Subscribe
Share
Share
Embed
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.
David Hoffman:
[0:10] Another week, another DeFi report. Michael Nadeau, good to see you. How are you doing?
Michael Nadea:
[0:14] Doing great, David. Nice to see you as well.
David Hoffman:
[0:16] I'm bullish, Mike. I'm pretty bullish. We were talking last week about Bitcoin at the 200-week moving average and how last cycle, last bear market from June of 2022 through, March of 2023 was the only time Bitcoin traded below the 200-week moving average. And that was, in my mind, And I am claiming idiosyncratic because it was right after FTX, Three Errors Capital, Terra, Luna, DCG, all of that contagion.
Michael Nadea:
[0:45] Yeah.
David Hoffman:
[0:45] None of that is in the market today. What would you have this bear market? We have Michael Saylor somehow plowing more and more billions of dollars into Bitcoin. Bitcoin is just a few percentage above the 200-week moving average. I think we're at the bottom, Mike. I think we've bottomed. What do you think?
Michael Nadea:
[1:03] Well, it's a bold call. It's a bold call. I would love to be as bold as you in calling a bottom right now. We're about eight and a half months into this bear market. We've seen three 25% plus corrections so far. Most of the high level cycle KPIs that we track are flashing. We're in the buy zone. And I think that's kind of been my view. Like anything under 67k is like definitely on a longer you know time horizon a good time to buy this week you know we had the the sort of smoke clear a little bit from the latest capitulation uh over you know which was about 12 days ago and really what i'm going through now is just some of this high level data and trying to figure out if we've had enough pain and i think that's the big question is like, if we haven't had enough pain,
Michael Nadea:
[1:59] and we haven't hit the bottom, what is the catalyst? And maybe, you know, we can kind of get into some of this. It was really FTX, you know, late in Q4 of the last cycle, where lots of things started to happen, lots of coins change hands. And that's really how we hit the cycle low. And, you know, I don't know if that's going to happen again this time. So I think it's like a decent time to be to be in the market. At the same time,
Michael Nadea:
[2:25] I still feel like we haven't had the full apathy, people really giving up. I know sentiment's pretty bad out there. But these kind of come into judgment calls. I think a lot of investing, especially at these stages, is being able to hold conflicting thoughts at the same time. Like being bullish in asset, but maybe not being bullish near term on an asset. I think this is the hardest thing in investing is really holding these kind of conflicting views. But maybe we can get into the data and people can kind of see what I'm looking at here.
David Hoffman:
[3:00] Yeah. So let me elaborate even further on some of my thoughts. And I'll even like argue against myself in a way that I think is maybe what you are thinking. Say this was the bottom. Sure. Easiest bear market ever. Yeah. We've never had such an easy bear market. You know, usually with the bear market, you can see this in the charts. You know, we have this period of long and flat just range. Yeah. You know, we ranged from $30,000 to $16,000 between there for a year and a half last bear market. The bear market before that, you know, we did it again even longer, really. It was like almost three years, it kind of felt like, of just ranging for Bitcoin between something like, you know, $10,000 and $4,000 Bitcoin. We haven't ranged at all. We've only gone down. And so say this was the bottom, I know maybe we could range from here. But like we still have that ranging part to get through and so maybe don't be so greedy don't be so hasty David like you've got time usually if we hit the bottom at 59,000, In six to nine months, maybe we hit 54,000 and there's no reason to get ahead of ourselves. But that's the four-year cycle thing. That's if you're saying the four-year cycle plays out, which it totally has. Maybe I'm putting back the cap on of the four-year cycle is just not going to always be a thing. It has to change at some point. Doesn't it have to change at some point?
Michael Nadea:
[4:28] I think so. It is fascinating. I mean, even this bear market, we kind of diverged a little bit when we had, you know, kind of a three year, three plus month uptrend retracement there for a little while. But even going back, I mean, we had these really deep corrections in the last bear market in June. It's really mirroring what we've seen in the past. And I think a lot of people have sort of come to the conclusion that, well, it's Bitcoin's maturing. The crypto markets are maturing as an asset class. We now have, you know, we've really financialized Bitcoin.
Michael Nadea:
[5:00] We've added, you know, over 6% of the Bitcoin supply into ETFs. I think a lot of people had the view that we'd have this shallower bear market in this cycle. And that has been the case so far. And we've had shallower bear markets in each successive bear market. We went down for Bitcoin 75% in the last bear market. And I think most people have sort of had the view like-
David Hoffman:
[5:22] And only 53% in.
Michael Nadea:
[5:23] This bear market. Yeah, 53%. Like that feels about right. And it's sort of like, I guess maybe what gives me a little pause, I think that is like consensus that like we've now that this period of like these nasty, deeper bear markets is over. And like, if that's true, what, why is that the case? You know, if you look at what happened on the ETFs, I think a lot of the reason people believed was,
Michael Nadea:
[5:46] If we'd have the shallower bear market, you know, the ETFs are going to be, we're diamond handed. They were showing like, you know, that they were kind of holding their coins. That is not the case anymore. I think that narrative is, we're losing that narrative. And, you know, what is the thing that's going to, you know, maybe bring us down? If we come down 65%, which would kind of be in line with the stair step of the shallower bear markets, that still gets you down to 45K. I think that's non-consensus that we're going to go that low. And so that sort of factors in a little bit. I think most people are comfortable allocating now. So I sort of expect a mean reversion short term. We went from really extreme oversold levels on the RSI over the last few weeks. And so I kind of expect a mean reversion. And then let's see, it's impossible to predict what the catalysts are going to be. You know, I think we still have what Sailor is dealing with. You know, that STRC product has been trading down a little bit again. So I don't know how that's going to resolve itself or if that is going to drive more volatility in Bitcoin moving forward. But, yeah, it's kind of a judgment call, I think, when you get to these levels. And what I'm doing is really trying to look at all the data and,
Michael Nadea:
[7:02] Really get a good hold on all of that and then start to pair it up with what I'm seeing on the, you know, sort of sentiment side. What's kind of market consensus and position the portfolio so that if things go up, you know, you're kind of comfortable.
Michael Nadea:
[7:18] But also you're ready to buy if we do get to like 40, 45K or something like that.
David Hoffman:
[7:23] So there's been a lot of conversation about the Bitcoin ETFs and the outflows from the Bitcoin ETF lately. I mean, you can just look at them. They're pretty red. You're seeing, you know, $483 million outflows on June 1st, 520, you know, 396, some very big numbers. But I'm going down to this cumulative flow chart. And man, it just doesn't look that bad, dude. Like we peaked at $60 billion total in the ETFs in May of 2026. And now here today, we're at $53 billion. So we're down $7 billion. Cumulatively, it doesn't look bad at all. It looks actually as good as a bull person would say it would look like if you were making the claim that ETF holders are actually diamond handers.
Michael Nadea:
[8:04] Yeah. Yeah. It's down less than 10%. So I think you can still say like, yeah, it's done pretty well. If you look at sort of what's happening, I guess over the last couple of months or so, we really haven't had like a strong inflow day since like early May. So it's been a month and a half, really no demand out there right now, which is sort of sad that Bitcoin goes on sale and then there's no demand for it. We've seen, you know, we're at negative outflows now for the year. And just over the last 27 days, we were at like almost twice as much outflows as any other 30-day period. So the ETS have taken a hit. But I think in aggregate, yeah, like, you know, down less than 10% in AUM is pretty solid. Yeah, you're kind of just, it almost looks like we're just sort of flatlining and just taking a pause on adding AUM there. So for me, it's more like the demand side of the equation. Who's going to come in and buy
Michael Nadea:
[9:01] And I think that's happening. I think you have long term holders that that are stepping in people that have a view on Bitcoin over the next five, 10 years are happy to buy at these levels. And then you have some people that are maybe sort of like the newer money that came in over the last year, as Bitcoin shows volatility, start starting to cough up the coin. So it's really a, you know, where is that equilibrium, you know, going to find itself? And a lot of that comes down to sentiment and, you know, what's happening in terms of just like catalysts in the market.
David Hoffman:
[9:34] There's two stories that I'm looking at. You mentioned it just now. Stretch, I think when we recorded last, Stretch was trading at like $95 and it had bounced back from its peak, from its trough of $90. So almost 10% off of par. And they started to come back up retraced by 95% it was starting to look pretty good, it does not look good today it is down while Bitcoin price is seemingly recovering we're at $91.86 on stretch so Michael Saylor's stretch product is 9% off of par that's a little bit different than, Seda which is this very much more small off-brand version of stretch, from Strive they're doing the exact same thing that strategy is they're just like kind of off-brand strategy that this one is trading perfectly at a hundred dollars so this one has recovered and then asset which is the mstr you know version of this is, not not going down but not looking i mean it's down bad over it but like in the local term it's it's not it's not terrible yeah uh mstr is down bad, and then if we look at stretch it's just like 10 off and so i do pause here with this as our canary in the coal mine i do pause here it's like well how does this get fixed? But like, I don't know, maybe if you're a Bitcoin holder, you don't really care because Michael Saylor is buying a Bitcoin again. He's not selling anymore.
Michael Nadea:
[10:53] I think that's the, so that's kind of my takeaway on it. It's like, I don't own any of these products or MicroStrategy shares. I think this is something If you're holding MicroStrategy, you got to really pay attention to this. Or if you're holding that SDRC product, it does seem to me like that SDRC product is trading down on Bitcoin weakness. So it's almost like just reflexively moving off of Bitcoin weakness. And that gets a little funky if Bitcoin does have another drawdown, which I don't, near term, I don't really see that happening. But like if that starts to show more weakness and STRC drops below 90 or so, I do think that that's, you know, we're just going to start seeing more rumblings of people getting nervous and all the eyes are just going to turn to Michael Saylor and like, what is he going to do? Again, I think if you're a Bitcoin holder, you can kind of just watch this and like look for a buying opportunity and everyone else kind of has to maybe pay a little closer attention.
David Hoffman:
[11:55] Right. Other people are playing sailor games. Sailors playing sailor games. You're a Bitcoin holder. That's not the game. You don't have to be worried about that game. And so people who are losing that game can sell you their Bitcoin for cheap.
Michael Nadea:
[12:08] That's that's kind of how i think of it and this is kind of like the case to just own the underlying asset and not get involved with like all these other sort of financialization plays off of it because you're introducing all of these other you know risks uh third-party risks when when you're owning something outside of just bitcoin in uh in cold storage so yeah that's kind of my view on it's like okay if if this leads to the ftx style unwind or something then okay that's great that that'll probably be very clear that that's the the cycle low um
Michael Nadea:
[12:41] Otherwise you know let's let's see we've got bitcoin trading above its 200 day moving average which you know seems like that's decent support uh sorry 200 week moving average decent support right now you've got the short-term holder cost basis at like 73.4k so i I kind of think we're like in a somewhat of a safe zone trading around in there and we'll see how that, you know, how things kind of start to shake out. I'm looking for some sort of catalyst on the demand side that would make me think that like, OK, there's, you know, we're going to we're going to get the Fed meeting today, which will be interesting to see, you know, what the new the new chairman comes in, what the messaging looks like. Market's pricing in one rate hike right now. If for some reason, you know, we start to think that because the war is winding down, we don't have to worry as much about inflation. Warsh wants to keep this AI thing going. Maybe the market's a little off sides on the hawkish and things go the other direction. And then that brings money back into Bitcoin, gold, things like that. So something to pay attention to there. But I think generally speaking, I think just not a lot of demand. We're clearly in the depths of the latter half of the bear market and not a lot of demand for crypto tokens out there right now.
David Hoffman:
[14:01] Maybe when we look at the Bitcoin chart, that is kind of how we sum things up is like, there's just no demand for Bitcoin, but also at least we've atoned for previous sins of previous cycles. And now there's no like toxic sellers. There's no force sellers. And so we're kind of just stuck in this no man land where no one really cares about crypto at the moment. Everyone's buying AI stonks. But hey, at least there's no forced sellers, at least in this present moment. And maybe that's why we just haven't bottomed that much.
Michael Nadea:
[14:27] So far, so far.
David Hoffman:
[14:28] So far, so far, so far. Mike, you've got a lot of charts and data I want to get into from your report this week. But before we do, we want to talk to our friends and sponsors over at Galaxy. Galaxy has really just established themselves as a global leader, first in digital assets, but now also in the critical data center infrastructure world. Galaxy is just powering the AI era. And this is really what's unique about Galaxy is how they are bridging these two worlds. They have a full-stack platform for digital finance, institutional trading, custody, tokenization, all of this. And... Not but, but, and they are also building a next generation industrial revolution. AI and HPC ready data centers, including their Helios site, it has a staggering 1.6 gigawatts of power. This is a public traded company, GLXY. Their leadership brings another level of transparency and durability that's rare to the space of crypto, but it's also spanning the gap into the world of AI. If you want to see how Galaxy can help institutions invest, build, and transform relentlessly into the frontier of technology. Go check them out,
David Hoffman:
[15:29] bankless.cc slash galaxy. Okay, so Michael, a lot of your report talked about just the Bitcoin realized losses relative to two things. Maybe you can talk about what signal the chart I'm sharing on the screen is. Bitcoin realized losses relative to change in market cap. What is this telling you?
Michael Nadea:
[15:48] Yeah, so all we're looking at here is we're measuring the increase in Bitcoin's market cap, you know, basically prior to each cycle's peak. And then we're measuring how much of that was taken out in realized losses in the bear market. And so, you know, what we can see is in 2018, 2022, pretty consistent in terms of the amount of the increase in the market cap that was pulled out to realize losses in the bear market. What we're seeing so far is like we're at like 58% of the levels that we saw in 2022 and 2018. So, you know, and that's measured as 252 days into the bear market. So we're trying to line up, you know, we're about eight and a half months into the bear market. We're trying to line things up and say how much pain, you know, how much realized losses has the market absorbed relative to that increase in market cat and And even though we've had these three plus, three 25% corrections, we still, to me, it doesn't look like there's been enough pain out there. I know that's kind of wild to say the asset's down almost 50% right now. But this is like a very high level metric that I think has some single, we've analyzed it a few different ways. So that's just sort of comparing to the increase in the market cap.
Michael Nadea:
[17:14] If you just kind of look at the relative losses, the BTC losses relative to the change in the realized cap,
Michael Nadea:
[17:23] Which is basically the total capital invested into crypto. So we're measuring the increase in the realized cap instead of the increase in the market cap in this metric. And you kind of get somewhat of a similar outlook here. The numbers shift around a little bit. back in 2022, about, you know, 252 days into the bear market. We had taken out about 43% of the increase in the realized gap. We're at about 24% right now. So just another way to kind of look at this and try to build some conviction around like, you know, have we had enough realized losses relative to the last few cycles? Again, people, the view has been that, well, this is, we're not going to see as much realized losses because the markets are maturing, Bitcoin's being financialized, and maybe that's true. And that is what we're seeing so far. And I think that the big question is kind of what we're talking about. Is there another move here? Eight and a half months in, typically bear markets last 12 plus months or so. So we could have three to five months to kind of figure this out.
Michael Nadea:
[18:33] If we just look at like the drop and the realized cap again the realized cap is essentially the total capital invested into bitcoin so one way to think about this is like if you buy bitcoin at a hundred dollars and then you sold that at two hundred dollars you created the person who bought it has a new cost basis of two hundred and they've they've created a hundred dollars worth of realized cap uh by in doing so because you sold out a gain uh when people sell at loss you're basically destroying capital uh so this is just looking at the btc realized cap decline relative to the prior cycle increase and again we've only taken out 7.2 percent of like the capital we've only destroyed 7.2 percent of like the increase uh in the realized cap over the last cycle, it was 22.4% back in 2022, and it was 17% in 2018. So, you know, high level, it just, even if you just look at just the decline in the realized cap, we're only down at 4.8% versus 18.8% as like the full cycle decline back in 2022. So,
Michael Nadea:
[19:47] Have we had enough pain? That is the question I've been asking myself this week. And I think it just comes down to what we were talking about earlier. Is there a catalyst for this rapid repricing, reshuffling of coins, another period of fear that wipes this out and says, okay, yes, we're now at these levels? I think that's the question is, does that play out or have we sort of already kind of experienced enough and there's going to be some sort of catalyst on the demand side coming?
David Hoffman:
[20:22] Yeah, all of these numbers that we're showing on the screen just point to the most luxurious bear market that we have ever had. And do we deserve it? Do we deserve it? And I don't know, man, like we've already talked about this, but like you look back in the history and you just see carnage and wreckage last bear market. And this bear market... Everyone, everyone, like, what sins do we have to pay for? Like, we have been good. Bitcoin has been good. There's been no Sam Bankman-Fried. There's been no Alex Mashinsky. Maybe we deserve this. Isn't this what we would expect as Bitcoin matures? Like, this is the expected thing. Maybe not this much, because maybe as an industry, we're not used to this level of, like, lack of pain. But isn't this what we would expect as Bitcoin grows up?
Michael Nadea:
[21:10] I think so. I think so. I think if you sort of have the view that we are maturing and we're being financialized, all of this, I think for sure we should see kind of more subdued bear markets. At the same time, you always have to, I always come back to this idea that Bitcoin is a memetic asset.
David Hoffman:
[21:34] And this time it's not different.
Michael Nadea:
[21:35] And it runs on narratives. And the reason that I think a lot of the four-year cycle is like, kind of always playing on and the reason people miss it is it's human behavior it's just the human behavior elements of this and that's that just like there
David Hoffman:
[21:50] Are new humans this time there are new humans that it's like it's not retail oriented like it's this the the market and distribution of bitcoin is in a larger base of people, so is the human behavior is at least diversified across different types of humans is that right i mean am i just trying to smoke some hopium right now?
Michael Nadea:
[22:09] I mean, a little bit. I think if you are sort of bringing in a different type of investor, I think part of the reason you have the sort of shallower drawdown in each subsequent bear market is... People that are in the market, you know, start to learn how this trades and they develop more conviction and they're coming in to buy at these levels. So I think I think it's evolving a little bit. But I also think that just man, you know, for some reason, us humans, we just like to, you know, kind of repeat the same mistakes. And so I try not to fade that. I think that's really important. We cover a lot of data and it's a lot of quantitative analysis, but there's like this other qualitative aspect of crypto markets that is really kind of like these narrative sentiment and just kind of like the psychology
Michael Nadea:
[22:57] of the market. So definitely something to keep an eye on.
David Hoffman:
[23:01] Let's look at a few other charts just so we can cross-reference this thing. I really like this chart. I really, really like this chart. So this is the Bitcoin, as the numerator with the NASDAQ as the denominator. Yes. And of course, Bitcoin has been beating the NASDAQ over the longest terms. But of course, when you see that, you can see the bear market, you can see the U.S. dollar price in here to some degree. And in the first bear market that I was in, maybe you were here too, 2017 through 2019, a 75% decline versus the NASDAQ. The most recent bear market prior, 21 to 22, 68% decline versus the NASDAQ. And here we are at a 59% decline versus the NASDAQ. This looks good. I'm sorry. I'm looking at this chart and I'm buying. I am buying this chart. This is a buy.
Michael Nadea:
[23:44] This looks good. I agree. I agree. This looks good. It looks like probably the bottom is in. You can kind of, it's a little bit hard to see, but it looks like the Bitcoin is starting to come off the low there more recently here. So, you know, I think this chart does look good. I think the one thing I would pause a little bit on it is just because Bitcoin is bottoming against NASDAQ doesn't mean Bitcoin can't still go down. So Bitcoin could, that chart could stay there and we've actually hit the bottom, but Bitcoin still could come down. What would be that scenario? It would just be a scenario where Bitcoin and NASDAQ fall together. So if you think there's a chance NASDAQ could come down another 10, 15% at some point, Bitcoin could just fall with it and that chart would look the same, right? It would just start to flatline a little bit. So, so that's something to keep an eye on, but I think, and we've talked, we've covered this in recent episodes, Bitcoin tends to be more correlated to NASDAQ in bear markets. And so far this year, it's been the most correlated we've seen. It's, it's, it's at like a 0.6 Pearson correlation coefficient. So barely correlated and Bitcoin tends to lead on that. So it's possible that,
Michael Nadea:
[24:58] You know, Bitcoin has already, most of the errors come out of Bitcoin. it's I thought maybe it was sort of leading the markets down a little bit over the last few weeks. NASDAQ has once again shown strength, SpaceX IPO, all that's going on. But yeah, keep in mind that we could still come down even if that chart has bottomed.
David Hoffman:
[25:16] Yeah, I've pulled open the NASDAQ, the Bitcoin NASDAQ chart here on TradingView
David Hoffman:
[25:22] so we can get a little bit more granular. I was talking to Arthur Hayes on the podcast and that'll come out Monday of next week. His whole trade a hypothetical trade that like you know, if his imagination went the way that he would want it to it's you sell the top of ai you buy the bottom of crypto ai has been taking all the money out of crypto all the the, speculation on crypto all the all the oxygen out of crypto anyways once the ai bubble pops because of just reality hits and like we get all this capex spending done, then around then the bid the ai top is going to be around the bitcoin bottom he even goes so far to say that the the, bubble popping in ai will be so violent that it will require federal reserves stepping in i feel like that's a little bit much but you know who knows uh but then like the idea is you sell the ai top to buy the bitcoin bottom and bitcoin bottoms when when ai is like done being so crazy and euphoric and people get bored with the public markets, seems it seems plausible to me it's not it's obviously not going to happen so gracefully like that but if you look at this chart right here, man this chart is telling you that qqq, is way overpriced versus btc.
Michael Nadea:
[26:38] Yeah, I love that story, honestly. And it's something I've been thinking a lot about as well. And like, what is the path here to sort of crypto being like noticed again, like this crypto trade, because we haven't seen like a consensus like crypto trade, you know, outside of kind of crypto natives. And I think this is the path. I think this is really interesting. There's so much capital that's gone into this AI trade and even some of that's coming from crypto. We've seen a lot of crypto natives chasing that trade, leaving crypto. And yeah, what does that path look like is I think the question. And are we going to see some major volatility come into NASDAQ at some point here? I think if we did, it's probably, you know, maybe coming later in Q3, Q4. So we'll see how things start to shake out with the new Fed chair and the war. I think, you know, I don't have a whole lot to share. I mean, we'll see. I'm curious, maybe get your thoughts. You're probably following this a little closer than I am on how durable this like ceasefire, you know, is likely to be. Because I think this is probably going to play a role in what happens over there. And if we do have that correction, which I think has to, you know, we have to come off at some point. That's kind of what you're saying with Arthur's thesis there, like.
Michael Nadea:
[28:01] If that happens, do we have a bunch of turmoil? And does the crypto markets get caught up in that? And does it lead to the Fed slashing interest rates in kind of an emergency type situation? And then everyone's like, okay, which asset do you want to be in? And you get the crypto trade, you get the Clarity Act, you get all the things that we need, and everything's in place, markets are down. So that's the dream scenario. I want to build conviction that Bitcoin has bottomed and then wait for that.
Michael Nadea:
[28:34] And then get really bullish and wait for that to play out. That's kind of how I see things going here.
David Hoffman:
[28:38] Yeah, you can never depend on stability in the Middle East region. We have 60 days of stability, it seems like. So we have 60 days of permission for things to be bullish. But at that 60-day mark, my base case is that it's basically over. The issue is basically over.
David Hoffman:
[28:56] I give that like a 75% probability but there's a 25% chance that like Israel does something to destabilize things maybe Donald Trump does something to destabilize things Iran, there's enough players who you could imagine destabilizing things it's complicated but my base case is that it's essentially over oil is going to go down oil is going down this is another reason to be bullish in my mind, is that we're at $76 WTI $79 Brent has been, the lowest has been during the war, you know, for the time of the war. And so we are starting to, you know, we're getting back at levels, right before the war started, which oil had gone up because as America deployed all of its military to the Middle East, oil went up. We are right between all of that oil price appreciation happening due to the threat of war versus the actual war. We're right between there. And so that's, in my mind, kind of like a green light for the markets to be bullish because inflation is coming. It's going to hit harder and harder over the next two months because of the lag time for the oil markets, but I think the equities market and the crypto markets are going to look at these incoming inflation reports and be like, it's literally transient this time because we know that the current oil price is down. And so it's going to only be like a burp rather than like a long-term thing. That's kind of my take.
Michael Nadea:
[30:18] What do you think about that? Maybe that gives the Fed chairman some leeway to potentially start to talk a little more dovishly you know and we'll see how that that gets expressed through so yeah a lot going on i mean i think my view on that has just been it's really complicated if it's a 60 month if it's a 60 day thing where does that where does that take us it's just impossible to like forecast this out but um yeah we'll see i think that like it's sort of like as this as these stories start to play out we tend to get consensus on one sort of side of things and then if that flips in the other direction that's like kind of the thing to pay attention to i think so the thing to pay attention to to me right now is like is it possible that like it seems really contrarian to be bullish oil all of a sudden um and i kind of want to look at just the actual like kind of physical realities out there even with this you know pause um and and try to understand if Even if the market can look forward and say, okay, this conflict is going to be resolved and has confidence in that, is there still some physical reality that has to play out in the short term if there's not enough oil to go around? I don't know. I don't really know how oil markets trade or if they would just look through it. But that's something I'm planning to look into a little bit this week.
David Hoffman:
[31:44] Here's my bull case for the price of oil, which is my bear case for the rest of the world, for everything else, is that the world's biggest countries, United States, China, Japan, have been drawing down on their oil supply to add supply to the local market to help quell inflation. So they need to buy back their supply. They're likely going to buy back more than what their supply had prior because this is the new precedent. then like the Hormuz is no longer a secure asset. So the reserve size of the largest countries in the world is going to go higher. The Strait of Hormuz is actually just not open. It's just not open right now. We're trying to figure out how to get it open and that's what happens over the next 60 days. At 60 days, there's no necessarily a guarantee that that is going to open. So we have the biggest countries in the world creating a huge demand on oil while the straight-up horror movies is not quite open yet. And so that's the bull case for oil, is actually there's plenty of buyers and, there's still constrained supply. Yeah.
Michael Nadea:
[32:51] Yeah. And some of those, I think some of the strategic reserves that kind of what you're saying, those strategic reserves have been depleted. They need to be refilled. So something to keep an eye on. I mean, it's funny. It's been an interesting topic, you know, for me to follow just because I'm just kind of going to these oil experts. And I think you guys have interviewed a few on Bankless as well and trying to hear what they're saying. And they seem to still be bullish oil, but it just hasn't happened. And maybe once it becomes a contrarian trade, it kind of gets a little more
Michael Nadea:
[33:23] interesting, but we'll see.
David Hoffman:
[33:25] I do want to turn back to the conversation of the Bitcoin versus Nasdaq chart, but maybe actually I want to talk about Hyperliquid, and I'll talk about why that's a similar thing. Hyperliquid and a few other tokens uh near zcash venice a lot of the revenue producing uh coins uh are are up are up right now and they i'm kind of correlating that to like the nasdaq so these are things that are kind of trade like equities because you can value them like equities you know hyperliquid buys and burns 99 of the supply yeah i'm trying to find a good hyperliquid chart um i guess this is the one uh and so, i had hasib on the show not last week but the week before, and he was like oh yeah like there are some of these tokens that are doing well now but they might be counter cyclical to bitcoin as in when bitcoin rips because bitcoin is going to rip one day, it doesn't mean a hype is taking hyper liquid with it in fact the fact that hyper liquid is counter, trading counter cyclical to bitcoin now means that it doesn't actually also get to follow in the upside of bitcoin when bitcoin does rip and so like some of these things you know, VVV.
David Hoffman:
[34:33] Hype, especially that are buying and burning a ton of the token are probably more like the NASDAQ. And so there's probably two different segments of the market. There's like the hyper liquid bulls who are like, look, we're like, we're going against the current of Bitcoin. Look how bullish our asset is. But then when Bitcoin turns around, it's not necessarily going to take Hyperliquid with it, because I think Hyperliquid is something similar to the QQQ, is something similar to the Nasdaq. What do you think about that?
Michael Nadea:
[34:58] It's definitely possible. I mean, this has been fascinating. When you were on a few weeks ago, we were just talking about just the amount of dispersion in the market and how things were trading independently. And this has been very interesting to follow. I think there's a case to be made here that, hey, these are just fundamentals. These things are performing differently. They have these token buybacks. I think that's what I want to believe is like durably happening right now is that the market is sort of like getting more sophisticated. It's valuing things that have clear, you know, fundamentals and like token economics where you're buying back that token. And I think that's largely why Hyperliquid has outperformed. At the same time like I would feel more comfortable telling that story if I if when I pulled up the hyperliquid revenue charts open interest chart like all the fundamentals that I would want to like I would want to see hyperliquid producing the most revenue it's ever produced when it's when when the token's at all-time high that's that's not the case so that tells me oh interesting
David Hoffman:
[36:00] Thing is hyper liquid revenue down.
Michael Nadea:
[36:02] It's it's it's down uh you know maybe 50 percent or so from peak levels uh i haven't looked at it in the last week or so but it's been the hyper that we have a dashboard and people can can check it out it's on our website um but the the hyper liquid like if you just look at the whole ecosystem yeah wow there's pockets of like things that are good like hip3 and like some of the things that they've been doing but like it kind of looks similar to like if you look up look at the Ethereum ecosystem or look at the you know it's doing a little bit better but it's bear market you know it's not like it's doing it's not like there's more traders on there than there's ever been it's things like that so that to me tells me like some of this is the fundamental story some of it's also
Michael Nadea:
[36:46] Inertia in this narrative speculation in this narrative you know there's a lot of derivative if you look at the derivatives markets on some of these tokens they tend to have more open interest um this is mostly playing on the perps markets so something to to keep an eye on you know a few weeks ago if you asked me i would say yeah things are just trading independent and that this is like really fascinating i'm i'm a little worried that like there could you know you'd have to have a catalyst there has to be some like there hasn't really been any negative news around hyperliquid or anything i don't know what what it would be um but that's kind of my view yes fundamentals but also there's like a lot of inertia we saw this we've seen this in past bear markets not to compare hyperliquid to like other things that that were sort of like outperforming into a bear market like terra luna and things like that in last cycles but we've seen like this play out in the past where there's still inertia on certain tokens and things after Bitcoin has already shown weakness. That typically has resolved in everything showing weakness at some point. So let's see. Let's see. You know, I think there's a lot of people piling into the trade right now. And as someone who's a little more contrarian, who would love to buy a dip, you know, I'm kind of biased looking for a dip here, but that's kind of a...
David Hoffman:
[38:05] Yeah, Hyperliquid did not give you that dip.
Michael Nadea:
[38:07] Did not give me the dip.
David Hoffman:
[38:08] Everyone was looking for the dip when this like head and shoulders was forming and 52, everyone was like, yeah, I'm going to buy it like 45. And now it's at 74.
Michael Nadea:
[38:18] Yeah, I just, I cannot get on the right side of Hyperliquid. We expressed a trade in perps on with Lit and that's done, that's doing really
Michael Nadea:
[38:27] well. So I'm kind of happy we have exposure.
David Hoffman:
[38:29] The Lit chart, I think is the coolest chart in crypto right now. Look at this thing.
Michael Nadea:
[38:34] Dude. This looks like a bottom. If you want to have conviction something's bottomed, this is a good-looking chart for that. We kind of had a nice bear market. You can see you've clearly broken out of those trends. And now it's just like, yeah, it's got some nice steam to it. And it's like building... That's a good looking...
David Hoffman:
[38:54] It has been linearly going up since May 28th.
Michael Nadea:
[38:59] Yeah. And this is also, you know, we own, you know, this is in the portfolio. I'm happy to see the price action. But I also am like, again, pull up our lit dashboard. You'll see that like the price action is not matching... The volume. Like actual stuff happening on Lite. Right now it's more getting, I think, which is okay, because I think it was undervalued relative to hype. So it's sort of repriced i think a little bit based on what hyperliquid's been doing um so we'll see i think you know world coin's another one that we have in the portfolio that's been doing really well um maybe not so much on like revenue and token economic fundamentals but but there's some um just kind of that narrative
David Hoffman:
[39:38] Though that narrative is good that.
Michael Nadea:
[39:40] Narrative and one thing like that's interesting about world is like their uh like app is one of the most used apps like in in in crypto so like there is a fundamental there is some fundamentals there um and you can also measure just the you know the total you know signups for that are people that are getting uh you know signing up and getting their their ids and stuff like that so something something to look for that's kind of a contrarian asset that i've kind of had a long-term view on for a while um it's been doing well but yeah like those coins like if you pull out if you look at the derivatives markets on all of those it's a totally different story from you know if you looked at Bitcoin, ETH, SOUL, where open interest has really been wiped out and it looks like basically the speculative froth is out of them. Not the case for, for some of these things that are, that are outperforming. I think it's just a matter of like, you have to have like a, a really broad, um, sort of one-to-one correlation event where everything kind of sells off together.
Michael Nadea:
[40:40] We just haven't really, really had that moment just yet.
David Hoffman:
[40:43] Yeah. Yeah. Uh, Mike, if I was a pro subscriber to the TDR, which I am, uh, what would I read or what would I learn about this week that all the free subscribers would not get access to?
Michael Nadea:
[40:55] Yeah, great question. So you would get access to this really high level view of like where we're at in this cycle based on all of this data, some of which we've talked about today. You would also get a look into what long-term holders are doing out there right now. I think that's actually something that is interesting to pay attention to. It looks like maybe we peaked. There's a story to tell there. So maybe I'll let people decide If they want to sign up,
David Hoffman:
[41:24] You can sign up for free. There is a story there, but you're not hearing it here.
Michael Nadea:
[41:27] You can sign up for free. We do give it away for free. And if you want to, you can try it out. And if you want to stick with us after 30 days, you can do so. You get access to our portfolio. So we've been pretty active establishing positions. What my goal is right now is we've been doing a ton of work on the fundamental side, identifying the themes and sectors that we think are really important that we want to have exposure to. And then really trying to get solid entries. This is the hard part is getting the right entries. I think we've done a pretty good job so far. Not super pleased on like a couple assets in the portfolio, but portfolio is up. And the goal is to like get into positions that we have high conviction on and get into at a level where like when the market turns and like people start to come back into crypto, So,
Michael Nadea:
[42:20] There's really not even an acceptance that we're in a bull market. And if you get into the right assets at the right valuations, you can be up like 100, 200 percent. And, and, and kind of let things play out from there, let these marketing departments, these communities, everybody start to work for you. That's, that's really the goal. It's obviously easier said than done. It's a high bar to get to, but that's the work that I'm doing right now. You know, we're getting into positions. We're also keeping some cash behind just in case, you know, we get another fat pitch here. So yeah, you get access to all this. We send out alerts when we make, when we make changes to the portfolio. So people are interested, they can check that out.
David Hoffman:
[42:58] I read the portfolio every week. I take advice from Mike. I'll tell you what I'm doing downstream of your advice is with the little roommate, I'm never kind of really sitting on a lot of dry powder because I always like to be fully allocated. But I got some and I'm aggressively DCAing. I will run out of that cash in like two months because I'm aggressively DCAing into Bitcoin. And then that's it. That's my fat pitch.
Michael Nadea:
[43:25] Well, there's so many different ways to do it, right? And what's interesting in some of the feedback I get from some of the TDR Pro members is there's sort of like some people that find value in this and they're not necessarily copy trading, right? They're just kind of like they want to get the views. They're managing their portfolio mostly themselves, but they want like a view. They want perspectives. Perspectives and maybe some of the stuff, some of the trades they add to their portfolio. So some people are doing that. Other people sometimes disagree on most of it, but they still want the perspective. And then other people are sort of like a little bit more hands-off and are kind of like sort of using this to mimic their own strategies. But I think there's different ways to do it. There's different ways to get value from it. And that's been cool for me to just get some of the feedback from some of the readers.
David Hoffman:
[44:15] Well, there is a link in the show notes so you You can sign up for free and get access for free for one month. And then you'll convert because it's the most valuable newsletter, alpha newsletter out there. Mike, it's another week. You're back with Ryan next week, but I'm looking forward to whenever Ryan goes on vacation again so we can tap back in.
Michael Nadea:
[44:31] Likewise. Yeah, thanks for filling in, David.
David Hoffman:
[44:32] Cheers.