Bankless - Why This Crypto Cycle is Over | Michael Nadeau's DeFi Report #7

Episode Date: October 21, 2025

Is the crypto cycle already over, or is this just a reset before one last push? Michael Nadeau from The DeFi Report joins Ryan to break down why he went 70% cash ahead of the flash crash, what late-cycle data he’s watching, and the signals that would flip him back risk on. We dig into Bitcoin’s 50-week moving average, ETH’s $8–10K scenarios, slowing ETF flows, rising leverage, and whether global liquidity and AI could still drive a melt-up. Michael explains why this cycle has felt muted, what would confirm a top, and how he’s positioning into year-end. Michael Nadeau & The DeFi Report: https://x.com/JustDeauIt https://thedefireport.io/ ------ 📣BIT DIGITAL ($BTBT) | ETH-FIRST PUBLIC COMPAN https://bankless.cc/bit-digital We’re being compensated by Bit Digital (NASDAQ BTBT) for this segment promoting their company and BTBT. The compensation is paid in cash as a one time payment. You can find  ------ BANKLESS SPONSOR TOOLS: 🪙FRAXNET | MINT, REDEEM, EARN  https://bankless.cc/fraxnet 🦄UNISWAP | SWAP ON UNICHAIN https://bankless.cc/unichain 🛞MANTLE | MODULAR L2 NETWORK https://bankless.cc/Mantle 🌳KGEN | REQUEST A DEMO  https://bankless.cc/KGEN-podcast 💠BIT DIGITAL ($BTBT) | ETH TREASURY  https://bankless.cc/bit-digital We’re being compensated by Bit Digital (NASDAQ BTBT) for this segment promoting their company and BTBT. The compensation is paid in cash as a one time payment. You can find additional information about Bit Digital and BTBT on their Investor page at https://bit-digital.com/investors ------ TIMESTAMPS & RESOURCES 0:00 Intro 0:48 Crypto Cycle: Is It Over? Mike's Risk-Off Strategy  https://thedefireport.io/research/portfolio-update 2:15 Flash Crash Insights  3:14 Crypto Investor Profiles  https://thedefireport.io/ 5:40 Understanding Market Cycles  https://thedefireport.io/research/cycle-awareness-update#fear-greed-index 7:34 Late Cycle Analysis  https://thedefireport.io/research/cycle-awareness-update#fear-greed-index 12:41 Shifting to Risk Off  https://thedefireport.io/research/portfolio-update 18:54 On-Chain Data Insights  https://thedefireport.io/research/where-might-eth-top#scenario-analysis-for-eth 21:47 Stages of the Cycle https://thedefireport.io/research/cycle-awareness-update#fear-greed-index 26:12 Wealth Distribution Phase https://thedefireport.io/research/cycle-awareness-update#fear-greed-index 28:15 Realized Profits Comparison  https://thedefireport.io/research/cycle-awareness-update#fear-greed-index 32:00 Global Liquidity Discussion  https://x.com/RaoulGMI/status/1977140156386660654  https://x.com/RaoulGMI/status/1977498706510487748 33:52 Gold vs. Bitcoin  https://x.com/merlijntrader/status/1978793051062509966 1:01:52 The Shittiest Bull Market Ever  https://x.com/cryptorbion/status/1979614717707489461 1:08:31 What Would Change Mike's Mind? https://www.coinglass.com/bull-market-peak-signals 1:17:14 Future of the DeFi Report  https://thedefireport.io/research/portfolio-update  https://thedefireport.io/ ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures

Bangless Nation today, we're going to talk about the crypto cycle. Is it over? Mike Nato thinks it is. And he joins me today. Mike Nato, of course, is from the Defi Report. Usually we put these episodes out every month or so. We're doing this one a little bit early because there have been some big changes that Mike, I want to get your take on. How are you doing? I'm doing great. Great to be here, Ryan. All right. So things feel pretty uncertain in crypto right now. It feels like it could go either way. Either we get a resumption of the bull market, or this has been the end of the cycle. And maybe we're into a bear market. If this cycle is over, though, I will say it will be different.

It will have played out differently than previous. But if it extends into 2026, that's also different. And I know your position is basically you're now risk off in crypto. So primarily overweighted risk off. and I believe this is the first time you've been risk off in crypto this cycle. So like the first time since 2022, is that correct? That is correct. Yeah, we've been probably too long for a very long period of time

and have been kind of like scaling out of the market a little bit as, you know, as we go through the last few years, particularly Q4, Q1 of this year. And our view has been that we would top sometime in Q4. and we've been sort of evaluating both, you know, sort of left-tail risk of cycle being over, things rolling over, and also potentially right-tail risk of sort of a melt-up. And we can kind of go through how I've been thinking about sort of the risks in both directions kind of as we go today. Yeah, I want to talk to you about that because you actually, you called the flash crash. So I got a notice from the defy report, and this was like earlier in the morning on October 10th.

This is before like shit really hit the fan that day. And you were like, hey, I'm risk off. So you saw some things before the flash crash. I actually want to get in your head and find out what you saw and hear why you are primarily risk off right now. And I think like just before the crash, flash crash and then kind of doubling down on the risk off position post flash crash. I also want to hear you respond to the countertake. So there are still some notable bulls in the market. and they have reasons for being bullish.

I personally, I'm not ready to give up on the bull cycle yet, Mike. So I got some challenges to you to get you to respond to the bull take. We'll get into all that and more. We have to shout out our friends and sponsors over at Bit Digital. So Bit Digital is a public company. They used to be a Bitcoin mining company. They went all in on Ethereum. So they sold their Bitcoin.

They added a whole bunch, many millions to the raise, hundreds of millions. they now hold over 150,000 ETH. They're staking it all on institutional grade validators. They are an ETH treasury company, of course. They're a huge supporter of Ethereum and a supporter of this episode and the D5 report. One stock gets you at ETH price plus staking yields. You can learn more about it at bit-difidigital.com. All right.

Let's set this up. And as I said, I wanted to start by getting in your head. and I think the type of investor I've observed, because I've been observing you over the past few years, Mike, as we've gotten to know each other. And then we started doing these fundamentals episodes about every month earlier this year. But I think the type of investor you are is you like to pick a small set of very high quality assets. So, you know, five to 12 or so max. So you're not doing everything in the market. And these are assets that are driven by data fundamentals, particularly on-chain fundamentals, which is really what you study. You are long-term

buy-in-hole. You're not shorting the market. And you're a long-term bullish crypto. But you do like to play these cycles. You do like to play these liquidity, you know, four to five, three to five years cycles in crypto. And you like to rotate into cash in order to take advantage of these cycles so that you can deploy them during bear markets. That's what you did the previous cycle. And so I saw you deploying a lot in 2022 into some assets that you felt like were massively undervalued by the market. But that's generally your outlook, your time horizon, and how you play things. Is that about right? That is right. Yeah, that is absolutely right. I mean, it's actually kind of interesting that, you know, when I got into investing, when I learned about investing, it was through the lens

of Warren Buffett, Charlie, Charlie Munger. And I do have sort of a focus on fundamentals and deeply understanding also the macro cycles and sort of what drives the price of Bitcoin. I think the philosophy is really deeply understanding what drives the price of Bitcoin. What is fair value for Bitcoin? That is the price that we want to pay for Bitcoin and we're pretty disciplined in terms of like our entry points of when we actually allocate capital. And so the strategy is to sort of be risk on when the market is more risk off and sort of deploy capital. points and then hold for long periods of time. And we also will trade into other assets during risk off regimes within the larger cycle. But the goal is to exit the cycle with more cash

than you started with so that you can deploy that and be greedy when others are fearful, which is a Warren Buffett quote, you know, in the bear markets. And so that's really the whole strategy. Okay. And so I think it's really important to understand Mike's decision making by understanding Mike as an investor. And a big list listener, you might play this differently. So you might be a trader, you might be doing things that Mike's not doing, you might be deeper on the risk curve into alts. You might be someone like me. I would consider myself a long-term investor that doesn't really play these cycles too well or too much. So I tend to kind of buy and hold more across cycles. And the reason is because I'm terrified that I'm going to miss one of those days where you want to be in the market

and you get kind of a melt-up. So I've decided personally to just simplify my life and not to play these cycles too much. So I'm always biased towards like, hey, it's going to be bullish at some point. So you may as well always be buying dollar cost averaging in every single month. So that's my take on it.

And that's why I'm not very good with these cycles and why I like to pay attention to people like you. So let's go through where we left the podcast about a month ago when I talked to you at the end of September. And this is a post you wrote the end of September. You've been calling it late cycle by the end of September. I think you thought we would get a top sometime in Q4 of 2025. You actually mark the expansion phase.

Here's how your entry on the defy report kind of begins. The current expansion phase is now on day 1,04, as measured from the price trough for Bitcoin in November 2022. The 21 expansion lasted 163 days, and the 17th cycle lasted 165 days. Measureed this way, we're distinctly late cycle. Now, at the time we're recording, we're actually 1,065 days in. So the symmetry is kind of interesting. We're at about the same time the previous cycles ended. And so you think this means we're late cycle. Now, you said there's no law that requires Bitcoin to continue on four-year cycle paths. But when you look hard at the data,

it's difficult to fade the idea of a Q1 top. Now, at the time, I think you were primarily still deployed in crypto. So you're like 20% cash and the rest deployed in crypto. What were you thinking at the beginning of October? Yeah. So thinking at the beginning of October was that, you know, sort of anchoring to this idea that, yes, we are a late cycle. And the base case is that you're going to have a Q4 top. So October tends to be a pretty bullish month. September tends to be a little bit more bearish. And so coming out of September, heading into October, we did have like a pretty good move, like every first few days of October. And like everyone kind of got excited. It looked like October for the case here. October is here. And, you know, I think the view at that,

at this time, you're right. We're about, you know, 20, 25 percent cash at this point. And so we're sort of leading, you know, towards exiting the market. That's sort of where the bias is starting to push. But at the same time, we've been acknowledging that the economy still looks strong, even though there are some sort of, you know, we've seen some weakness in the labor market, but the economies are strong. GDP looks good. Earnings look good. Valuations are high. Fed rates were going down, right? And we have the Fed cutting rates. So you have an interesting sort of setup here. There are other risks with tariffs and geopolitics and other things going on out there. but we're sort of like balancing this tension between, hey, crypto typically does really well in Q4,

especially post-having years. We've had a pretty good run. We are definitely a late cycle here, but there is also this right-tail risk of a melt-up. And so you want to be in the market. Crypto markets can reprice rapidly in a two to three-month span. And so your strategy of sort of saying, hey, I don't want to miss that. I want to be in the market is fair. There's absolutely risk to just, you know, exiting the market too early. And so we've been balancing, I think, this tension and monitoring this, and it's sort of boiled up a little bit within the last few weeks or so. So this was another report on the DFI report in early October when you were in kind of this frame of mind. And you were talking about where ETH might top, right? Of course, there's a lot of

folks that are incredibly bullish on ETHER and have price predictions far higher than what your base cases, you know, people like Tom Lee, you go talk to him and, you know, we get something in the 20,000 range, maybe, depending on the day. But you close this post by going through some on-chain metrics for ether the asset. And he said it was possible that ETH trades 250% above its 200 weekly moving average that would put EF at around $8,500. So $8,500. Or if you look at the realized price, there's another way you can get ETH to about $8,700. Or if you compare it to Bitcoin market cap and you think Bitcoin hits $150,000,000, anyway, it's basically your base case was ETH could be $8,500,

which is, of course, like, more than double what it is right now at the time of recording. I think we're recording. ETH is hovering around $4,000. You said even the bull case would send EF to 10K. So at the beginning of October, you still thought this was this meltup type scenario was very much on the table. In fact, it was actually the base case, right? Yeah, yeah, yeah.

Yeah, this was essentially the base case. And this is all predicated on Bitcoin's performance, right? This is, you know, I think, you know, over time, we should start to see these assets that start to trade independently of each other. But I'd say right now, everything is still sort of being priced relative to what Bitcoin is doing. And so if you have a view on Eath, if you have a view on other alt coins in the market, in my view, you first have to have a thesis and a view for what Bitcoin is going to be doing. And so that was sort of the base case.

Hey, we're probably going to see a typical, you know, Q4. There's no reason to be super worried about, you know, macro risks out there. and a 30% or so move from Bitcoin gets you to 150K and then you can kind of back into where you would think that that Eath would land. And so, yeah, this was sort of the base case towards the end of September at the same time sort of acknowledging building risks and we can get into sort of what sort of prompted me to kind of start to go more risk off. Well, let's see that because this was where we sort of left things, right?

And then I got an alert email from the DFI report from you, and it was titled, Shifting to Risk Off. Okay? I got this on, I believe, sometime Friday. So Friday morning, before the market started to sell. And I think you had started to make moves that Thursday night in your own D5 report in portfolio. So before the flash crash, which is why this is really interesting. Why I wanted to give that history because we can set up kind of the contrast point. So this is basically, he said, I'm sharing a quick update.

we've updated our portfolio last night due to rising market risks. You switched to risk off mode, right? So just to quantify this, moving from a 20 to 25% cash position, everything else kind of deployed to a closer to 50 to 60% cash position on the back of this. This is what I was seeing. And you gave some reasons for that. You said Bitcoin, low trading volumes, ETF flows have slowed for Bitcoin and EF. what was kind of remarkable.

I don't know if you had just fantastic luck in timing, Mike, or if, like, you're just that damn good, all right? But, like, you called the flash crash before the flash crash, and I kind of want to know what you saw in order to take a convicted dad at that point in time. Yeah, so I don't feel, to me, I don't feel like I called the flash crash. It was more just, hey, you know, and I try to trust my insects. We study, you know, tons of data in the process. here is really pulling in lots of data.

We follow other researchers in the space as well. We pull different opinions into our own. But I think, you know, I try to trust the gut and the instinct of what it's telling me. And a lot of this just had to do with we had a pretty big liquidation event that preceded the one that we had two Fridays ago. And it was a largest one since like last cycle. And then we had this massive one like two weeks later. and I've been sort of monitoring just the amount of leverage, you know, in the system.

And then pairing that up with what I'm seeing with the other fundamentals and on-chain data. And if you have a lot of leverage building up and you're not seeing sort of strength behind that, that is when you sort of get these potential air pockets. What do you mean strength? Is that like trading volume strength? So, yeah. So trading volume. looking at ETF volumes, looking at, we look a lot at like the Salonite ecosystem in particular, like what's happening with launch pads, like how many new tokens are coming out,

what's happening with trading bot platforms that are like sort of in the trenches, so that we have a good sense of like where the animal spirits are. Is there like still a lot of interest in crypto at like the like pure DGEN layer to get a sense of like just, you know, the risk appetite in the market? And so I think combining some of this analysis with what we're seeing just in terms of, you know, spot buying, ETF buying other, you know, active users and things like these types of metrics, this is what started to make me nervous that, okay, you have like a situation here where the market's tilted heavily towards risk with all the leverage. But I'm seeing weakness, you know, underneath that.

And that's when the house of cards can get a little bit wobbly. So I was not predicting a flashgrass or anything like that. It was more just, hey, like, you know, my conviction is starting to lean towards things are getting riskier. Right, right. That was really what it was. And when you're this late in the cycle, if you end up holding too long, at some point, we are going to move past whatever that all-time highs. We don't know if that has happened already for these assets. but it's always going to be in hindsight when we find out.

And so you have to move. If you feel you have conviction on something, you do have to move. We realize that like, you know, we might, we still might be wrong here. Like the markets, we still could see another move. I would say that the market structure for Bitcoin, the bull market structure has not been fully broken, I would say. And we can talk about what that looks like. But it's more that, hey, the problem.

is pointing towards sort of weakness here, and I'm having trouble kind of like coming up with a view of what the next catalyst is going to be for the markets. And so if I can't find a catalyst, I'm seeing weakness, and I'm seeing this sort of lopsided market structure of leverage and sort of weaker fundamentals underneath it, that's kind of what prompted the sort of moving, moving more towards risk off. As an investor, I always admire, like, fellow investors making, like, kind of contrarian plays, but also conviction-type plays. And I always find, like, much harder for me personally to have conviction on cells than it is buys. I can do, for whatever reason, my orientation, I can do buys all day, right? It's like I get very excited about something. I study it, like,

you know, learn what's going on. And he can get conviction on the buy harder on the cell. And so the fact that you were able to do this was a signal to me. And part of the reason we're having this conversation and doing it a little bit earlier. Of course, what happened, that same day was what Bitcoin sold off from the 120 range all the way down to 110. It's since gone lower. So we saw 104. So as of right now, that was definitely the right play. We have recovered a little bit. So we're back at 111K. For Ethereum is basically the same story except a bit more volatility here. So on the Friday flash crash sell-off, we went as low as $3,600. Unbelievable. It's quite a wick down. We've since somewhat recovered to around 4,000. You are now,

I believe, in a 70% cash position. So post these Friday events, you've decided, hey, like, it's kind of, I'm still risk off for the remainder of this cycle. Now, I'm going to ask you a little bit later, you know, what would convince you to change your mind on this? But first, give me some of the rationale for where we are now, where you are now. Let's talk about some of the data that you're seeing on chain that's driven you to the conclusion to be more risk off than you are risk on at this point. Yeah. So the chart that you have up here currently is the ETH futures estimated leverage ratio.

And we can see that it got up, you know, this is before the crash there, that blue line got close to one. and that's, you know, far and away, you know, an all-time high. We got up to about close to 0.8 or so. This was this was early, a little bit earlier in the cycle, and we've almost doubled from where we got to, like in Q4 of last year when we also- This is the amount of leverage, like, traders are taking on ETH?

Is this, like, measuring the perp stuff? Yeah, so this is, well, this is, think of this as the total amount of, like, leveraged eath that's in the market. So when you see that hitting up towards one, it means for every eith that's sitting on an exchange, there's another eith that of leverage in the market. So you basically got twice as much sort of long exposure in the market

than there is of actual ETH collateral sitting on those exchanges. And this is how, you know, you get the crazy liquidations when, when price turns. And then we had a lot of auto liquidations. And we had some technical things on finance that, that caused some big unwinds. Now, if I look at this ratio, Mike, in the blue here, it's like far higher than it was in the previous bull cycle.

Does that indicate that the structure, the market structure, really changed this cycle, and a lot of the run-up has been driven by kind of margin? I think so. And this is part of sort of the analysis that I was going through looking at all the buying activity that was behind us in terms of the deaths. And I think what happened there is when you have a price agnostic buyer in the market,

like these massive debts and all of the buying that BitMine has done in SBET and BitDigital and some of these others, it gives traders and others that want to put on leverage a lot of confidence to do so because they know they've got a large buyer in the market. So I think we saw this really pick up after, you know, the summer, like after July or so, when we saw these stats really kind of get out into the market. And so if the market starts to get too complacent and too comfortable with putting on leverage, this is sort of how you get out over your skis. I think it's played a big role.

And then looking forward, it's like, okay, most of that story is behind us, not all of it, but most of it's probably behind us, you know, what's going to be the catalyst to take us to from 1800 to 4K and then 4K to 8K, how are we going to get there? that's part of the analysis. Let's talk about this slide, which is the stages of the cycle. And this is moving back maybe in the direction of Bitcoin here. So you've got the early bull market. You've got wealth creation.

You've got wealth distribution and wherever we are now. What stage are we in the cycle? And how do you see this? So, yeah, I think this is helpful, you know, just kind of how I think about cycles. And so early bull, you know, the people that were in the market were the people that were, you know, buying whatever. else was fearful, right? This is kind of the Buffett's strategy. This was after FTCX. You know, people were calling for Bitcoin to go to 10, 12K at this time. You were getting into the market then, you were catching some of that bottom. And what tends to happen is like for about a year,

Bitcoin will like double in price. So that early bull period from January of 23 to about October of 23, Bitcoin doubled in price. But I don't think anybody would have told you you were in a bull market at that point because you're still significantly, it doesn't feel that way because you're still significantly below prior all-time highs. But, you know, you are in a bull market, certainly for people that got in at the right prices. And then, so coming out of the early bull phase, you enter, we enter wealth creation. This is kind of the typical phase two of a cycle. This is October of 23, up to about January of 25. We had the Bitcoin ETF launch happened during this period.

We had Trump come into office and everything that happened, you know, around that period. And so this is kind of the wealth creation period. This is where Bitcoin goes from, you know, 40K or so up to about 110K. So a massive wealth creation period. And if you kind of go back, we've done a lot of work on like trying to understand when did the most new users come into crypto in this cycle. this was the period that most of the ETF buying happened. This is when most of the meme coin speculative activity was happening.

This is when, you know, long-term holders of Bitcoin were selling most of their Bitcoin. So it was mostly happening in this sort of wealth creation phase, particularly around Q4 of last year into Q1 of this year. And that looks similar to what we saw in the past cycle. there were two tops in the past. I go, the first one was in April, and the second one was in November. And the first top... Of what year was that?

This was of 21, 2021. So the first top was April of 21. It was like right after Coinbase went public. That looks to be like the true top, in my opinion. We did have a correction. And then we sort of had a little bit of a leverage push that got us back up to like 66K or so. And then that was the top.

And so it feels a little bit similar, where that initial big move, that is probably like the true top. That's when most of the new short-term holder activity picked up. And we've seen since that time, since we, you know, we had the tariff tantrum in April of this year. And now we've rebounded. And the question is, is there enough here, given that a lot of like sort of early Bitcoin investors have been, you know, de-risking into, you know, 100K Bitcoin. you know, who's the marginal buyer that's going to take us from where we're at now, you know, up to,

you know, 150K or so. And that's the question. Because that's where we've been in for the last year is the wealth distribution phase, which is basically some of these holders, long-term holders, that are selling into this market above 100K. That's right. Yeah. And so that takes us to, you know, where we've been for 10 months, which is a pretty long wealth distribution phase here. And I think this is part of the reason that the cycle's been somewhat muted is that there are sort of a lot of early Bitcoin holders that have finally decided that 100K is a pretty good number to take some risk off. And, you know, in some ways we've had a different bull market. I think we, because of this and because, you know, when you think about all of the new buying activity that's happened here, these are all new holders now. this is going to be setting the base, you know, for the next bear market, we could have a different,

you know, bear market as well and probably set a higher base in the bear because of the length of this sort of wealth distribution phase. What tends to come after this is wealth destruction. We don't know if that, if we are entering that period just yet. But that tends to be when things, things break down, tends to happen after Bitcoin has a failed weekly close at its 50-day moving average, which is about 102K right now. So we're still sitting above that. Make your case with some more numbers here. So here is realized profits last cycle versus this cycle. What's that showing you? Yeah. So again, just kind of anchoring to this idea that we're a late cycle. So this is realized profits. We take this from Glass Node. And just looking at, you know,

what was the last cycle? We expected to be higher this cycle just because of the total, you know, the price of Bitcoin and acknowledging that a lot of people are, you know, were early holders of Bitcoin. but we've almost, you know, doubled the realized profits. So this just helps me anchor to like, okay, if we are going to have this extended cycle that everyone's talking about, like, you still have to factor in like who's going to be the buyer. Who are the buyers and who are the sellers? We've already seen quite a bit of selling from the sort of people that you would expect to be the buyers in a bear market.

And so it's hard to sort of take off to like to go into another phase when we're already this late in the cycle. So what this is showing is last cycle, the long-term holders of Bitcoin, let's call it, realized $500 billion in profit, basically. So they kind of cashed out their chips, $500 billion. This cycle, they've already cashed out $900 billion. And you're just making the point, like, that's a lot.

That's a lot. That's a lot. And if you're going to, you know, when you're thinking about, I think a lot of the people that are sort of projecting okay, the setup looks great for cycle extension. I could agree with a lot of that, actually. And I think that you can make a pretty sound argument there. But then when you come back to this type of data,

it's harder to make that case of like, okay, who's actually the buyer? What is the catalyst? And that's why we look at this data as well. Now, ETH is not telling us quite the same story when it comes to realize profit. Maybe that says more about Eith's more muted cycle than Bitcoin. So same realized profit numbers.

Last cycle, ETH holders realized $220 billion. This cycle, it's been $206 billion so far. So that's actually under the previous cycle. How do you factor that in? Because I think there's a lot of EF Maxis out there who are just like hearing some of this and be like, we haven't even had our bull market, Mike. Right. What are you talking about?

What does this mean for your analysis? It's interesting to look at it from this perspective, because you can kind of make the case, okay, Bitcoin, Bitcoin's done its thing. And it's maybe a little bit less than people we're hoping for it, but you could sort of make the case that Bitcoin's done its thing. Eith has not. When you look at this, you know, it just hasn't repriced relative to Bitcoin. And that's really what this is telling me right now is, okay, if we can kind of concede that,

yes, it's a little bit of a muted cycle of Bitcoin, but still 5, 6x from the lows, pretty good returns, if ETH had just done what it typically does relative to Bitcoin, this would look different, right? The ETHBTC ratio still hasn't been able to get up to the levels that we've seen in the past during bull markets.

And so I think this is what the market is, and a lot of people don't own Bitcoin, right? So then this really feeds into sentiment and people just can't wrap their heads around the fact that the cycle could be over and end in this type of state. And that's something, you know, if that, if it does play out this way, to me, we have to sort of sit back in the bear market and say, wait a minute, what does this, what does this mean?

Because I think what we've started to see here a little bit is like in some ways, the Bitcoin Maxi crowd has been accurate about some, some of their sort of thesis that Bitcoin would sort of swallow most of crypto. we are basically seeing that. If you look at most charts of even some of the top all coins paired against Bitcoin, they tend to bleed out against Ben Cohen does a lot of great work on this subject. But yeah, I think that's really it. These other assets just haven't, you know, repriced relative to Bitcoin the way that I think

a lot of people were expecting myself included. Well, maybe you could argue that Heath has just had kind of a weak cycle. Of course, there's also the argument we'll get to that, The cycle's not over, Mike, but we'll get to that later. That's right. That's right. Imagine a world where traditional finance meets the power of blockchain seamlessly. That's what Mantle is pioneering with blockchain for banking, a revolutionary new category at the intersection of Tradfai and Web3.

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Let's zoom out to the top seven crypto assets and get even more coverage here. So you've got a chart that shows capital base and trillions of 1.73 trillion and then a valuation of over $3 trillion. So I'm actually not sure what this chart means. What is this telling us? Yeah. So some more data that we sourced from Glass Notes. So we're calling the capital base essentially, this is the realized price or the realized cap of the top seven crypto assets out there.

And what we're looking at here is the sort of cost basis of these assets. So the total amount of capital that investors have placed in the top seven assets is $1.73 trillion. The market valuation, the current market cap of those assets is 3.1. So this has come down significant. It was over two or so before some of these liquidations. But this is something we track because when you think about crypto valuations, you have the way I think of it is you have the capital base. And that's like the actual money that investors have put into these things.

Like this is something we don't have this metric in stocks, right? There's no way to track this. This is one of the cool things about on-chain data as you can kind of understand like the cost basis. Yeah, of the asset. Very cool. And so it's a proxy. It's a rough estimate, but it's proven to be a really strong signal. And so you have the, that's your capital base. The amount of money investors have put in. And then you have a premium, which is essentially the valuation plus the leverage premium. So if you're in an environment where there's tons of leverage being put on and there's twice as many sort of leveraged eth in the market as there are actual eth held by investors, then, then that's how you get that valuation premium pushing up. And so that is fine. And we're happy to see that. And that tends to be what drives bull markets.

But we want to see strength sort of supporting the leverage. And that's where we started to become a little bit more bearish based on just the indicators and the fundamentals that we were seeing in the market. But my view is that in bare markets, and we track data on this, the right side of that chart is going to collapse to the capital base in the bear market. And that's when the leverage and sort of the valuation premium gets wiped out. That tends to be the best time to buy, you know, crypto assets. Okay.

So the full story here, if I could, you know, summarize a little bit, you're seeing the end stages of a bull cycle. You're starting to see momentum slow down. You're starting to see us kind of, they'll say running on fumes because we're running, not on net new buyers so much as we're running on leverage in the system, debt, and kind of like hope for an alt season. And you're seeing weakness and trading volume. You're not seeing a source for net new buyers.

And so you're just like, okay, October hasn't really happened. And so I'm at now, judging by your cash position, 70% probability that the cycle is over, at least for your portfolio, and maybe you're more risk-adverse than others out there, you know, like managing funds. But for your portfolio, you're kind of calling it. You're going to still leave some deployment in the market. But from what it looks like, you've also consolidated to your highest conviction bets here.

So you're not doing long-tail stuff with that 30%. Is that about right? That's exactly right. So when we started to go risk off, the first things that we were getting rid of were assets that we don't want to hold, you know, dirt through a bare market. So we have, you know, a small allocation of the portfolio, some meme coins, things like that, things that we've done well on earlier in this cycle that we just said, all right, let's just, let's cut, cut these, a few other, you know, risk on positions as well.

And then we trimmed our sort of core, core asset holdings. And, you know, that allows me to kind of say, okay, you know, I'm sort of 70, 30, 30% chance that I'm wrong, we do have this sort of meltup, you know, meltup setup here and we'll still capture some of that upside. Otherwise, I'm happy to, you know, book some profits and sort of get myself in a good position for the bearer market. I think we do most of our best work in the bearer market. I enjoy actually the bearer markets more than full markets, which is surprising to hear, but it's just the tide goes out. It's easier to do the analysis. It's easier to see what's truly real. And so we want to be in a good position for that.

And so to me, it's riskier for me to sort of sacrifice being in a really good position for that. And this way, I can sort of still capture some upside while allowing myself to sleep well at night and kind of preparing for the next phase here. I get it. I get the rationale. That's exactly what I wanted to get in your head to just sort of understand that. And I don't like the conclusion. I'll say that.

But I do understand the rationale. There's someone who also agrees with you that, you know, I followed for a while. Chris Brinisske, he said this after, he said this on October 17th, so late last week, increasingly convinced that last Friday's massacre, he was talking about the Friday flash crash, of course, broke crypto for a while, hard to quickly develop a sustained bid after such a meltdown. This cycle has been disappointing for most, which can paralyse action as people hope for bluer skies or former all-time highs. He said, if you look at Bitcoin and Eiff, we're in the elevated range right now.

He also says, this bull is different. The next bear will be different too. This is not, like following Chris for a while, this is not so much Chris saying, yeah, the bull market's over. I don't know that Chris will ever say that, but it is him probabilistically leaning more in your direction, which is like it's late cycle, books and profits right now, and prepare for the very real possibility that we have. hit at top, even though that's not for sure. He's kind of saying the same thing that you're saying. Yeah, no, I have a lot of respect for Chris as well. And, you know, I think he's one of the good ones out there who will sort of share a little bit more of even when he's sort of long term, always long term, bullish, but we'll be sort of strategically bearish. And I think that's similar how I view

these markets. Like, we're building a business in this space. We're extremely bullish long term on crypto as an asset class and what it's going to do to just change finance. And many, other things. And we can sort of hold that view and also say that, okay, there are cycles. This is just how a lot of this is just how human behavior and markets work and we tend to get these cycles. And we want to sort of be smart around some of that. So yeah, a lot of respect for Chris. I mean, we'll see. Nobody knows. Chris's super smart guy. He's managing money. At the end of the day, we're all trying to sort of like play to whatever we think the probabilities are and position for, you know, basically be positioned for whatever outcome comes and be in a position of strength

rather than weakness and sort of making, I never want to be in a position where something happens that I wasn't prepared for and I had too much risk in the market and then that starts to impact your psychology and it makes it harder to make good decisions. So that's something that I sort of plan for as well because I don't want to put myself in a position where you're sort of struggling with you're on tilt and you're struggling to kind of like center yourself. I always want to kind of like be ahead of that. Yeah, I'll also add, I'm seeing these things publicly in a place like crypto Twitter is not very popular. So at least for a lot of people who want to stay bullish, of course, right? And they have bags maybe counting on this. Let's get into the counterpoint because

I want to get you to respond to this because I know something that you've looked at before is one of the points that Raul Paul makes around global liquidity. And maybe I can just articulate this. But as I understand it, Raul Paul, another crypto kind of macro trader, macro voice that I tend to follow. At least I appreciate his opinion, he basically thinks that this is going to be an elongated cycle. Okay. So not call it, not a top in Q4. His base case is that we have six to nine more months into the cycle, that we get something extended, that it goes into 2020. He said, if this was a flash crash on Friday, all said and done, regardless of what sparked it, flash crashes usually recover in V shapes back to the prior price.

In this case, we entirely wiped out the accumulated leverage, so higher. He's basically saying, hey, the flash crash was actually good. We wiped out the leverage. It was just a flash crash, just a flesh wound. It's somewhat like flash crashes in late summer, September of 2021. where we actually did hit all-time highs after that. If he more of his analysis, he kind of looks at basically,

um, current prices of stocks and other risk on assets, of course, which is, I mean, I think we'd all agree with Bitcoin and Ether and the long tail of crypto is very much in kind of the, the risk on category, at least right now.

It's not, not as correlated to gold as we might like. And you've pointed this out. But Rao Paul's base case is like, we're not done. It's not even a bubble. in tech stocks yet because the global liquidity cycle actually hasn't completed yet. So he's got a chart.

Maybe you could explain this a little bit more, Mike. I'm not always entirely sure what I'm looking at, but he's got a chart of ISM and a five and a half year like sin curve. So he's basically saying, let's see, he's basically saying this is why the cycle is lackluster thus far because 2025 was not the year of the big debt rollover. Thank you, COVID, for allowing average maturity. to be lengthened by a year as rates hit zero. So a lot of the stuff Rao Paul grounds his work in is basically the global liquidity cycles,

which tend to be on four-year cycles. He's saying in this case, it's not a law written in the universe that says a four-year cycle. This could be maybe a four-and-a-half-year cycle or a five-year cycle. In fact, if you kind of look at ISM and some of the global liquidity metrics out there, you can kind of make the case that we're just on a delay. a lag delay of Bitcoin price, crypto price, even tech stock price, catching up with global liquidity. And that's going to take some time to play out. Probably won't fully play out. We won't hit Max Global liquidity into sometime the first quarter, the second quarter of 2026. Thus,

an extended cycle. I know that you look a lot at global liquidity because we've talked about it on bankless before. What about global liquidity? Right? Like, aren't the money printers still printing money? Yeah, so a few things I would say on this. And, yeah, a lot of respect for Rao Powell and his team. The way I sort of think about this is he could be right, right? He could be right that the sort of refinancing schedule got pushed out a little bit and therefore the liquidity cycle should stretch a little bit longer here

and that could take us into, you know, first half of next year. The thing that I keep coming back to is the fact that global liquidity continued to expand. I don't have a chart for this call, but global liquidity continued to expand well past the cycle peak last cycle. So we should definitely acknowledge that. That it's not like a perfect predictor just because it's still going up. That's one piece. The second piece is even if global liquidity continues to sort of, do its thing, I still think you have to factor in the crypto market structure and the fundamentals

and sort of what we look at with wallet cohorts and profit taking, coin days, destroyed, all of these things because I still think that that is, you can't just ignore that and just say, oh, there's going to be new buyers because global equities going up. You still have to have a thesis for who's that new buyer. What is the market structure? What has actually played out? So you have to have a crypto asset specific. thesis. You can't just say global liquidity go up, therefore crypto asset prices go up. Yes. I don't think you can just blindly say that, even though it can work that way at different points in the cycle. And then the final thing is I'm seeing sort of a attention with liquidity. And you've got the chart up here.

you know, I'm not an expert on sort of monetary plumbing. We get a lot of our insights through people like Michael Howell with his global liquidity indexes that we're looking at here. What this is showing is that the SOFA rate is sort of exceeding the Fed funds rate. And when this tends to happen, there's a red dotted danger line there. When this tends to happen, it means that the rate that banks are lending to each other in the overnight hours is going up. And so you have essentially some liquidity like drying up out there within the banking sector. And I think there's a few reasons for this. We've written a little bit about the TGA rebuild, the drawdown of reserves.

We have another chart just to show where we think ample reserves should be and where we're at today. And so this is sort of something I think that's sort of growing under the hood. I don't know if Rao has addressed this at all just yet or if he agrees with this of what's happening out there. But it kind of looks, we had like a reverse repo scare in 2019. This was right before COVID. This has happened in the past. It tends to create a more volatile environment in assets, which we are starting to see. So credit spreads are starting to pick up.

That's giving you an indication of how. how difficult or how easy it is for riskier companies to be able to access credit in the market versus sort of like the treasury rate. And so we're seeing credit spreads pick up. The VIX was up quite a bit, got up to 29 or so last week. It came down a little bit on Friday. So when you see this happening in the,

in terms of liquidity in the banking sector, tend to see that get expressed through volatility in the markets. And if we're showing weakness in terms of funding, fundamentals and we know there's a lot of leverage still in the system, this just sort of adds to my view that like the risk is tilting more towards the left tail risk as opposed to the belt up risk. And so that's, I think that's, that's kind of where I land on this. You mentioned Michael Howlestick, who's somebody who I know tracks global liquidity quite a bit. What's his take right now? I think he thinks it's late cycle, even with respect to global

liquidity. Is that correct? Yeah, so his view is that we are late cycle. There are, the Fed is sort of not adding a ton of liquid. We know that the Fed is going to be cutting, is going to cut rates. I think it's like last time I looked it was 97% chance of an October cut and also a 97% of a December cut. Isn't that more liquidity? That's more liquidity. That should add liquidity to the system.

It's not, you know, the Fed doesn't necessarily directly, you know, inject liquidity by cutting rates. the banks can can issue loans and that gets liquidity out in the market. If they start buying assets and doing QE or if the treasury starts to do some interesting things where they just start buying like T bills, right, to just sort of add liquidity to the system or they do buybacks, there's stuff that can happen that can sort of put the bank, this sort of liquidity crunch at ease. And so this is a, this is also, we cited this when we shared our note with TD PR Pro members, you know, there's other risk out there and just like, and the policymakers just

come up with ways to sort of, you know, continue to juice the markets. And that is a, that is a, that would be a risk for the being in cash position right now. Yes, that's a risk for the meltup. You know, if you're in, if you're in cash and. And Trump is just like money can in time. Yes. Yeah. Yeah. Then things could like global liquidity could increase and that could cause a reaction in risk on assets. There's talk about, you know, if you got the Fed cutting rates, I mean, he's floated out this idea that, you know, he could issue, take some of the tariff revenues and issue stimulus checks with those. Like, if I start to see, if I start to see this happening, like this changes

the calculus here. That changes the calculus? Yes, this changes the calculus. We're going back to COVID. And the next thing, you know, Elon's tweeting about memes and everything. I think he saw it. He tweeted out about a meme coin this morning. So we'll see. But yeah, this is. this played into it, and I do track this liquidity, you know, and this kind of was just another variable that I threw into the mix, and I just said, okay, this is continuing to build towards the kind of risk offside. And we'll earmark that for later, because I want to get your thoughts on

what would really change your mind, but it sounds like global liquidity is still very important to you. You just think we're closer to the end cycle of global liquidity pending something happening, some sort of catalyst, a Trump-driven, a political-driven capitalist, right? Yeah, and like, you know, this could swing out. So, I mean, you tend to have to have sort of an end to the cycle and then a restart. And so I expect, you know, we have Powell coming, you know, he's going to leave office next May. I expect there's going to be potentially a trough here at some point. And then we take off again towards the end of next year is kind of how I'm thinking about it.

There's another take here I want to get you to win. and this is from Chow on Crypto Twitter. Regarding where we are on the cycle, the story is quite simple. He says there's one factor that outweighs everything else, including your favorite liquidity metric, everything we talked about, basically. If the AI bubble pops, it's over.

If AI stops keep going up, all bears are wrong. He says it's basically that simple. And so this is very much you see, what you see with kind of the U.S. capital markets trade. Is it something like 80% of all stock moves this year in the positive direction have been because of AI? AI is kind of like holding the entire U.S. economy up, holding the entire stock market up. So are we wrong to even look at these indicators, these on-chain indicators, if it's all AI at the

end of the day, fueling kind of the risk-on sentiment? Yeah, I mean, I think AI is fueling like over 50% of GDP right now, which is pretty wild. Yeah, at least the growth in GDP for sure. And the growth, yeah, and all the CAPEX investment. Yeah, for sure. this is like what's driving mostly kind of this is what's propping up all the tech companies right now. And so if we did see this this sort of bubble, if we're going to call it a bubble pop, this is definitely going to have an impact on the rest of the market, similar to kind of what we saw, you know,

with kind of the tech bubble back in, you know, 2001, I think. So yes, I would say that the way I think of it is if the AI bubble pops, that's essentially the markets that it's, that's the markets sort of. sort of rolling over and like heading into a bear market. I guess I kind of have a take where I think the AI bubble is being fueled basically by global money supply as well. And so it's sort of a narrative driving price or it's a price driving narrative type thing. Everyone's bullish on AI because AI stocks keep going up.

Although there could be some things that happen, you know, major disappointments in the progress. ChatTP6 is not what we thought it was. The interesting thing about like the stock boom and bust in 2020, was that was actually happening with more restrictive Fed policies. So, like, rates were going up in the backdrop of stocks, like going to NASAC going to all-time highs, which is kind of different. Then now we have easy money.

We have gold. We have debasement. And then we also have stocks going on a tear. So it's not directly applicable to, like, 2000 and the Internet stock boom and bust. Agreed. And, yeah, there's one other chart in here towards the bottom. that's just showing the tariff. Here we go. So, you know, we're talking a lot about liquidity and sort of where does liquidity come from? You've got the monetary policy side of it and what the

Fed's doing. And then you also have the fiscal side of it. And that is really what has driven this market, right? So the Fed, this was not a, you know, crypto cycle. I think most of us had the belief that the Fed had to be cutting rates for Bitcoin to do well. And that wasn't really what happened And we've had high rates for most of this cycle with Bitcoin doing quite well. And I think what's been revealed is that the fiscal spending is the other side of this. And that's been propping up not just the crypto markets, but also the, you know, the, the tradfied markets. And so we do need to be paying attention to capital flows, you know, from the perspective of fiscal. And what this is showing is like the tariff, the tax receipts and the impacts that tariffs are having.

And so when you think about, you know, just flow of capital, if you have capital moving from the private sector, which is the economy, businesses and households that are producing products and services, and that's moving, that's being taken out via taxes and going into the government coffers, you know, that is a transfer of wealth from the private sector to the public sector. That's withdraw. That's liquidity negative. That's negative for liquidity. So this is another element of kind of liquidity story that I don't think is being talked about as much.

And there's this view that tariffs are inflationary. And I think that's possible from like a one time price increase perspective. But I actually think they're more deflationary over the longer period. And so this is something I'm paying attention to. I think it takes a long time for this to truly get expressed into the markets. But from a capital flows perspective, I think we're losing liquidity. from a fiscal perspective as well. Ethereum's layer two universe is exploding with choices.

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Let's talk about the gold catch-up trade. So gold is at all-time highs, I think at 4,300 per ounce last week is absolutely ripping. Bitcoin is digital gold, right? Okay. So we have the other, you know, it's below silver right now, but there's gold. there's silver if you want some sort of denationalized store of value. And number three is Bitcoin. Ours is digital, right? And so if gold is 30 trillion, shouldn't there be a catch-up trade for Bitcoin where we can reach at least like three, four, five trillion? What about that?

There could be. There could be. I think this is one of the, this is that right-tail risk, I would say. This has been fascinating to watch the move for gold. And like, I think last week, it's starting to look pretty topy for gold, seeing lines of people outside the bullion shops that I've been seeing on Twitter. It's starting to feel pretty frothy for the gold markets. I think the RSI was at the highest reading it had ever been. I think gold has added close to $14 trillion. You've done some correlation between Bitcoin and gold, and I think you've pointed out it's

like barely ever correlated, right? It's very low. you know, there's this, we did see gold sort of have a similar, not not at the same levels we've seen in this cycle, but gold had a pretty good move in 2020 before Bitcoin had its move. And then Bitcoin had a much larger move moving into 21. And so I think there is some hopium out there that that we're going to see a similar move here. I see. We'll rotate from Bitcoin to gold. I don't have a strong view on this. You know, like I said, the analysis we've done. tells us that Bitcoin really is not correlated to gold and what drives the price of gold is not what drives the price of Bitcoin. I guess where you'd want to see it, right, is the ETF flows in that training activity because that would indicate that people are then selling maybe other assets, maybe some gold for Bitcoin again. And until you see that, it's hard to actually see

the data behind the Bitcoin catch up to gold trade. Yeah. Yeah. And I think, you know, the longer this goes on. So I think part of the way that I think about this is, you know, Bitcoin's trading around, what, 110, 111K or so. And we're starting to see more bulls or more people start to come out and say that they're kind of like risk off. They're taking some chips off the table. We know there's been quite a bit of selling from OGs and Wales. And so the longer this goes on, where you sort of know that you're recycling the capital

base, but Bitcoin is holding, you know, 110 or so, or it's holding above 100K, I will start to become more bullish if this continues to drag on, because now you're just really consolidating and turning over the base. And then if you have a change in narrative, liquidity change, whatever, then I think you could potentially move up from that type of situation. And so, yeah, I think we're in an interesting spot here where Bitcoin is kind of holding us ground as all of these whales sell out and rotate, you know, capital into new hands. We've seen what gold's doing. So there's still, to me, it's still very much, you know, to be seen how this plays out for

here. And for that story to be true, I guess you'd want Bitcoin to hold steady above certain price point levels. That 50-day moving average comes into the point. Okay, that's a big one. 1002. Yeah. Okay.

And we'll come back to that. One other thing I want to talk to you about is just like, let's get in our feelings for a minute, okay? If you don't mind, I'd like to express some feelings. But I think a lot of people listening are hearing, which is like, this was the shittiest bull market ever. Yeah. I think a lot of people feel this. So here's a tweet I saw talking about this bull cycle, 2025, and this is somebody

been through a few, right? And didn't sell the tops on the others, but been through the 2017, 2021. For this one, there was no hype. There was no euphoric blow off. There was no, this is the top moment. It was just rotating L1s, dying, mean. failed perk chains. Every pump was sold into. Every breakout got front run. Retail never really entered in size. Now here we have Bitcoin at 107K. We're barely above 2021 levels, the total three,

I guess he's saying. Most alts are still, alts have been obliterated. Most alts are 60 to 80% from their highs. Feels like the old season we were promised, it never even started. So I'm stuck between these two theories. Either we're early and the real alt season starts in Q4. Okay, that's the hope. Or, this was it. It was a silent top designed to trap everyone. He said, both are scary because one punishes early sellers. The other punishes believers.

I know markets don't give you what you think you deserve as an investor, but this cycle feels kind of disappointing. And there's that nagging thing in the back of everyone's head, which is just like, we haven't hit these bull market indicators from that we've seen hit in previous cycles. It's kind of like, it can't be over, right? It can't be over. That's how we feel.

I think that's how a lot of people feel. And when I look at a lot of these metrics, I think that's a great point that like there's, there's certain metrics you expect to be hit to give you a sense that, okay, the market is overheating. And a lot of those were not hit. Like the pie cycle top indicator has not been hit. We've talked about MV-RV ratio quite a bit on this show.

you know, that's at like 1.9, right? It peaked at like six in the prior cycles. We got to 3.5 in this cycle. Obviously, the ETHBTC ratio hasn't gotten to where we would expect it to be. And so I think there's a few things here. So you have all of that playing out. And then you have sort of in this cycle, it was really a stock pickers market. And so that just makes it way more challenging for people, especially if you're not expect, if you're just expecting your beta assets, all of them to go up as Bitcoin and ETH go up, it impacts, you know, sort of what your returns are looking like. And I think a lot of people have been in the wrong assets. And that's part of the sentiment that we're seeing out there. It's funny that used the term stock pickers market, right? Because I was like, oh, you mean token pickers market. But actually, we mean stock pickers, too, because a lot of the gains and some of the bull market actually happened outside of our

crypto-native assets. And in assets like Coinbase or Robin Hood stock or Circle or even Galaxy more recently. So you actually, in order to capture the bull market this cycle, you actually had to own some stocks. And that's totally different because in the past, you know, there's been studies on this where, you know, people have looked at should I own Coinbase? Like even the early investors in Coinbase back in, you know, 2015 or so, they've looked at it and said, should I have bought Bitcoin or should I have bought Coinbase?

And they always came back to, it was right to just buy Bitcoin. That did change. Like we've seen equities Robin Hood outperform Bitcoin. We've seen Coinbase, I think, at some points the cycle, outperform Bitcoin. So that is a new thing in this cycle, for sure. It is. And it doesn't trigger any of these bull market indicators because all of these are sort of our crypto-native assets on chain.

I want to give you another take. So somebody else who's been, I think, fairly right this cycle. We've had them on bank lists a few times just because we appreciate his analysis as Ben Cowen. So his take is it could be over. All right. So he's like, I hear what your stuff. saying Mike Nato, it could be over right now. But if it is over, that would be different than all of the previous cycles, slightly different. Okay. And he says it's very possible that we get one more push.

So maybe we've been calling that the melt-up. So in particular, he's saying one more push for Bitcoin, which then kind of filters over into Ether and then possibly an all season. But the case for this would be a Bitcoin top still sometime in Q4, okay? So, and the bear market later in 2026. But we get that one more push and that this, what we are experiencing now in downtoker, I guess, is the final dip before a Bitcoin market cycle top. Okay. And so, you know, his case is like, look at, look at what we just said.

the bull market indicators, it hasn't been really, like, none of these things have been hit yet. This can't be it. This can't be the end. And yes, it does seem in certain measures, like this is toward the end of the cycle, if you go days from kind of the bottom. But a lot of the metrics really haven't been hit. And so maybe we see one more final push into Q4. And he says, if we do see that, you know, 40% that we'll see the top in October, probability, 20% November and 40%. percent December. So keep your eyes on Q4, but we still might have some legs. What do you think about

that analysis? I think it's fair. I know Ben does a lot of sort of cycle to cycle, period to period. He's very good at just sort of laying out what has happened in the past and what should happen moving forward. I think it's fair, given, you know, when you look at all the metrics, it just doesn't look great. But I would say if you're going to draw that conclusion, you still have to say, okay, all of these metrics haven't hit, you know, the probability points to more upside. Okay, what is the catalyst? You know, I would like to see some, something else there to say, like, what is actually happening in the market that I can tie this, tie this back to. And maybe he has, you know, something there. But that's what I would. There's still a missing piece.

You can't just say, oh, we didn't hit the metrics, so we're going to hit them. You know, And we still need to see like a catalyst. It's kind of by view. It's also like, I guess betting it all on that happening is maybe not advisable if you're in position to take some chips off the table would be your take. Okay. Let's start to close this out. What would it take to change your mind? Because I know your opinion changes when the data changes.

And so what data would you look for that would really change your mind and cause you to leave your cash position actually deploy back into crypto? So a couple things. You know, a nice, you know, basically in a bare market. So Bitcoin down below 80K or so, somewhere in that range is kind of where I'm targeting. I think that we will see Bitcoin at 60K or so. So that's one thing. Just we get a bare market and I'll flip bullish. The other thing is, you know, where we're at right now, if I continue to see more and more sentiment that the cycle's over,

yet Bitcoin continues to show strength, kind of like what we're seeing, right? There's sort of building, you know, there's more and more people saying, okay, I'm kind of leaning risk off. Yet Bitcoin continues to hold up. I think that's interesting because we know there's lots of whales

that have been selling and the capital base has been rotating. So that's... And do you have a number for that, Mike? Do you have a number in mind? Because people are pointing to like, it's not over until we see two weekly closes of Bitcoin below 100K or 102K,

which is the current 50-week moving average. If we get two weekly closes below those numbers, then it's kind of like it's always been over at this point for cycles. But as long as we stay above that 50-week moving average on the close, like you start to build more conviction in this market? Yes, yeah, that's exactly right. So 50 week is 102 right now. So the longer we go with the capital base rotating and Bitcoin staying above that number,

the longer and then the longer, the greater the chances, maybe the liquidity, you know, gap that I'm seeing in the market. Maybe that gets resolved. Maybe the Treasury starts to do something to add liquidity. We know the Fed's going to be cutting. So the longer that goes with Bitcoin showing strength, and then the narratives can start to change behind them. maybe the fundamentals can start to change behind that,

then that's when I'll be changing my mind. Outside of that, I think, you know, continuing to just... We talked about the Trump money canon? Is that another one? Yeah, that's the other piece is, you know, we know Trump cares about the markets. We know his team cares about the markets. And there are things that policymakers can do to add liquidity to markets.

And so something to keep an eye on as well. I saw Secretary Bessent doing an interview, I think, last week and talking about, you know, I think there's this view that China is trying to play this long game and potentially hurt the U.S. capital markets. He did make a statement saying, hey, we're not going to negotiate to prevent, you know, just because the markets are down. We're going to, you know, that's not going to be a strategy. So I don't know, that's not what you want to hear for kind of more of the bullish take.

But, yeah, I think all of these factors are constantly. constantly at play and I'm constantly just monitoring them and trying to have clear eyes about it. You know, one thing that you can get in trouble doing if in my situation currently, having gone risk off, what you don't want to do is start to confirm your bias in a bearish slant, right? You still need to be open-minded, you still need to acknowledge the other side. And you want, you know, that's sort of the game that I'm playing is I try to make sure I'm, I'm acknowledging all kind of aspects of the market. No, you have to be definitely unbiased.

You like to play this markets well. Speaking of that, when I was talking about the conviction it takes to actually hit the sell button, how do you feel like that about that? So do you feel like there's this opportunity cost that you're being hit with with being predominantly majority cash position? Just the opportunity cost of what you said could happen earlier in October of Heath getting to 8 to 10K and beyond. Like, it is scary.

I find as a crypto investor, it's scary to be out of the market. So imagine, let's say, on the tariff scare in April earlier this year, you got washed out of Eith at $1,700, right? Only to see, just a few short months later, recovery to all-time highs. That is, to me, that is more painful

than just seeing. And it always has. If you've been in this space for any number of years across any amount of cycles, you're always like, oh, I regret the X that I sold back when price was Y. How do you feel about that? Like, how does it feel to be,

do you feel exposed, I guess, in a cash position? Yeah, so I agree with you that it's harder to time the tops. I find it easier as well to actually to buy in the bare markets than to time the tops. And I don't expect to time them, right? So my strategy is not to try to time the, We were selling crypto in Q4, Q1 of last year as well.

And I'm trying to capture as much of the run as I can acknowledging that I'm not going to get it perfect. And yes, there's risk, right? There's risk to selling. And you just brought up a great example. I mean, the sentiment on ETH was just absolutely terrible, not too long ago, six months ago. And to think that it would double its market cap and a couple months after that period is just, just insane. And this is why these markets are so, so difficult to navigate. And for me, the way that I sort of do it in a way that I can kind of sleep at night is like I'm kind of anchoring to

fundamentals that I just believe that I have strong conviction that these, I have strong conviction that Bitcoin will trade a 60K again is sort of how I think of it. And so I'm okay missing, you know, 30% upside or so potentially. And putting myself in a good cash position, making sure I can sleep at night and knowing that I'm not going to like, you know, drop the ball on something like that. So I think that's what makes it easier for me. And, you know, you can't lose money taking profits.

So that's a good, you know, we try to play a long-term game. We're not going to make it all in one cycle. This is a long-term, you know, wealth-building strategy over many, many years, hopefully decades. And we want to just be playing the game as long as we can. The other thing I find psychologically hard, is like when you sell high conviction crypto assets,

it's just like the question of what do you buy? So like in your case, you're buying cash, right? And when I think about cash right now, I'm like, okay, the thing that's getting debased, the thing that like the U.S. is running, what, is 7% fiscal deficit GDP this year? Like the thing that we know the U.S. money printer is going to continue to inflate,

like how do you decide what asset to actually sell for? Do you not overthink it? I mean, because you could not sell for treasuries or cash. You could sell for like Swiss francs or you could sell for like something like gold. Does that ever cross your mind or do you just put that aside and just be like, you know what? The long-term game is the U.S. is not going to lose global reserve currency status, you know, in 2025. That'll play out over decades. And so you just put that on hold and not worry about it.

Yeah. So it is somewhat of a risk. I remember actually having this tension in my head actually at the end of the last cycle. I'm like, okay, if I'm going to sell some Bitcoin, am I buying, I'm going to buy dollars and hold dollars? Yeah, exactly. It's so hard. So I totally get it. And, you know, I guess where I've landed on this is like, the answer is like, I don't really want to buy cash.

I don't want to hold cash long term. Like we are getting, you know, it's in high yield savings. So it's not a totally a melting ice cube. it's like, okay, I don't want to hold that long term, but I'm also acknowledging that there are times where cash is a good position to be in. And if you're going to really take advantage of bare markets, you need to be in a strong cash position. If I was worried that we were like about to go into hyperinflation or something like that,

then obviously that you can't even be messing around going into cash. You don't just buy anything other than cash. I don't have that view, though I think long term, that is definitely something that could happen. All right. Well, we'll wrap it here. So you got Mike's take on the market where it's going. I got to say, Mike, I've been really enjoying your work in the Defy Report this year. All the stuff, including the calls, including Mike's portfolio, where he is deployed right now. The remaining, you know, crypto assets he had has where he's putting those. That's all available in something called TDR Pro, which people can upgrade to and get access.

as to all of that. What's up and coming at the Defi report now that you're in kind of risk off mode? So still monitoring the market. So yes, risk off mode, but still monitoring the market and we're still going to update people on our views and how we're thinking as the conditions evolve. We do most of our best work, I think, honestly, in bare markets. And so, you know, if we are heading into a bear market, I would just hope that people stay engaged. You know, this is, that's how you start to outperform if you make good decisions in a bear market and also, you know, and how you position at the top of bear, bowl markets. Yeah, just enjoying it, sharing everything that we do, fully transparent. And I think the readers have gotten some good value out of it as well.

Well, fantastic. Guys, we'll end it there. Got to let you know, of course, none of this has been financial advice. Crypto is risky. If you don't know that by now, you haven't been in crypto for too long. You can definitely 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.