The Breakdown - Bitcoin Breaks $125,000: The October Melt-Up Is On

Episode Date: October 7, 2025

Bitcoin hit a new all-time high over the weekend, surging past $125,000 and capping its strongest week since May. Analysts point to ETF inflows, a weakening dollar, and broad asset rotation as drivers behind the move — while skeptics warn of monetary panic and late-cycle exuberance. In today’s episode, NLW explores whether this is a true macro melt-up, what it means for institutional adoption, and how traditional portfolios are evolving as hard assets take center stage. Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/@TheBreakdownBW Subscribe to the newsletter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://blockworks.co/newsletter/thebreakdown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownBW

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Monday, October 6th, and today we're talking about a new all-time high. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. Well, friends, October is in full effect with Bitcoin reaching a new all-time high in the first week of the month. Bitcoin topped out early Sunday morning, reaching a peak of around 125,750,000 750. The Saturday night surge capped off a big week for Bitcoin, adding 10%, and putting up its strongly weekly performance since back in May.

Now, there has been a slight pullback since, but at the moment at least, the $124,000 level looks pretty solid. Michael Saylor checked in as usual on Sunday, but signaled that Micro Strategy did, didn't buy any Bitcoin over the past week. Which means, for those of you paying attention at home, that the entirety of last week's 10% move happened without micro strategy plowing into the market. Analyst Will Clemente wrote, possible we get one last dip, but the most bullish thing about this move on Bitcoin is that it wasn't driven by treasury companies or perp DGens. It was driven by spot ETF buying, which is likely macro portfolio managers and funds viewing Bitcoin as a rotation from commodities

and small caps. The lack of leverage is really noticeable, with futures open interest, resetting sharply at quarters end last week. Selling from long-term holders has also slowed to a trickle, setting the stage for a supply squeeze. Bitcoin Jack argued that Bitcoin must be heading higher, tweeting triple tops don't exist, and broadly there are two big narratives driving this Bitcoin move. First, we have the government shutdown, which Fabian Dory, the CIO at Cignam Bank said, had, quote, renewed discussion around Bitcoin's store-a-value role as political dysfunction underscores interest in decentralized assets. Now, most analysts see the shutdown as theater to be resolved and due course. But on the other side of the show,

shutdown, big fiscal looks set to make a comeback. In an interview on Thursday, President Trump said, we are becoming a country that is so rich, so powerful. With the kind of growth we have now, the debt is very low, relatively speaking. You grow yourself out of that debt. In other words, the idea of austerity as an escape path has run its course, and the administration is preparing to run the economy hot. To that end, Trump suggested the government would use tariff revenue to fund $2,000 checks to consumers instead of reducing the deficit. However, the far larger narrative is that we are in a generalized meltup. Gold, stocks, and silver have all been ripping for weeks.

Bitcoin is just the latest asset to reach for all-time highs. The Coveisi letter wrote, What's happening? The S&P 500 is up 40% in six months. Gold is nearing 4,000 an ounce, and Bitcoin hit a record 2.5 trillion market cap. Meanwhile, the U.S. dollar is set for its worst year since 1973. Are markets that strong, or is the U.S. dollar just crashing?

They noted that gold as a safe haven asset is now trading with a record high correlation to stocks. Continuing, they argued, there is a widespread rush into assets happening right now. As inflation rebounds in the labor market weekends, the Fed is cutting rates. The dollar is now on track for its worst year since 1973, down over 10% year-to-date. The dollar has lost 40% of its purchasing power since 2000. Market commentator Shanaka Pereira wrote, The illusion of prosperity is breaking. Stocks up 40%, gold at 4,000, Bitcoin at 125, and the dollar is down 10%. This is in growth. It's a flight from

Fiat. The Fed is cutting rates into inflation, printing credibility while calling it policy. When gold, Bitcoin, equities, and real estate all rise together, it's not a bull market. It's monetary panic and slow motion. Asset prices are screaming what officials won't say. The denominator is dying. This is not a boom. It's the endgame of a system priced in paper and powered by illusion. Although some are dower at the implications of a crack-up boom, sentiment indicators in Tradfi are off the charts. Goldman Sachs reported on Friday that bullish sentiment among clients is at its highest point since December 2024. Over 40% of survey respondents expect the S&P 500 to outpace other indices this month. A sentiment tracker from Bloomberg Intelligence has entered the

Manixone. Oscar Osslund, Global Head of Content Strategy for Goldman Sachs wrote, Not-So-Distance about high valuations in bubble territory are forgotten, as investors are ready to pile back into stocks. FOMO is starting to creep as the cost of being on the sidelines might be tipping the scales right now. Now, he believes that FOMO-driven rallies rarely end well, concluding his note by writing, while almost all indicators point up, this setup also increases the probability of rapid unwinds down the road. Buyers beware. In Bitcoin markets, many analysts took a similar view that overheated markets are risky markets. Skew 52 noted that a ton of short interest had open positions on the consensus that the weekend pump is bait. Wrecked Capital pointed out that the all-time

high was rejected rather than continuing higher, recalling that the last rejection from these levels proceeded into a 13% pullback. Still, I'm trying to give you the full picture. The reality is right now, in the second week of October, these aren't really the takes that are driving. And with an undiluted bull take, we have Kaleo coming in who said, we're entering the era of new Bitcoin all-time high tweets every day. Been way too long. Feels good, man. And now, as I mentioned earlier, this was not an all-time high-billed-on-high-leverage speculation. Instead, we saw a ton of accumulation from the ETFs all week. The Bitcoin ETFs put up their second largest week of inflows ever, taking in $3.24 billion. The highest week came at the end of November last year, shortly following the election result.

and was only slightly larger with $3.38 billion. Interestingly, options on BlackRock's ETCF now have more open interest than Deribit. David Lawant, the head of research at Falcon X, commented that Bitcoin's, quote, center of gravity is starting to shift to trad-fi venues just like in other corners of the market. Ibit is also steadily climbing into the top echelons of the ETF world. Last week, it entered the top 20 by assets under management for the first time with 90 billion in assets. Bloomberg's Eric Balcunas tweeted, Someone asked me how long till top 10, it's 50 billion away.

If the last 12 months are repeated, it may not take long. It took in over $40 billion over the last 12 months and went up 85%. If forced, I'd set the over-under for Christmas 2026. Legacy internet and infrastructure are brittle, plagued by downtime, coverage gaps, and outdated financing models. Communities and builders are left behind while capital sits locked out. Althea is changing that. Since 2018, their technology has powered resilient, sustainable networks across the U.S. and abroad. With Althea L1, they built the world's blockchain purpose-built for utilities and telecom, turning infrastructure into a transparent, investable asset class. Through liquid infrastructure, networks can now be financed in real-time,

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view stablecoin market cap growth as purely a bullish indication. The metric has only ever declined during bare markets indicating capital flows out of the crypto ecosystem. Ricardo Santos, the CTO of Stablecoin company Mancea said, Stablecoin expansion is often interpreted as a sign of fresh dollar equivalent liquidity that can quickly rotate into Bitcoin, Ethereum, or all coins. In this sense, that $300 billion threshold looks like rocket fuel for the next market cycle. Of course, as stablecoins start to see wider adoption, that could become less true. Stripe stablecoin, for example, doesn't likely represent liquidity into crypto in the same way that Tethers does.

But for now, adoption is very early and rapid growth in market cap seems highly correlated to crypto bull markets. Analyst Kyle Dupes wrote, Capital doesn't stay idle for long, feels more like a spring wound tight, ready to snap. Now, while Bitcoin's sentiment is in full euphoria, there is still an agging feeling among some that it's getting late in the cycle. Those who still believe in a four-year cycle are expecting the cycle high to be by the end of the month, 550 days after the halving. And a booming market to end the cycle would be completely typical. The final days of the 2021 cycle top had some of the

strongest price action of the entire cycle. Others are looking at Bitcoin as a function of the larger business cycle, which many believe was extended this time around. Last month, Raupal of Real Vision said, why do we have an elongated business cycle? It's because in 2021 and 2022, they actually extended the maturity of the debt from four years to five years. That extension of the maturity of debt has actually pushed out the business cycle by a year. The four-year cycle is now a five-year cycle. Our best guess is that Bitcoin should peak well into 2026, probably Q2. Now, there are still plenty calling for a super cycle, but generally the feeling is that the Bitcoin cycle has been prolonged and changed rather than completely abolished. Gemini head of APEC sought Ahmed, said in a recent

interview, I think when it comes to the four-year cycle, the reality is that it's very likely that will continue to see some form of a cycle. It ultimately stems from people getting really excited and over-extending themselves, then you see a crash, and then it kind of corrects to an equilibrium. Now, one interesting difference with this late cycle price action in Bitcoin's behavior in late 2021 is a relative absence of volatility. We are still seeing some big green candles, but we're not seeing the huge intraday moves that came as Bitcoin put in a final top of the last cycle. Ahmed noted that increased institutional participation had dampened volatility, so that's not necessarily a good indicator that we're getting close to the top.

And as institutional adoption is now a firm fixture of the Bitcoin ecosystem, we're getting a lot of research notes from the large banks covering this rally. Citigroup is calling for Bitcoin to reach 133,000 by the end of the year, which was a reasonable target when the note was published on Thursday, but rapidly getting overtaken by the October price action. JP Morgan analysts are targeting 165 for the year, giving Bitcoin a little more room to run. And what's interesting about these price predictions is that they give a lot of room for

narrative reinforcement. Many institutional investors rode the wave in gold and AI stocks over the past quarter and might be feeling ready to take some profits. Bitcoin, especially relative to gold, hasn't seen anywhere near the same run-up over Q3, so could be ripe to capture the rotation. We're very used to watching the rotation of crypto capital from Bitcoin into altcoins, with multiple examples over this cycle in the last, but what we haven't really seen is a trad-fi rotation away from gold and into Bitcoin. The relative size of the asset classes are similar, but obviously at a much larger scale. At the same time, Bitcoin allocations are becoming more normalized. Morgan Stanley has published their updated guidance from their global investment committee

to investment advisors, and for the first time, the portfolio allocation included Bitcoin. Morgan Stanley recommended a 2% allocation for balanced growth portfolios and 4% for opportunistic growth willing to take on higher risk for higher returns. Interestingly, Morgan Stanley executives have been flagging a major shakeup in the way they think about portfolio allocation more generally. Last month, Chief Investment Officer Mike Wilson confirmed that 6040 is dead. In its place, he suggested a 60-20-20-20-20-20-20-Barrength. Macro-Trader Tony Greer said that this was the kind of statement that makes Wall Street sit up and

pay attention. And sure enough, gold continued to rally throughout the rest of the month. So maybe the Bitcoin allocation suggestion will have the same impact on Bitcoin, or maybe the general shift towards hard assets will have Tradfai giving Bitcoin a second look. In any other case, no one is full euphoric, but we are certainly in the grips of October, and I am here for it. going to do it for today's episode. Appreciate you listening as always. And until next time, be safe and take care of each other. Peace.