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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:
[0:09] Hello, everyone. Welcome to the report. Market sentiment. It's turned a little
Ryan Sean Adams:
[0:13] bit bullish, but what is the data on chain saying? This is April 15th, 2026. Time for the DeFi report on the week. Bitcoin is up 19% since its lows in February. And now people are saying, as you might expect them to, the lows are in. The bear market is subsiding. Spring is coming. It's only up from here. They're fading the four-year cycle. And I love the way the report starts today. I'll give you some of Mike's words. The current bear market was officially confirmed in the first week of February. That's when Bitcoin traded into the low 60s. It's also when investors who thought the four-year cycle was over had to admit they were wrong. Now, here we are, two and a half months later, Bitcoin is up 19% from its early February lows. And the same crowd now wants us to believe... That the bottom was in, that the low was in. The four-year cycle doesn't exist again. Mike, I read that in a bit of a spicy tone. Did you mean to be spicy? Is that the way it was written?
Michael Nadeau:
[1:13] A little spicy out of the gate this week, for sure. And this is an investor journal. And I've always treated the DeFi report as the problems that I'm trying to solve as an investor in the market. And I think we're in a very interesting period right now. There's starting to be more contention. I did a poll a few weeks back asking, this was on X, asking if people thought the bottom was in. I think it came in at like 75, 25. I sort of want to run that poll again and see if that 25 has come up a little
Michael Nadeau:
[1:47] bit closer to 50% because I think we're starting to get to that spot. And so, yeah, this week we really kind of just went back to fundamentals, back to our core process, looking at data, and really, really kind of getting more convicted on our views.
Ryan Sean Adams:
[2:01] So last time you ran that survey, 75% thought the bottom wasn't in, that we were going to dip further. And your guess is you're saying that that might have switched around. I want to, because this is your journal, I want to give you license to be a little bit spicy today, if you have to be. And give us your straight up opinion, because I could tell in today's report that you were really like wrestling with this in your own mind as to whether to be bullish or bearish. And for listeners, stick around to the end because we're going to get into some price, some key price levels to watch and wish this would break and what would actually change Mike's
Ryan Sean Adams:
[2:38] I think in order to start, we have to talk about why four-year cycles in the first place. Build some conviction around that. So we're going to do so right after we hear from our friends and sponsors over at Galaxy. So what I have open is Galaxy One. That is a consumer app from Galaxy. They just launched staking for Solana. If you're already holding Sol, you need to be staking it or else you're giving up 6.5% of the return. That's the return Galaxy One offers. and they also charge you no commission fees. That's all the way through the end of this year, no commission fees. So it's just straight up stake. It's all powered by Galaxy Digital. They've got their own validator infrastructure and this is a consumer app. So it's incredibly easy to use. It's all integrated. You can buy your soul there. You could stake it from there. Start staking soul on Galaxy One in the show notes. There's a link, bankless.cc slash Galaxy One. Okay, at the time of recording this, Bitcoin is hovering around 74K. As we mentioned, that's up 19% or so. Your positioning, Mike, I'm not going to give the exact numbers, okay? We'll leave that for TDR Pro members. But...
Ryan Sean Adams:
[3:48] The last time we talked was two weeks ago and you had more cash. Well, no, you had less cash and more crypto than you do now. So you've made some changes in your portfolio deploying out of crypto and into cash. I think you might call that you're getting a little cute on things, but that implies the direction of travel. You think this is all headed. Let's get to that question that I just asked you in the intro around the four year cycle. Some investors right now are thinking crypto native investors. As I might add, that the four-year cycle is just kind of like,
Ryan Sean Adams:
[4:20] it's vibes, all right? It's like not real. You clearly don't. So can you walk us through why you are still a four-year cycle believer?
Michael Nadeau:
[4:30] Yeah. And I think, you know, people, there's some confusion of like, this is potentially looking like it's April 2025 again. And I think we can get into that a little bit later too. But, you know, and I was doing this, going through the same process actually back then. Um but to me like there's a very sort of clean sequence it's not like a perfect straight line and how this this plays out but there is a sequence to how this all works and that's why i sort of view it as almost like a law of nature and and certainly not not vibes um and the way it works it really follows what you would tend to see actually in a traditional market you know business cycle. And, you know, in TradFi, this typically comes from, you know, interest rates, right? Interest rates tend to fall, you know, if the economy slows down, The Fed has to cut rates that tends to lead to demand, you know, in the economy for loans, demand for loans, then kicks off other things like hiring and investment and growth.
Michael Nadeau:
[5:35] That tends to lead to what I would say is an asset allocation cycle in the actual financial markets where people move from cash and bonds into equities. And there's kind of like this wall of worry that sort of gets built, you know, during these cycles. And as that wall of worry sort of gets climbed, people start to rotate and you see more risk-taking and people get more complacent. Eventually, you know, leverage builds in the system and you sort of have that correction. I think we are very, very late cycle on the TradFi side of this story. And I think we've already seen this play out in crypto. For me now, on the crypto side, this is really about where we bottomed. Is it possible that we're just going to have this shorter bear market cycle? I think it's unlikely and we can get into why I think the probabilities point to...
Michael Nadeau:
[6:36] I think there's a chance that in a few months' time, like the real bear market is actually setting in. And we can kind of get into that. But that's really what I anchor to. The way that that works in crypto is just very similar. Like it's liquidity conditions. And then the KPIs that we look at are slightly different, but it's liquidity conditions. It's how that feeds into demand for loans and DeFi activity on chain, how that feeds into, you know, VCs allocating capital and the asset allocation cycle with investors rotating into new projects, beta assets, altcoin season, right? These are the types of things that play out throughout these cycles and typically leverage builds. And then you end up with liquidity rolling over and you sort of go into the correction phase. So that's what I anchor to. And then we have certain data points that we're looking at to make sure, you know, we understand where we're at in that process.
Ryan Sean Adams:
[7:36] Okay, so you write this, again, this isn't just vibes. Instead, the market cycle follows a relatively clean sequence that reflexively feeds upon itself through capital creation investor psychology until the liquidity cycles conditions roll over. And so that is true of TradFi. You're saying it's also true of crypto markets. We see the same seasonality at play. I think you just took us in TradFi and also in crypto through kind of the birth, the early bull phase all the way to wealth destruction and starting with an early bull starts after a previous wealth destruction season, right? And so you said this in TradFi markets, when the economy slows or breaks, that's when central banks and governments respond, rates get cut, financial conditions ease, liquidity improves, and credit starts to flow again. That is at the beginning of an early bull market. And you say it doesn't happen at once, of course, it's not a straight line, but there is a clear sequence. Now, The early bull starts after the economy has slowed. And I want to check you on that, okay? Because you say this happens in TradFi.
Ryan Sean Adams:
[8:50] Has the economy slowed? Because I think there are investors who will listen to this and say, hold up. They'll throw a flag and they'll say, Mike, the economy hasn't slowed, okay? We still have a bullish economy ahead of us. Growth looks good.
Ryan Sean Adams:
[9:07] Earnings look fantastic for stocks. Here's the kicker. We are half a percent from S&P all-time high right now. And you're saying the economy has slowed? Why do you think? Why are you counter trading? Why do you think the economy has slowed?
Michael Nadeau:
[9:25] So I think the economy has slowed from a few perspectives, and it really goes back to like October period, well before any geopolitical conflict, anything like that. We think liquidity conditions started to roll over around that time. And that was when the S&P 500 hit like its first peak back in October. It then hit a second peak in January, where it sort of just barely poked above that initial October peak. And now we sort of have had a second correction here through the volatility with the war in Iran. And now we've retraced, I think, today could be the 11th straight day of positive returns on the S&P 500, which is extremely, extremely rare.
Michael Nadeau:
[10:10] And, you know, my view on, you know, why is that happening if I think the economy is slowing? I just think there's quite a bit of inertia to, you know, financial markets, especially in kind of a late stage distribution cycle. And I think you could go back and see a similar pattern that played out in crypto. You could argue that the crypto markets really peaked in terms of like the amount of new users that were coming into crypto, the actual desire to speculate and just all of the capital markets activity was really like Q1 of 2025.
Michael Nadeau:
[10:46] And the crypto markets sort of went through basically a year distribution phase. So that was all basically inertia that got us to the top in October of last year. I think the TradFi cycle is just sort of mirroring what we have already seen play out on the crypto side and the crypto side is sort of leading us there. So if we are correct that this is just, you know, it just takes time for this to play out, I would expect Bitcoin to... To at some point show more weakness. And that's, you know, leading the traditional markets down. I guess like if you want to get into like actual stuff in the economy like that, that we look at to tell us that things are slowing down, you know, GDP came in at 0.5%. It was at like 4% or so just a few quarters ago for Q4, GDP was 0.5%. So that's already getting close to, recession territory, when you look at the amount of jobs that have been created, it's basically been zero job creation in the US over the last year. When I look at things like the savings rate, that's kind of given me an idea of what's happening with the consumer.
Michael Nadeau:
[11:58] That is down to about 4%. The pre-COVID norm was about 7.5% on savings rate. So that's happening. And we're also seeing credit card debt increase, which tells me a consumer is kind of getting pinched and turning to credit cards. You know, this is happening at a time when gas prices are rising, and that's sort of kind of also pinching the consumer a little bit. You know, I know some people have pointed to like the ISM, that's sort of inflected above 50, which sort of says that you're going into an expansion. I think if you look under the hood of that, it's not the bullish kind of indicator that I think some people think it is. If you get into the employment on that, if you really get into the inventories and get a feel for like what's actually driving that above 50, a lot of it just has to do with prices and they're not actually moving more inventory and selling more units of goods. So I think you kind of need to drill into some of these things. And when you add it all up, to me, you add all that up and then you look at the performance of the market and it looks like we're in a distribution pattern.
Michael Nadeau:
[13:02] To me, all of those things point towards weakness coming and not like we're at the start of a business cycle, which I think is some people's view out there.
Ryan Sean Adams:
[13:14] There's also the question of, you said this, your sense is that most crypto investors, the crypto natives that is, they're fully aware of the four-year cycle They know Bitcoin tends to top in Q4 post-happening. They know this has always happened. They know it's always followed by a bear market or has been in the past. Bear market's going to be rough, that they last roughly a year, and yet they're still fading the four-year cycle. You said, that tells me they don't actually understand how it works? I don't know. Maybe that's not true. Maybe that's one explanation. Maybe they do actually understand and they're covering their eyes they don't want this to be the case they are um uh ignoring reality maybe that's some of the inertia that you were talking about um why do you think crypto natives who've been here multiple cycles are still fading at some some loud voices right now i don't know if you want to name names you're welcome to do that Mike, this is your journal on some of the biggest offenders. Yeah. But why? What's the, I think some people understand it and yet they're still fading it.
Michael Nadeau:
[14:23] Yeah. I mean, that's a good question. You know, why, why does this get faded? And. People love Bitcoin. People love Bitcoin and they want to see Bitcoin go up. And I think a lot of the loudest voices in crypto and maybe on social media, you know, you have to really understand the incentives of people, especially if they work for Bitcoin companies or if they work for crypto native companies. Like very few people who work in the crypto industry are incentivized to sort of be bearish, right? We are very comfortable doing this because I view the DeFi report as a service. I'm not trying to promote the crypto industry or different assets or anything or be ideological about any of this. It's a service of what we think is correct in the market.
Michael Nadeau:
[15:09] I think that's maybe one difference. And if you look on social media, people are incentivized to be bullish by the algorithm itself. Right. So if you'll notice that bullposts that don't even share any any actual research or any any insight, get get quite a bit of attention versus somebody who's putting out like really thoughtful analysis. And maybe it's a bearish view that sort of, you know, is probably going to hang against some emotions out there and people don't really necessarily want to engage with it. So, you know, I think it's a lot of these different factors. And like, there's always, no matter what, there's always a narrative that you can point to. And like, those are, to me, those are signals that like, when a narrative is coming up, and you're seeing it just like really repeated. And it doesn't really make sense. It's a signal to me that the market's off sides.
Michael Nadeau:
[16:05] You know, if you go back to what was this, what were people saying back in, you know, December, January, I think it was, you know, it was just insiders and OG holders were selling Bitcoin. That was the reason it had nothing to do with the cycle or it was Bitcoin's IPO moment or, you know, there's different narratives that come up. One that I'm seeing right now is like the sailor thing, which we've talked about quite a bit and we can get into. But there's always something that people will point to. And right now there's also very different views on like liquidity conditions out there. So I think people can have different views. And this is healthy to me. I think it's healthy. I'm glad people, you know, aren't all in agreement on something. You know, you want the market to be in contention. But yeah, that's kind of my read on it is just kind of all these factors in combination.
Ryan Sean Adams:
[16:58] A lot of incentives then to be loud and structurally bullish, both for attention, economics reasons, and because many of these loud voices actually hold a lot of the assets that we're talking about and don't trade these cycles in the way
Ryan Sean Adams:
[17:15] that you're trading them. They'd rather not have a cycle, of course. Yeah, yeah. But let's talk about the current market conditions. And I think liquidity is maybe the... I don't know if this is one of the pillars of your case, but I think it's a very important, at least from the macro perspective, in addition to the on-chain data, this seems to be the indicator that we return the most to. This is Bitcoin and global liquidity. I've got this chart up. I would like you to explain this chart and some of the arrows. They have different color codes. There's a blue. There's a red. There's a green on this chart and what you're seeing. Of course, this is taken from Michael Howell's work, which we refer to often. The orange line is global liquidity. I believe that's global liquidity, right? Not the rate of change.
Michael Nadeau:
[18:04] Orange, yep.
Ryan Sean Adams:
[18:05] Okay. And the black line is just simply Bitcoin price. So what is this telling us?
Michael Nadeau:
[18:11] Yeah. So the color codes here, the blue arrows are the Bitcoin peaks. And you can see that those occur before the red arrows in the sequence. So Bitcoin peaks. The red arrow is the global liquidity line. So typically, a couple months later, liquidity peaks. And it's interesting to me that Bitcoin is almost like an index there. It's sort of telling you where things are heading. And then the green is sort of like, those are the green arrows, that's the best time to buy Bitcoin. Global liquidity has bottomed. And that's when Bitcoin tends to resume its next expansion phase.
Ryan Sean Adams:
[18:49] Wait, so what we're seeing is the blue line, Bitcoin peaks, right? Or the blue arrow, we could see that, the Bitcoin peak. And then from this timeline of this chart, it was a couple months later, we see global liquidity peak, and then we see global liquidity bottom, and then Bitcoin also bottoms shortly after, and then liquidity resumes. And this has happened in 2018 to 2019, and this has also happened in 2022 to 2023. 3.
Michael Nadeau:
[19:19] Exactly. And the lag in terms of like how liquidity rolling over and how that's impacting different asset classes, it hits Bitcoin artist and first. And that's, you know, that's what we've seen so far in this current cycle. There tends to be a little bit of a longer lag in terms of how that impacts the traditional markets. And so it can be upwards of like six months or so before it starts to really impact. And we're kind of coming into that range on the TradFi side where you would expect to see, you know, potentially some more volatility here. And it's just very interesting to me, this current price action, you know, after we had kind of come down like around 10% or so, So now we have rallied all the way back to all-time highs. And this is like a very interesting moment. We'll see. If it just takes off from here, I'd be very surprised considering what the conditions look like out there. But a very interesting moment here.
Ryan Sean Adams:
[20:20] So then our job at some level is if we think this pattern holds, which I think it does, And even many of the bulls right now think that, you know, Bitcoin crypto assets have a lot to do with the amount of global liquidity that that's sloshing about. Right. The job is to really to forecast that orange line. And it's very difficult to know when we've hit the peak. You know, like I was reading Michael Howell's work this week and he said, oh, actually, the orange line has gone up a little tiny bit. You know, the rate of increase has slowed, but on, I don't know, the week or the month or something, it's gone up a little tiny bit. So, I mean, it could go in the up direction as well. And it's hard to know in advance where global liquidity is going to go. But I guess you're betting on the fact that it just continues to play in the cycle where this is the beginning of a drop in global liquidity. We're down 1%. Maybe we get it down as high as 5% to 6%. That's what we've seen in previous cycles.
Michael Nadeau:
[21:26] Yeah, I think so. And, you know, we've talked a little bit, I think, in previous episodes on, you know, U.S. Liquidity is probably the one that really is going to impact the crypto markets more. And you could ask, you know, why are there these gyrations? Why is why was it up a little bit over the last few weeks?
Michael Nadeau:
[21:45] And what, you know, Michael Howell is incorporating, not just like everything that central banks are doing and treasury liquidity and what the Fed is doing, but there's also some factors here in terms of like what's happening with real rates, what's happening with, there's the Fed is doing these RMP purchases right now, which is also getting pulled into his framework. You know, my view is that that's not really impacting, that's sort of securing liquidity within the banking sector. It's not really driving asset allocation because it's not impacting the longer end of the yield curve. So you can have gyrations. Real rates have come down a little bit and that will impact liquidity. But the direction of travel to me is down just because when you look at what the Fed is projected to do this year, when we look at what inflation is doing, we had some pretty high prints on inflation.
Michael Nadeau:
[22:40] Related to oil prices. And when we look and we can pull this down, maybe look at the fiscal impulse here. This is just focusing on the U.S. And this is something we've been talking about going back to October that on the fiscal side of the U.S., this was rolling over. A lot of this has to do with tariffs. And it doesn't mean that we are like balancing the budget or anything like that. It just means that the level of increase in the government pushing capital into the economy, that is at a declining rate. And so that is also correlated with, Bitcoin. And that is also in decline. The fiscal impulse is in decline right now.
Ryan Sean Adams:
[23:23] In addition to Michael Howell, someone else I follow is Real Vision and Raoul Paul and his work. And he is one of the people who is still bullish at this point in time. He does think the bottom is in. And I know he pays attention to global liquidity. Real Vision has some metrics similar to Michael Howells. I think he still said that global liquidity hasn't peaked for this cycle, that it will peak sometime in 2026. At least he has previously said that. I'm not sure what their latest data shows. I know there's, is it Jamie over there?
Michael Nadeau:
[23:57] Jamie Coutts, yeah, lead crypto analyst.
Ryan Sean Adams:
[24:00] Jamie Coutts, he's their lead crypto analyst. I think maybe his indicators, which are probably the Real Vision indicators, are showing perhaps liquidity is going down and is similar to Michael Howell. I guess I'm just wondering, is Michael Howell's work the definitive source for this? Or how would it be like Raoul Paul looking at similar liquidity data and coming out with a bull case?
Michael Nadeau:
[24:25] Yeah, I have less insight into how Real Vision is tracking this. I think I did see a chart that was showing the line going up. And I think that is the Treasury doing the R&P purchases. And that's been roughly $40 billion a month. So if you look at the Fed's balance sheet, it's increasing because they're adding these T-bills onto their balance sheet. The way I think of that is just it's not really – it's securing liquidity within repo markets, banking sector. It's not the type of liquidity that I would be looking for that impacts investor allocation and potentially go out on the risk curve. So I can see why, you know, you could look at, you know, the Fed balance sheet, it's going up a little bit, but I don't think that's, and that's in Michael Howell's framework. I don't think that's the thing that you should really be anchoring to. And I would be curious if their view is that liquidity is increasing or the forecast is for it to increase this year. What's driving it? Because I'm focusing on, I'm looking at, you know, what are all the major central banks doing? This is what, this is in, you know, Michael Howell's framework.
Michael Nadeau:
[25:37] You know, I think China is the only one that's actually, you know, adding liquidity to markets currently. So that's one thing. And then, you know, on the fiscal side, That's clearly not, you know, driving, there's no impulse on the fiscal side. So I would just be curious, you know, is he just waiting the RMP purchases more maybe than Michael Howell is? But, and I think they've had some collapse where they've kind of gotten together. The market seems to be demanding that right now to view that. We don't track this internally, but I think to answer your question, like, you know, Michael Howell, this is like his thing. This is what he focuses on, you know, 30, 40 years of doing this type of work. And it's historically been a really strong signal. And like, I like to anchor to somebody like that, that I think this is what they do. This is their domain. So that's part of the reason that we, you know, probably put a little more emphasis on the data that Global Liquidity Index puts out.
Ryan Sean Adams:
[26:37] On the fiscal point, today's report makes the point that fiscal spend is not accelerating right now. In fact, it's been decelerating, of course. And you say this, the takeaway, we know that Bitcoin responds to global liquidity conditions, but it's also correlated with U.S. fiscal policy. But what do we see right now? The fiscal impulse is in decline. This is due to tariffs. And so is Bitcoin. Now, that could change with future spend, which could come out of nowhere. One place it could come is future budget for a war, let's say. Trump has requested $1.5 trillion military budget. I didn't know this, but you said that's a 50% increase from the previous year. That's quite a bit of spend. And that could be the type of catalyst that really impacts fiscal.
Ryan Sean Adams:
[27:29] But that's not going to happen right now. That would be sometime in 2027, which I guess that would be consistent with the way you're viewing things. It's kind of a year later, early bull, maybe.
Michael Nadeau:
[27:42] Right. That makes me very bullish about like the next phase of, you know, if we go into this next expansion phase, that makes me very bullish because it almost looks like the type of stimulus that we got during COVID. And if you can kind of imagine a world where this war is dragging on and we have to, you know, spend more and the U.S. Economy really starts heating up, we're selling lots of oil, and then you've got a new Fed chair in and they're focused on getting interest rates down and getting the private sector going and getting liquidity coming out of the banking sector, you can start to formulate a very bullish, you know, setup, you know, coming out of this. But, you know, this has to get approved by Congress. We still need to know what direction is the war heading. And so, you know, to me, it's like it's a future thing, but it's not something that's impacting liquidity conditions currently.
Ryan Sean Adams:
[28:37] I mean, big fiscal spend is not necessarily bullish for the U.S., but it's a double whammy bullish in terms of crypto because it increases liquidity, but then also increases the deficit and, you know, dollars. Become more inflationary over time? Do you want to store your value in dollars and in treasuries? This is a question to all the global wealth, right? And I mean, no, if the US keeps running these large deficits.
Ryan Sean Adams:
[29:04] Let's look on chain in terms of what's happening. So what are you seeing? What's the overall picture of on chain that pushes you in the direction of bearishness.
Michael Nadeau:
[29:16] Yeah, I'm mostly just trying to, you know, assess whether or not this recent move, we've been in this upward trend now for Bitcoin for two and a half months or so. And I am looking for signals that there's something more durable here. You know, when we were doing this work back in April of last year, about a year ago, when we were, you know going through the the volatility related to tariffs uh we were doing a similar exercise, and what started to become very clear early in that process was that there was like a serious you know move out of the lows right we saw etf flows really coming back we saw on-chain activity picking up we saw, uh, more, uh, we saw traders getting more bullish and putting on leverage, right?
Ryan Sean Adams:
[30:05] That's actually a good question. What was your take when we, when we had some of the similar muted volumes, uh, in April and massive sell-off, right? That could have been an indicator for you to just be like, okay, cycle's over. In fact, it was for some, uh, crypto investors and that turned out to be a head fake. So what was your take at the time? And then what, what moves did you make coming out of that? What data did you see? Because I think you continue to be bullish after that. Yeah.
Michael Nadeau:
[30:31] Yeah. And people that are long-term subscribers may remember that period and all of this research is out there. So people can go back and look at what we were saying. I thought there was a chance that the crypto markets had peaked at that early, right when Trump came into office. This was when the most speculation occurred. This is when Solana peaked. This is when the Trump meme coin happened.
Ryan Sean Adams:
[30:56] That was late January and February,
Michael Nadeau:
[30:58] 2025. Yeah, late January. Yeah. So I was of the mind, this is before the tariffs. I was starting to actually exit the market at that time. And the way that we manage this is I'm typically like, you know, my cash position is trying to align with like what I think the probabilities are of going up or going down. And so at the time, it looked like there was a decent chance that the crypto markets were peaking at that time. And we started exiting positions, we sold all of our Solana, which actually was the that was the peak for Solana. And I sold some Bitcoin. And then we actually bought back in, we bought I bought back in at 77k, which turned out to be really good move.
Ryan Sean Adams:
[31:39] When was that?
Michael Nadeau:
[31:40] That was in April.
Ryan Sean Adams:
[31:42] After the tariff scare?
Michael Nadeau:
[31:44] After the tariff scare, we came down, I think 70. We came down lower, came back up, and then it kind of came back down again, and then it took off.
Ryan Sean Adams:
[31:52] So that's the key thing. What gave you the conviction to make that purchase?
Michael Nadeau:
[31:55] It was clear that there was just a ton of ETF flows. Like shortly after Bitcoin had its correction, there was a ton of ETF flows, and we didn't break the bull market structure. So we never went below the 50-week moving average. It had multiple weekly closes on that. So the bull market structure never broke. And I saw that there was still enough of a thrust just in terms of the ETF flows and just capital that was in the system. So that's what got me to pivot then. And I think what we're looking at right now is not the same setup in terms of what I'm seeing.
Ryan Sean Adams:
[32:36] Because the bull market has already broken. That structure is already broken. And then you're seeing something different in spot volume, perps, funding, ETFs, DEX volumes, you know, even even Solana stable coin traffic and bonding curve revenues.
Michael Nadeau:
[32:53] Yeah, DEX volume, we got DEX volumes in here this time. But yeah, like, I always want to go, where was the most speculation in the last cycle? And then, you know, what are we seeing today? Because that could be an early indicator. And we look at, you know, meme coins and all these things for this reason. And this is where the most speculative activity you can see on that chart. That shows, you know, early Q1, that was the peak speculation on the Solana blockchain. And we've kind of been, you know, we had sort of a, what I consider like the inertia of the market, right? We still had another move, you know, about a year later, but you can see it was much more muted. And that's the inertia of the market, I think, starting to come out. That is now fully removed. And, you know, we're back to levels that we saw in like 2024, 2023 in some cases.
Ryan Sean Adams:
[33:43] This was one of the most interesting parts. So some people will still say, okay, but Mike... Fear and greed index. And we have seen fear at lows that we haven't seen since 2022. In fact, I don't know if the fear index even dipped lower than 2022. It was incredibly low at some points in early February. And so when you have a low on the fear and greed index and you have max fear, that's a sign that the market has bottomed. And now we've recovered from that a little bit. But what's your disagreement with that?
Michael Nadeau:
[34:21] Yeah, so fear and greed index, I think this can be very noisy. I'll just say that to start because you can be in extreme fear at $110K. We were in extreme fear at the first capitulation when the market broke back in October. And you can make the same argument. We're in extreme fear and we're at $110K. The market is totally offsides and we're going to go back up. So I think this is a good indicator if you have really strong conviction in the sort of market structure and where things sit. And if you think this is like going into extreme fear levels, you can make a contra move on it. What I'm looking at here, we do a 30-day moving average just to try to get some signal in terms of like how this plays out. And what's interesting is like we also the markets were also peak fear much earlier in the bear market last cycle. Um, and Bitcoin price actually dropped like 30% after we had already gone to peak fear level. So I think, uh, if you're anchoring to this as like a really strong, like basis for investment, I think, especially for what I'm doing and focusing on like the cycle, um, I think it can be a little bit of a distraction, but what we want to put it in here, this is something I'm seeing, you know, it's a, it's a, it's a narrative in the market. it right now.
Ryan Sean Adams:
[35:42] But even this is still fitting the pattern, right? Because in 2022, fear and greed bottomed in June, price bottomed in November, right? It's kind of still fitting the pattern of previous cycle?
Michael Nadeau:
[35:52] Yeah. Yeah. So it could be. It's possible we did bottom on the fear and greed index and the Bitcoin price will still drop another 30% or so.
Ryan Sean Adams:
[36:00] Yeah. People are no longer fearful because it's not just like falling in a hurry, but you move into complacency season. Acceptance season. Let's remind folks about where we are in the cycle from a KPI perspective. We touched fair value on your KPIs, your MVRV, all the KPIs that TDR tracks. We touched that in early February. Now we've bounced back out of that. So I think you make some comparisons to 2022 that are actually useful here. You said, remember, Bitcoin has yet to trade below both its realized price and 200-week moving average in this bear market. It took 7.5 months post-Bitcoin price peak for this to happen in 2022. Okay, so we haven't yet done that yet. And in 2022, there was, do you say 7.5 months that we were trading below both realized price and 200-week moving average?
Michael Nadeau:
[37:00] So it took seven and a half months before we went. These are kind of like the deep value zones here, like when you start to go down. It took seven and a half months in the last bear market before we got there. So if you look at our current situation, we're in line with that. Yeah, we're about six months in. So this still could be coming. And to me, this is like when the bear market's like really solidified. And if that occurs, I would not expect what's very interesting to me with these, we've seen two legs down so far, and we've talked about how Bitcoin price will actually be rising during bear markets for longer than it's actually falling. And in the first capitulation that we had in December, January period, where we went from 97, or we came down to 84K.
Michael Nadeau:
[37:51] We then just like basically chopped upwards up to 97K. So if you were looking to buy a dip, you had to chase that, which is very interesting to me. And this is how markets get chopped up. And then so we did that and we chopped along up to 97K. Then we had a very rapid decline down to the low 60s. And again, if you were trying to buy the dip, you had to chase because it went down to 62 and then it immediately reverted up to 70K, chopped around in the upper 60s. And now, you know, we're into the mid 70s. So it's really it's this is really pulling investors off sides. And that is not how macro lows are set. Macro lows are set when you you have a capitulation and then you stay there and it gets it gets quiet. You don't have a quick, you know, immediate rebound out of that. And you know we haven't hit these these sort of deep value metrics we hit them in the last cycle and we hit them for very long periods of time right for for almost like six months you had an opportunity to get in the market um and you know i i do i'm still thinking that that that those type of opportunity i'm not saying it's going to be a six month period but i think there's going to be a time where if you're looking to buy the dip you can sort of you're going to have your your pick.
Michael Nadeau:
[39:05] It's not going to be like you had to chase it on the exact day that you had a capitulation. So that's typically how bear market, you know, macro lows are set.
Ryan Sean Adams:
[39:14] So we haven't seen market participants be chopped up into pieces yet. And that's still coming. That's what has happened previously. And that's how macro lows are generally set.
Michael Nadeau:
[39:25] Yeah. And we're chopping people up, I think. If my view is correct here that we're going to see another leg down, we are chopping people up right now. People are getting pulled into the market right now thinking that the low is in and they have to chase that move. And then that leads to the next leg down. So, we can get into some of the price levels that I'm- Yeah.
Ryan Sean Adams:
[39:48] Do it. What are you looking at?
Michael Nadeau:
[39:49] Really looking at here. So we're in a zone right now that is a pretty key level. So 76K is like the 100-day moving average. We tried to get up there and we got rejected pretty quickly. And we're back in 74K or so as we speak. This is an important zone. If we do get through this, I could see us going up to like the 81K range. That's the short-term holder cost basis. And then we've talked about how during the first kind of correction that we saw, about 4% of the Bitcoin supply was bought at dip buyers. We're grabbing it at $84, $85K. So I think that's another interesting level here. And I think what I expect to see is just like, and I think we're already seeing it, is like we're not even with the S&P 500 showing more strength, yes, crypto is up 19% over the last few months, but like, I don't know. Is it giving you the vibes that like where, you know, this is a real durable move? It feels a little weak to me.
Michael Nadeau:
[40:59] And if you go down and you look at meme coins, you go down the list, you know, when you see Bitcoin make a move of five to six percent, you know, in a bull market, you can see meme coins and other things going up 20, 25 percent. We're not seeing that right now. So I'm not seeing this kind of risk on conditions that I would be looking for. And for me to change my mind, I would just have to see Bitcoin really, you know, get to these levels that we're identifying and then have like a, you know, a couple of weekly closes, possibly a monthly close that then tells me, all right, like something, you know, the market structure has shifted and it looks like maybe we are going to flip that into support.
Ryan Sean Adams:
[41:42] Okay. So to change your mind, what you would have to see is the 100-day moving average, 76K be passed by Bitcoin, 81K passed by Bitcoin, that's the short-term holder cost basis. And then we get above the 85 to 87K range. That would mean the 200-day moving average and where the largest cohort of previous dip buyers came in in the early bear market. So, you'd have to see those levels reclaimed and then also sustained with multiple weekly closes. If you say that, then Michael Nadeau maybe comes on a future TDR podcast and capitulates and says, okay, you know, I guess my journal entry for April 15th was wrong and you would consider changing your mind. But you don't think the probabilities point in that direction. You think the probabilities point in the direction of further dips. So that means you're waiting for what back to fair value market territory for Bitcoin or deep value territory?
Michael Nadeau:
[42:39] I think so. I think, you know.
Ryan Sean Adams:
[42:41] What are those ranges, by the way, price ranges?
Michael Nadeau:
[42:44] Yeah. And if that's what happens, like I'm happy to change my mind, like I won't stay stuck in this. And, you know, we will change our mind and say we were wrong. No issue with that. But what I'm looking at here is like it could be, I could absolutely see a scenario where we get up into the 80K zone and, you know, Bitcoin corrections are typically pretty fast and they can be 30, 40 percent. So you could very easily go up to 80 and then end up down at 50 or go up to 85 and then end up down at 55. So I think that's like kind of my. Base case for what the direction I think this is going right now. And, you know, we'll see. I think we're getting to a stage here where this is coming into focus. There are these other variables. We didn't even get into what's going on with the war in Iran and everything right now. And if there's a, you know, if we get some big deal, you know, who knows, maybe that just pushes the market into a, you know, full on risk on mode. So I'm open to that scenario. But like I said, it's going to be interesting, like, you know,
Michael Nadeau:
[43:56] next month or so, it's a good time for people to be paying attention. We're running a sale, you know, if people want to get access to our portfolio and get some of these research reports, just check out, check out the links.
Ryan Sean Adams:
[44:07] Yeah. Link in the show notes, TDR Pro. I subscribe to it religiously. Of course, that's how I get these reports, I read them every Wednesday, and then we just come on, we log on, and we do these episodes. I think that's great, Mike. Thank you very much. You've got your conviction, you got your play on. We've heard the journal for today. The one thing that gives me pause here still is S&P, 0.4% below all-time highs, that feels strong. AI strength, that feels strong as well so that's the other thing on the on the counterbalance to everything you're saying uh the way you are playing it of course is you have the majority in cash right now and you're waiting for the fair value and deep value territories if you want to see what percentage is what that looks like go subscribe uh the way i'm playing it is maybe a little less as you say cute than you uh personally i am reserving some dry powder though i think it's important to have dry powder during this phase
Ryan Sean Adams:
[45:07] In the case that Mike is right and I actually veer towards you being right so you want to scale your dry powder accordingly if you don't want to play it quite as cute as Mike does but you can find out exactly how he's playing it on the TDR What's coming up in the DeFi report? Actually, let's do this instead. We have an ask today, which is, we get a lot of comments on these episodes. Sometimes it doesn't, we don't know if they're from real humans. You know, sometimes it's clear they are. Sometimes, I don't know. It could be bots, it could be trolls, that sort of thing. If you are a real human listening to this and you enjoy these reports, you appreciate them, please leave a comment wherever you subscribe. On YouTube, on Spotify, even on X, you can comment. Of course, if you're not subscribed to those channels, go do that. And we want to hear if you think we've seen the bottom or if there's more to come. Let's hear from the TDR community. Of course, got to end with this. 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.