Transcription
Welcome to the report. It's May 27th, 2026. Ryan Sean Adams and Michael NATO here. The topic today is a realized loss analysis. We're going deep here, folks. How do the losses in 2026 stack up against prior bare markets?
We've got Bitcoin. It's been up about 26% from its February lows. Some signs that momentum is slowing. Maybe there's some ETF blood on the week that we'll discuss. And yet, and yet there is a mini altcoin season of sorts. The market is sending some weird messages, maybe some mixed messages. The big question, as always, is where are we going next? We're going to go do a deep dive on that realized loss data and figure out what it's telling us about maybe some of Bitcoin's unfinished pain. Also talk about mini altcoin season hype, Zcash near, what does that mean? The ETF flows. There was a $1.3 billion whale sale on the week. Also, Michael Sailor has switched to buying bonds instead of bitcoins. That's new. And the macro setup, as always. Stick around to the end. We've got some key Bitcoin price indicators to watch. Also, Mike still has almost 50% of his cash waiting on the sub, uh, on the, the sidelines here. What's he waiting for? What's he looking at during the summer months of this year?
Mike, your closing line on the report was, uh, really good. It was this: Bitcoin is trading in a zone in which there are simply not many buyers and also not many sellers. Why is that? Like, what's happening right now? Is this the calm before the storm?
We've been in a, in somewhat of a calm. It's been, it's been interesting with Bitcoin basically trading in this like 75 to 82k range or so for the last few months. And I think the reason for that is we've been right near kind of the short-term holder cost basis, right near the true market mean price. And there's just not a lot of buyers or sales. You're trading right around where the kind of average cost of the network is. And so we need to see Bitcoin either move in one direction or the other, and I think there potentially is a follow-on on that. So I think it's an interesting time right now. It's been quiet. I'm kind of excited because now things are starting to happen. There's more data to analyze and things are, things are shifting. It's been really interesting just with, with the price performance of Bitcoin down about 10% or so over the last month. But we've seen these, these other coins rallying and it almost looks like, you know, Bitcoin, Bitcoin moves first, altcoins come after. Is this a regime shift or is it more of a head fake? I think we want to get into some of that today and also go through this realized loss as like a really kind of high-level, um, setting for kind of where we're at in terms of realized losses relative to past bare markets. So excited to, to get into it today.
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All right, let's get to today's report. So Mike has almost 60% deployed in crypto, indicating he's not, he's not bearish, certainly, but he's not yet bullish. He still hasn't seen these fat pitches that he's waiting for. At least he'd like some more before he's done. 40% waiting on the sidelines. Bitcoin at the time of recording is 75K. Let's talk about this altcoin season, this mini altcoin season first. That's where you open today's letter. So, um, it's weird that we're seeing a mini altcoin season amongst some select coins because like, isn't Bitcoin supposed to lead this? So, what does this mean? Is this some confirmation that the regime has shifted, the animal spirits coming back, or is it something else?
Yeah, it's, it's an interesting time to, I think, to be sort of observing things on, on crypto Twitter, uh, specifically right now. And, you know, what you typically see is Bitcoin make the move first. Um, and we kind of, we kind of saw some of that. I think, you know, these other coins, Hyperliquid, Zcash, they're the two that are really outperforming. There's been some other kind of smaller AI adjacent coins that have, that have been outperforming, but it's really been those two coins. And as that's playing out, we are seeing kind of like what I would call like what looks like kind of the return of the animal spirits, right? It's been kind of interesting over the last, you know, let's call it last few weeks, last month or so. You're kind of seeing like the return of some people that maybe went quiet, uh, a little bit for the, for the first six months of the bare market. Uh, a lot of like larger accounts that will, you know, pump a lot of coins. We're seeing some of this activity, which is sort of like what you see during a regime shift, right? People are coming back in, retail's coming back in. So, that's interesting to me. Um, and we're going to go through some of the data to look at sort of the breadth of that. Like, you know, typically you're going to see, we have, we have an altcoin season index that we're going to get to here, but can now follow.
Yeah, we can go right into it. Yeah. Cuz this was really interesting. This is, um, down below in the report. So, I'm going to scroll all the way there. Here's the altcoin index. And so, you said there was a mini altcoin season going on. It definitely feels that way with some key assets. So, some of the assets are hype, Hyperliquid, is just like doing incredibly well on the 30 to 60 day range. So, is Zcash. Also, some of the AI specific coins, VIV, that's Venice token. Near is catching a bit. All these assets are catching a bit. What's interesting about this is like, uh, like we still call them altcoins. I guess we call anything that's not Bitcoin an altcoin. To me, the expression altcoin comes from like assets that are sort of either forked from Bitcoin or like Bitcoin. You could even include Ethereum, Ether in that camp, but not quite Bitcoin. I don't know if the term altcoin applies to like Hyperliquid. That's like that's almost Hyperliquid is more comparable to a Coinbase or a Robin Hood. Yeah. And and also, um, the AI coins like Venice, that's something different entirely. It's not trying to do anything that Bitcoin is doing. Maybe Zcash here as sort of the private alternative to to Bitcoin. Maybe that's the only altcoin here. But should we even be calling these things altcoins?
It's a good question. It's a good. I mean, as the markets mature, I, I think, you know, a lot of these nomenclatures are going to kind of evolve as we go. And yeah, in this bare market, I don't think we've seen in the past like coins reaching like big coins, right? Hyperliquid has a larger market cap fully diluted than Solana, uh, now a larger market cap than Coinbase, uh, now, which is pretty wild. So seeing these big moves, I think 45% move or so over the last month. Like that's a lot of capital.
Did you just say Hyperliquid is bigger than Coinbase right now?
It is. Has a larger fully diluted market cap than than Coinbase. I tweeted about this yesterday, um, because it's actually kind of interesting. Coinbase International, which is like a small subset of Coinbase's user base, um, has done, you know, about 40% more volumes since Hyperliquid, um, over the last year or so. So, that's interesting, that's interesting to me, you know, on, on its on the surface. But, you know, if you, if you look at that as like a value investor, you're kind of like, "Wow, does Coinbase have a Hyperliquid inside of it?" And people aren't really realizing that potentially. Um, but yeah, it's, you know, it's bigger than Coinbase. It's bigger than Solana now. And I don't know if we've seen this in the past. You know, Zcash has tried to push through all-time highs. It hasn't quite gotten there. It's come off a little bit, but this, this is a little bit different. And as this is playing out, the activity on crypto Twitter kind of looks like a bull market almost all of a sudden. You've got these big accounts coming in pushing narratives that can be reflexive with like retail following on to that. So something definitely to pay attention to. But, you know, when you look at this alt season index, it, you, it barely registers on CoinGlass's alt season index, which is interesting. And to me, that's telling me that like this is very isolated. Uh, it's not a large breadth move from the rest of the, the ecosystem. Um, and so, you know, when we look at some of the other data, it gets kind of interesting. You know, what's, what's also interesting here is like you're seeing euphoria on the narrative side with Hyperliquid, but if you look at the data of what's actually going on there, it looks like a bare market, right? You, you're not seeing open interest at sort of bull market peaks. You're off 50% or so. Volumes are off 50% or so. There is interesting stuff happening with, um, you know, HIP 3 and and and new, you know, per markets and, um, partnerships with S&P Global and like, there's a narrative there, but we're, we're not seeing like the sort of, you know, what, there's animal spirits on crypto Twitter, we're not seeing them on-chain right now, I don't think.
So what do you make of this then? And that's interesting that the alt season index, the alt season index is bar, it's barely showing. Yeah, an alt season. And that means I guess that this is much more isolated to what, like, you know, five, five to seven or so key assets. It's not all general non-Bitcoin assets.
Yeah. It makes the sort of, you know, the narrative on Twitter and the sort of social side of it. It makes it feel to me like as somebody who's looking at both sides of it, it makes it feel like a little bit more of a head fake, uh, to me in terms of just like, is there tons of liquidity in the market right now? Are we in, you know, are we seeing stablecoin supply, you know, increasing, all the things that you would want to see for it to be like a really durable move? And I'm not seeing that. So, you know, that's, that's kind of the, the setup here. And there's, there's rising macro risks and we're going to get into sort of what's happening on the Bitcoin side here, too. But, um, interesting, interesting part of the market. And, you know, I got to give it up to Hyperliquid. And, you know, every time I tweet about Hyperliquid, I get, I get more bull, you know, I get attacked for simply sharing a chart, but I'm actually kind of makes me more bullish on Hyperliquid because like there's a cult. There is clearly a cult on Hyperliquid. That's something you, I look for, um, as an investor, right? That's a, that's an army of marketers for the Hyperliquid token. And so that is very interesting, something I'm, I'm paying attention to. Uh, we missed, we missed, you know, hype when it was down to 20 bucks. I think we talked about it on the show and, you know, I think I missed it because we were kind of focused on bit, probably too focused on Bitcoin. But my strategy is like, it's kind of an abundance mindset. If I miss something, I'm not going to chase it just because it's everyone's talking about. To me, that's, that's a sign to probably, if you're in it, to potentially take some off, right? Um, and there's other coins, right? There's other stuff. We, you know, even though we've been, uh, mostly sitting in cash, we've also made some moves and we're having some fun and and making some trades as well. So, you know, abundance mindset, don't chase things, but we're, we're definitely keeping an eye on on this ecosystem.
There's always a fat pitch somewhere. You don't have to hit all the fat pitches out of the park. Um, let's talk then about Bitcoin down, uh, up, excuse me, 26% from the February lows. Maybe some animal spirits and some subset of of coins. Let's talk about this from a realized loss perspective. You put a lot of detail and focus in the report on realized loss. First of all, why is that? Why realized loss as, uh, a data point interest area for you? I, I think you, you referred to this as unfinished pain that we might potentially.
What is it?
It's kind of another. We, we've covered a lot of stuff on market structure, you know, in a few past episodes. Really trying to, to, to get a good feeling for like how much of the kind of top, top cohort buyer coins, the hot money that came in, how much of that has rotated. Our view is that has been that it, it hasn't fully rotated and hasn't fully played out. Looking at realized losses is just another way to sort of assess that. And this is something I was looking at the, the, the other side of the coin when we were kind of back in September, October, looking at realized profits, uh, and trying to see if that was sort of overheating relative to where we were. And and now we're roughly, you know, getting, getting close to 8 months into this bare market. And so it's good time to kind of level set with what has played out, just another really kind of high-level data point to, uh, to anchor to.
So explain this to us. Now, there are some layers. So here's the top layer. We're looking at a chart which is just Bitcoin realized losses over time from 2017 until right now. So it goes through the two previous cycles. The, um, 2018 bare market, the 2022 bare market, and the, and the current bare market we're in. And on the left axis, it's, um, Bitcoin realized losses. This is in dollar amounts and it's a 30-day moving average. What is this showing us?
Yeah. So, um, you know, we've kind of boxed out the, the 2018 bare market, the 2022 bare market, and like typically what you see is like a pretty big spike in realized losses as the cycle turns, right? So, pretty early in the cycle, and that's what we saw in 2018. Um, and then we, we've historically seen these large spikes at the end of, end of cycles. And so, we, we saw that at the end of 2018, kind of a capitulation, uh, December of 2018. And in 2022, it was similar. So, we had a, a pretty big spike, uh, early, you know, so this is like, uh, late 2021 going into 2022. Um, and then we had a larger spike in the June period of 2022. So, kind of around the time that that we're, we're entering now, and then another larger spike, um, you know, around when FTX went down, November of, of 2022. So, um, it's kind of common to see a spike early in the bull market and a spike later in the, in the bare market.
And the first, the first spike has been bigger than the second spike in the, in the previous two.
Well, it was in '18. It actually wasn't in 2022. So, the first, um, spike in 2020. There were kind of two in 2021. The first one was kind of, we had like an initial peak, but we were still in a bull market, came off, and then, um, we had a larger spike. Um, but the biggest spike was in the middle of the bare market. It was actually in that June period. That was when BlockFi, you know, went out of business. Celsius, like there was a, if you, you remember that period.
Oh, how could I forget?
Uh, yeah. So, um, sorry, what's the name of that hedge fund? The Suzu hedge fund. Three Arrows Capital. How did that escape my brain? Oh my god.
Yeah, it's been a while. We don't want to remember that. But that was that was kind of the biggest capitulation in 2022 and then we had another one. So, what this, this cycle is a little different. If we go to the, the right side of the screen, we had, you know, a pretty large spike and these spikes are growing, right? Because the market value of Bitcoin is growing, is growing over time. So that's normal to see them being larger. Uh, but we had a pretty big spike, you know, when we came off back in October and then we had a, a very large one in, um, February with the capitulation there. So now, you know, the, the, the, the analysis starts to turn to what is the likelihood of another spike and where are we at? This is just giving us a visual of kind of what it looks like. We went much deeper in the analysis here, which we can get to now. This is like maybe a little cleaner way to, to look at it. And this is just aggregating the realized losses, uh, across cycles. So there's no scaling here. We're just aggregating. And you can see right now, about 231 days into the, the bare market, we are at like a very similar level in terms of realized losses as we were in 2022. So that's, that's one way of dollar value of the realized losses 231 days into the cycle.
Dollar value. Exactly. So, so around the same, you know, that's helpful to us to sort of just kind of level set, but you, you, you still have to scale this to kind of understand as Bitcoin is growing and the market cap is going up, uh, we need to scale it to that. So, that's what this next chart, uh, is showing. And this is where it gets a little more interesting. Um, we can see what we did here is we're scaling this to the peak market cap. Um, and we're basically saying, okay, how much, how much losses in dollar terms as a percentage of that peak market cap to, to understand as Bitcoin is growing as, as a network, um, how are these losses scaling relative to that, basically? And we can see it's kind of interesting that the, um, about 231 days into the bare market, both in 2018 and 2022, we had, uh, between 12 and 13% of the peak market cap, uh, had been set and realized losses at that time. So, very consistent there. And if you go to the entire, you know, bare market, also very consistent, right, in the 17% range. So, 17% of the peak market cap, you know, came out and realized losses. Um, so if we go to current, the current bare market, again, 231 days in, so we're just lining it up with exactly where we were in the prior bare markets. We're only at 6.5% of realized losses relative to that, that peak market cap. So, it's kind of interesting that the losses scaled, um, relative to the market cap in the past cycles. Right now, we haven't seen, we haven't seen that. So, telling me like maybe there's not, hasn't been enough pain, uh, out there just yet.
Okay, that's one interpretation of it. Another interpretation is that the bare market is more shallow, that there just won't be this pain ahead. What you're saying is basically from a nominal dollar value, the pain is about equivalent to 2022. But from a percent of market cap, it's about half of 2022. And you'd think again, if this played out like the previous cycle, uh, we would have more pain ahead. But this is, um, kind of objective in, in terms of the number of days, right? Both these cycles are 231 days. So this is also objectively showing us that it's been a shallower bare market. Like, wouldn't we have to conclude that at some level?
Yes. Yes. Absolutely. Um, and, you know, that's one way maybe we can get to, we've got some takeaways on this and, and kind of how I'm interpreting it. There's one, I took it one layer deeper here. Um, and instead of scaling it to the, the market cap, we said, why don't we scale it to the increase in realized? Right? So the realized cap rises, um, because, you know, as the bull market is playing out, and that's basically all the capital that's getting invested into Bitcoin, cost basis of the network. Um, and so what we did is we just took the total, you know, increase in realized cap leading up to the peak, and then we're taking how much in realized losses, basically, came out during the bare market.
I see. And this, this is a little bit more of a nuanced view, and you can see like it's back in 2018, we took out about 60% of the realized cap increase, you know, 231 days into the, the bare market, and we ended up taking out almost, you know, 80, 81%, um, through the entire bare market. This is like scaling down, right? So in 2022, we were only at about 40% of the total realized cap gain that came out 231 days in. We finished the cycle at 50, almost 57%. And we can see on the far right there, in the blue bar, we're at like 22%. So, so we added 740 billion of, uh, realized cap. This is going back to like early '23 up to the peak, um, in, in, in last year. And we've taken out 22% of that, you know, so far. In 2022, we had taken out about 40%. So, little more nuanced view. Does look like it's kind of scaling down here. So maybe we won't see like the same levels as, as what we saw in 2022. Um, but I think the overall takeaway is like, it, it looks to me like, you know, not enough pain has really happened. I think there's like basically two interpretations of this. Um, not enough pain has occurred. Like, you could just look at it with a simple view using this objective data and say, yeah, it just doesn't look, look right. We need to see, you know, about 140 billion of realized losses if we're going to match the severity of the '22 bare market in terms of scaling to the market cap. Um, so that could be what's, what's coming. We don't know. Um, I think the bullish interpretation of this is, you know, the, the holder base is stronger, right? The people that are, Bitcoin's been around now for what, 17 years or so. So, you know, there's just more knowledge. There's more education. There's people that are buying it, kind of know what, what they hold and they're maybe just a little bit more diamond-handed. Uh, we have, we have ETFs and institutional players now and the market's just maturing. So you could just look at it and say, well, you know, this is, of course, like there's less pain, like people are, um, we have like a more mature market structure. And I think, you know, we're probably, the truth is probably somewhere in the middle, uh, on this, is kind of where my head's at on it.
So when you say the truth is somewhere in the middle, you're saying effectively you do anticipate a shallower bare market and also you do anticipate more pain ahead still, even though that will be a more shallow pain than the 2022 cycle.
Yeah. Yeah. I think a lot of this is going to depend on, you know, we're, we're going to get into some of the, you know, what we're seeing on the ETFs and stuff. Um, you know, how do things start to do? What's the domino effect that we're potentially going to start to see play out here? Um, the narratives that we were talking about a few, you know, a few weeks ago, a few months ago.
The momentum stuff, right?
The momentum stuff, the ETFs, you know, really holding up really well. Looks, it looked like institutions were maybe a little more diamond-handed than than we thought.
Reverse.
Sailor in the market. It looks like, you know, it's starting to reverse. So, we got that chart up here and, you know, this is starting to catch my eye a little bit. We've seen $2.5 billion of outflows over the last.
We're looking at, uh, Bitcoin US spot ETF net inflows, right? And you're, you're saying now when we see 2.54 billion in net outflows over what period of time?
Over the last two to three weeks or so, that's, that's come out of the market.
Um, so there's been a shift there. And if you just, like, as a reference point, what is that? How, how much is that relative to like other 12 roughly 12-day trading periods? It's in like the, the worst like 4%. Uh, so it's, it's meaningful. Um, but as you can see on the chart, it's not, you know, jumping out relative to these, some to some of these other outflow periods we've seen. Um, but then yesterday we had something that caught my eye a little bit. Um, so there was a whale that that dumped 1.3 billion of the IBIT BlackRock ETF yesterday. This was confirmed by, um, by Bloomberg and Eric Balchunas. And, you know, that, that's a little spooky to me.
You don't like to see that.
Yeah, that's a little spooky because when you start to think about what's happening here on the macro picture with inflation, interest rates, um, Bitcoin may be starting to give us a signal of like, kind of what's, where we're going here. And like, if you think about what investors, a lot of people still think Bitcoin is an inflation hedge. It's, it's really not. Um, and even gold has has been going down into into this environment. Um, and so if you go back to 2022, rising inflation, higher interest rates, this is really bad for, for Bitcoin. You know, this just, the, the, the way it plays out is investors just have to sell risky assets. Uh, and Bitcoin's probably the riskiest. If, if you're an institution, you're holding a bunch of Bitcoin, Bitcoin is probably the riskiest asset in your portfolio. And so, um, this is what concerns me a little bit. And, and the market has a herd, there's a herd mentality to this. And so, if you see one doing it, there's probably other shops that are looking at that move and starting to say, well, you know, the issue here is like, we've talked about this in the past, Bitcoin's kind of a mimetic asset, right? If you can't just look at it and say, oh, that person sold, the fundamentals look fantastic. I'm going to just hold. It's more like, oh, everyone's shifting and like, maybe I need to shift as well. And that's why you have, that's why Bitcoin's so volatile, I think. Um, and so something to pay attention to is just kind of, um, what I would say there. And this is one of the things that people have been pointing to to say like the bottom's in, right? These institutions aren't selling, you know, and, and this, it's more durable. So something to definitely keep an eye on.
So, you think maybe the reason this $1.3 billion whale whale sold was to kind of, um, take some risk off of the portfolio in general, maybe concerned about macro conditions in the months ahead. Now, let's turn to funding rates because this is actually in the positive territory and for the last few weeks, we've been talking about the negative funding rates on Bitcoin, which meant traders were were shorting it essentially. Now they're net net bullish on Bitcoin.
Yeah. Yeah. You know, it's not, um, you know, a huge, you know, bullish move there. The, the funding rates are still relatively low, uh, compared to what you would see, um, you know, in a bull market, but it has flipped positive. You know, I think for me, this is, we, we've talked about how you, we've been trying to assess that move that Bitcoin made from, you know, early February up until it peaked, um, a few weeks ago, about 82K. Trying to assess like, how durable is this? Is it, is it, is there a chance here that, um, a decent percentage, you know, amount of that move came from just positioning, right? And positioning comes into play when you have a lot of shorts on. If the price isn't going down, some of them are getting liquidated and that sort of reflexively can can make the price go up. And so, um, this is starting to confirm to me that maybe that was the case, that that a lot of the movement there was coming from just really positioning rather than durable spot buying, uh, you know, ETF flows, stablecoin flows, things like that that I would, that I would like to see. So, um, again, just another sort of data point here. You, this and you're like, "Oh, that's confirmation that there was a bit of a short squeeze going on and that propelled some of the momentum that we saw in the past, uh, few weeks prior to this kind of now more bearish, uh, short-term cycle that we're in."
Yeah. Yeah.
How about, um, Michael Sailor? So, here's a tweet from Michael Sailor. This week, we bought bonds, not Bitcoin. The BVAC is charging. BVAC? Oh, Bitvac. So, he's saying like, uh, it's like a, a battery. I suppose it has to recharge every once in a while. What's this guy doing? He's not supposed to buy bonds. Is he got, does he have to pay someone back?
Yeah. And he's selling it as a, you know, as a bullish, bullish thing here, which is.
He's selling Bitcoin in order to buy these bonds?
Well, no. I mean, he's sort of tweeting that out. Hey, we bought bonds, but hey, we're just charging the batteries. Like, don't worry. You know, it's sort of like, you know, trying to mask over the fact that they bought bonds. I mean, to me, this is signaling, um, you know, they're trying to shore up his balance sheet. I don't, I don't blame him. You know, he's trying to send a signal to the market that he's shoring up his balance sheet. They, they bought, they repurchased 1.5 billion of convertible debt, so they have less debt on their on their books now. So, that's that's like a, you know, a healthy thing to do when you can do it. And, um, you know, that, the thing that I'm paying attention to here is just they have about six months of dividend payments, uh, in cash remaining to my knowledge.
It, they only have six-month runway to pay dividends before what? Before they have to sell Bitcoin to pay those dividends?
Or sell more stock of some kind.
Potentially. I don't, I'm not 100% sure how they could raise additional C. Yeah, I guess he could, uh, you know, issue shares, raise cash, and, you know, that's the Ponzi sort of, you know, economics of some of this, but he has hinted, you know, that they, they, they are prepared to sell Bitcoin and that's just being sold as like, yes, you got to sell some. You're, I'm still going to acquire more than I'm selling, but, um, I got to sell some when the price appreciates to pay these, these.
Would not like to see Michael Sailor selling and certainly selling in size. That would not feel good to the market, I've got to say.
Right. And especially considering that this has been one of the like, kind of strongest narratives if you're on the bull side here. And so something to, something to pay attention to if, if the price starts going down. I mean, I could definitely see a scenario where the narrative shifts and people are blaming Sailor, uh, for, for it. So, we'll see.
Let's talk about how all of this juxtaposed with, uh, macro and what's going on there. You, you said this in the macro section today. Our view on macro is simple right now. It all comes down to Iran. We've held this view into the that the war would drag on longer than the market wants us to believe. We continue to hold that view. The market depends on the macro depends on Iran. Let me, before we get into the case for why that you, you think that's true, let me throw out a counter case here, which is.
Mike, the market depends on AI, man. It's all an AI trade.
Iran is just kind of a a sideshow. Uh, do you think there's any merit to the idea that the market is actually more dependent on AI than it is Iran?
The market's clearly very dependent on AI and I'd say even the broader economy is very dependent on on AI right now. Um, the question I have is just how I think we've had nine straight weeks of just straight up on the on the on the S&P 500. Uh, a lot of these AI names and almost everything that's sort of like adjacent to the capex buildout has been just getting bid up in in the stock market. So I think both can be true that, uh, you have this situation where that's basically the only thing the market's paying attention to right now. But it doesn't mean that it can't shift and at this, while this has been playing out, oil prices are coming off. Um, that is pretty interesting. Uh, when you look at the, the, the setup here and really I'm trying to just keep this very simple on the macro side and just really kind of look at like, what is the complexity of, you know, getting a deal done? And it's, it's just been very interesting to observe the way the market responds to every ceasefire announcement. Um, it's, it's almost like, what is the bull case if we actually get a deal? Because we've already made like a number of moves as if the, as if the deal is already in place. I, I, a part of me wonders like, once a deal is done, is that the top?
Sell the news.
I mean, you got to give Trump credit, the way. Yeah, sell the news. You got to give him a lot of credit. The way he's been able to jawbone the market. It's almost like maybe he's creating a playbook for, you know, future policymakers here. Create, create, create a, you know, a problem, make everybody scared, and then like just keep kind of putting out some stuff to make them feel like it's over or it's better, it's not this start.
I feel like no one can. I feel that it's not repeatable. I think no one else could do that. Only Trump could do that. It, I haven't actually followed the details of this because to me it's kind of noise. But you said this just yesterday, we gained further insight into what it might take to get a deal done and Trump wants Saudi Arabia, Qatar, Pakistan, uh, Turkey, Egypt, and Jordan to join the Abraham Accords. Really? That's what that's the latest on this?
That's what it looks like to, I mean, there's a big tweet. People can go look at what he tweeted out yesterday. Um, and this is kind of like, again, helps me confirm like this view of just like how complicated this is and all of the competing incentives of all these countries in in the Gulf region. And, you know, I'm not an expert on this. To me, I'm like, again, trying to keep it simple and just say like, if you just sort of look at the incentives of all these different countries, you look at the, what he's trying to do. He's basically trying to rewrite history here. Reset the Middle East. This is going to impact all of the trade agreements, all the security alliances, normalization with Israel. These are all things that have not happened for hundreds of years. And the countries that Trump wants to come in, like Saudi Arabia is probably the most important one. He wants to come into the Abraham Accords and really kind of, kind of corral all of these countries against Iran. That's what it looks like that is he's sort of resorting to as like, this is how I'm going to get this done. You know, that that just seems like a big ask, you know, if you kind of look at some of these countries and how their actual populations feel about that. And so then you say, so he's, he's making an ask of, um, Saudi Arabia leadership to come in, and then they're turning around and realizing that 80% of their population is opposed to that. So that's a tricky, tricky thing. You know, there's just layers of, you know, negotiation and give and take that would have to play out, I think, for this to come together. So to me, it's just like, okay, this is going to take, this is confirming my view. It's going to take a while.
So your contention is this continues to look messy. It hasn't gotten any cleaner. There's no easy, it looks like there's no easy way out and as a result, sustained high prices in oil as a result of that, including kind of global supply chain, oil, energy prices, continued uptick in, uh, inflation. We already, we've been looking at CPI the last couple of weeks and with continued uptick in inflation, this is going to force the Fed's hand into something, perhaps raising rates by the end of the year, which, um, you said, what is, what is the market pricing this 47% chance of a rate hike by December '26? So, those numbers have just shot right up. Uh, I mean, it was, I think the consensus view that maybe a new Fed chair would cut rates. Now it doesn't look like that's going to be the case. And you're keeping an eye on the 2-year and 10-year for all of this, but this is basically the case. Everything that you just laid out there is the case for why everything in macro really depends on Iran because Iran is upstream of, uh, Fed rates and it's upstream of CPI and it's upstream of treasury and it's upstream of the entire global market.
Even the AI trade is upstream of this, in my opinion.
The AI trade is based on energy, right?
Relies on energy, exactly. And I think that's, that's an important piece here. And, and, um, when you think about just where all the capital is sitting right now, it's in this AI trade. And I would think that, you know, if this starts to become, if you, if you listen to the oil experts, they'll tell you all of these, you know, part of the reason oil isn't already at 150 right now is because we have, you know, globally released strategic reserves into the market to to keep it that way.
Yeah.
Those experts will tell you that that is now coming to a head and we're like, you know, a month away from some serious shortages. So, if this starts to get baked in, we, you know, the S&P is up nine straight weeks. Some of that capital that's in the AI trade, it would be a smart move to move that to the energy trade. So that's the shift that could, could happen. And then now you have infl, more inflation. We've already seen, you know, PPI was six, over 6% in the last print. CPI 3.8. If you, you have a high conviction view that CPI is going to go up over the next two, three prints, we'll get the next one in, uh, June, then that's not a good setup for risk assets. And just with all the debt that needs to get refinanced, uh, all of the corporate debt that needs to get refinanced, like credit spreads should, should, you know, come up, liquidity conditions will get tighter as that plays out. And, you know, people, you know, typically have to sell risky assets. And so that, that's sort of the setup as I see it. At the same time, you know, people have been saying this for months and it hasn't happened. So like there's, you know, you know, there's maybe we're just going to stay in this sort of suspended reality for a little while, for longer. But yeah, that's kind of, um, that's kind of how I'm thinking about it. There's a 40 or 47% chance of hikes now getting priced in and we're going to get, you know, Wars' first meeting in, in next month as well. And that, that should give us some more insights.
You know what, Mike? I think there's another variable where you could be right on, um, AI trade, like Iran is, uh, upstream of the AI trade, and that's this, which is, uh, CPI upticks are not very good for populism. It, it is not a mitigator of populism. It is an increase in populism at a time where there's this huge anti-AI push coming from populist sources. I've seen this on both the left and also on the right, and they're kind of converging in sort of a horseshoe. So CPI is not going to be good for building more AI data centers, uh, you know, in the US too. And that could bubble up and and hit us sometime in the future with regulators, election losses, and just slapping down on AI.
Yeah.
Okay, let's close this out. All right, so, uh, what are the key levels for Bitcoin at this point in time in your mind? Have they shifted from last week? Are they about the same?
Pretty much. We're, we're kind of in a similar spot here. You know, kind of waiting for a move and then and then we're going to see. But 75K, you know, that's an interesting line. That's a 2025 low. We already went, we did go below it. So, if we go down below that again, um, something to pay attention to. We could start to hit resistance at that level. Um, the 50, 50-day moving average is about 77. Short-term holder, uh, short-term holder cost base is 78K. We're now below that and we, we haven't been able to get above that. So that's, that's an interesting level. The 80.3K is 200-day SMA that we've talked about that a few weeks ago, how Bitcoin was looking, was threatening it, and it had never really durably pushed through in a, in a bare market before. It's come off of that and then we know there's an even, you know, stronger resistance level at about 84K. That's sort of on the upside. Um, I think on the downside, you know, 60K is like probably the most durable level right now. And I think the big question is, you know, if, if this inflation story starts to play out and, you know, Bitcoin is showing weakness here as this is playing out and Bitcoin can be sort of the canary in the coal mine. So, if, like, like we said, if you have to sell risk assets and you hold Bitcoin, that may be the first thing. So, it makes sense that Bitcoin would show the weakness first. And maybe we're starting to see that right now. Um, yeah, I think that's kind of the, the setup here right now and we'll see how these other altcoins and things, you know, are responding.
Let's talk about that. Let's talk about what you're doing this summer. All right. So, what are you exploring, you know, in the altcoin season world for the people that missed out on hype but don't want to miss out on the next altcoin kind of bump? What kind of things are you looking at? What I know because I know your portfolio has started to increase and fill with some non-Bitcoin, uh, purchases. What's your thought process there and what are you going to be looking at on the TDR in the months to come?
Yeah, so, you know, we've established a few altcoin positions. We made a trade, so we missed this rally, you know, in Hyperliquid, but we did, you know, close a 78% win on on a different trade. So there, like, again, abundance mindset, there's always stuff out there. Um, so we're, we're having some fun as we go, but, you know, we're, we're getting into some positions. These are in assets. You know, the, I think the, the thing that people are, and maybe pushing back on me a little bit. I've heard from a few readers is like, hey, if your view is that Bitcoin, you know, is going to show some more weakness, should we wait on these other altcoins? Like, does this make sense? And my answer to that is the stuff that I am starting to establish positions in is stuff that, you know, was, I was comfortable with the sort of level that I had already come down to. We, we do the same, you know, we don't share it always in, in, in the research, but we do the same sort of cost basis analysis, holder cohort analysis on these other coins to try to, you know, have a view on where these things could bottom. And I was, you know, comfortable enough to start allocating. So, we've been allocated to some sort of high conviction stuff, but I'm also, you know, I also have the view that like, yeah, I may be underwater. If Bitcoin comes down on those, we may be underwater on some of those. We'll likely add to that. The goal is to establish a position in some of these coins that I have a thesis on and be in a position that like, you can potentially be looking at like a 10x gain and the thing hasn't even gotten back to like 50% of its all-time high. Like that was the Solana trade, you know, back in 2022 when Solana had sold off. And I'm looking for that type of stuff where the risk reward is just so obvious. Like it's down so much that it doesn't even need to get back to all-time highs for it to be a really big success. And you have to be prepared to potentially be underwater a little bit on that. It's not, you're not, you're never going to get the the timing perfectly on this. Um, but I just want to be in a zone where I think the risk reward is correct. I do think you want to have some cash and be ready, um, to deploy. And yeah, it's a good time to be locked in. I, I know it's the summer months, so, you know, I want to be touching some grass as well, but, um, definitely a time to be locked in. And all of the work that we've been doing, um, assessing kind of where we want to allocate is going to start to come into play, you know, if we see, you know, more fat pitches coming.
I got to say the TDR portfolio is looking pretty interesting these days. I know you did a report last week on on Pump and contrasted that to hype. That was, uh, fantastic. Some of that has made its way into the portfolio. I won't disclose what though. That is for TDR pro members and if you are not a pro member, Mike, is there still like a trial period where folks can sign up for 30 days?
Yes. So people can, we'll put the links in the show notes so you know, if you want to try us out, uh, and just get access to the portfolio, start reading some of the research. Hopefully, hopefully it resonates. Um, we're offering that right now. And if you're on the monthly plan and you like what you're seeing and you want to lock in at $16.67, basically the cost of a Netflix subscription for the next year, you can do that. We've had, um, quite a few of our monthly subscribers do that over the last.
It's been huge. It's been huge. And my message to folks listening to this, if you, if you're spending your time listening to these episodes, why not lock in and get the full package? Okay, so, uh, we'll see you next week. Got to end with this. Of course, none of this has been financial advice. You guys know this is an investor journey and we're alongside this journey with you. Until next time, stay curious.