Key takeaways

• The current crypto market is experiencing a typical bear market cycle, with expectations for further declines before reaching a macro low.
• Market recovery after hitting a macro low is often slow, as buyers are not immediately ready to re-enter.
• Significant entry opportunities in the crypto market tend to occur every three to six months.
• The market structure has become lopsided, with new money entering while long-term holders are exiting.
• Bitcoin’s fair value is estimated at $65,000, but market dynamics could change with the new Fed chair.
• The new Fed president’s policies might not align with market expectations of aggressive rate cuts.
• Reducing the Fed’s balance sheet is a form of quantitative tightening, contrasting with expected quantitative easing.
• The current economic environment might not be favorable for crypto due to potential shifts in monetary policy.
• A significant drop in the stock market could lead to layoffs and a decrease in interest rates.
• The labor market appears weak despite low unemployment rates, suggesting a potential recession.
• The decrease in US liquidity is detrimental for risk-on assets, particularly crypto.
• Bitcoin’s price may take about a year to align with historical cycles and metrics.
• The market value to realized value ratio is a key metric for assessing market cycles.
• Bitcoin has historically acted as a liquidity index, often following the movements of the Nasdaq.
• Bear markets provide a better environment for analysis and understanding of the market.

Guest intro

Michael Nadeau is the founder of The DeFi Report, a research and advisory firm delivering onchain analysis and market insights for crypto investors. He previously worked at MIT Investment Management Company and served as Director of Ecosystem Strategy at Inveniam, bridging crypto with traditional capital markets. Nadeau applies equity-style research to value Bitcoin and track cycle signals like MVRV and long-term holder behavior.

Understanding crypto bear markets

• “The market is likely experiencing a typical crypto bear market, and it may take time to reach a macro low.” – Michael Nadeau
• After hitting a macro low, market recovery is slow as buyers are not immediately ready to enter.
• “I’m not ready to say that this is like a macro low just yet.” – Michael Nadeau
• There are significant entry opportunities in the market every three to six months.
• The influx of price agnostic buyers created a risky environment for traders leveraging their positions.
• “The market structure became lopsided with new money entering while long-term holders were exiting.” – Michael Nadeau
• Bitcoin’s price may stabilize around a fair value of $65,000, but market dynamics could shift with the new Fed chair.
• “The current market structure and reduction in demand for Bitcoin suggest a cautious approach is warranted.” – Michael Nadeau

Impact of monetary policy on crypto

• 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, which contrasts with the expected quantitative easing.” – Michael Nadeau
• 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 layoffs and a subsequent decrease in interest rates.
• The Fed’s approach to monetary policy could signal a shift away from traditional bailouts and yield curve control.
• The labor market appears weak despite low unemployment rates, suggesting a potential recession.
• “The intersection of jobs hard to get and jobs plentiful typically signals a recession.” – Michael Nadeau
• The decrease in US liquidity is detrimental for risk-on assets, particularly crypto.

Market dynamics and asset performance

• The current regime favors gold and precious metals due to China’s monetary policy while being unfavorable for crypto.
• “The economy is likely to roll over, leading to the Fed cutting rates.” – Michael Nadeau
• Populism is a crucial factor to monitor in the current US political landscape.
• We may be entering a different economic regime due to potential changes in monetary policy.
• “There’s a possibility that the Federal Reserve will revert to their traditional methods despite current rhetoric.” – Michael Nadeau
• The current wealth destruction phase in crypto is likely to last about a year.
• Wealth destruction phases in crypto often follow a predictable pattern, and it’s important to let Bitcoin’s behavior unfold before making strategic shifts.
• The market value to realized value ratio is a key metric for assessing market cycles.

Bitcoin’s role in the market

• Long-term holders are starting to re-enter the market, indicating a potential shift in market dynamics.
• Bitcoin’s price may take about a year to align with historical cycles and metrics.
• The fair value of Bitcoin is estimated to be around $65,000 based on key metrics.
• The market is unlikely to see major changes in the near term, with low chances of interest rate cuts from the Fed.
• Bitcoin has historically acted as a liquidity index, often following the movements of the Nasdaq.
• Gold and silver are likely to continue to rise relative to crypto assets due to the current economic conditions.
• The ratio of Bitcoin to the Nasdaq composite index shows cyclical patterns that can help predict future price movements.
• If Bitcoin continues to decline, it is likely that the Nasdaq will also experience a sell-off.

Investment strategies and opportunities

• Bitcoin is likely to bottom around the same time as the Nasdaq, potentially leading to a sell-off.
• The current sentiment in crypto reflects a historical pattern of market cycles.
• The mimetic nature of crypto assets leads to extreme confidence at market peaks and rapid narrative shifts during downturns.
• “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.
• Bitcoin serves as the foundational asset in a diversified investment strategy.
• “We allocate investment based on a structured approach with defined asset categories.” – Michael Nadeau
• Ether’s price target has been set based on its recent performance and market conditions.

Long-term market outlook

• There are expected opportunities in the crypto market in 2026.
• Bear markets provide a better environment for analysis and understanding of the market.
• It’s challenging to outperform Bitcoin through a market cycle.
• Bitcoin needs to show a clear capitulation before a macro bottom is confirmed.
• Bitcoin must demonstrate a change in its current trend for me to shift from a risk-off stance.
• A retracement rally in Bitcoin’s price is likely due to current oversold conditions.
• The market structure is currently lopsided, leading to lower highs in price movements.
• Bitcoin could exceed $1,000,000 in the long term.

The future of finance and crypto

• The transition of the entire financial system to crypto rails is inevitable.
• Periods of market disillusionment present buying opportunities for long-term investors.
• Bear markets present unique opportunities for investment in the right assets.
• The deployment of crypto into finance is progressing, despite current market challenges.
• “We’re crossing the chasm to this being fully deployed into finance into these use cases we’ve been calling for a really long period of time.” – Michael Nadeau