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Our weekly show is hosted by Michael Nadeau (The DeFi Report) and Ryan Sean Adams (Bankless). Each week, we discuss how we approach managing our own portfolio and the data, research, and analytical frameworks that inform those decisions — for educational and informational purposes.
Ryan Sean Adams:
[0:10] Welcome to The Report. It is August 26th, 2026.
Ryan Sean Adams:
[0:15] Regime shift. This is going to be an exciting episode. We are asking the question, did Bitcoin just enter the early bull phase of the next expansion? Guys, on the week, actually in a 48 hour period of time, Bitcoin rose 22%. This was the largest short squeeze since October 2020. The whole crypto ecosystem was moving up. This happened just after we stopped recording last week. And somewhere in between last week's episode and today, Mike Nadeau.
Ryan Sean Adams:
[0:51] Flipped full bull, okay? He's not calling for new lows now. That's not his base case anymore. He thinks that the lows may already be in. So I got to ask the question, what changed? Why did it change? What's the move now? We of course have Besant doing big things. He is signaling. He won't tolerate any high yields on the long end of the curve. Was that it? Mike calls it debasement. We're going to talk about the changing macro conditions and the big changes in the TDR portfolio this week. Here's a line from the report. When the conditions change, we update our views. Guys, make sure you hear these updated views and stick around to the end. There is a number that I'm going to say right now that we'll refer back to. That is 81.8K.
Ryan Sean Adams:
[1:43] Mike, I don't think since we started these podcasts anyways, the audience has met full bull Mike. This is full bull Mike on today's episode. I got to ask what changed and when did it change from last week where your base case was, ah, we're probably going to see another lower low to now. You don't think that's the case. You are as fully deployed as you can be almost, according to your strategy. What changed?
Michael Nadeau:
[2:12] A lot changed. Yeah. Like you said, after we finished recording last week, there was a massive short squeeze in Bitcoin, which was kicked off by a very interesting catalyst that we're going to get into in the macro section this week. And that's really what it was. The last few weeks, we've been going through the data and we've been saying that.
Michael Nadeau:
[2:32] In terms of like the cycle metrics that we look at, the market structure, Bitcoin's relationship with NASDAQ and gold and S&P 500, we felt that we could make an argument that the cycle lows were in. And it was really the macro setup that was giving me pause with rising long end yields and what that could potentially mean for risk assets. And my view was that it sort of made sense to kind of keep some cash, a little cash on the sideline, right? We're deep into this bear market we've been buying and we've been building on our portfolio, but those risks were sort of preventing me from like being fully risk on into the market. And what we've seen now is basically a new policy that looks like volatility control. I think you could call it yield curve control. We'll get into some of the mechanics of that.
Michael Nadeau:
[3:20] I didn't think we would see this before we got any volatility in the markets. And, you know, we've had a little, there's been, you know, NASDAQ came off and now it's trying to get back to all-time highs. But normally you'd see like policy intervention during, you know, a risk off move in the markets, lots of volatility, the move index going up, VIX going up. We haven't really seen that yet we have intervention. And so this to me signals that the concerns, those risks that I was worried about are are somewhat being removed from the market, And there's a lot of signals that come along with and how sort of the market's reaction function responded to those signals. So that's really it. You know, we can go through the data and really get into that catalyst because I think there's a bigger picture behind this as well. That's important for the crypto markets.
Ryan Sean Adams:
[4:14] So Besson tipped you bullish and we'll explain why in today's episode. Did I overstate things? You are risk on mic now. I don't think the audience has ever seen that from you since at least we started this podcast. That's right. You're full bullish now, right?
Michael Nadeau:
[4:28] I'm full bullish. I mean, I think there's still some risks out there and we can get into some of that. But I think the probability is pointing to the lows now being in. And when I had a chance to kind of go through some of the data as the smoke cleared last week, there's some stuff in there that just makes me think that it's going to be hard for us to actually break those lower lows going forward. I do still think there are risks out there. I still think the AI trade looks like it's rolling over. Looks like we've been in sort of a, you know, wealth distribution phase there for a little while now and also had a blow off top. So I still think there's some risks. But in terms of like portfolio management, yes, we are in a risk on stance. And it is the first time since, you know, TDR Pro has been a live product in the market and, you know, we've been recording these episodes.
Ryan Sean Adams:
[5:17] There you go, risk on Mike. He is here and he's going to be with us, I think, for a while. Just for continuity's sake with these episodes, last week and for the last, I don't know, month or two, I've asked you the probability, the odds that we'd see another lower low, another correction. You've repeatedly told me 65%. That's where we ended last week's episode. I want to ask you that same question. What is now the probability that we see a lower Bitcoin? If last week and for the last couple of months it was 65%, what is it now?
Michael Nadeau:
[5:52] I would say we're probably down to 40, 45%. So we're on the other side. You know, it's not like a huge, we haven't like tilted to 80, 20 on the other side. I would say it's now tilted in the favor of the lows being in, but it's, there's still, as I just mentioned, there's still some risks out there. But I think the probabilities are now favoring that June 30 low, 58.5K is very possibly the cycle low. And we may now be emerging into what I would call like kind of the early bull phase of the market which is still very early you know in the cycle I think a lot of people are out there, got a little twisted up last week feel like they missed things I think everyone should calm down we're still very very early in this cycle there's plenty of opportunity out there which we'll get to as well but yeah that's kind of how I think of it it wasn't like, super tilted in the other direction. It has moved to more probabilities that the lows are in, but still some risks out there, I'd say.
Ryan Sean Adams:
[6:50] So part of, I imagine we'll be exploring in the weeks to come is confirmation
Ryan Sean Adams:
[6:55] that the lows actually were in on 630 and whether we see that in the price or not. But speaking of price, let's take a look at it. So Bitcoin right now trading at about 78K. So this is up on the week, on the seven day, about 20%. Let's start, we'll get to best in the macro in just a few minutes, because I think that is the thing that has really tipped you over. But let's start with market structure and some of the coin rotation metrics that we see. And there's this 56 to 66K cohort that we've been talking about over the last month. Last week, a key indicator, one of your key indicators was hit that that cohort became actually the largest cohort owner of Bitcoin supply. That only lasted for last week, though. It was only a week. And that has now flipped. Talk about this metric and what this means.
Michael Nadeau:
[7:55] Yeah, so pretty interesting. We've been eyeing that 56 to 66K cohort as sort of the fair value range for Bitcoin price, but also where we thought the most coins would ultimately consolidate in the bear market. We were able to check that box last week.
Michael Nadeau:
[8:11] What's interesting here now is with this big short squeeze that we had, 22% move in a very short period of time, 48 hours or so. We're actually up about 36% to go all the way back to the June 30 lows, which is right in line with the bear market rally that we saw in April, May. Um, but yeah, what's, what's, what's interesting here is we've been expecting those cohorts 66 to 78K, 78 to 92K, the cohorts directly above it to actually continue sort of some of their coins going into this 56 to 66K cohort. That is not what happened last week because we bounced off. Actually, most of the buying was in that 66 to 78k cohort. And there was a good amount of selling from the 56 to 66k cohort, which is kind of interesting. It kind of suggests that there's some traders in more hot money, you know, that was buying those dips back in June, July, and was happy to sort of get out of that trade up 20, 20 to 30 percent or so. So that's a little bit interesting. And there's been a ton of buying in that 66 to 78k cohort, which is now the largest cohort. So sort of interesting when I go back and look at like, how did this play out in 2022?
Michael Nadeau:
[9:30] What we saw was the prior cycle top cohort, which was like 17 to 21k at that time. And once that became the number one cohort in terms of the most coins, it stayed there and it continued to grow for another 60 days or so right into the FTX collapse. This is a little bit different where we kind of went there. We think a lot of the sort of high level cycle metrics had touched areas where we were expecting to see the lows. We hit we checked this box and then a week later we reversed out of it. So, you know, I think the question and the question on my mind last week as this was starting to play out was like, is this an idiosyncratic, sort of market positioning move where we had some short positioning around 62K or so that was blown out when the Bessett news hit? And then later in the day, Trump was meeting with a lot of the crypto CEOs and there was meetings at the White House press conference, mentioned Bitcoin, mentioned Hyperliquid. Boom, you took out another layer of short positions and we went, you know, almost all the way up to like 80K or so in a really short period of time, you know, that's a idiosyncratic move. It could be positioning. And so we're going to get into some of the sort of, current conditions data because that's, you know, the key thing is this, is there durable buying? Was, did we get that reset of the holder base? Was there durable buying there? Is it spot buying?
Michael Nadeau:
[10:57] Are there sort of, you know, what's happening in the derivatives market? We can get into all this because that's really where I'm looking to try to figure out. Is this really a market positioning move? And we were just so oversold. We had shorts piled up. People got complacent. We reversed out of that. Now, where are we going to find the sort of like support? Is it going to be above 70K, which is like the, I would say, bull market support above that 200 day moving average? Or are we potentially going to dip down again? So, yeah, interesting market positioning going on.
Ryan Sean Adams:
[11:28] That is the alternative explanation for this. It's not that, you know, we've seen the lows and the bear market is over. And, you know, the lowest of lows for Bitcoin was 630. It's that this was another short squeeze. And you've been unafraid to call out other head fake short squeezes in the past when we see them. But this one, you're saying, well, this one may have some more juice. And I do get the sense it's kind of macro again, that's tipping you over the edge, but we'll get to that case later. I guess for this, when I look at this metric and we were there, I don't know, five to six days in this kind of cohort with the largest of supply rather than 60 days, it does seem to be like a shallower hit of the metric than we've seen previously, which doesn't necessarily make me confident that the bare lows are in.
Ryan Sean Adams:
[12:18] But let's talk about some other metrics that are important. This is Bitcoin realized losses relative to increases in realized cap. And another one, Bitcoin realized losses from peak. What do you see here?
Michael Nadeau:
[12:29] So both have been rising. We've been sharing this and tracking realized losses in relation to the increase in the realized cap. We've been saying that we thought maybe that would get up to 30% or so, probably still will or go into the low 30s or so. We expect the sort of percentage, you know, of that, the percentage of the losses of that realized cap increase to be lower this cycle, primarily because we have a much larger denominator. We had $740 billion of realized cap increase in the last bull market. And so it makes sense to me that realized losses would be a lower percentage, like a lower low than what we saw back in 2022. Yeah. And from just like a, you know, total notional level where we've had 216.5 billion of realized losses now, exceeding what we saw in 2022, when we were about about 192 billion at this stage of the 22 bear market. So, you know, this, for me, this like is pretty much in line with some of the other, you know, high level KPIs that we're tracking and also what we're talking about on market structure in terms of kind of resetting the holder base. So there's a chance it's not complete but it's pretty close there.
Ryan Sean Adams:
[13:45] Yeah. And I felt that way with a lot of your cycle KPIs, which is just like if you squint, you can kind of see that it's complete. It's technically complete, but it's not a very, I mean, it's kind of a shallow, a more shallow low than we've seen in previous cycles. But I know I've asked you before, and you've been pretty consistent on this. I've asked you, hey, if in the future, we realize that the bear market ended in, say, June or July or something, would you have considered your cycle metrics kind of complete, that we actually had a repeating cycle? And you said yes those previous times. And this just seems like more confirmation of that. If you squint, you can kind of see, yep, we completed the full cycle. Maybe I want to ask you about another number that you've been pointing towards, which is volume. It's been a thesis that you've stated here that we will see high volumes when it comes to kind of like capitulation time and previous headfakes. We haven't seen the volumes. This week, we did see some volumes in terms of ETF flows, also in terms of spike volumes. There was a spike last week. We'd see it. The Bitcoin spot volume on this chart, you could see the spike. However, when I look at this spike, Mike, compared to the what was this, the 2022 spike, you know, where the bear market was really confirmed, this spike seems a lot smaller. So we do have volume. But is it the capitulation volume that you've previously been looking for?
Michael Nadeau:
[15:13] It's really not. So, you know, I think we have to sort of look back at that period back when FTX was imploding and when those volumes really, really escalated back in 2022. I have been looking for more of a sort of like rapid reshuffling of the coins. I sort of thought that's what it would take to get to what we saw last week with the 50, 60, 66K cohort becoming the largest cohort on chain. We've kind of got there in more of a sort of time-based capitulation mode. That doesn't mean we can't still have more volatility in that rapid reshuffling of coins. But I'm sort of putting more weight just on all the other metrics that we're covering, what we're seeing in the market structure, and now the shift kind of like in policy on the macro side. So yes, this is one that, you know, where the box hasn't been checked, like there's always going to be some KPIs that don't actually hit, right? This was true also at the top. And this is really more art than science in terms of like just going through a check, you know. So I think there's always going to be some stuff. We have to apply more weight to some things, but definitely something I'm tracking and gives me a little pause that we haven't, you know, seen that really high volatility.
Ryan Sean Adams:
[16:33] So I guess part of your insight here in your investor journal is you can't be puritanical with respect to these KPIs. You have to let other factors weigh into the investment decision as well. And it does seem that if you're right, that we've seen the lows, that this bear market ended in a whimper rather than in fireworks, like previous bear markets have ended much more in fireworks.
Ryan Sean Adams:
[16:56] And I guess the rational investor has to be open to that. But there's some other metrics here. I do want to get to macro, but important to note that we also saw animal spirits alive in other sectors of crypto. So it wasn't just Bitcoin. Dex volume, Solana, the meme economy going strong. Ethereum's DeFi system also strong. And this was notable. Strategy continued to shore up even more capital.
Ryan Sean Adams:
[17:23] And they now have three years of dividends. So they issued some more MSTR, $136 million that was used to repurchase SDRC, $300 million to their USD reserve to fund future dividend payments. So they're pretty strong from a cash position perspective. And this is something I hadn't considered that is in today's report. People still think about strategy as a net seller of Bitcoin, and that's a risk to the market. What if they now turn that into a net buyer with their cash position? You say that strategy now has nearly 1.6 billion of dry powder to purchase Bitcoin. Oh, my God. What happens if strategy suddenly it'll seem to a lot of the market participants out of nowhere starts buying Bitcoin again?
Michael Nadeau:
[18:12] That is, that's why, you know, I think some of these things are pointing in the direction that those could be in. And they issued a ton of MSTR this week and raised, you know, $2 billion. So a lot of that went to repurchases. A lot of that went to funding the dividend payments, but the bulk of it is now in a cash pool that they can use to buy Bitcoin. And then on top of that, you've got STRC looks like it wants to move towards par. And if they can get it back to par, he can potentially even, you know, possibly issue more shares of that and get even more cash on his balance sheet to buy Bitcoin. So this is, you know, the crypto markets are extremely reflexive. You have to respect sort of how this works. And I think this is part of the reason why we've been saying you want to be allocated, you want to be allocated. Yes, there are risks in the market, but you want to be allocating because once things turn, there's always this reflexive move behind that. We saw that you just mentioned sort of what we alluded to and sort of a large breadth move across the entire crypto ecosystem last week after BTC initially moved. And that is an interesting signal to me because we haven't really seen that type of a breadth move in these other bear market rallies. Yeah.
Michael Nadeau:
[19:31] You know, the return of sort of people coming back in and sort of potentially seeing some wealth effects. We're seeing active loans and things like that picking up on, dex volumes starting to pick up. So those are the things that like the reflexivity starts to build. Animal spirits come back. Sailor starts doing things that kicks off even more reflexivity. So I think it's something you got to pay attention to.
Michael Nadeau:
[19:55] And it's sort of a risk to the upside that you always need to be aware of.
Ryan Sean Adams:
[19:58] Okay. Okay. Let's talk about the main event, the thing that really tipped you over. You call this the catalyst. That is what's happened in macro between last week and now.
Ryan Sean Adams:
[20:10] You start with this. We've been talking a lot about bond market, in particular, long duration bonds, 30-year yields going up to 20-year highs. That's been a theme over the past few weeks. You write this, it's been our view that the bond market is demanding a higher yield due to excessive fiscal spending. Of course, we've seen that. Wars and funding concerns, geopolitics, oil prices and inflation, and deglobalization. So we have new trade alliances, and this is causing structural higher inflation. In fact, you've pegged that as a concern. That's why you've been concerned about macros, because you're seeing long duration bonds move in terms of yield. And you're like, this is a catalyst to the downside. This could cause a cascading pop that pops AI, causes a risk-off sell. That reversed for you this week. And I think it's because of one institution and one man, although this is probably all linked, is the US government, but Besant and some of his statements. You say this, last week we learned that Treasury Secretary Besant shares the same concerns, the concerns that I just outlined. What happened with treasury buyback on August 19th? And what is this like treasury general account? People are talking about $1 trillion. I didn't know we had this money.
Ryan Sean Adams:
[21:36] Tell us what's happening right now in Treasury and with long duration yields.
Michael Nadeau:
[21:42] Yeah, so a lot going on here. And there's a lot, there's a really big picture that we can talk about as well. So this really started, we talked about this a few weeks ago with FX intervention in Japan that was really designed to strengthen the yen without the Bank of Japan having to sell any of their treasury. So that was kind of the first signal we got that Besant was concerned about rising long end yields. He put that signal out to the market to sort of calm everybody down. Hey, the yen needs a strength, but don't worry, they're not going to sell treasuries like we're going to manage that. That was kind of the first thing that happened. And then last week, and I think this was announced probably while we were recording last week, or actually, maybe it was before, because I think we might have mentioned it, basically came out and said that the treasury is going to double the amount of the repurchases. So the buybacks that they're executing in the market, they've already been doing $2 billion, you know, per auction on the 10-year, I think the 10 to 20-year and also the 30-year. And they're going to pick that up to $4 billion. What they're doing there is essentially, you know, managing the amount of like off-the-run long bonds that are coming into the liquid market. So they're trying to take away the need for the market to absorb these longer-duration treasuries, and they're issuing short-duration treasuries to pay for that, right?
Ryan Sean Adams:
[23:09] So it's basically like we'll issue T-bills and use the T-bills that we issue to purchase the longer-duration, the 10, the 20, the 30-year, right?
Michael Nadeau:
[23:19] They're issuing the T-bills, and then – so they issue the T-bills, they get cash. when the market gives them cash they go and buy the long end box so that's the exchange what that's doing is it's removing the, long end it's removing duration from the market, It's also putting like these cash-like instruments into the market at the same time. So this is sort of like a debasement type trade here. I think this is why you saw this like reaction and gold has been doing well and Bitcoin's been doing well. It looks to me like this is basically treasury QE is really, you know, what it looks like to me. Yeah.
Ryan Sean Adams:
[23:58] Sharpen that intuition for people because some people will say a debasement trade. We're actually just swapping dollars, types of dollars, let's say, you know, T-bill type instruments are increasing, you know, decreasing, you know, long duration bonds, but it's kind of a one-to-one swap. Where's the money printing that's happening here, Mike?
Michael Nadeau:
[24:18] The money printing comes when they come to market with the bonds. So that's, you know, they're coming to the market. We need to get that money. So yes, it's a swap, but because you're reducing, the duration of the long end and suppressing the yields out there, which if there is a true market price and they want to reprice higher, that causes other issues with risk assets and asset allocation. So you're managing the long end of the curve is what's going on here.
Ryan Sean Adams:
[24:51] What people don't understand is that T-bills are much more of a money-like instrument than long-duration bonds, which of course have volatility, right? The market trades those ups and up and down. I mean, treasuries, they're just kind of fed fund rates. They're much more cash-like. And so in a way, you really are printing money. But what is this? So it's just seemed like a little bit. You know, it's going from two to four billion or something like that, maybe four to eight, something like this. Very small amounts. And then I read a headline. I don't know if this happened Sunday or Monday earlier this week, that there is some talk of the TGA, that is the Treasury General account that apparently holds $950 billion that Besson is saying this $950 billion might be used to buy even more bonds.
Michael Nadeau:
[25:44] Possibly. That's what the market's starting to speculate. I don't think they've actually communicated that with the market just yet. And you're correct. This is sort of like, you know, it's $2 billion to $4 billion. And then Besson also said that's going to be the floor going forward. That was like the next day, which I think also caused, you know, more volatility gold in Bitcoin.
Michael Nadeau:
[26:05] For me it's like it's more the signal right it's more just like this this chain of events now with the fx intervention with more management of the long end of the yield curve and then more messaging around that, it's really to me it's it's what's being signaled to the market and the market is reacting you know to that signal we're seeing people, allocate into non-sovereign you know of store value assets because of this. And I think a lot of this also has to do with potentially what we could see is an escalation in what's happening over in Iran right now. This communication by Bessent was made before a press conference on Monday about Operation Economic Outcast, which is basically a sanctions program run by the U.S. Treasury that's going to be designed to basically, I think the words that he used was asphyxiate Iran from the global economy. So I think... And the messaging, the timing of it makes sense as well, that you would say that and you sort of try to calm down the bond vigilantes right before the war potentially escalates when strategic reserves are already somewhat depleted, and there's a lot of concerns around inflation and kind of where this is all going.
Ryan Sean Adams:
[27:24] Well, right, because I mean, part of the economic sanctions, and we saw this with kind of the Russian sanctions against Russia in like 2022 and 2023. I mean, everyone around the world has to be looking at kind of the treasuries that they hold and the bonds that they hold and saying, well, like how, you know, could Besant and the Trump administration asphyxiate us? I mean, maybe we don't want to hold these assets, right? We want historic value assets that aren't treasuries, right?
Michael Nadeau:
[27:54] 100%, yeah.
Ryan Sean Adams:
[27:55] Okay, so let's maybe compare this because... I don't think people fully understand what the game plan Besant might be going for is. But you hearken this to something that happened during a very high debt to GDP era of U.S. economic history that everyone listening probably will not remember was not alive at this time. And that was during World War II and after World War II, the post-World War II era. And this was some coordination between Fed and Treasury that happened then, which is what we might be seeing early signs of with Besant and Warsh in this administration. And back then, the Fed explicitly agreed to suppress Treasury yields. So again, this is treasury yield suppression. Last time, it was the Fed really pushing it.
Ryan Sean Adams:
[28:51] And this was to fund the war, the recovery, to get debt to GDP lower. Can you talk about what happened in the 1940s, particularly this 1946 to, say, 1951 era of U.S. economic history? What did the Fed and Treasury do then? How were they controlling things and what did it lead to? Yeah.
Michael Nadeau:
[29:14] Yeah, this is a great, I think, period to be going back in history and looking at other times where we had these sort of similar setup across, you know, debt to GDP, just the amount of public debt that's out there. And then, you know, geopolitical tensions and all this kind of coming to a head. And so, yeah, what the policymakers had to do back then, to basically allow the economy to process the war and fund the government during the war and out of the recovery was to pin the long end of the curve at 2.5%, and basically run this same program where you're issuing T-bills and also the Fed is buying a lot of those bonds. This was more of a Fed QE, which we haven't seen just yet, but potentially may be coming. And it just gives you a little insight into the solution to these problems when debt-to-GDP gets as high as it's going. We keep hearing Bessette say, we need to grow our way out of this. We need to grow our way out of this.
Michael Nadeau:
[30:23] What that means is basically this playbook where you pin interest rates on the long end down. Either the Fed has to buy it, the Treasury has to buy it, somebody has to buy that, and you're probably printing money to fund those purchases. You run the economy hot, right? So you have higher inflation, which means tax receipts go up. Hopefully, people's incomes go up. We know this damages the sort of bottom half of the economy. And there's probably, you're sort of, in my view, what sort of happens during these periods is you're trying to suppress volatility and fund the government. But what you're doing is sort of pushing that volatility into the social fabric, by, you know, as a result of these programs. So that's what they did. And by doing so, they were able to get, you know, debt to GDP in 1946 was at 106%. By 1953, they had a six-year period where they were running essentially this yield curve control. By 1953, the debt to GDP had dropped to 56%. And that's because you're pinning the yields and then you're running the economy hot and increasing your tax revenues and everything. So that's to me is like the only way that you can actually grow. When Besson says we need to grow our way out of this, that's what he's saying.
Ryan Sean Adams:
[31:43] You think we need to grow our way out of this? He's talking about money supply. He's not talking about the economy and upside. He's saying we need to grow our way out of this by printing more money.
Michael Nadeau:
[31:52] Exactly. Printing more money, directing that to the right areas of the economy, hopefully creating jobs, creating more economic activity. And also lots of inflation that comes with that. And then what does that mean for asset prices and asset allocation and things like that? So we're seeing that, I think, the early signs of this with gold and Bitcoin. What's interesting, I mean, from when you just think about that period of time, and sort of access to information in the 1940s and what did the investing public really know about these operations? I think it's totally different today in terms of the communication, in terms of, you know, Twitter and X and just access to information and how that travels on the internet, And how fast assets also move, right, today versus back in the 1940s. So, you know, capital is able to flee, you know, much, much faster now. And we also have things like Bitcoin, which were designed for this very moment. So I think it's going to be harder to, like, execute this quietly and cleanly, I would say, I would think. But to me, this is the big picture of what we're starting to see, you know, play out here.
Ryan Sean Adams:
[33:01] And that could be what the market is sniffing out and why you see a 22% price move when the market catches a whiff that Besant might be playing the late 1940s playbook. And during that period of time, too, like there were some pretty high inflationary years, like 1946, 1947, 17.6%. And overall, during that period from 1946 to 1951, prices rose 42%, while the bonds were capped at 2.5%. So long duration bonds just got a massive haircut. Now, we did go from, as you said, something like 106% debt to GDP to 56%, right? Because we inflated it all away, we printed all the money. Right now, debt to GDP is 122%. You could see a similar playbook maybe needing to be put effect to get us back below 100, maybe to something in the 90s, maybe something in the 80s. And you've always said this and repeated it in the report, Bitcoin as a truth bill, right? The market really sniffing out this debasement trade and flowing into debasement hedge assets. So I guess...
Ryan Sean Adams:
[34:18] Asking the question, is that why you made the moves? Is it basically you see now, you've always believed in the debasement trade at some point in time. Previous weeks we've gotten together, you thought that maybe a capitulation first, a long yield would get ahead of itself and that would cause treasury and the Fed to have to intervene. Now you're saying the regime has shifted and it looks like they're proactively intervening. They're already planning to intervene. They're already making steps and therefore debasement trade all in. And you don't want to be on the wrong side of the debasement trade.
Michael Nadeau:
[34:54] Yeah. I think this is the most important thing that's factoring into sort of my views on the market right now.
Michael Nadeau:
[35:02] And when I think about.
Michael Nadeau:
[35:07] Sort of what is the incentive and what is kind of happening with the Fed and the Treasury? We talked about a few weeks ago, I think, about, you know, Warsh and what we think the Fed is trying to do is sort of, you know, lack of forward guidance and sort of letting the long end actually sort of find its true market price. That's sort of what my view was a few weeks ago, that he was going to let that play out. We might see rate hikes in September. And if they're going to let that play out. It's a sign that they want a lower liquidity. They want inflation down. And like, that's sort of a natural way to get that. And I still think, I still sort of think that's kind of what they want to happen. I don't, I'm not going to, I don't, I don't think what Besson is doing is like totally trying to pin those interests. That is when you get the Fed QE and they're actually trying to pin it. I would still call this more active management. And so it's possible that that long end of the curve can still rise a little bit here. And when you factor in sort of what's happening in the AI trade and stuff like that, I can still see a scenario here where the market sort of tests decent, right? Like I kind of expect that to happen. Like the market's going to test that level again.
Michael Nadeau:
[36:24] The 30-year has come off since this was announced and we could still see that correction. Even in that scenario, you would still have, you'd have to have like a 25% drop or so, you know, for Bitcoin to get back down to the June 30 low. And so if that if this still plays out and it's maybe a little bit more of a controlled thing and they just want to control the volatility of that they don't want um.
Michael Nadeau:
[36:48] It to happen rapidly in a chaotic fashion then i can see almost kind of like similar like a 2022 type q4 where, um the the nasdaq sells off as the fed's hiking rates um bitcoin has i think, sort of completed its cycle and we've kind of come off those lows, maybe there's some weakness coming for Bitcoin. But do we get to deep value territory is like kind of where I'm saying, I can't put the probability there based on what I'm seeing in terms of this new policy and how the market's reacting to it. And then also what we talked about with like sailor and reflexivity and everything that I'm seeing in terms of people coming back into crypto, on-chain activity picking up, animal spirit activity picking up. You know, I sort of think it'd be hard for us to go all the way back into deep value from here. But this is kind of the setup in my view. So definitely, definitely art, not science at this stage.
Ryan Sean Adams:
[37:48] I do wonder, though, if Besant might back off from kind of the yield curve control type of path that he seemed to be signaling the market interpreted this week. Did you see that Wall Street Journal editorial from Stan Druckenmiller? It was like Besant's mentor. He basically said, hey, like, don't do this. He's talking to Besant. He's saying, don't do this. You're making a mistake. Like the long end of the yield curve is bond investors basically telling the U.S. government to get their house in order from a fiscal perspective. And if you cover that up, Things are only going to get worse from a fiscal deficit perspective. So let the market play out. Don't try to control this. It would be a mistake. It would be a mistaken policy. I wonder if you might take that chiding from people like Druckenmiller and back down a little bit from this type of yield curve control.
Michael Nadeau:
[38:43] Possible. It's definitely possible. And it feels like we're going to get some volatility around this. I do expect that there's going to be some volatility around this. I think that was interesting that Druckenmiller put that out there, kind of calling out a guy he used to work for. And you'd think that he'd be able to just call him up and have a discussion, but he put it out in the public domain like that, which is kind of interesting. And he kind of alluded to a lot of, I think, the concerns that I would have around this too. When you think about, and I think maybe this is where he's coming from, when you talk about how fast capital can move now and access to information, when you start making these signals to a market when you're not even in a correction, it's a little scary what you could see. So there's a chance that, yes, he has to sort of let some volatility come back, let the free market sort of establish itself a little bit before we see kind
Michael Nadeau:
[39:39] of, you know, how this is ultimately going to play out.
Ryan Sean Adams:
[39:41] Okay. Let's talk about what you're doing in the portfolio, but first some key levels. Now we have key levels that are a lot higher than the key levels we've previously talked about. What are the things to highlight this 81.8K numbers, the 50 week moving average? Anyway, what are the numbers that you're looking at right now and what would really confirm that we are back in kind of the early bull phase of the market?
Michael Nadeau:
[40:07] So the key level that I'm keeping an eye on is 70K. So the short-term holder cost basis is at 70K. The 200-day moving average is at like 69.2K. So if we stay above 70K, that's very bullish, I would say. And I would think the path forward from there would potentially be taking out the 50-week moving average, which is 81.8K. That is the key sort of we're entering the early bull phase confirmation for me that I would be looking for. The challenge with that is you're not going to get that confirmation. You know, once that happens, you've already missed, you know, you've missed some of the move here. What I think, you know, typically what happens is you break that and then you come back and revisit it. So you break it, you tap back down to it, and then the bull market starts to kick off. So there's a few different scenarios. You know, we could, if we continue to see strength, we could push through that 82, I would say 82 to 84 K. I expect resistance there because that's where the 50 week moving average is. If we do push through that. We could sort of go up to 90, 95 K or so, and then maybe come back down to that level, 82 K.
Michael Nadeau:
[41:23] Now you're in the early bull, I would say. The other scenario is the market, it doesn't really have continued strength and durability from the current levels we're trading at. And, you know, a lot of that sort of, you know, market positioning move, short squeezes and stuff sort of reverses out, and we potentially dip back down into that high 60s, low 70s level, probably a decent buying opportunity if it does come back into that area. But that will be the key level to look at if it's going to lose that support because now you're back where you were a couple of weeks ago where you're trading between the 200 week moving average and like 70K and wondering if you're going
Michael Nadeau:
[42:07] to go to deep value from there.
Ryan Sean Adams:
[42:09] Now, let's talk about how the TDR portfolio is playing it. So I think I counted in my TDR Pro membership, I got three different price alerts that Mike was buying in the market. I think last week we ended things and you had something like a 20% cash position. I believe now you have a 10% cash position. So that is about as fully deployed as I have ever seen you. So you are deployed, I guess, bags packed for this market. And I think that TDR Pro members should be pretty happy with some of the returns. Can you remind folks, since the TDR Pro was actually launched, what's the upside relative to cash and relative to Bitcoin that the TDR Pro portfolio has enjoyed?
Michael Nadeau:
[42:54] Yeah, so the number's always moving around a little bit, but with that big move last week, we're up about 60% in terms of unrealized gain loss on the total portfolio. So that represents all the positions we're in currently.
Ryan Sean Adams:
[43:06] 60% above just fiat, above cash.
Michael Nadeau:
[43:09] 60% above cash. If you factor in how that looks against Bitcoin since TDR Pro inception last July, I think we're up 90% of alpha points against Bitcoin. So it's looking good. The non-BTC percent of the portfolio is actually up 90%. So that's a very important thing to me. If I'm going to allocate to something other than Bitcoin, I want it to outperform Bitcoin. So in most of those positions, we're outperforming Bitcoin as well. So looking good. I, you know, I think we do a few weeks ago, you asked me, I was kind of like prepared for the portfolio to go to zero to go to or not to zero, but to break even, right? Like, I kind of think if you end the cycle.
Michael Nadeau:
[43:55] And you're up in your portfolio in a crypto winter. That's like a huge win. So this is sort of unexpected. It feels like maybe it's hard for me to say like where this is ultimately going, but really happy with the positions. I think it just highlights the importance of having, you know, discipline and a framework. I think, you know, we have the watch list and we have all these assets we're doing fundamental analysis on. We have fair value targets. And that's really important because having those targets and sort of knowing what you want, what categories, what sectors, what areas you want to be allocating into, when it goes to fair value and you have a thesis for something, you just buy it. You don't try to time the market and get, you know, I think a lot of people got twisted up a little bit last week thinking the lows weren't in. So maybe I'll wait on some of these other buys. You kind of have to just buy things when they hit fair value and get into your positions and then keep some cash just in case there's deeper opportunities. So I think the framework is largely working. It's not perfect. We never expect it to be perfect, but definitely happy with how things are going and, I think TDR Pro members are happy as well. So that's the main thing for me.
Ryan Sean Adams:
[45:05] Yeah, congrats on that performance. And I will remind folks, if you've been listening to us for a number of weeks through this and you kind of see how Mike thinks, you've viewed the Investor Journal, the way to unlock the rest of this is really to upgrade and become a TDR Pro member. I gotta say, I have really enjoyed the product and the calls.
Ryan Sean Adams:
[45:26] And I think the performance really speaks for itself. Let's talk about in the bull cycle um are you continuing to make moves during the bull cycle or is like kind of the work the work over they we're done for now
Michael Nadeau:
[45:40] No the work is definitely not over there's no set it and forget it on this like i said it's more art than science um people that were early tdr pro members, uh that came that were with us last summer around this time know that we We were quite active even, late in the cycle. That was kind of like the sort of debt season stage and we were sort of like redeploying. So we're staying active. We're not looking to like trade any of these positions right now. Like we're going to, we have high conviction on the things that we're in. But if we're just starting to enter the early bull period, we're very early in this cycle. We sort of separate the market cycles into like early bull, wealth creation, wealth distribution, and then wealth destruction. So we're at the very early stages of the early bull possibly, right? We don't know for sure, but that's where we kind of think we are. So there's going to be ample opportunities. I think people should have an abundance mindset. If you feel like you missed things, try to get that out of your head and just realize there's lots of opportunity out there. We're still early in the cycle. Bitcoin's still down 37% or so. So I think this is hopefully going to be a fun few years and a good time to be risk on in the crypto markets.
Ryan Sean Adams:
[46:56] And thanks to all the listeners who've engaged with the content and who've been here for us so long. So if you have enjoyed the TDR content and you're excited about entering what could potentially be the early bull, please engage with the content a little bit. Leave a comment. Leave a five-star review on Spotify. If you're listening on YouTube, subscribe. If you're not on YouTube or some of the other channels, go subscribe to another channel. Send this to a friend. That's how we get the TDR out there. Gotta say, still, Mike and the TDR report, this podcast is criminally underfollowed. I think it's going to be absolutely massive going into the next cycle. And you were here early if you're listening to this episode. Gotta let you know, of course, none of this has been financial advice. This is an Investor Journal. We're on the journey right alongside you. Until next time, stay curious.