grew 6%. So picked up 6% increase. That was during that sort of mid-August through end of September period. Since the beginning of October, we're basically flat. So we've had some inflows, we've had some outflows. You can see on that chart there, the red outflows are pretty minor. So there's been more inflows since we had the kind of capitulation over the summer. And I think, you know, it's kind of like we're in that phase where people want, the wall of worry needs to be climbed. And I think people are looking to the Fed, looking to geopolitics, looking to, you know, the oil markets, things like this to try to figure out, if they want to get back into Bitcoin. I think one thing just in the current conditions that stood out to me this week was the hash rate for Bitcoin.
Michael Nadeau:
[14:44] What looks really healthy from that perspective is that we've seen a strong, move in the hash rate over the last few months. We're just about four, almost 5% off the all-time high now. Now, this is a very healthy indicator to me that the sort of part of the Bitcoin market that you want to be really bullish, the miners, they're sort of the core of the market. We need the miners to be bullish. And it looks like we're now seeing more hash rate coming online. More people want to mine Bitcoin. Very healthy when you consider sort of the quantum risks in the market. When you consider that a lot of these publicly traded miners have been getting hammered. Their stock prices have been getting hammered, kind of getting caught up in a lot of the core weave AI financing worries out there. So that's a really healthy indicator for me. Bitcoin dominance is still rising.
Michael Nadeau:
[15:44] This is kind of the Bitcoin dominance you don't want to see is when it's rising, while Bitcoin sort of like bleeds out, chops a little bit, it's telling you that the altcoin space is just really kind of selling off and re-rating. And that's what we've seen. Altcoins have fully reset here on the 30-day. So when we were talking about this a few weeks ago, 96% of altcoins in the top 50 were outperforming Bitcoin on a 30-day period. That has fallen off a cliff. It's down to just 16%. I actually looked this morning, It's fallen even further. It's down to 12%. So kind of a full reset, I would say, across the more speculative, longer tail, you know, kind of animal spirits part of the market looks like pretty much a full reset there.
Ryan Sean Adams:
[16:35] And that full reset indicates an opportunity in your eyes, given that this is, you think, still the early bull market, that it's an opportunity to buy discounted, high quality altcoins.
Michael Nadeau:
[16:46] Yeah, I think so. And I think the early bull is probably the best time to buy altcoins. You know, we've talked a little bit about this in the past, you know, towards the end of the early bull period, if Bitcoin starts to trade better, we've had this reset. I think it could be a really good opportunity to get into some of these projects.
Ryan Sean Adams:
[17:08] And that's why the tilt in your portfolio right now is still there. Altcoin, right? Would you say it's about 70-30, something like that, in terms of deployed assets, altcoin versus Bitcoin, 70% being altcoin? It is.
Michael Nadeau:
[17:20] That's roughly in that space. And, you know, if we see our altcoin and we've, been outperforming Bitcoin, which is good, and that's, you know, you have to do that if you're going to put capital in non-BTC, we've been outperforming. The goal there is to... Outperforming Bitcoin, there are periods during a market cycle where things will detach and we will exit those assets. If we're still early enough in the cycle, we'll then just put that into Bitcoin
Michael Nadeau:
[17:46] for sort of the latter stages of the cycle.
Ryan Sean Adams:
[17:49] I saw you put the ETH Bitcoin ratio in today's report. You said ETH Bitcoin ratio is currently at 0.029. That's down 28% from last year's high, down 66% from the 2021 high. And you also mentioned BMNR, that would be Bitmine. Tom Lee's treasury group announced that it has stopped purchasing ETH. Indeed, I think they have about 4.95% of all supply. They're aiming for 5%. So they're just about to stop. I'm wondering about the ETH Bitcoin ratio because it's low right now, which you could say, okay, that's a sign again that all coins are kind of trading lower. I accept that, but also it's sort of in a secular like five-year decline as well. I'm wondering if the ratio to you more indicates like less altcoin versus Bitcoin season and more just indicative of general ETH weakness.
Michael Nadeau:
[18:44] So it's kind of interesting because we have been in kind of this more secular, decline, I would say, in the ETH-BTC ratio. And the real alt season, like kind of when the term alt season was born, was kind of more back in 2021 when ETH really outperformed most of the market, outperformed Bitcoin. You can see on that chart that vertical line around early 21 when things really repriced.
Ryan Sean Adams:
[19:12] I should say there is another vertical line. You do see an alt season in 2017 as well.
Michael Nadeau:
[19:19] Pretty serious one. Yeah, pretty serious one there. And we've kind of been in this you know secular decline and I guess you know we've had sort of these like mini alts I would call them more mini alt seasons in the last cycle, and there are always points where ETH will outperform I think you know when I look at that that chart and and I'm seeing like getting close we're at 0.029, getting closer to 0.02 which, has served as kind of like the low for that ratio, over the last like six, seven years.
Michael Nadeau:
[19:55] That's kind of interesting to me because I think, you know, you can be more comfortable like buying Ether, and feeling confident that you're probably going to outperform Bitcoin. I think the question is, is there, is this chart, I think if you're like a ETH maxi or an ETH, just like an ETH bull, you have to have the view that this chart will actually reprice and it'll go back into like more of a bull market structure and potentially take out those highs, which were like 0.085. If that happens, then, you know, ETH is the asset you want to be in rather than Bitcoin as kind of your anchor asset. I have had trouble building a thesis for that outcome. And so I've kind of positioned more using Bitcoin as my anchor asset. I know a lot of people still use ETH. And, you know, I talk a lot about ETH. People always want to hear views on it. But when I put a lot of stuff out there, I just, and a lot of times I put stuff out because I want, I'm like asking, I'm looking for a reason to change my mind on ETH. And I just haven't really been able to get there.
Michael Nadeau:
[21:02] I sort of think of, you know, for me, it's more just like Bitcoin is a special snowflake. And I sort of separate it from everything else. And I think the people that are bullish on ETH sort of don't view it that way. They think ETH is also a special snowflake and that there could be this moment where it eventually reprices or the market appreciates ETH and sort of how it serves, the market and all of the assets and applications and things that are built on it, that someday that will be appreciated more than sort of digital, you know, store of value.
Ryan Sean Adams:
[21:33] I do think I still probably tend more towards the latter camp, though I accept the point. But I think what has to happen for ETH this cycle to break out of this downward channel of the ETH-Bitcoin ratio is sort of a narrative repricing. Something like similar to what we've seen recently in zcash over the past you know year to 18 months which is a complete smashing of the narrative reinvigoration re-excitement at the asset as a story value i mean if you look at the um the zcash the zek bitcoin ratio i think it would show you like a down only slope until until something happened recently and then it's been up i think ETH would
Ryan Sean Adams:
[22:17] have to do something like that in order to break out of this. Let's switch to the main question, though, that probably drives whether we are able to hold the 50-week moving average on Bitcoin, which is what is TradFi going to do? Where's the AI trade going? And I want to ask you about this because there's been some discussion all over financial news and financial Twitter, certainly, about this idea of a stealth bear market that we may already be in. And I think you were entertaining this case a little bit. You said, this is kind of the case, 60% of the S&P 500 is now down over 20%.
Ryan Sean Adams:
[23:01] So 60% of the market is already in a bear market, that would be down 20%. percent. 41% of stocks are down more than 30%. 17 of those stocks are down over 50%. The only reason the S&P is just like only mildly affected by all of that bear activity is because of AI outperformance concentrated in the MAG-7. There's been so many indicators of this, including how much of the S&P is actually composed of these seven AI stocks entirely. So maybe make that case for us, this idea of a stealth bear market. And I know in today's report, you kind of do that by zooming out to late 2021. And you talk about the big cycle starting in 2021. Maybe start there for us. And then let's discuss this idea of a stealth bear market.
Michael Nadeau:
[23:55] Yeah. So trying to zoom out, trying to kind of see the whole kind of picture here. And if we do that, you know, we can go back to late 21. This is when inflation, you know, it became impossible to ignore inflation at this time. Fed came out. Powell had like a, it was his speech that he does out in, I forget, out in some mountain town out in the West.
Ryan Sean Adams:
[24:21] Was this the transitory inflation line?
Michael Nadeau:
[24:23] I think so. You know, it came out and there was a lot of that at the time. But then eventually they came out and kind of made it clear that they had to that they had to hike rates and that kind of kicked off the bear market. And they ended up hiking 11 times in 2022, 2023. Eventually, inflation started to come off in like middle of 23. Yeah. And then, of course, we had ChachiBT launch at the end of 2023.
Michael Nadeau:
[24:51] NASDAQ bottomed down about 33%. And then once we kind of fast forward to 2024, the Fed started cutting rates, you know, going into the midterms. And we ended up with five rate cuts. You know, Trump won the election. We kind of had this shift in strategy in terms of managing the economy. Less public sector support, more private sector support, tariffs. And then we had this massive sort of like re-industrialization, you know, push towards AI build out financing and everything that kicked off in 2025 in terms of, you know, AI adjacent assets, you know, really, really seeing massive returns. This fed all the way into the second half of 26. You know, back in 2025, we also saw the commodities space go through a bull market, silver, gold, outperformed copper. And to me, like when you kind of like zoom out on all this.
Michael Nadeau:
[25:59] Looks to me like we focus on cycles pretty closely in terms of crypto. It looks to me like we kind of had the cycle in terms of bank lending, in terms of Fed cuts, in terms of new investment cycle and a new industrialization period. We have had this other stuff with geopolitics, with tariffs, all of that kind of getting mixed in and creating these little sort of corrections through the way. But now you have an economy because of everything that kind of went in, you have an economy that's kind of running hot where inflation is creeping back in. We've now have some volatility in the stock market, in the bond market. And, you know, you just mentioned like we're kind of in this stealth bear market in terms of equities. You know, when you go under the index level, there's been quite a lot of quite a bit of volatility. We've seen the sort of like AI financing scare happening. We'll see if that has hit peak fear levels or not, if that's kind of bottomed out.
Michael Nadeau:
[26:59] We've seen all these speculative trades in quantum and space and meme stocks have all sold off. Gold is down 28%. Silver is down 55%. Bitcoin and the crypto markets went through a nine-month bear market. And the bond market has been pretty much crushed because of rising yields. So, you know, in terms of just like wealth destruction, like we've seen, we've seen some. And I think this is the, when you think about the cycle in terms of lending and investor preferences, asset allocation, I think we've seen these shifts that you would look for. And the question now, I think, is just, are we going to see the index things fall out, you know, from the index level? We have this concentration in a handful of stocks that are kind of keeping the broader index, you know, elevated. If that sort of falls out, then that to me would be the bottom. The question is, are we going to get that move? And I think that's maybe midterms are that clearing event that we got the FOMC today. That's kind of where my head's at, but I think we have had enough here where, I don't want to be too, I think if you're really bearish right now and you're looking at, if you're just focused on the macro setup and you're ignoring that all this stuff already has played out, you could potentially get yourself,
Michael Nadeau:
[28:17] you know, caught offside.
Ryan Sean Adams:
[28:19] So you conclude with this, you say there's a lot of wealth destruction behind us now, suggesting we may be closer to lows. You're talking about the trad markets and that, and the start of a new cycle than the market may appreciate at this point in time. So you're coming on the side of the bulls, really, in this case. And this is where I've heard the term stealth bear market being talked about the most is sort of on the bull side of things, the bullish equity side of things, which is they're making the point, no, we've already gone through the cycle. All the bearish stuff that you just mentioned with most of these stocks off of all-time highs by 20, 30 percent. And you mentioned gold and a lot of losses there.
Ryan Sean Adams:
[29:01] You know, some sector losses in Corwee, for example, shares falling almost 50% over the last couple of months. What they would say is there has been a bear market and we're through it. And then after the, or we're almost through it. And then after the bear market, which has been somewhat blunted from an index perspective, just by the, you know, industrial strength of AI, which is of course the next industrial revolution, It's been a more muted, more tempered, more blunted bear market. And the next phase after bear market is recovery. So a little blip, maybe, maybe this is all we get in terms of a blip. And then off we go again, back to the races. You kind of think that there's merit to that argument. You're coming down closer to that side. Is that correct?
Michael Nadeau:
[29:52] That's kind of where I'm landing. You know, it's possible that you could have some of these names and some of these sectors that have sold off significantly, maybe they start to, you know, rebound a little bit. Maybe MAG7 and the stocks that are kind of holding things up come down a little bit. And you have that move. But again, if that's happening, the index is probably going to be kind of flat. So, you know, I'm not necessarily thinking like, oh, this is we're just going to go off into another, you know, bull cycle here. I think we still have to sort of digest this. We need to get more clarity on what the Fed is, is doing geopolitics before, like, I think a new cycle like actually kicks off and the market has kind of consensus around that. But I kind of see things just, I have a harder time just like seeing the things happen, fall out from here, I think you'd have to have this AI financing concern really hit like, a fever pitch for something like that to happen or some of these other risks, you know, that are out there with, you know, cybersecurity and some of these scares that we've had with, the ability for like these AI systems to, do some scary stuff, like just, you know, hacking, hacking the internet, doing things that.
Michael Nadeau:
[31:09] You know, putting tools in the hands of people that we don't want to be doing. I think those systems are ultimately going to become the defense for, you know, what they're used for right now in these attacks. I think that's a significant risk out there. You know, we have the we have the anthropic clarity around their IPO and they shared their S1. I sort of, you know, took a look at that and I was kind of surprised. I thought it was pretty good S1.
Ryan Sean Adams:
[31:41] Surprised to the bullish side?
Michael Nadeau:
[31:42] Surprised to the bullish side. And I think that's kind of interesting. If that S1 revealed that, you know, their costs were rising, you know, relative to the revenues that they were producing or that, you know, they were still making all of these investments. And we were seeing that the ones that they had made in the past weren't really working out and they weren't able to get their operating costs down relative to their revenues. I think that would create a lot more fear and potentially push that AI financing concern to another level. But I think this is sort of potentially tempering that because it was, I think, the numbers that they're reporting look pretty good. They had operating, you know, positive operating margin in Q2, which is pretty impressive. And they're sort of like costs relative to the revenues they're generating are dropping, which is I think what investors want to see. So that's another kind of variable getting thrown into the mix, but I think it sort of helps at this stage of kind of where like market psychology is right now.
Ryan Sean Adams:
[32:47] Yeah, it does seem maybe the Anthropic IPO and kind of the numbers and how that goes may continue the AI trade for some months into the future. And maybe it does mark the bottom of sort of, you know, this kind of like shadow bear market.
Ryan Sean Adams:
[33:05] So that's something to look at. The other thing to look at in the near term, of course, is midterms. So Polymarket has the Democrats taking the House 92 percent. It's almost a certainty there. And the Senate has almost 70 percent. So let's consider that the Democrats win both the House and the Senate. You said the New York Times shared a piece projecting a shock and awe strategy. Should the Democrats reclaim power, which would be restoring health care subsidies, Medicaid, many more populist style strategies, which would have ripple effects into fiscal deficit. Maybe set that up for us. What could happen to markets if the Democrats win? Because maybe some pushback in the New York Times piece. Well, that's the House and the Senate. You still have veto authority with the executive branch, of course. And so Trump gets lame duck, but it's not like the Democrats can push forward any of the shock and awe strategies in the way they mentioned. So that wouldn't happen for at least two more years and a whole nother election away. What's your take on this if Democrats win though?
Michael Nadeau:
[34:12] So if Democrats win, if they sweep, so Congress has power of the purse. So I think they could probably, if they do control both branches, they could push and make some of these changes. I don't know if they can, anything that has to go to Trump's desk, yes, can certainly be vetoed by him. You know, this is a tricky one. You know, I think what people expect to happen is this kind of shock and awe. Democrats get power. They start, they want to, they're probably going to try to impeach Trump. There's probably going to be lots of lawsuits. And then they're going to try to push forward these policies. You know, we've seen kind of like this, people are calling it like a lots of energy from like almost this like more radical part of the Democratic Party. Which is like the DSA movement. And I think that's gaining, still gaining strength. And it's kind of almost moving its way into sort of mainstream views. So that's a little bit concerning. We don't know like totally what that looks like just yet, but it's almost like Trump was an extreme version of kind of Republican view. And now you're getting maybe a more extreme sign, which is kind of interesting. It's kind of a natural thing that plays out, I think, in politics.
Michael Nadeau:
[35:30] But yeah, to me, like when Trump came in, You know, he did a lot of tax cuts and things that, you know, potentially, you know, worsened the fiscal situation. But then we had tariffs on the other side of that, which sort of sort of offset that. It looks like Democrats want to take take out the tariffs and then also spend more. So from like a fiscal situation, like you're probably blowing out the deficit even more if the Democrats take power. What does that mean for markets for like someone like me focused on crypto? So that's just more, you know, nothing stops this train, you know, type of type of activity. So I don't, you know, view it as like a super negative thing for crypto and for Bitcoin, potentially negative for the AI trade, if they also go after, you know, data center build outs and and that type of thing. So, you know, it's an interesting period in time when politics just gets so combative and we know this does impact markets and it's just a tricky period to navigate because politics are just.
Michael Nadeau:
[36:40] They're an X factor that's a little bit hard to factor into the mix. When I looked at the last, you know, 10 midterms, which, again, it seems like politics are getting even more, you know, just combative is probably the word I would go with. But if we look at the last 10, they tend to serve as a clearing event. And in the last, after the last 10 midterms, the S&P 500 was up 12 months later in every single example. And there probably was a lot of drama going into just about every single one of those. So that's, you know, hopefully gives people a little bit of comfort. The S&P 500 actually bottomed before the midterms back in 2022, but Bitcoin bottomed after. So that's maybe an interesting, you know, little data point there. But we'll see. You know, I've got my popcorn ready. And maybe one other thing here is... But the polling has been wrong, as we know, in most of these elections that Trump has been involved in. And almost every polling going into the election says that the Republicans or Trump looks like he's going to lose. If the polls are off by the same margin that they've been in the past, it would actually be a Republican sweep. So I'm sort of trying to stay open-minded to the chance that it doesn't seem like that's what's going to happen based on the feel. I live in the Northeast, which is more of a blue area.
Michael Nadeau:
[38:08] So I probably don't have a clear picture of this, but it does feel like to me, the polling is making it seem like it's a slam dunk, and I don't know if it is.
Ryan Sean Adams:
[38:18] There's definitely a chance, and I agree with you on polling. However, I will say prediction markets have held pretty well. There's been some recent studies that they're fairly accurate in terms of probabilities. And so I would more trust the poly market on these numbers than anything else. And poly market is still saying that a 33% chance that Republicans maintain the Senate. So we'll have to see on all of that. Okay, so this could go in either direction. You are on the more bullish side of things with traditional markets, at least right now, in that you see that they could go down a little bit more, but maybe not as far as all
Ryan Sean Adams:
[39:01] of the bears are saying that we could have a recovery from that. Let's talk then about your base case for crypto from here on out. Nowhere in the early bull. Let's maybe focus on some key numbers. The 50-week, I believe, is your key number. And you think it'll hold. Can you talk about that and why you think the 50-week moving average for Bitcoin will actually hold?
Michael Nadeau:
[39:29] Yeah, I think this comes back to just the how much we study the market structure. And then when you look at past early bull periods, if we are, in fact, in the early bull, which I think we are.
Michael Nadeau:
[39:43] Because of the way the market structure is during these periods where you have stronger handed folks that have come into the market and bought up, the lower asset prices, you've kind of cleansed the structure of the sort of, short term money or top buyer money. Tourists have all been been cleared out the leverage has been wiped out, um we're at a stage you know after we after we've repriced off the lows where we think you know the sort of traders have taken their profits and are probably looking potentially to buy the next momentum move um, to me like that's why you don't have these it's that's why it's harder to break the 50 week because of just the structure structure of the market so there's always a chance that, um there's some black swan out there or something that creates a bunch of fear and people, you know, kind of reverse out of that. But I think the probability support because of those things. To me, the probability support like Bitcoin continuing to kind of look through a lot of all these risks, you know, macro, midterms, oil, inflation, geopolitics. Like I'm kind of still of the mind that I want to put more emphasis on Bitcoin.
Michael Nadeau:
[40:54] And kind of the view that these people that are buying Bitcoin are looking out 6, 12, 18 months and saying this environment is going to be conducive for people that want for more demand for Bitcoin. And that we're just not going to pay attention, which feels, you know, it feels risky to do that. But I think that's kind of where my head's at.
Ryan Sean Adams:
[41:17] So if we maintain that, that would be Bitcoin above the 50-week moving average, which right now is about 76.3K. Right. And you said a move to that level, if it moved close to that level, would represent a 12% correction from the 86.5k high on October 4th, which is kind of in line, a little though more muted than previous cycles where we saw Bitcoin corrected 17% twice in the early bull period of 2023. And each of those corrections took roughly two months. So you're predicting we hold above just like we held above last time. We'll keep above the 76K 50-week moving average and we are still in the early bull period of time. At least that's your take on the week. And maybe we should end it there, Mike. I would love to ask everyone who's listening if you have benefited from the DeFi report. Again, this comes out every Wednesday. Send this episode to a friend, leave a comment, subscribe across any channel. And of course, go to the defireport.io and you can get access to today's report. None of this has been financial advice. This is an investor journal, as you know, and we're on the journey right alongside you. So until next time, stay curious.