Key takeaways

• The market is expected to continue experiencing bearish conditions, with fewer bulls remaining.
• Reaching a macro low in the market will take time and won’t lead to immediate buying pressure.
• The market is not yet at a macro low, indicating further potential declines.
• Significant entry opportunities in the market occur every three to six months.
• The market was showing signs of a lopsided structure with increasing leverage and long-term holders exiting.
• Bitcoin’s fair value is targeted around $65,000, with potential changes due to the incoming Fed chair.
• The new Fed president’s policies may not align with market expectations of aggressive rate cuts.
• Reducing the Fed’s balance sheet is a form of quantitative tightening that contradicts anticipated policies.
• The current economic environment may not be favorable for crypto due to potential shifts in monetary policy.
• A significant drop in the stock market could lead to increased layoffs and a potential shift in interest rates.
• The labor market appears weak despite low unemployment rates, suggesting a potential recession.
• Global liquidity is decreasing, which is detrimental for risk-on assets like crypto.
• The market value to realized value ratio is currently at 1.4, indicating it has room to move before reaching a buy signal.
• Long-term holders are starting to re-enter the market, which could signal a shift towards a new bull cycle.
• Bitcoin has historically acted as a liquidity index, often following the movements of the Nasdaq.

Guest intro

Michael Nadeau is the founder of The DeFi Report, a research and media company focused on decentralized finance and digital assets. He previously served as Director of Ecosystem Strategy at Inveniam, bridging crypto and traditional capital markets, and held finance and accounting roles at Boston Properties and MIT Investment Management Company. Nadeau provides institutional-grade analysis on Bitcoin cycles, on-chain metrics, and macro signals through his newsletter and advisory services.

Understanding current market conditions

• The market is likely to continue experiencing bearish conditions, with fewer bulls remaining.

  — Michael Nadeau

• Reaching a macro low in the market will take time and won’t lead to immediate buying pressure.

  — Michael Nadeau

• The market is not yet at a macro low, indicating further potential declines.

  — Michael Nadeau

• There are significant entry opportunities in the market every three to six months.

  — Michael Nadeau

• The market was showing signs of a lopsided structure with increasing leverage and long-term holders exiting.

  — Michael Nadeau

• The influx of price agnostic buyers allowed traders to leverage positions without caution.

  — Michael Nadeau

• Bitcoin’s fair value is targeted around $65,000, and the current market conditions suggest a potential new regime due to the incoming Fed chair.

  — Michael Nadeau

• The current market structure and reduction in demand led to a risk-off strategy, which was validated by subsequent market movements.

  — Michael Nadeau

Implications of monetary policy changes

• The new Fed president’s policies may not align with market expectations of aggressive rate cuts.

  — Michael Nadeau

• Reducing the Fed’s balance sheet is a form of quantitative tightening that contradicts the anticipated policies.

  — Michael Nadeau

• The current economic environment may not be favorable for crypto due to potential shifts in monetary policy.

  — Michael Nadeau

• A significant drop in the stock market could lead to increased layoffs and a potential shift in interest rates.

  — Michael Nadeau

• The Federal Reserve’s approach to monetary policy could determine the future of economic recovery and its impact on crypto.

  — Michael Nadeau

• The labor market appears weak despite low unemployment rates, suggesting a potential recession.

  — Michael Nadeau

• The lack of yield curve control and the absence of buying long-end treasuries could lead to significant economic shifts.

  — Michael Nadeau

Global liquidity and its impact on crypto

• Global liquidity is decreasing, which is detrimental for risk-on assets like crypto.

  — Michael Nadeau

• The current liquidity dynamics favor gold and precious metals over crypto due to differing monetary policies in the US and China.

  — Michael Nadeau

• The economy is likely to roll over, leading to the Fed cutting rates.

  — Michael Nadeau

• Populism is a critical factor to monitor in the current US political landscape.

  — Michael Nadeau

• We may be entering a different economic regime based on current monetary policy discussions.

  — Michael Nadeau

• There’s a possibility that the Federal Reserve will revert to their traditional methods despite current rhetoric.

  — Michael Nadeau

Market cycles and long-term holder behavior

• The current wealth destruction phase in crypto is likely to last about a year.

  — Michael Nadeau

• Wealth destruction phases can be volatile and may not follow a consistent downward trend.

  — Michael Nadeau

• The market value to realized value ratio is currently at 1.4, indicating it has room to move before reaching a buy signal.

  — Michael Nadeau

• Long-term holders are starting to re-enter the market, which could signal a shift towards a new bull cycle.

  — Michael Nadeau

• The supply held by long-term holders typically decreases during wealth distribution and increases as new buyers enter the market.

  — Michael Nadeau

Bitcoin’s relationship with traditional markets

• The market may take about a year to align with historical cycles and metrics.

  — Michael Nadeau

• The fair value of Bitcoin is roughly around $65,000, based on key metrics.

  — Michael Nadeau

• The market is unlikely to see significant changes in the near future, with low chances of interest rate cuts from the Fed.

  — Michael Nadeau

• Bitcoin has historically acted as a liquidity index, often following the movements of the Nasdaq.

  — Michael Nadeau

• Gold and silver are likely to continue to rise relative to crypto assets due to the current economic conditions.

  — Michael Nadeau

Investment strategies during market downturns

• The ratio of Bitcoin to the Nasdaq composite index reflects the cyclical nature of Bitcoin’s price movements compared to traditional stocks.

  — Michael Nadeau

• If Bitcoin continues to decline, it is likely that the Nasdaq will also experience a sell-off.

  — Michael Nadeau

• Bitcoin is likely to bottom around the same time as the Nasdaq, potentially leading to a sell-off.

  — Michael Nadeau

• The historical performance of Bitcoin relative to Nasdaq and gold suggests that current market behavior is consistent with previous cycles.

  — Michael Nadeau

• The crypto market experiences bear phases that are exacerbated by the mimetic nature of assets, where belief and confidence can quickly shift.

  — Michael Nadeau

Opportunities in periods of disillusionment

• We are entering a period of disillusionment in the crypto market, which presents investment opportunities.

  — Michael Nadeau

• Investors in crypto need to be anchored to data while also understanding the unique intangibles of the asset class.

  — Michael Nadeau

• Bitcoin serves as a foundational asset that influences the rest of the altcoin market.

  — Michael Nadeau

• We allocate investment based on a structured approach with different sleeves for varying risk levels.

  — Michael Nadeau

• Michael Nadeau believes that certain assets can outperform Bitcoin.

  — Michael Nadeau

Strategic investment approaches

• Nadeau suggests a gradual investment strategy by scaling into positions.

  — Michael Nadeau

• Ether’s price target has been set based on its recent performance.

  — Michael Nadeau

• There are expected opportunities in the crypto market in 2026.

  — Michael Nadeau

• Bear markets provide better opportunities for analysis and understanding of the market.

  — Michael Nadeau

• It’s challenging to outperform Bitcoin through a market cycle.

  — Michael Nadeau

Bitcoin’s potential and the future of finance

• Bitcoin needs to demonstrate a significant change in behavior for the market to signal a bottom.

  — Michael Nadeau

• A typical market bottom is characterized by capitulation followed by a period of quiet and apathy.

  — Michael Nadeau

• A retracement rally in Bitcoin’s price is likely due to current oversold conditions.

  — Michael Nadeau

• The market structure is lopsided due to weak hands, which prevents Bitcoin from reaching previous highs.

  — Michael Nadeau

• Bitcoin could exceed $1,000,000 in the long term.

  — Michael Nadeau

Integration of blockchain into finance

• The transition of the entire financial system to crypto rails is inevitable.

  — Michael Nadeau

• Periods of market disillusionment present buying opportunities for long-term investors.

  — Michael Nadeau

• Bear markets present unique opportunities for investment in the right assets.

  — Michael Nadeau

• The deployment of blockchain technology into finance is progressing despite current market challenges.

  — Michael Nadeau