The Wolf Of All Streets - Bitcoin CRASHES To $85K As Global Recession Fears Set In! What's Next?

Episode Date: December 1, 2025

Bitcoin’s sudden flash crash has rattled markets as global liquidity tightens and Japan’s bond market sends crisis-level warning signals. With 20-year JGB yields spiking toward historic stress points, the yen carry trade is rapidly unwinding and dragging risk assets with it. Gold is surging to six-week highs, Fed rate-cut odds are accelerating, and Trump’s move to appoint a new Fed chair adds major uncertainty to the monetary outlook. At the same time, BlackRock’s Bitcoin ETF has become its fastest-growing product of 2025, even as Tether faces renewed balance-sheet scrutiny and confidence across crypto wavers.

well good morning everyone it's time for macro monday bitcoin crashes over the weekend we are trading exactly where we were a week ago when mike james and i talked last what's going to happen next well let's have the conversation scots out today so it's just the three of us which means i'm going to try to talk less. And let's get going. Well, it's, it's macro Monday time. And as I said, we're trading exactly where we were a week ago, which is kind of funny. you look at it but you know here we had a nice little crash over the weekend but before we talk about the crash and uh i let james talk about leverage uh why don't we see what the hell's going on in the rest of the world mike so what was going on the morning meeting this morning yes um thank

you dave will go there and i encourage everybody to listen to the interview with james in scott this weekend it was quite good i really enjoyed it um so starting with anna wong um talking about kevin has it i guess he's 70 percent in polymarket she does think he will be the next Fed governor. What she thinks will happen is he'll probably start influencing the Fed and the market starting in January. Mr. Moran's seat will be up. He thinks Hatson will initially take that seat and then move into the chairmanship once he's officially designated and approved and everything. She did do an interview, Donna, with Kevin Hanson, a couple weeks ago. And she said Hasse was expecting investment and productivity boom in coming years, similar to what Mr. Greenspan nailed in the

90s. And kind of key things that he's looking, he's looking for signals that green spainer was able to nail. And one of those was declining prices of tell communication goods. So she thinks HACS is going to be a push for a double shoe and management reform at the Fed. Maybe, you know, focusing on why they missed that transitory a couple years ago. Politically, obviously he's a bit leaning left or the Fed's a bit leaning left. Cassett will offset that. And then she focused, there was a question about Black Friday. MasterCard spending is about 2.3% real growth this year compared to 3.5% last year real growth than Black Friday. Ira Jersey, our income strategists pointed out that funding markets balance contract for a month end to continue. There's a bit of an excess. The Fed does not have excess reserves that we've done in the past. But he thinks the long end is still going to remain range bound, short in the rally more. So he's still looking for that bowl of steepener. But but thinks the Fed's going to be more devilish than the market expects. Michael Casper, our equity strategists,

pointed all the good things are happening in the stock market. Earnings are running 14.9% 95% strong this year. Industrial sector is only one that's missing, getting a lot of participation outside of the MAG7. The other than 493 earnings are running around 11%. Typical signals are still green, but less bright than last quarter. and average 13% earning per share rise expected in 2026. It's the high since 2018, so his quote was that could bring in a little bit of volatility.

Small cap earnings still strong. Audrey Chilb Freeman pointed out dollars starting the month week and expects that's pretty much on the back of the Delvish Fed, which is now priced 100% for a cut next week. And the 10th, sorry, that's not next week. More dollar weakness expects into 2026, strong. And she pointed out there's a strong negative seasonal factor in the dollar in December. Eight of the last 10 years was down this month. And then I pointed out, I've been focusing on that Bitcoin-to-go ratio is one of my key leading indicators.

It's broken down. 25 was the key support. Now it's at 20. It's the next support. Fair value is around 13. And I just pointed out why I'm really, really frightened about the things I've seen in the stock market. I'm sorry, the commodity market, and that is gold, the velocity of the rally this year in gold. is only happening once or like three times or so in the last 50 years,

but it's never happened with stock market volatility getting buried like this. So it might be an indication that Bitcoin is going to be right and it's going to pull stock market down with it and volatility back up. So to me, that's the key thing I point out. And then I pointed out crude oil still think the trends downward as with the grains and markets are waiting for pops to sell. Right now it's the time to be light on positioning and you wait for rally to sell to bear markets back to you yeah i mean before i before i say anything because we'll we'll let uh as

moderator as i promised last week i i tend to want to talk a little bit less the i will say one thing um i still think that gold is going to run to 5 000 i've said that on this show multiple times uh i think that the liquidity gold is unhindered by some of the idiosyncratic things we're seeing in Bitcoin, and that's what's going on. It is interesting that I think gold is going to lead the hard asset rally higher, and I think the hot money is there first, and we'll see it pause once we get to that level. Of course, there'll be a tunnel of euphoria. I mean, just the fact that it, you know, what it did over the last week is, is, I think, pretty interesting. I mean, I assume you agree with that, James. I mean, you know, if one in the world on the trading

side thought, once it lost 4,000 a couple weeks ago, it was going to stay there. And here we are back pushing towards all-time high again. Well, let's talk about this overall macro, the macro picture. And Mike, thank you for your nod to the interview I had with Scott. We talked a lot about leverage and, you know, about liquidity. And so one of the things that you said is dollar strength. I mean, if you look overnight, you look at the overnight market. We can't really talk today about macro without bringing up Japan, right?

So one of the key structural changes that we're seeing in Japan is that they're allowing the 10-year to, the Japanese 10-year is now trading at 1.87% yield. It's a remarkable move for Japan. If you look over the course of the last decade, you know, Japan's 10-year has gone from about, 30 basis points down to basically negative 30 basis points, and now it's up to 1.87%. What does that mean? What does that mean for the macro world? It means that the structural availability of free capital in the world is gone. It's over.

And this is what we talked about either last week or a couple weeks ago, I think, Mike, is that the era of borrowing from Japan for nothing is over. And so part of what you said today is, and what came out in the meeting is the expectation of a stronger dollar, well, I'm sorry, of a weaker dollar. And part of that is that you're seeing today that the Japanese tenure yield up means that the yen is stronger, meaning that the dollar is weaker because one of the key components of measuring the DXY is the yen. And so that is happening right now. So now we kind of roll into what you're talking about, Dave, is, you know, gold and Bitcoin and all the indicators of what's going on in the macro world. Well, I agree with you. I think that that gold structurally is going to go higher from here.

I think that because I believe that we're going to see, we're going to continue to see liquidity. It's just not going to come out of Japan. And so it's going to be coming out of central. banks, primarily the big central bank that we're going to see it come out of, is the U.S. Central Bank. And it has to because it has to support the Treasury. And when that happens, how that happens, I think that, you know, some of the faster money got ahead of itself.

And you're seeing that in overnight prices of Bitcoin. This is nothing new. We have an end of the month here. It's, you know, now December 1st. So the last day of the month was yesterday. and I think that we had some algorithms that were triggered both month-end and just price-wise and risk-off sentiment because of what's going on in Japan. I want to make it clear.

I don't think that Kerry Trade is blowing up. I don't think that we have an implosion somewhere. That's not what I'm seeing. But you are seeing a structural move toward or away from free money. And that means that you've got a repriced risk. And when risk is repriced over the weekend, what gets repriced first? Of course, of course, Bitcoin does. It trades 24-7.

It's going to get reprised. Now, here's where it gets interesting. And here's what I'll bring up a chart here. And we can look at this, Dave. If you know how to do this. Well, I just tried to, yeah, okay. So hold on. So if you can.

I see it. You see my. i saw your chart i that was a different one there there it is okay well this is this is the this is the this is the 10 year the japanese tenure and so you could see it's just structurally moving moving higher and this is from 2020 you know when they were keeping it at basically zero uh zirp zero interest rate um you know um uh policy that this all kind of came undone we all talked about this and you we've seen this movie here in the end but this is this is a long-term move this is not this is not like a violent move upwards um this feels violent but you can see the policy changed okay that's the

tenure the policy has changed so that's one thing and then if we go to bitcoin and we look at the liquidations for the last 48 hours, you can see that the liquidations came, and let me make this bigger for everybody. You can see the liquidations came here when we were in the 90s. You started seeing shorts being liquidated, and then this risk-off sentiment occurred, and boom, we just hit this cascade of liquidity. And this is the cascade of leverage unwinds. And it's just continued and continued.

And then it kind of held its value, right, into early into this morning. And then it hit it again for another washout here. And these bars are leverage. That's all this is. Was it a massive amount of leverage? No, I think it was about $700 million from what I've read. Dave, you probably have a better handle. Very thin.

I mean, it almost, because of October 10th, He doesn't even show on the liquidation chart. The fascinating part about this is one would think that the amount of Bitcoin that is bought by yen carry trade is tiny. One would think that the Yen carry trade unwinding off of the BOJ news that Bitcoin reacts to, we would come in and we would see very different markets this morning. Let's talk about that. So really what I think is happening.

here in Bitcoin is that you've got leveraged longs expecting moving from the Fed a little bit too soon. Okay, so what is significant about today? Today, QT is ending for the Fed, right, in December. I don't know if it's December 1st, December 5th, whatever. They said December. So if QT is ending today, okay, that's significant enough. It's $25 billion of liquidity.

it's not going to be drawn out of the markets, but it's not liquidity coming in yet. Now, we did hear Powell say, and he's reiterated, and other officials from the Fed have reiterated that we are going to see liquidity come in from the Fed for bank reserves, but that does not mean QE in the traditional sense. It could just mean that we're seeing a steady flow, a steady stream of liquidity in the short end of the curve to just short. up bank balances. And that means Treasury's buying T bills with the expectation that they'll roll off pretty quickly. Now, we've seen this movie before also. Back in 2019, we saw the repo crisis where the Fed came in and said, this is, this is not QE. It's not QE. So it became the term of QE, not QE,

right? Or not QE QE. And so that and because it never rolled off. And so essentially it is liquidity, but it's not the fire hose that we saw back in 2000. or 2010. And again, in 2021, 2022, it's not the same fire hose. But the significance of it is the era of tightening is over at the Fed. We're not tightening anymore. That's it. Now, the question is how much liquidity is going to come and when? And I think that the markets got ahead of themselves again, once again, in crypto and Bitcoin, they got ahead of themselves thinking, okay, well, QT is over. Here come the fire hose. It's not quite that simple. And so we really need to zoom out when you're investing in, you know, assets that are being

adopted like this, you have to zoom out. So to your point about gold, Dave, I think you're right. I think that gold is going to structurally move higher, but it's going to move higher along with liquidity. And that liquidity is not going to come in a burst or a cannon or, you know, a bazooka today. If it does, it means we have some sort of black swan event. we're going to see a lot lower values in all these markets la Mike McClone's point of a steep drawdown. Yeah, we would see that and everything will correlate to one. And then you'd have the fire hose. But what we saw last night is the realization and the algorithmic trades and response to the reality that Japan is letting this go a little bit.

And they're doing it. Again, it doesn't look like it's, it. It doesn't look like there's chaos in the markets, okay? No, that was actually going to be my point. It's just, it looks like it's a structural move. And they're trying to do this without having a drop from, you know, a 10th, 10th, 10th story floor to the ground. They're trying to take an elevator down and kind of stop into in between floors a little bit rather than just drop it off a cliff. And so that's what I think we're seeing.

And I have not heard of any desks being blown up from this gen, this is the end carry trade yet. But I do see a risk off sentiment. And again, this is a mathematical end of month, end of year risk off sentiment that you're seeing. And that's kind of what, from my perspective, I'd love to hear Mike's views on this. But that's kind of what I'm seeing from where I'm sitting. and Dave, anything you're seeing and just the sheer amount of leverage that came out. Well, it wasn't that much leverage. That's the strange thing.

There's less than a billion. I mean, as I said, I think, you know, Mike, you and I all agree. We don't all agree on a lot of things, but one thing we do agree on is Bitcoin does tend, because especially on the weekend, tend to be a leading edge of the spear, unless, of course, it was complete nonsense. And some one, it doesn't take that much to move the Bitcoin market, right? I mean, we saw less than a billion dollars in liquidation. Well, when you have leverage like that, it doesn't.

It's just sitting there. It's just sitting ducks just ready to be picked off. Right. And so, you know, over the weekend, right before that happened, you know, whatever, James Wynn famously said, okay, I'm not short anymore, you know, whatever, and stay tuned. And, you know, you have all these people who are like, oh, okay, that's probably. And who knows, I mean, maybe many of his followers just went and said, oh, if he's not short, let's go leverage long and see this thing go crazy.

December. And then, of course, they're easy sitting ducks to get picked off. The thing that's interesting is, is if you look, I mean, Mike, I'm sure your bond strategist has said this, you just look at the 10 years. They pretty much all moved in lockstep. Germany. I mean, everything is five, six, seven basis points among all of them. And that's not, you know, that doesn't look like, you know, the headline saying Bitcoin dropped because of the BRJ, well, then why would bond yields of all kind of moved, you know, fairly muted, pretty much in tandem. I mean, everywhere else other than Bitcoin, there's no sense that there's an issue in the N-carry trade because the N-carry trade is a very big deal in the bond market, right?

Look, we had the Yen-carry trade blow up in August of 2024, right? We experienced it. It was a lot of fun. But that put everybody on alert, and that was kind of it. And so I don't, I just don't see these desks being way over their ski tips on this anymore. It just doesn't, it just makes no sense to me. There might be some hedge funds, but there won't be any, we're not talking about any professional dealer desks, the ones that are the systemic.

Exactly. So, exactly. Right. Anything on that, Mike? What are you thinking? Yeah, I, I'm glad you went there. I agree with it. And I'm, if I can just run through some screens and kind of.

mimic on it. Obviously, my bias is the big one. This is way overdue, and yes, I've been wrong in that one for a while, but here you pointed out global world bond yields. They're all up about six or seven base points, with the exception to China, which is not really a live market anymore, it's very close. But yeah, they're all up, Europe,

Japan's up six base points, U.S. up about seven. But I want to tilt over to I think what's really going to be mattering and why I'm sticking with this bearish view is, first of all, this is just you take Bitcoin divided by its 50 month, a 50 week moving average, It's, you know, it's at right now to 15% discount.

It's never, ever gone down below its 50 week moving average this time of year, certainly without S&P 500 filing. This is since 2017. To me, 2017 was a milestone because that's when futures started trading. And then the next milestone was when we had widely disseminated ETF, so it was really 20, 24. So the key questions for the end of the year is, will Bitcoin be the Grinch? And then I like to point out, yeah, I think so.

And one of the key things that really tilted me, I just want to show you real quick, it tilted me lower to get, to give up on a little bit Bitcoin too much last year was if you look at it versus 50-week moving average, it's made the same lows and lower highs. It's a maturing bull market that's becoming normalized. But the lows have been the same around a 50% discount. I expect that. But you overlay that with what's happening with gold. Gold is rising versus this 50-month moving average Bitcoin is declining.

So from a leverage standpoint, which is my background, to everything's leverage. You want to belong to one that's increasing relatively. And so that's a big difference. But also I want to show you out to me my favorite leading indicators, Bitcoin to gold has broken down. 25 was the key support. We looked at all year. Now it's at 20. Our model says it should be closer to 13. And the bottom line for everything, what you talk about is why there's not a lot going on and a lot of, you know, it's just kind of a complacent market. This volatility, S&P 500 is buried. It's kind of potentially recovering. This is 120-day volatility. potentially recovering from the lowest level since 2021, 2021, and we end the year here.

It's the lowest since 2017. So I'll just end with one thing that I'm still worried about. Here's volatility, very buried. Last five years, Bitcoin's inflation point has been around 50,000 when people say, look at the chart. It's bullish. I say, okay, well, that's normal. And that's why I'm worried for going into the end of the year, the Grinch might be coming in here.

And if we just give a little more trickle down, especially with bond yield spiking here. This is not good for any risk assets. Yeah. Look, and we talked a lot about this with Scott and I talked a lot about this, which is, you know, Bitcoin liquidity cycles, Bitcoin four-year cycle, its historical performance and looking at it, there's only a few data points. And to me, as a long-term investor, that just means that you're looking at something. it just does not have enough historical data to really give you comfort and confidence in trading it.

Now, that said, because of these cycles, there is some self-fulfilling prophecy. There's no doubt about it. But the reality is that I just think that the four-year cycle for Bitcoin is over. and we are in now a we this this is showing you especially in a day like today it's showing you that it is the tip of the liquidity spear and so it is showing you what markets expect from liquidity and are reacting to in liquidity in kind of a hyper reactive mode and so it unfortunately you have to zoom way out to really understand how this is working with Bitcoin because it does have short-term volatility. But that means that something like gold is, you know, that's also reacting

to liquidity. And that's why I don't think that gold is finished. And I think that gold is going instruction, they move higher. So, and I believe that, Mike, because just like you, you know, the market, it, on all metrics, forget about Bitcoin. Just look at all the market metrics. It looks overdone. Unless, of course, you change a denominator. It doesn't look quite as overdone as it is, but it still is overdone.

It's super concentrated. You have a tremendous amount of risk in just a handful of names that are hinging on this. this AI, you know, new structural change to not just the market, the economy. And so when is that, like, is that going to have, is it going to take a breather? And how much of a breather is it going to take? And does that cause a cascade of selling where the Fed has to rush in and dump liquidity into the markets rapidly? That's really the big question.

It's not the question about whether or not we can have a breather. of course we can and we all agree that this you know the the the danger is that it's it's extremely concentrated and and it has gotten ahead of itself so but to look at bitcoin i think that you really do have to i mean i know bitcoins love saying the zoom out zoom out zoom out but you really do have to just pull back you do have to zoom out and you have to revisit what your what your what your thesis is. If your thesis is that Bitcoin is the hardest money in the world, that it cannot be corrupted by central banks, it cannot be corrupted by the dollar or the yen or the euro systems, that it will swallow them because of exactly what we're talking about and that it can't be

just expanded on and devalued and debased like the other currencies, then that's your thesis and you you have to zoom out and really understand that hey look this is a volatile asset that's going to continue to be volatile along its long-term adoption you know kind of of personality but as as something you look in in the markets but to just trade it around on four-year cycles i think at this point is probably a mistake we have to see how the liquidity cycle is playing laying out. Are we finished? I don't think we're finished yet. I think that we're entering a period where the Treasury is going to do whatever it can with a government and an administration that is likely leaning heavily toward liquidity rather than pulling liquidity, especially as we

go into midterm. So this does turn political. And now you've got a Fed that we're going to see a regime change in that is going to change to a regime that is probably highly favorable for the current administration. And when you have that with an administration that is hammering for lower rates, hammering for liquidity, well, you're probably going to see that next year. But again, we're still in December here. Midterms aren't until almost a year from now. And so there is time for all of this to still oscillate around and play with.

And so I do reiterate, if you have that, if you do have a long-term view on Bitcoin, don't forget it. Like step back, take a breath, take a moment. It doesn't mean that you shouldn't have liquidity sitting there waiting opportunistically for a trade that Mike is pointing out that you, could have a drawdown. That doesn't mean that you should be 120% in on it. I think that Mike would tell you take chips off the table and step back and be ready for liquidity. Now, in my hedge fund, we're ready for liquidity because we have different levers we can pull than an individual can.

That's a completely different thing. But, you know, it really is, it's determined by your own balance sheet and how you're approaching this. And so I do, I cannot reiterate this again enough. I reiterate the caution around having leverage on something like Bitcoin. It is still violently volatile. And you've got to be aware of that. So, you know, last night again, it's really important. Look, I personally think that this was idiosyncratic, that people there's a tweet that I did last week or a post that I made last week where I lamented how in the long run the narrative does tend to fit price right price and narratives do work right so the long run narrative why is gold up gold's up because we print more dollars the denominator changes gold price goes up full stop end of story it works first principles just that doesn't mean anything different in the short run when there are short term price moves People always desperately, it's sort of like the search for religion, search for a reason. What happened over the weekend?

Well, the answer over the weekend is somebody, and it could very well have been orchestrated, looked at what was going on. And you made the point, you said words that were important words that I want to delve into. You said, picked off. And what happens is, is traders like to make money. And big traders have big bats and can do things. So if, for example, you have a position where you are long spot Bitcoin on exchanges, you are short perpetual swaps.

And by the way, in the funding rates, you can see that that trade is not nearly as expensive as it would, that trade is not nearly as good from a funding perspective as normal, right? But it has oscillated. We went from negative funding rates to now slightly positive, slightly, but still below normal. So that trade costs you a little. But walk through what that means for people who don't understand it. Right. So when the funding rate is normal, effectively what that means is you're being paid to be short, you're being paid to be short on the futures or on the perpetual swaps,

politely enough to offset the cost of the money you borrow to do that. And so when it's when it's when the funding rate is negative, you're actually being paid, you know, to be long. And so, or paid to be short. And so when it oscillates back and forth, trading desks, and there are trading desks that do this all day long, they use it, they go, they either have long or short spot positions that they've borrowed vis-a-vis per positions where they can make money. Now, it obviously costs to borrow spot, not nearly as much as it used to, but it still costs. So what happens is traders look at this and their opportunity cost is what they care about. Because if you have a big position that's hedged, the only reason you would have that big position is, well, to be quite frankly, it's you're moving

in and out of it. If you're going to hold that position, unless you're being paid to hold it, i.e. funding rates are high, you wouldn't hold it. But you could build it up and then dump spot an opportune time. What is the most opportune time to dump spot on the weekend? When on the weekend is the most opportune time to put a dumb spot? Generally, it's Saturday night. Well, what happened? So, you know, if you're asking me probabilities, the probability is a trading firm or firms wouldn't have taken more than one because it wasn't that big of a move, saw an opportunity to have a large spot position and dump it at the same time that they were hedged in the perk markets and they take their profits at the bottom of the dump

because the spot, what you do is, and this is true about every electronic book, but really true in Bitcoin and really true in crypto, particularly on the weekend, is liquidity is concentrated right at the bid offer. And if you look, liquidity down $5,000 on Bitcoin, it gets less and less. The first $1,000 move in Bitcoin may cost $300, $400 million. The next might be $100 million. The next might be $50 million. The next might be $20 million, right, until people start reacting and putting bids back in the system.

And so it always tends to be sized as a move. in sizes that make sense to people. And so you look at it. And this looks like, I hate to say the word, they would call this if it were in a regulated market that was U.S. only, it would be called manipulation and some of it be getting investigated for it. Now, in the crypto world, there are no regulations in terms of market manipulation, except the CFTC literally does have authority.

And whether they'll ever do this, I don't know. But this is a sort of thing that is manipulative. You look at it and you see it, and it, to me, looks like that again. And we've seen this many times. I've commented, I'll never forget the 29,000 to 26,000 drop, which was $3,000. Half the size of this, but it was from a significantly lower level. So in percentage terms, was even bigger. We've seen these many, many times.

And so we all rushed to come up with narratives. Why did it drop? Tip of the spear, liquidity, all this stuff, great, except for nothing else moved, which tells me this was manipulation. Yes, someone may have looked at a new story that panicked a couple of people, boom, down it goes. Now they look and, and, you know, here we are again. And that's why I made the observation that we're literally trading where we were trading a week ago on this show, having recovered a little bit. Then there was a rally a few days later. I don't think that I'm just not reading a whole lot into this move. I don't think that it really means a whole lot. You know,

It's just that simple. I don't think it matters. I hate to say it. But, you know, it matters to traders, but I don't think it matters within the scope. I think that if we came in and the S&P and the NASDAQ were crashing down this morning, as Mike said, the Grinch started on December 1st. If that happened, okay, that would be different, right? But that's not what's happening.

And so that's why I think sometimes people overreact. I think there are a couple of other stories that we should talk about, though. uh you know on the macro side one one that i really would love to get your opinion on mike likes to talk about micro strategies being the tip of the spear but i think it is worth noting something and james you're in the bitcoin community so you know i'd like to get your comment on this four year cycle i personally think we're going to play out very much like the four year cycle and it is exceedingly bullish and i'll expand on this narrative later and the reason is because is the main driver of the four-year cycle used to be fear when the having happened that mining

would fall off a cliff and the network would have a problem. And then within six months or so of the network being stable, then it rallied to catch up. And I think that we are now in a period we are the most stretched where mining is still doing extremely well. The network is still, the price of Bitcoin is at an all-time low discount to the the total overall hash rate. And I think that there's geopolitical reasons for that. There's lots of reasons for that. But to me, that's a buying opportunity.

I've been saying that for a while. It doesn't mean it can't stay bad for a while, three, four more weeks. It could easily, months even. But the truth is, is selling at these levels relative to the fundamentals of what's going on in the network is just not a really smart move when you zoom out. There's a lot of infighting. I don't think we've ever seen more Bitcoin OG people yelling, oh, man, you know, black rock this and and Fidelity that and Vanguard this and, you know, talking about all the institutions and how it's

corrupting the meaning, et cetera, et cetera. And so you're seeing all this stuff play out that's idiosyncratic to Bitcoin, but it is worth noting this weekend. And the other reason for my thesis is on October 10th, Bitcoin was one third of the liquidation. And it was not the biggest. This weekend, Bitcoin led the liquidations significantly. It was a Bitcoin led. And in fact, you know, that mattered.

So inside, this is, there's a Bitcoin story going on here. And barring, you know, major dumping from people who are, you know, who made, who would be cutting, literally hurting themselves to do it. I just don't see this price action being all that destructive. I think it's actually somewhat constructive. if you understand and you look back on it. But we could be in a bad macro cycle, but we're not seeing it anywhere else, right?

Can I fall up on the bad macro cycle to piggyback? I was trying to trigger you, Mike. I know you would. And I know our audience wants us to disagree, but I mostly agree. The thing is I want to point out, as a year of a year, Bitcoin is down 10%.

That wasn't supposed to happen. It's just a one-year basis to now, you know, after Trump was elected. Before it is obviously elected, it's definitely higher. But the key thing I want to point out is what's changed. Number one is what you said, James, is what the Trump administration wants by stacking the Fed. That endgame is over.

First of all, we've solidified the fact that I want to show you a quote from here that inflation is a number one issue in elections. And if you're the one behind the government creating in somewhat inflation, which is the Republicans right now, you're definitely in elections going to help if you keep inflation up, help the Democrats win. That's what's shifted. If you want to stack the Fed and keep the stock. stock market strong, great. You create an inflation, but for the 60% in this country, they're not so much involved in that, you're getting hurt. And one key thing that's changed I want to show you,

this is my colleague, Andrew Silverman, just published on Friday, the headline is not so much the first line of this story, something I would have never dreamed of a year ago. Under the nation's first crypto billionaire in the Oval Office, and then he explains what's going to change. That's what shifted. The whole world, I remember loving this space when he hated it, partly because he didn't get the fact that crypto dollars are investing in treasuries and didn't get that. And now he's not getting the fact that, by the way, inflation is the number one reason to lose in the elections, and he's trying to create more inflation. Good luck with that. It's how the thing's shifting. That's why I want to show you what's changed in markets.

It's the end game. Now, again, I show you the same chart. Bitcoin below 50-week move on average. It almost always bottoms at a 50% discount. It's nowhere near there. But what's change is we have Fed funds in one year. They've been hovering at 3% for a few years now, just bouncing on 3%. A year from now, it's going to be at 3%. And we're still not there. We're still running rough. But my point is, this is going to be below 3% a year from now. This is Fed Fund futures in one year and partly because Bitcoin's going to lead the way to, I think, at least a 50% drawdown versus its 50-week move and evidence. What is always done, maybe it's different this time.

Yeah. That's what I pointed out is it's not working. I just want to fill it with one key thing that's shifted this year. I'm predicting and the market's telling me we're overdue for the third negative year for the S&P 500 since 2008. Hopefully it's not going to be this year. That would be a crash. And that's what I just showed you.

This is Bitcoin gold, and you see this massive green candle this year. By the end of the year, I've been thinking, yeah, it could come back a little bit. But it's very green now, but this candle, I think, is going to be red next year. So that's my point is we have to put up with and probably deal with. We're at the potential end game where we're overdue for what used to happen, a down year in the stock market. Bitcoin's frontlining it. Microstaff is ahead of the game. All the crypto alts are leading that.

And now we're getting towards the end of the year. So my point is we can just have a little bit of pickup and volatility. it's all pointing that way into year end. It might just be a week that it takes to switch to flip the switch. Like it took one day in crypto's October 10th to flip the switch. Yeah. So part of that is, I think part of your thesis is it's priced in. Part of it is that, you know, we've already seen the liquidity.

I don't, look, I agree with you and I wrote all about this on my newsletter this weekend. The game is rigged against the little guy. And that's just reality. You know, if you do not own assets in this country, you're going to be left behind. And it's not about whether or not the Fed and the central banks have learned their lesson. They are mathematically trapped. They must add liquidity or we don't have money to buy the bonds that we're issuing to pay the debt that we're creating from the deficits that we refuse to give up. That's the issue.

And there's just, there's no way to give up the, the deficits without structurally. changing the benefit the beneficiaries and so are you going to tell all of the the gen x and boomers that have already paid into social security that they're going to get a fraction of what they're already getting a fraction of what they paid in for are you going to tell them that they're not even going to get that that would be pretty that would probably be worse than allowing extra inflation on a voting perspective you know you'd that would be turning your back on what you have promised the pay-ins for all these years. You're going to turn your back on them and say, well, sorry, you're just not going to get Social Security. No, they're going to print

money and make sure you get Social Security and your Medicare and your Medicaid. So the question is, how does it happen and how quickly does it happen? Not whether or not it does happen. They are mathematically trapped. They can't get out of this. We are in a debt spiral. It is it is as clear as day to everybody who studies debt. And Mike, you studied debt for a long time. You see how it is. I just don't think that there's any way, and that's not that I don't think,

you're looking at the numbers. If you have a way that you think that we could actually balance the budget without destroying the economy, without causing a worsening effect on the deficits that we have, then I think that you, you should probably, you know, be nominated for part of this cabinet to help them figure it out or the next cabinet. The voters, if you lower rates now, and remember, remember, the politicians are on four-year cycles. They don't care about anything but being reelected. We have, we have,

that has been made abundantly clear in the last three or four administrations. They do not care about anything but being reelected. They will talk out of one side of their mouth and deal with the other side all day long. And it doesn't matter which side you're on. Republican, Democrat, I don't care. If you're in, if you're in D.C., you're likely in this game. And it's just overwhelming. Well, and that's the question is who's going to be, who's going to be favorable for the Fed? He wants zero interest rate policy. He wants liquidity. he wants somebody in that chair that's going to help facilitate that we're going to see it the question is when and how much but powell's done in may right so that it may take some more time to see that

if you see liquidity you know front running the the elections that are in November you're not going to see the inflation off of that until months or years ahead yeah it takes a long time for that code to get through the boa. It's not immediate. Because you're talking about you're talking about printing money, adding liquidity to the markets, adding liquidity that that makes asset prices rise. And then the derivative of that is eventually consumer inflation.

But that's a different thing than asset inflation. Dave talks about this a lot. And it takes a while. for that to get through that that goat to get through the boa and be digested and again what once it's in the boa man it is hard to stop as we have seen we saw when inflation sort of raged to seven eight nine percent that they admitted to that it's very difficult to stop that and you've got to draw a lot of liquidity out trillions of dollars out of the markets to stop that it's not just it's not just raising rates. It's also that QT where you're literally drawing trillions of dollars out of the market to slow it down. So, but again, and that takes time to work its way through. So all of this stuff

is on a timeline that markets understand generally. And if you want to see what's going on, please watch the debt markets. They have a finger on this pulse. It's not the equity markets. They are trading around it in real time and they react to things very rapidly that often are emotional and they're not what the long, long term structural reality is. Well, I mean, yes, that's absolutely true. Although if the equity markets you think react quickly, then the crypto markets react like, you know, like Ricochet Rabbit, for those old enough to remember that cartoon, which probably most of our audience has no idea what that is, but you know, you can look it up on TV land or whatever. But, you know, it is really, really vexing to listen to, you know, just the assumption that pulling it, hurting, curbing aggregate demand is what causes is about consumer inflation. Their monetary inflation is very clear.

I mean, you want to pull, you want assets to go down, you suck liquidity out, boom. You get 2022. assets go down. I mean, you know, pretty straightforward. That's pretty easy. But if you want assets to go up and you want consumer inflation to be muted, then what you need to do? Well, then you need to get rid of all the choke points. So what are the two biggest choke points on consumer inflation and two biggest levers they have? One, energy, by far, the biggest, not even close. What's the other? Well, the other is supply chains of the stuff that people actually buy. Competition in supply chains, not collapsing. What were the things that we were doing

earlier this year on tariffs? You're not hearing a lot about it anymore, right? You know, the whole trade war with China. Why is that a big deal? Well, because most of the stuff we buy comes from there. You know, you want to drive the price of people's stuff up. Well, you tax it specifically by tariffs on what they're actually buying. Instead, you want to encourage domestic production. Well, you need to do two things. First, you have to make the regulations make it such that American companies aren't disadvantaged. That's really hard to do. A lot of estate and local, and on the federal side, they're trying, but it's hard. What's the other thing you do? Well, you cut interest rates. Why? Because you want people to be able to invest in new factories and new

things, but as you pointed out every time where I mentioned this, James, months, years, you know, for that, for that to actually impact supply chains. And so you know what you're trying to do. You understand that. And, you know, I just think the Black Friday data is, is fascinating, right? You know, you started this with this, Mike. You said real growth of two something percent, which, you know, when you saw that it was an all-time high, the nominal increase was significant. So effectively what your analysts are doing, if I'm not missing you, if I'm not misquoting you, you were saying there was real growth. So the consumers are still buying stuff. That is different than we were hearing a few weeks ago. We were hearing a few weeks ago that that

wasn't going to be the case. It was all going to be inflation, but a significant amount of inflation in what people are buying. I catch that right? Is that what you were saying this morning in the morning meeting, Mike? Yeah. So Anna, it was her. Anna Wong pointed out, yes. The nominal numbers are good, but the real numbers actually chalked down from last year, from above 3% to a little bit less than 2% the assured Black Friday sales. Well, right. But let's get that right. It's not lower than last year in real terms.

No, it's less growth. So it's just less, yeah. Yeah, diminishing returns. Still up. Oh, yeah. Growth is positive. Yeah. Right.

So there is growth, and on a nominal basis, there's a lot of growth. And obviously, the administration would strongly prefer. for it to be, you know, not to be inflated because when people have to pay more for stuff. I mean, effectively, I saw some analysts over the weekend talking about it, saying that, well, you know, Americans are trained to hold off on their purchases until Black Friday so they don't pay too much because people, and so a lot of what's happening is people effectively pulling backwards or forwards, depending on whether, you know, however you're looking at it. But they're trained to buy on Black Friday because that's going to say.

save them money because people don't have as much overall money. So that's why looking at Black Friday in a vacuum is kind of difficult. It's also important to understand whether it's necessities or, you know, or presence or, you know, whatever people are buying. And I guess we'll get a lot more on that after Cyber Monday, which is I guess today, yada, yada, yada. Right, you know, but it feels like, you know, James is getting away right when I was going to cue you up. I mean, You wrote about this weekend something, the game being rigged. And, you know, I do a lot of spaces with, you know, with people who talk about the case-shape economy that's become a very popular term.

It's stuff we've been talking about forever. By the way, that is a large reason when people are in Bitcoin. And before, you know, you go through this, is that this one? No, it's a monopoly one. Yeah, it's a monopoly one. Yeah. But. I do want to do my weekly comparison.

I'm presenting something. So I see of our background. I can see it. What I was talking about before, every time, Mike, when you go through your charts, if you look at the far right of this, and this is getting worse by the week, the blue line is the Bitcoin hash rate

is the power of the network, and the black line is price. It continues to get the most extended ever. Unless, if you believe that price is going to lead the half rate down, which, by the way, is the narrative that happens at points in the halving cycle right before rallies, and you can see it at every other time. I mean, there's smaller moves, but you can see it around there.

If you believe that you should value Bitcoin completely in a vacuum from the network itself, then fine. And basically you're saying, okay, it's an asset. I still think Bitcoin's an option, and we've talked about that many times. I don't want to go down that diatribe. But effectively, when you're looking at this, this is telling you the reason I don't agree with your 50,000 call, a reason I don't think we see these big drawdowns are because this blue line. The blue line breaks down. That's a totally different situation.

I want that to be clear. Let me follow up on that because I love that chart. I used it for five years, at least every year. And I stopped using it last year when I flipped over to gold and risk off assets. And because I thought sometimes we have to try to determine when the answers have changed. And to me, the answers have changed. Now we have a president who's a crypto billionaire and while the people got involved in the first place, don't want to get involved, don't want to be exposed to that human being.

They want to be away from the system. Gold allows that. Cryptos don't know. Now you're dependent on cryptos. And we have a president who wants to run it hot despite the fact that inflation is a number one issue and wants to get the Fed to ease despite the fact that inflation is the number one issue in elections. He's going to get unelected. I mean, sorry, this is the way things are working right now.

But that's what shifted. And I fully expect now the signals I'm seeing from commodities are historic. We've never had gold rally at this velocity with the stock market volatility this low, with crude oil going down this low. Never. It's never happened. So maybe it's just a faint. But I look at it as, okay, it's just predicting now we're going to have a down here in the stock market next year. Big deal.

Not a big deal. If we drop 10%, everything changes. Bitcoin will probably go down at least at $50,000, maybe $10,000. I have that outlook. But here's some question I want to ask you. So last year at this time, I was way early, I flipped over to completely golden treasuries. Now, I think gold is so expensive I should only be in treasuries, fully expecting that next year, you have to be willing to fall behind when risk assets are taken off. But I see risk assets rolling over.

And so critique that view because last year, critiqued hard and overweight gold, and that seemed to work out. How about now? Well, I think, first of all, risk assets is an interesting definition. arguably everything other than Treasury is a risk asset because you're looking to outperform it because treasuries don't get you, you basically lose to inflation. Treasuries are a melting ice cube to use Michael Saylor's debt. So by that definition, if you're talking about just search for yield or search for return, everything is a risk asset, including gold.

Two things have changed with gold. Gold, first of all, gold and Bitcoin share one really important thing that people don't talk about. Yes, they're both provably scarce assets, although gold's Scarcity kind of changes. There was some new gold discoveries over the weekend again, but whatever. I mean, it is what it is. They're both global assets, whereas U.S. Treasuries, yes, they are globally used and less and less so over time because people are sick of it, right? And you've seen that in terms of central bank holdings of gold versus treasuries, but they're global assets. So it's not only what's happening in the U.S. And outside of the U.S., gold has found a product market

fit as momentum hot money trading and that is new and that does matter because I know we've talked about the contract for differences market but gold and silver I mean silver you know whoops let me undo this let's kill that let's do this let's do this let's see if we can get it right I mean I mean silver you know is going crazy and you know silver is a risk asset in the in the precious metals world but it's going it's at it's now at you know record highs and why is it being driven a record highs well i can tell you that it's not physical silver demand in terms of coins in the united states uh dealers are or if you want to sell you're selling below spot there would have been many times in the silver market when you want to

sell you're selling above spot uh and when you want to buy uh you you would be paying a big premium that is not the case now the silver market is running because the hot ball of money that chases stuff is chasing it and there are a lot of people who see silver as is undervalued versus gold and you know etc but it really is it does react with more volatility and the volatility of silver is what is it 40 more than gold mike double you know somewhere even 40 yeah you're muted yeah you're still muted you have your mute button yeah sorry it's true times it's the nicknames leverage gold right exactly so what you're seeing is is there's a lot of moment there's just a lot of leverage in the system and a lot of people willing to employ it and with

contracts for differences the gold and silver markets are no longer the stately market where you look at and you buy it you know right before de wali when the indians buy gold and and use it basically as presence for their their investments and then then you're done for the year you know, it's a, that market doesn't exist anymore. You know, we've had central banks buying it. We know that. But we also have had this hotball of money buying it. And that's my thesis of why I think gold will continue to move higher because, frankly, where else are you going to put it? The entire world is printing. Literally every single country now in the G7 is printing money. They're all running massive fiscal deficits. So if you're, if you do it in constant fiat, gold or

silver probably will continue to go higher. Bitcoin has that narrative, but in the crypto community, who are the people who believe that most, there's been a lot of four-year cycles talk, dumping, blah, blah, blah, and so that momentum isn't there. That momentum can switch on a dime. And all the people who keep making these leverage bets like this weekend, basically pushing it up to 92 from 86 last week and now back down round trip back to 86, are just trying to get ahead of itself in front run, next quote big move understand bitcoin volatility despite it being up is still you know is the other chart that's worth looking at hold on stop screen let me present this share screen bitcoin volatility index right so if you look can is this up here yeah you can see

it if you look you can see it at 1.93 is where where it's at right down there and if you can see that. But this has been, this is where Bitcoin used to be in terms of volatility. So, and where it was, and you see where we are now. We are now in the middle, almost in the middle of the range, still not toward the high end by any means, middle to low end of the recent range, and still low by historical standards. And so what are you seeing with this? Well, you're seeing that it's, you would say it's a maturing asset. It's not a terminal velocity, though. I mean, so, but it is still there. When Bitcoin moves, you'll see a spike, and it could be in either direction.

The difference in Bitcoin and the S&P, I'll point out, is some of the biggest moves in the volatility have been on rallies, whereas in the S&P, when the VIX goes up, if you told me the VIX was at 50, and where are we at now, 18, 19, Mike? 18. 18. You know, VIX goes to 25. you're assuming probably a 3 or 4%, 5% correction. Vix goes to 30, you're going to assume a 10%.

Vix goes to 40 or 50, you're assuming a 20% correction. Bitcoin, there is no such correlation like that. It's bidirectional. And so it's important to understand that we're still in a compressive volatility environment. What does that mean? That means that rallies get sold and crashes get bought. And it's generally in that.

And there's reasons for it. You know, in terms of who's buying it. Most of the people buying Bitcoin are buying it for the same reason that people buy gold. The difference is there's no momentum in Bitcoin right now, zero. You said it. It's down 10% over the year. You mentioned Trump. Let's be specific.

You know, if in the U.S., half the population says, well, I can't buy Bitcoin because that's going to enrich the Trump family, that's a very real thing. Now, investment members don't work that way, but that is a real thing. And it does dampen it. it does dampen things is Dave you can show the screen that I that I just shared I don't know how but I'll stop there you go so this is the 10 year this is the 10 year yield okay that's a US 10 year treasury yield you can see what has happened here and here's what where we differ Mike is that this how is it different this time well it's different this time it's not because it's

different this time. What is structurally changed is the market, the world, the, the, the, the, investors around the world are waking up to the fact that zero interest rate problem, zero interest rate policy has, has put us in a spot where we absolutely must have, we must continue and we must continue to run deficits and print money to keep this whole charade going. so what Dave just said is gold has sniffed this out central banks around the world are buying gold they're not buying US treasuries like they were before the demand for them is structurally down okay one of the largest buyers in the world is tether okay that there's a reason for that they're looking for pockets of liquidity with this thing and so you've got pockets of liquidity for

people who are on exchanges who can't just sit in dollars or can't just sit in a money market that's the new money market okay so that's that's what's happening there but this red line shows that how we have broken this is the this is the the structural dissent of the yield on the u.s 10 year that ended in COVID that that that dissent ended in COVID And it broke through and it broke this long down downward trend. And now the 10 year is at 4%. So when we say that we expect lower rates, we expect the Fed to lower rates on the short end. The Fed does not control this.

We know that they don't control it because when they- They buy bonds when they want. What's that? I used to say the same thing. But now I've learned that when they want the bond yields to go down, they buy them. Well, they can do it. The only way that they can fix, they can own, the only way they can control this is through yield curve control.

And the only way you can do yield curve control is by printing money. And the only way that you can print money is by, and the only way you can do that is by dumping, that means QE dumping money into the markets, okay, which is inflationary. So this is not controlled by the Fed unless they print money. It's not by just lowering rates. If they lower rates like they did right before the election last year, then they lowered rates by 50 basis points and the tenure went up 50 basis points. That's the reason for that is that investors realize, oh, my God, they are going to just continue with this. They're going to allow inflation to run hot.

And even though it's nowhere near their 2% so-called target, they're going to allow some sort of range. that they can stomach, whether that's three to five percent, which I believe that's what it is, or they can just somehow manipulate it to look like it's not as bad as it really is. But you said it yourself, Mike, this is hurting individuals, not investors. It's hurting the everyday consumer, and they feel it, whether or not the BLS will admit to it, whether or not the government will admit to it, the CPI, the PPI, whatever it is, it, it, in, it, in, And the consumer feels it in their home and insurance and health insurance costs, they're feeling it everywhere. One simple way that chart is going to go from 4% to 3% to next year, which is my view is the stock market going down 10% and staying down.

Very simple fact. And you have to remember the key fact is that Trump, this race is losing now. Inflation means they're not going to get reelected, which means we're going to get Democrats. It's just, the election is less than your way. inflation's the number one issue and right now if the elections now they would get hammered and then there's a trump in it that's what's changed i'm just pointing out that chart there i look at china look at japan it's going to 2% heading towards 2% in my view and next year at this time if we're heading higher yeah mike mcgloan you're wrong but and we're going to make and the and my bet is that the

is that the is that the u.s fed makes up the difference by adding liquidity from this side just like in china Just like China. And their rates are 1.8%. And that is what you're hearing from the gold market too. Yeah, I don't disagree with that. But it's just so stretched. You're hearing it from the bond market and the gold market. The bond market, the chartage has showed, tells you that the bond investors are saying

inflation is going to rage and they're going to let it rage. And they're going to do whatever they can to allow it. And that's what you're seeing in the bond market. Guaranteed not going to get elected. You just said the number one purpose of a politician has. having said on Republican town committees for 20 years is to get reelected. If inflation runs hot, they're not going to be elected. They wouldn't, I didn't say they wouldn't step in it.

They have short-term views. That's it. I mean, we have an election coming up. This administration believes that if they can get the kind of liquidity in the market, and they can spur investment that they can run it hot, and they can get it to the point where it's not hitting consumer inflation, that's what they want. I have no idea.

I mean, do you think, wait, just pause on that, Dave. Do you think, Mike, that handing out $2,000 tariff dividends would be inflationary or deflationary? Well, we know the answer to that. All the Republicans push back on the stupidity of that. We're literally talking about buying votes. Oh, yeah. That's what we're talking about. By modern.

Whether you do it through, whether you do it through illegal immigration, handing out Social Security and benefits, or you do it by handing out checks to everybody. I think we should delve into this in a few weeks, you know, when we get to the, the end, our New Year's predictions, but I think it's a little bit early to worrying about elections. The only thing we do know is that the administration is going to do what they can to run the economy and improve the job situation and make people feeling better. That's what they're going to try to do. And there's a bunch of levers that they can do, but they can't get anything done if Congress is totally dysfunctional. Because basically, and by the way, if in fact the midterms go the way Mike says, and I think that there's every reason to believe that it could,

then for two years, you're going to have nothing but impeachment at a Congress, and nothing's going to happen, right? So which means we'll have total gridlock in Washington. By the way, markets like, markets love gridlock. Yeah, markets love gridlock. So, you know, I'm not saying that's going to happen. I hope it doesn't as a citizen, but markets love it. But anyway, we are way over time again.

It's been fun. I mean, I miss Scott. Hopefully everything will go well with him this week, and we'll see him. We'd even talk about micro strategy floating more stock to shore up their dividends. downs down 6% today you know micro strategy is is what it is I mean they have enough cash to pay their dividends now for quite some time and that's that well they listen like they listen to wall street and they said you okay you want to have some cash we'll have some cash and they do they're going to have two years of dividends sitting there waiting to be paid right and so once you you

have that then you ask yourself the question when is the time I don't know what the bottom of Microstrategy versus Bitcoin is, but it's a hell of a lot closer to the bottom now. This may even be the Pico bottom now versus Bitcoin. If Bitcoin drops to 50, as Mike says, micro strategy is going to get cut in half again or more. If Bitcoin goes back to all-time highs, micro strategy is going to perform better than Bitcoin from here to there. It's just, that's the math. And if you believe Bitcoin is almost bottomed out and you want a little bit of extra juice,

the micro strategy would likely be the one of the names to hold but right that's again that's again you got to do your own research and understand these things that's right and how they work as i said bitcoin dropping 25 30 percent from here micro strategy gets cut in half i will say those words again so that we don't we understand while i think it's quote a buy i think it is a buy relative to bitcoin because it's trading it very very low but to me that's a there's there's juice in the model that's a That's a better trade than a leveraged perp. Well, it's certainly, you're not getting liquidated, but you're, you could afford to have a long-term view, just like Michael Sale would have a long-term view.

That's the point. But understand what you're doing, because Mike McGlone is correct, that if Bitcoin drops, micro strategy is going to get, is going to drop more. Absolutely. But if you're buying, if you're buying a levered Bitcoin ETF, you could get, you could get liquidated on a steep drawdown in Bitcoin. too. It's just the way those things work. That's right.

Well, we're added at 10-10. So we will sign off and we will talk again. You guys both here next week? Yep. Thanks, Jay. Yep, me too. Okay. All right. See you guys. Good care. Cheers.

Let's go.