Bankless - Was That the Top? Bitcoin, ETH, & Q4 Setup | Michael Nadeau's DeFi Report #6

Episode Date: September 30, 2025

Is this really the cycle top, or just a reset before Q4 fireworks? Michael Nadeau from The DeFi Report joins Ryan to decode the latest onchain and macro data. We dig into Bitcoin’s key levels, ETH��s $4K line, and why September’s liquidation event might have cleared the path for new highs in Q4. Michael explains what a “mini alt season” tells us about dominance, where fresh capital could come from, and how to think about positioning ahead of year-end. Michael Nadeau & The DeFi Report: https://x.com/JustDeauIt https://thedefireport.io/research/is-the-top-in —————— 📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24 https://bankless.cc/spotify-premium —————— BANKLESS SPONSOR TOOLS: 🪙FRAX | SELF SUFFICIENT DeFi https://bankless.cc/Frax 🦄UNISWAP | SWAP ON UNICHAIN https://bankless.cc/unichain 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 🎩DEGEN | JOIN THE COMMUNITY https://bankless.cc/degen 🌳KGEN | REQUEST A DEMO https://bankless.cc/KGEN-podcast 🏄SURF | UPGRADE YOUR CRYPTO RESEARCH https://bankless.cc/surf —————— TIMESTAMPS 0:00 Introduction to Crypto Fundamentals 1:43 Recapping the Summer Market 2:11 Analyzing the Mini Altcoin Season 6:54 Examining Long-Term Holder Behavior 7:35 Bitcoin vs. Altcoins: Market Dynamics 12:38 The Next Phase of the Cycle 14:41 Bitcoin's Critical Price Levels 17:12 Moving Averages: Key Indicators 20:40 Current State of the Altcoin Market 26:34 Insights on Ethereum’s Future 27:44 Liquidation Events and Market Sentiment 31:22 Understanding Global Liquidity 34:42 Macro Economic Outlook 38:41 Impact of Rate Cuts on Crypto 47:41 Future Capital Inflows into Crypto 49:37 Monitoring Market Cycles & Conditions 50:49 Closing & Disclaimers —————— Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures

Bankless Nation, we have a crypto fundamentals episode for you today. I've got Michael Nato on today's episode. We're going to talk about the big question that's in my mind, your mind, Mike, I think in a lot of crypto investors' mind. Is the top in? Is the top in is the question. We got this pullback in September and it didn't feel good. I know September is downtember, but still, it's like not fun to get that kind of a pullback. Bitcoin has seemed stuck in. the 110s for the longest time. Momentum seems to be slowing with some of our majors. We had this alt-coin rally and it kind of petered out. And now we're going the other direction. We've got crypto influencers calling the cycle top. And there's just some general anxiety in the space right now.

So, Mike, I'm hoping you can guide us through it today. Yeah, no, thanks for having me, Ryan. I think sentiment is, I think, of people are a little nervous. going into this kind of recent sell-off, it seems like there's a lot of people out there that are sort of looking, looking for the top, which typically doesn't coincide with tops. But I do see a lot of sort of people a little antsy out there. So hopefully we can kind of go through some data,

hopefully maybe put some people at ease as we move through the episode today. That's what you and I do, Mike, on these monthly episodes. So as a reminder for folks that are new to this, Mike and I put out a Crypto Fundamentals episode where we look at a lot of the on-chain data to guide analysis. It could be a particular project.

Oftentimes it's just where we are in the cycle. And today we're going to talk about the big question. Is the top in, or do we still have some more time? All right, Mike, as we're looking at the prices right now, we're recording this on September 29, so it's Monday, had kind of a bad Friday and then a not great weekend. We have had some recovery right now. So at the time of recording, Bitcoin is 114K almost,

so that's up from the 110. it was, and Ethereum is above 4K, which feels kind of nice. Can we just recap where we've been over the summer? So in your post, the top is in, you talk about a mini alt-coin season that just played out. What just happened to us over the summer? Was that the alt-coin season that we were all waiting for? You called it a mini one. Hopefully there's a bigger one in the future.

But what just happened to us? Yeah, so maybe a good, just to start there and kind of quick recap. of sort of what's played out, I think, over the summer, you know, we really saw the rotation into ETH, and we've seen Bitcoin's dominance. So this is the Bitcoin dominance chart here, just showing really that moving down from 65% or so, down to the 57% range. As that played out, we saw big rotation into ETH in sort of like a kind of an ETH season, I think we can call it. And sort of this is sort of the other side of that showing the ETH-BTC ratio. rising as Bitcoin dominance fell.

And sort of as this played out, he started to sort of, he got to all-time highs, that it bounced off of that. So we never really broke through firmly through that $5,000 range. And then we saw some of the other large-cap alts start to move over the last few weeks.

So a lot of the other companies that have treasuries, various narratives playing out, hype outperformed for a period. We've seen BNB do very well. We saw sort of a rotation to Seoul and some of sole treasury companies coming to market. And so we've seen kind of like the move from BTC to ETH. And then we saw the move sort of into some of these other

larger alt-coin networks and even some of the other like longer tail stuff like Pump and ENA did well as well. So we've seen sort of like I'm calling it a mini alt season because there was outperformance and a lot of these tokens relative to Bitcoin. And where we've kind of landed here over the last few weeks

is sort of a little bit of a gap, I would say, in liquidity, which I think a lot of this has to do with the TGA, the Treasury General account, essentially, which is the checking account at the Treasury, essentially being refilled up to 800 billion. There's a chart, I think, at the bottom of this report,

Ryan, that just shows that. liquidity gap. Here we go. And so this is pulling liquidity from the banking sector back to the Treasury's checking account. And I think as that played out, we finally saw a bit of a capitulation in the all-coin market. A lot of that had to do with, I think, just the perps, decks kind of meta that's been playing out. Hype has been doing very well, rising open interest on a lot of all coins, especially Eith and Solana. And we saw that basically, basically, get cleansed over the last few weeks. So there was over, you know, 480 million of futures long liquidations just for ETH. And really the last time we saw, you know, that many longs being liquidated,

was in April of 21. So on the way to all-time highs. So a massive liquidation event, kind of reset things a little bit. And really where my head is at is just sort of like, okay, this is this is what has played out. The market sort of front ran all these debts. We got a little bit out of our skis. We've seen, you know, this sort of leverage get wiped out. We've seen funding rates actually reset and go negative, which is what I want to see. And from here, it's just making sure that the market structure is still intact, which to me, it is.

And so this to me is just sort of like a reset on our way to all-time highs. That's how I'm seeing. certainly could be wrong. But this to me, this chart really says it all right here. You know, if this was, you know, on the down swing where we thought we had already peaked, let's say you had to run up to 8K or so. And then we saw something like this. Then I would be a little bit more concerned that like the market's actually rolling over.

As this plays out, everybody's a little skittish out there. And so I can, I understand why we've sort of reset on a lot of the sentiment metrics. We have, you know, some well-known influencers out there that I've been calling, you know, the top as well. And so I think a lot of people are a little bit nervous. But to be, you know, when I look at the economic conditions and the setup as we move into like a what is typically a more bullish quarter, Q4, I still feel pretty good about the overall direction that we're heading here. So we'll talk about some more metrics that maybe support some of your conclusions. But the answer to the question is the top in. What's your answer to that question?

I say no. I don't see that. I certainly pay attention to what other people are saying. I always want to like understand, you know, where blind spots could potentially be. But, you know, I just, I don't see anything that makes me nervous that the top is actually is actually in. There's some, there's certainly some data we could look at in terms of like what, you know, long-term holders are doing. Yeah, before we get there, actually, Mike, I want to ask you a question. So you called this. a mini alt season, the thing that unfolded over the summer months, right? So starting maybe June and July, and that was led by Ether, and then it kind of, in more recent weeks, has switched to other assets aside from Ether, as Ether, either kind of bounced off its all-time high and took a rest itself. And Bitcoin has been pretty much flat, and so that caused Bitcoin dominance to drop from 65% to 57%. So I guess when you say mini alt season, it did feel like a mini alt season compared to the big alt seasons of the past that felt much more euphoric, much more exciting, like much greater price appreciation.

So it's mini as far as the size, I guess, of the swing to all season. Also, I'm curious about this number. So in a bigger alt season or in alt seasons past, What has the Bitcoin dominance tended to do? So if it went from 65 to 57%, to my mind, 57% is still kind of high for any type of an alt season. Is that right? Like, what do we typically see as far as Bitcoin dominance during previous alt seasons? Yeah.

So in the prior two cycles, when Bitcoin has topped, its dominance has been closer to 40%. So you can see the orange line there. on the left side dropped precipitously as the price ran up in early, you know, 21. Yeah, so we're looking at this orange line from early 21 and look at a drop. So it dropped in early 21 from like 60%, actually above 70% in a few short months all the way to 40%. And so all of this energy, kinetic power, went into ether and other non-Bitcoin assets, alternative assets. So that happened in a hurry, right? And to compare what we saw in 21 to what we just

saw, I guess, this summer, it does feel much smaller, right? I mean, we're only going to 57%, not 40%. Does that does this imply that if you think the top, you think the top is not in, but does this also imply that you think will actually get a real alt season, something that drops Bitcoin dominance down into the 40s percentage points or even further? Possibly. I'm sort of targeting the 50. I think it's going to be harder for us to go all the way down to 40% in this cycle just because of sort of the maturity of the markets and the strength that we've seen from Bitcoin so far in this cycle. But I do think that we have a ways to go here. And the thing that is interesting here is, is as Bitcoin sort of dropped off there from 65 to 57%. We saw the move from ETH and some of the other all coins. We have not seen like actual influx of new money really into the crypto markets.

So the total crypto market cap has been sort of, you know, kind of hovering around $4 trillion or so. And yeah, so this chart here. So even as we've seen kind of capital rotating within the crypto markets, we have not seen an influx of new capital in. And I think that is part of what is required to get, you know, new money coming in and the majority of that new money going to things other than other than BTC. And so that is kind of what I'm looking for. The other thing is, you know, 21 was just an interesting cycle just from the perspective of the amount of capital that was printed during COVID.

we saw an all-coin season that we'll probably never see again in terms of just rising tide, just really lifting all boats. Like everything pumped during that all season. You just had to not be Bitcoin and then not be ether, and then your token was pumping.

You could just throw stuff at the wall and basically everything was going up. NFTs were going up. I mean, it was just kind of insane. So this, what we're seeing now is more dispersion. We're seeing asset selection being absolutely critical. I would say in these markets. You want to be in things that have a fundamental story, that have momentum, that have narratives,

token economics. We've seen a lot of innovation around token economics and buybacks. Those coins tend to be the ones that are outperforming. And of course, we have treasury companies in this cycle. Those tend to be the coins that have been outperforming as the market sort of front runs the actual buying of the assets for these firms. And so, yeah, I just, I view it as like, Like, you know, 21 was kind of an anomaly.

This cycle, asset selection is definitely more key. But I still think, you know, we are in a part of the cycle where I expect Bitcoin dominance to, we may see that sort of rise up. And it is kind of coming up a little bit as Bitcoin leads. I expect Bitcoin to lead the next sort of phase of the cycle here. So we could see dominance rise before it actually falls back again. Oh, I do want to ask you about that then. So the next part of the cycle, right? So ETH has cooled off a little bit. Other alt coins have cooled off a little bit. You think that if we get another leg to the cycle, again, assuming the top is not in, which you emphatically said, no, it's not in. It's all probabilistic, of course. But what pumps next? Do we get another Bitcoin cycle before it kind of rotates back into Eith and other alts?

that's what I'm expecting to see. So Bitcoin all-time high is around a 124 or so. So I think the healthiest way that this would play out is to see Bitcoin move back towards its all-time high, 124 or 125K or so, hopefully kind of break out of that and start pushing towards 130. And then Eith Salana, some of these other coins, actually start rising with it. So Bitcoin dominance isn't really accelerating, but Bitcoin is moving up. and then you sort of get the wealth effects created by not only Bitcoin rising, but some of these other large networks rising together.

And then you start to see that rotation. And that's typically how cycles play out. There's a number of factors that play into that. But I think people that have been in crypto know that we're at this part of the cycle where Bitcoin's probably not going to give you those outsized returns that you may have gotten earlier in the cycle. And so people push out on the risk curve into small. or riskier assets that that could outperform Bitcoin.

Is there a ticking time bomb? Or is there a ticking clock on that? So does Bitcoin basically have to make a move sometime in October and show that strength above all-time highs, 124K? And if not October, then say the first half of November. Because you've got some moving averages here in your analysis that you've been looking at. of course those moving averages will catch up to the current price if things stay flat.

And so we need to see some breakout. So what does that imply, maybe talk about these moving average and what that implies with respect to how much time we actually have for Bitcoin, if it's going to make a move, it has to make a move in Q4 for sure, right? Yes. Yeah. And this is all dependent on Bitcoin making that move. I don't think we're going to see an outperformance of all coins before Bitcoin.

makes a move. So I do think this is all dependent on Bitcoin. This chart we're looking at here is just we're trying to get a feel for is there new money coming into the market. This is just spot volumes 30 day moving average. And we can see that, you know, we've trended down since really Q1 of this year when we kind of hit our first all-time highs. And yeah, we're looking for new money to come into these markets that can come via the ETFs. It can come via on-chain data as well. And that's the key thing I'm looking for is new capital coming in rather than just sort of hop all of money rotating within the crypto ecosystem. So you said at the time of writing, you wrote this on last Friday, I believe so Bitcoin is

currently trading at 109K below both its 50-day moving average, which is 114K, which is basically where we are right now in the 100-day moving average of 113K. It's interesting that those numbers are so similar, it shows how flat Bitcoin has been recently, and it still trades above its 200-day simple moving average of 103, okay, that's good, but you do say that we've lost some momentum with the September moves. However, a key indicator for you is the 50-week moving average. And here's a chart of the 50-week moving average from 2013 on down. That's, of course, the white line and Bitcoin price is in purple. This is a log chart. of course, and we are above the 50-week moving average, which is a good sign right now.

That 50-week moving average is, that's about 99K, right? So talk about that. Why do you like the 50-week moving average, and what are the implications of this? Yeah, so as we were selling off last week, you know, the big question is like, okay, did something break in the market structure, or is this more, you know, just sort of a cleansed people getting way out over their skis with leverage. So what I'm looking at here is the 50-week moving hours for Bitcoin tends to be when Bitcoin breaks this on a weekly close, it tends to mark the end of the cycles. That's what those white arrows are showing there

after the initial peaks. And so if we saw Bitcoin have a weekly close under that 99K range, I would be more concerned that the probability actually is starting to point towards bear market, cycle, you know, at least the local top is in, potentially the cycle top is in that, you know, so to me, this is like the more longer term view of market structure, did that break last week, in my view, it did not. We still remain in, you know, the bull market structure is still healthy. And we've seen a little bit of a balance from Bitcoin off of, I think it got down to 109, 108K or so last week. Now we're bouncing back up into the 114 or so range. So to me, you know, that was a That was a cleanse. That was a, you know, liquidations. And the bull market structure to me is still, is still intact.

So the reason this is important is because all of these arrows indicate that the 50-week moving average in previous cycles, like was broken. And when it's broken in the fourth year, then that signal is kind of the end of the bull market, right? And like a new cycle, right? So enter the bear market. And so that number, the number to watch right now, of course, this number will change. as the weeks progress, but it's 99K Bitcoin. So if you saw Bitcoin drop below 99K, given that it's in the fourth year of this cycle, you would start to, I mean, would that cause you to be like, okay, bear market is coming? I guess it's a single indicator, one of many, but it seems like it's a pretty important indicator.

Definitely an important indicator. If I saw this breaking down last week, definitely would have been, would be more concerned about, you know, where we're ultimately heading. It is one indicator. so it's not everything. But yeah, for me, like this, this looks healthy.

And my expectation is that we're going to stay above that for a while here. We're heading into Q4. Down temper, excuse me, September, which is usually a week month, is almost over here. We're recording this on Monday. You know, midweek will be into Q4. And, yeah, expecting things to improve. This chart you just pulled up here is long-term holders.

So we wrote a piece a few weeks back, just kind of looking at different wallet cohorts. We pay a lot of attention to what long-term holders are doing, what short-term holders are doing to get a feel for profit-taking and sort of how that's playing into price discovery. And long-term holders started taking profits for the third time. This was back in July or so. That line is now leveling off a little bit.

We've seen some new entrants coming in from short-term holders as well. We also look at the ETF data to get a gauge of this. And so that to me, I think most of the selling from long-term holders that we saw over the summer months is mostly, mostly over now. Yeah, it's interesting that you can see it right in the charts. It looks like over the summer, Bitcoin long-term holders were selling some of their assets. And now they've switched into a hold type phase. So they're not necessarily accumulating, but they're not selling. And that seems to be the indication from the ETFs as well.

So the inflows for the Bitcoin ETF have slowed. down, they've waned, but also the outflows have, have waned as well. So it looks like there's some kind of, you know, holding type of activity that's happening. There's not panic selling, for sure. Let's turn to the Ethan, the alt-coin market. So this is the alt-season index, and this is a metric. We did enter kind of alt-season, according to this, the coin-glass metric year. We entered that in, I guess, September. So we're squarely in. old season did not spike up to the top. It did not last very long, but we did kind of touch it. What's your take on this chart? Yeah, so this is picking up, you know, that move that the rotation

of Bitcoin to Eath, and then, you know, we saw Solana move and we saw some of the longer tail assets move as well. And that's really what this is picking up right here. It's not the explosive alt season that I think people sort of have in mind when they think about alt season. But we did see a number of coins like significantly outperform Bitcoin over the summer months. And so the question here is like if we do sort of have this setup like we're talking about where Bitcoin starts to lead again and then we sort of get the liquidity rotation, is it going to be a stronger one? Like this in this sort of summer month alt season that we saw, we didn't see like the crazy outperformance from like the long, long tail of coins, like particularly in like the meme coins,

like it was really the sort of majors that have treasury companies and strong fundamentals that moved. And so to me, like a much sort of like more euphoric alt season would include the longer tail of assets, which I would say we haven't really seen over the summer months. Maybe that's coming potentially in Q4. But if you do think that like there's going to be another alt season and it's going to be stronger next time, you still sort of wait towards assets with alt assets with strong fundamentals. That means like kind of revenue types of metrics generally, something like hype, for instance, which is printing money.

You could see it on chain. Token economics are good. So some of those shares, there's a story for how some of that revenue and profit actually gets back to token holders. It's not just held in a treasury somewhere. It's actually given it a dividend or a buyback or something to the token holder. and maybe ideally there's some mind share around it. So, I mean, if something has a dat, it's at least graduated to enough mind share for some entity to try to do the dat play and list it in the public markets as well.

Those are some of the indicators. So do you think it'll be disproportionately those types of alt assets and not just everything? I think so. I still think that's going to be the case. I do think we're going to see bore of the long, long. tail asks as things like meme coins, which even when we we allocate to meme coins, we do like study data and there's wallet cohorts that we're looking for. And so yeah, and I think, you know, something I think a little bit about as well is like which of these debts have like the most sort

of which of them have the best fundamentals story and then which ones are the hardest to actually acquire. So I think hype is sort of interesting in this regard and that it's got a really interesting story. It's got quite a bit of mind share. It has really strong token economics, really strong fundamentals. But if you want to buy hype, it's kind of challenging to actually bridge your assets over there, use a new L1 that most people are unfamiliar with to acquire that asset. So actually, the treasury companies are pretty interesting from that perspective and that you don't need to do anything with crypto. You're just buying something in your brokerage account. So I think hype is interesting and the treasury companies around hype are somewhat interesting for this reason.

Let's talk about Ether. So it had a very strong summer and then toward the end of August and into September has been kind of flat and then down, right? So about $1,000 off. It's all-time highs. What are you seeing on Eith price? Yeah, so Market Front ran a lot of these, you know, treasury companies. I think Bitmine is over, I think they're at least 40% of the,

on the way to their target of 5%. Wow, so it's 2.65 million right now with, yeah, 2.2% of all ether supply. So almost half of the way to their 5% target. So a lot of their purchases are in. And I'd have to kind of check in on sort of how much cash some of these larger debts still have on the sideline for purchases. But we sort of saw that rotation. Heath has showed, I think, some pretty good strength here to get back above 4K. We saw it dip below last week in the cell. off it's now regained that like critical 4,000 or so line. And yeah, I think to me, we're going

to see another. We're still at like 0.037 in terms of the ETH BTC ratio, which is still historically low. And so I'm looking for ETH to make another move. Once we, once the market sort of studies itself, I still think ETH has another, another thrust ahead in Q4. Do you have a kind of a breakdown number for Ether in the same that we do with 99K for Bitcoin? So for eth, I'm mostly focusing on that 4,000 line just because it has historically had so much trouble staying above, above that line. And so typically when you see something that's serving as resistance, you know, once we punch through that, it can start to serve as support. And so that 4K line is very important.

the 100-day moving average or so, I believe, is like 3.7K, and we kind of like touched down to that. But I'm mostly focusing on that 4K line because that was a period of resistance that we've then pushed through. And I'm hoping that becomes sort of a line of support moving forward for ETH. Can we talk about the ETH futures and PURPS funding rate? So you said the ideal setup from here is further bearish positioning among traders before a shift in sentiment and a short squeeze to reignite the bulls, and that's in the ETH futures, PIRP funding rates. What are you seeing in the perp rates here?

Yeah, so this is sort of the aftermath of the liquidation that we saw last week. So over $480 million of liquidations on centralized exchanges, over a billion on decentralized exchanges, so massive liquidation event. How massive, by the way, like in the scope of liquidations we've seen? because we see these like from time to time in crypto, right? I mean, how big was this one? Fairly common in a bull market. This one was big.

I mean, this was, from what I could tell, it was the largest one we've seen since basically in the middle of the bull market of 21. So this was a massive liquidation event. A lot of that has to do with just the rise of perps taxes and how many people are trading on those perp perp taxes now as well. But yeah, this is just showing like, okay, we've sort of moved through that now. And when you see the funding rates actually reset and go negative,

it's basically telling you that traders are now bearish. And so you kind of want to see this happen. Like they're getting bearish at the precise moment that all of the bearish activity already had played out. And so to me, I want to see that continue for a little bit before we get like a shift in market, which we've already seen and sort of a short squeeze to kind of flip that in the other.

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Can you say a bit more about sort of global liquidity as well? So you mentioned at the top of the episode that part of this was a liquidity story. So basically what's happened is we had a mini altcoin season, but then we got some actual liquidity pullback. And when I say liquidity, I mean kind of the dollar liquidity, I mean global M2, I mean, you know, global macro liquidity. And there was a pullback there. And it caught some of these alt positions off sides and then led to that cascade of liquidations. What is this chart? I'm not super familiar with like what this is, the liabilities capital for, I guess this is the TGA, right? So you said roughly, there's something happened with the TGA. Can you describe what

that is? And then has that been corrected? Like, what's the story with the TGA now? Yeah. So, you know, as the markets were kind of getting out over their skis, we had this like kind of thing happening under the hood where the treasury is essentially refilling its checking account. It got down to, I think, 150 billion, 200 billion or so. That needed to be refilled back up to an 800 billion dollar tariff. And what do you mean when you say refilled? Like who refills it and like what is this for? Is this just more of a, I guess, like operational detail for how the Treasury provides liquidity to the banks? So the checking, the TGA is essentially the checking account of the Treasury so that they can pay the bills of the government. And so when that is being, when that number is rising, it means that liquidity is coming from the banking sector back to. basically outside the public market back into the sort of with the government finances. And so you're pulling liquidity from the markets as this, as that plays out.

I see. And it was about 500 billion or so. This is kind of like under the hood, kind of monetary plumbing. But that was happening sort of under the hood as the crypto markets were sort of getting out over their skis. And we sort of had this little reset. I think this played into just the overall liquidity conditions. This is going to impact stuff that's like, you know, further.

out on the risk curve. And so I think this played into, you know, why we saw that liquidation event. It has been now, this is like in the past. So we have, you know, fully refilled the TGA account. And so I'm, I think this is in the past. It's behind us. And we sort of, we sort of moved through it. And to me, it's, that's the bullish thing. It's like, we saw the liquidations. We've kind of cleansed the market. This little liquidity gap has now, we've now moved. past this. And so to me, like, the setup looks pretty good moving forward. Can we talk about the macro setup as well, because something could still, you know, throw a monkey wrench in things if macro goes poorly. But you said actually from a macro economic and business cycle perspective,

you also think that we have a positive setup here. Earnings are on the rise. This is, I suppose, corporate earnings. Banks are lending. I think we looked at some of this in our last fundamentals episode. The Fed is cutting rates, so that just happened in September, and is there now still two more rate cuts scheduled, hopefully, for this year, or expected by the market this year? Capital is still shifting out on the risk curve, so small cap equities are now outperforming. Actually, I didn't know that. Long-in yields are rising moderately. Initial unemployment claims data that came in yesterday, this would be last week, suggested that layoffs are still low, so we're good on unemployment, and the ISM appears poised to break into expansion territory.

So highlight this for us. Like, are you feeling basically like our business cycle and macro setup is good too? And there's nothing that looks worrying on the near-term horizon? There's always risks out there. But, you know, we spend a lot of time just studying the economic setup, looking for, you know, signs of dark clouds out there. We're just not seeing it. And so I know a lot of people are looking at valuations and just like trying to find ways to be bearish.

But we're just not seeing it. Even when you look at earnings, in valuations, the forward outlook for earnings continues to increase. Like the Atlanta Fed just updated its GDP expectations from 3.5. It just continues to rise. The last time I looked at was 3.9% now. Why? Why is that happening, by the way?

I've been seeing this. There's just still a ton of capital. This is really driven by AI. but there's just still a ton of capital that is being, you know, basically capital spending, cap-x spending that's being pushed into AI. And that is really fueling the economy. I believe it's like 75% of what's driving GDP currently.

And so, yes, that is sort of like a central, you know, centralization risk of just if that goes away, then the economy could roll over pretty quickly. But we're just not seeing any signs of that happening. What we're actually seeing is capital, like moving towards small. caps now. So I'm looking for like the Russell 2000, which is tracking the smaller cap index, starting to outperform, which is kind of a natural thing where it almost looks like the equity markets are trading a little bit like the crypto markets where you have like the Mag 7,

which is significantly outperform the rest of the S&P 500. And so now we're starting to see almost like the small caps or the alt coins and like capital starting to push out to the kind of riskier equities in the market. So to me, this, this just looks like the cycle continues to, to extend. And, you know, we're going to get some more labor market data this week. We'll get non-farm payrolls on Friday. We're going to get the Joltz report tomorrow. And I think we'll have some inflation data later in a few weeks. But to me, I just, I just, I'm trying to find ways to be bearish. And I'm just not, I'm just not seeing it. I think most of the bearishness is just mostly people just looking how far we've come, looking at valuations, and just trying to talk themselves

into being bearish when the data just doesn't really support it, in my opinion. What about the Fed cutting rates? So, I mean, there was a, the first rate cut in almost a year happened in September and kind of the Fed pivoting to Dovish. I think a lot of investors looked at this, crypto investors looked at this and said, okay, well, there it is. Now we're cutting rates. So now crypto can go on a full run. And of course, you know, the weeks following that have seen a sell-off in crypto. Why is that? Did the rate cuts actually not matter?

Does it take some time for it to work its way in? Why do we think rate cuts are just magically going to increase, you know, the price of crypto assets? And why didn't they this time? So I think it's playing out sort of similar to what we saw last year. So last September, similar setup where the Fed had just started. cutting rates, they did actually 50 basis points in their first cut last September. And the markets responded positively to that. And then we actually had like a pretty good sell off at the end of

September. So kind of similar to what we're seeing here. And, you know, to me, I think the markets are still worried that rate, you know, rate cuts can be insurance cuts or they can sort of be emergency cuts. And if their insurance cuts, it basically means the Fed is kind of cutting into an economy that's still expanding and it's just they're trying to sort of save, you know, paper over the labor market, get people spending a little bit more. And I think that's the variety that we have. I think the market's still digesting this a little bit, whereas emergency cuts are when growth is stalling, they need to cut rates to get the economy moving. And typically when they do that, it does, there's usually a sell-off that comes as they cut rates. I don't think that's the variety

that we are in. We did just cut once. The chances of a cut, I think I look, I look, looked at the CME Fed Watch this morning, it was still at 90% for October. I think we're in the 65, 70% range for a December cut. So to me, you know, this still, this looks good to me. And if there is something in the economic data that made me think that the economy was truly stalling, then my view on the rate cuts would probably be different. But I think these are more of the insurance variety. Now, you wrote on Friday you were looking for two kind of of key confirmations looking forward. And that was Bitcoin to hold this prior highs in the 105 to 107K range and for not to drop below that 99K number that we talked about earlier. And for

ETH to bounce and regain the 4K level. And you said if it breaks below 4K, we're looking for a bounce around the 100-day moving average of 3.7K. And we've seen both those things, at least so far, who knows what tomorrow will bring. But we've seen Eith Bounder's, regain 4K trading up above it. Today, we've seen Bitcoin not only hold 105-107, it was above that and has kind of bounced. So this seems to be good. And yet generally speaking, you said, you felt like, you see some of the sentiment here and you think some investors are going to be caught off guard by this. They are believing that this was the top. The alt coin season is is behind us. That was it, right? We just, the mini all-coin season was it. Now we have the top and

it's kind of over and we're back for another four years. But in your opinion, this is just trauma. You said, this is trauma from things that have happened in previous cycles. But it was really interesting that in September, we did switch over in the Bitcoin Fear and Green Index towards fear. Not extreme fear, but definitely fear. Is this all normal during bull markets for us to feel these things and for sentiment to play out like this and for people to be anxious and thinking it's over? I think so. I mean, this is, this factors into a lot of kind of the work that I do is, is obviously a lot of data-driven work, but we're also just monitoring sentiment and sort of paying attention to what others are sort of, how others are interpreting things out there. And I do think there's a lot of trauma.

You know, if you go back to last cycle, you know, everybody was calling for, and maybe this can help people think through what they're seeing today, but I mean, everybody was calling for 150 to 300,000 Bitcoin in September of 21, and it just never really, you know, played out. I think a lot of people round-tripped a lot of their gains, not just on Bitcoin, but on, you know, alt coins and other things. And so that, you know, creates sort of, that's somewhat of a traumatic experience to go through and now people have been waiting, you know, four plus years for the next bull market.

And I think a lot of people are wondering, are they going to make the same mistake? And just having that trauma almost can force you into another mistake if you're not actually paying attention to the data. And you're just going off of what some other influencer saying. And I think there's a lot of people sort of getting twisted up right now wondering if we're really, really late cycle or if we're more in like the, you know, seventh inning. on the cycle. In the wild west of Defi, stability and innovation are everything,

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And so we're just curious because we have seen. It seems like some institutional flows this cycle. So we've definitely seen some impressive volume into ETFs and our treasury companies as well. But it hasn't looked like the new capital that we saw in previous bull cycles. So I guess my simple question is, if we need new capital in order to continue this and to get a new top later, if this wasn't the top, where is that capital going to come from? Who is going to be the net buyers of our crypto assets? It can come from a number of areas. So, you know, it helps that the rest of the economy is doing quite well.

The stock market has been doing very well. Gold has been doing very well. We saw, you know, we did a report last week just looking at the kind of the correlations between gold and Bitcoin. And what was interesting in last cycle, gold actually was performing somewhat similarly to this cycle where it actually led the market in 2020 before Bitcoin had a big move. Gold has been outperforming Bitcoin again. in this cycle. So it could be a rotation from some of these larger asset classes into the smaller

crypto markets. It could be, you know, retail investors, you know, coming back into crypto. I think it's probably somewhat of a combination of the two. We do have like the crypto market structure bill. It went through the House. That is, you know, that needs to get through the Senate as well. That could be, you know, potentially a catalyst for, for the crypto markets. And the other thing is just like the markets are forward looking and there's we're expecting that, you know, Powell's term is going to be up in May. And so the markets are starting to look at the Fed and what is the structure of the Fed going to look like moving forward? What does that mean for markets? And so there's there's different ways that that this can play out.

You know, some of the work that that we've done over the last month or so is trying to determine, you know, has the most money actually come in? into the crypto market so far in this cycle. And what did that look like in the last cycle? And it does look like the majority of the capital came in in sort of the Q4 period of last year into January. Kind of looked similar to the period we saw in the first market cycle top back in 21. And so that is a concern of my.

I think this is something that we're definitely watching. Because for this to really take off the way people want it to, it has to be new money coming into the market. We need to see that $4 trillion total crypto market cap for the entire space start to move up rather than just sort of this hot ball of money kind of swinging around within the crypto markets like we've seen kind of over the summer months. All right. So, Mike, your current stance is this was not the top. That's what you're thinking, at least. You've got a plan in place to monitor some key price points for Ether and Bitcoin. and I'm sure you're updating your cadence.

One thing we talked about last time was the market cycle how long it would be. And we pointed out that if this plays out the way other Bitcoin four-year cycles played out previously, the top would be sometime in November or December, right? That matches the previous four-year cycles. You made the case for an extended cycle that it would go into 2026, maybe Q1, 2026, maybe even to Q2. Do you still believe that, given the data that you're seeing right now? I think it's definitely possible.

I'm also thinking it could just stand in Q4 because that's sort of, you know, there is like a psychological element to this and sort of just the way that people position for this. So when I look at the economic data and the strength of kind of the economy, that tells me we could be moving to a sort of extended cycle. one thing that still has not sort of taken off is the ISM. It's still in contraction. And so Bitcoin and crypto assets tend to follow the ISM, and that's still in contraction.

So that's something I'm looking for. We start to see that move into expansion as crypto is moving. That would give me more confidence that the cycle can extend into Q1 of next year. But something I'm monitoring on sort of a daily, weekly, monthly basis. And my base case is we probably end in Q4. Okay. Your base case is we end in Q4, but you're monitoring macro conditions like the ISM. And if we see a very healthy, bullish market outside of crypto, then you think that this could extend into 2026.

That's the thinking currently, yep. How have you adjusted your portfolio? So did you make any big trades this summer? Do you take any off the top? What does that look like? So yes. So we had a couple assets in the portfolio that ran. pretty nicely over the summer months.

We trimmed profits on some of those. Our Bitcoin holdings are the percentage of the portfolio on Bitcoin is that like the lowest that it's been all cycle. And we've kind of, we sort of caught the move into ETH and we've got some ETH beta plays as well. And at this point, I mostly, you know,

we actually reallocated a little bit into some stuff that, that we liked from earlier, has some momentum. We share, you know, weekly updates with our TDR Pro members on exact. exactly what we're doing in terms of what we're buying, what we're selling. And yeah, excited for Q4. And like I said, probability points to some more strength in the markets, in my opinion.

That's great. And a big plus one for TDR Pro where you can see what Mike is doing inside of his portfolio and get some of those trades and some of the exchanges he's making in real time. Well, this has been great. A good touch point in the cycle. I agree with you. I still don't think we have seen the top. I think we got a road ahead and I think it's going to be a good year, good year end. But we will see. Of course, none of this has been financial advice. You guys know crypto is risky. You could lose what you put in, but we're headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.