Are We Still In A Bull Market?

We’re not in a bull market or a bear market; we’re in a bull market and a bear market. We’re still in a bull market for Bitcoin, and somehow, while Bitcoin is close to the highs, we’re in a savage bear market for everything else. The crypto space just doesn’t know how to process that because we still use the word “crypto” to encompass everything.

The last 2 months of price action have been so damn choppy. Jonah, it’s been insanely choppy. How are you dealing with this? The last time we talked, about a week ago, we were basically at the same price, but Bitcoin has gone up and down in a range of 6% since then, which is kind of nothing for BTC. Somehow, though, it seems like a lot of people have gotten destroyed.

I haven’t made any money this year doing anything that has made me money in the past. The only thing that has made me money this year is shorting stuff. Being long Bitcoin hasn’t worked. Year to date, I guess it’s up 1% or something. Being long altcoins, granted in small size, has been a total disaster.

Shorting stuff works. That’s something you can do right now. I feel like the longer the market continues to trade in this insane range—the longer pretty much every single daily candle continues to cross through $95,000 or $96,000 Bitcoin—and the more tokens that get launched over the course of this sideways Bitcoin market, the more the alt space is just going to bleed.

This has basically been the case since the beginning of February. It’s just a choppy market, and we really need a catalyst to take us higher. It feels like we’re in no man’s land between Election Day and maybe some stablecoin bills getting passed, or rumblings about a strategic Bitcoin reserve.

I do my best to follow what’s going on in Washington because I think that’s where the next big announced catalysts are going to come from. Shout-out to the All-In podcast—they had the Stripe guys on, and they’re integrating stablecoins. David Sacks has talked a lot about crypto frameworks recently.

There’s a lot to look ahead to and a lot to look forward to, but it’s not going to happen next week. We’re kind of in no man’s land. We’ve gone from player versus environment to player versus player. The goal is just not to get yourself chopped up. Short the things that people who are stuck in a 2021 mentality are puking out of.

A big reason it’s been tough is that people got used to trading Bitcoin on a daily chart. If you’re a trader, you got used to looking at Bitcoin and asking, “What’s the trend?” We had a trend from November, through the election, all the way up to December 17. Then we trended down in a pretty substantial range for 2 weeks. Then you went up for 2 weeks and down for 2 weeks, and over the last month, we just haven’t moved at all.

That’s difficult because, in the last month where we haven’t moved, we’ve had a lot of different head fakes. We tapped $98,000 and broke above it quite a few times, and we tapped $95,000 and broke below it quite a few times, making new lows and new highs both times. Over the last 6 months, you’ve been trained to buy or sell when that happens.

What became tough here is that we also went from a much larger range to a much smaller range. On December 16, we hit $107,000 and then traded down all the way to $92,000. That was the major range for 6 weeks. Now we’ve coalesced into a much smaller range, from $94,000 to $98,000. People got messed up because they were trying to play the larger range when, in reality, we were coalescing into a smaller range.

The takeaway is just: don’t trade right here, unless what you’re doing is shorting some of the really shitty altcoins after a rally or looking at some pair trades. There have been some pair trades that have worked.

For example, TAO did well off the back of Dynamic TAO. Maker has done really well recently, which is actually really cool. Maker is a fine product and all, but it’s not something I’m ridiculously bullish on long term. What I find cool about it is that, if you were paying attention to the stats, you could actually kind of see it coming.

If you go to USDS, which is Maker’s stablecoin now, and change it from DAI, the market cap started rising pretty substantially at the beginning of this year. From January 1 to February 1, the market cap of this thing went up 20% or 30%. Then from February 2 to February 11, it went up another 30%.

What you were seeing was increased minting of USDS, but Maker’s price action didn’t pick up until February 17. From the beginning of the year, USDS’s market cap went from $5 billion to $9 billion. After an almost 100% increase in the core product that this protocol provides, Maker started going up.

Some of it has to do with the governance proposal that they recently passed, but I don’t think that’s the full story. I think a substantial portion of that move was the market realizing a bit too late, “Oh, their coin is actually getting minted. It’s getting used.”

That’s why I say it’s fun. If you pay attention to the market and do your research, you can find some trades.

Those same trades exist on the short side, too. I hate to bang the same drum over and over, but the news headline comes out that WIF is a scam, the coin doesn’t move, and you could short it. Then it goes down. This is all over the place.

It took some time for the move to happen. I shorted it at around $1.26, and I held it for 3 or 4 days. I covered it at $1, and then it went down to $0.60. That was a bit of a delayed reaction in terms of the massive move. I definitely should have held that trade a bit longer, but it does show that there are potential opportunities out there if you’re paying attention.

Solana is another great example. It’s just been underperforming ridiculously hard since the beginning of the year, against the backdrop of bad narratives for things happening on Solana—not Solana-specific narratives. When FTX blew up, that was a Solana-specific narrative because the little Jump and Alameda mafia was falling apart, and the chain also wasn’t working.

This time, it’s more like Solana is taking a hit because Javier Milei’s shitcoin was launched on Solana and turned out to be a rug.

I don’t know. I still don’t think that’s Solana-specific. I think a large portion of this underperformance is just because Solana went from $183 to almost $300 in a week because of the Trump meme coin.

Whenever you have that happen—if a coin as big as Solana goes up 60% because Trump launched a meme coin—what you’re supposed to ask is, “How long does that mania last, and how many of the people who bought those candles are reallocating to Solana for the long term?”

If you look at the weekly chart, that’s one candle. How many of the people who bought that one candle are reallocating to Solana for the long term? Probably not that many.

I think that could have been a moment when people stopped out of the rest of their ETH and decided that Solana was going to be their alternative Layer 1 for the cycle.

Yeah, I take your point. There’s an argument to be made there.

My take on all of this, based on the last 5 minutes of conversation we’ve been having, is that crypto natives are just sick of this. They’re rage-quitting crypto. The people who should be moving markets shortly after news—the people glued to the screen, clicking and trading headlines—are burned out.

Their whole strategy was built around altcoin season, and altcoin season never came. It never rained money. They’re all getting sick of this asset class, throwing in the towel, and in many cases rage-quitting their bags and puking out of stuff. They don’t care about the market tick for tick anymore.

That presents some opportunities for people who still do care, can weather this volatility, and can pay attention despite the chop. I also think that when things happen that would normally make you disenchanted with crypto, you’re going to see a lot of people hitting the exit button, selling everything, cashing out, and walking away.

I think that’s what’s going on in some of these asset classes. People are saying, “All right, you know what? Fuck this. Solana was supposed to be the global decentralized ledger that facilitates peer-to-peer payments across the world frictionlessly and for free, but it turns out it’s just a casino. I’m disenchanted. I’m just going to sell everything and walk away.”

Look at this latest Javier Milei scam. I think that’s what’s going on.

I think that’s a really good point, and you can see it in the charts. One interesting study would be to look at how many coins are up since the Trump election—maybe 5 that we care about. This is basically what’s going on right now.

We’re not in a bull market or a bear market; we’re in a bull market and a bear market. We’re still in a bull market for Bitcoin, and somehow, while Bitcoin is close to the highs, we’re in a savage bear market for everything else. The crypto space just doesn’t know how to process that because we still use the word “crypto” to encompass everything.

We still think of Bitcoin as the benchmark. Long term, that makes me more constructive on Bitcoin and everything else, if you can survive the bear market in everything else. Markets certainly peak when there are no buyers left and when you’re in total mania mode. We’re in the opposite of mania mode. The Fear and Greed Index is dipping decently into fear with Bitcoin near the highs.

That makes me think we have a lot more room to run to the upside once we clear through this. I think once the stablecoin bill gets passed, you’re going to see major Web2 companies start deploying on crypto rails, and then it’s off to the races again.

Until then, I think these impatient, dopamine-addicted gamblers who listen to this podcast—and whom you and I probably represent—are just not feeling the joy right now.

No, not at all, because you’re not getting those quick hits like you used to.

From a high-level technical perspective, Bitcoin doesn’t look great right now. We had the 100-day moving average break a few days ago, and on Friday it actually acted as fairly strong resistance.

Normally, what that means is that you use it as a momentum indicator. I think I’ve mentioned this on the podcast before, but the 2 most important things to me when buying or trading Bitcoin are momentum and value.

People tend to buy into this market when it’s going up because it’s a trending asset, and they buy when they think the risk-reward is really good. The question is, how do you determine what the risk-reward is? You can get a sense of it from the average targets of a lot of people, and then look for a 2-to-1 ratio. That’s when people say, quote unquote, “This is value.”

Before the Trump election, I was saying that $50,000 was a value level because people were aiming for $100,000. That was the target everyone had in mind: “If everything goes well and Trump gets elected, then $100,000 seems like a good target. We probably won’t break through it the first time, but I think I can get to $100,000 and stop out below $45,000.”

That’s a really amazing risk-reward setup. So now, where are people’s targets on BTC? I’m not talking about the moon targets, but the reasonable 1-year targets. Where do they see value, and where can they stop out really easily?

I hear a lot of people say, “Maybe we can get to $150,000.” That seems like the reasonable, quote-unquote, not-$250,000, not-$500,000, not-$1-million target. People think we can get to $150,000 by the end of the year if everything goes right.

The 2-to-1 level from there would be $75,000, which I think is a bit too low. I don’t think $95,000 provides a tremendous amount of value for people.

What you need in order for BTC to go up is to believe that Strategy is going to jam another $10 billion or $20 billion into this market, that states are going to pass legislation to allocate to BTC in a substantial way, or that the federal government is going to allocate to BTC in a substantial way. Until then, we go sideways.

Another way to generate a sort of value target is to spend enough time above a certain number. If you spend another 3 weeks, maybe 6 weeks, above $90,000, then you have so many people waiting—“Maybe we’ll trade to $90,000. Maybe I’ll buy at $90,000. Maybe I’ll buy at $85,000”—and they don’t get it. Then you rebase higher.

I don’t think we’re quite there yet. If you look back at the range in 2024, we ranged for, let’s call it, 200 days. I would say that’s about half a year above a certain number, and you start to think, “Maybe that number is value.”

We’re 92 days in, so maybe another 90 days. My take is that every day that goes by becomes a better buy for BTC, but I’m in no rush to get giga-long.

If your time horizon is short, you’re definitely not in a rush. If your time horizon is long, oddly enough, you kind of are in a rush.

You mentioned states allocating to Bitcoin. Can you guess how much state and local government pension systems hold in assets under management in the United States alone? Just give me the order of magnitude.

More than $1 trillion.

It’s $6.25 trillion. US public pension funds manage $30 trillion in assets. If they said, “Bitcoin is kosher now. Let’s put 10 basis points in there,” that dwarfs Strategy. It’s tens of billions. One percent would be $100 billion and hundreds of billions in that category.

It’s nuts how much money is just sloshing around this system. That doesn’t even account for private investment management. There’s so much money in America, and I think we all get fixated on the strategic Bitcoin reserve at the federal level.

Every day that goes by, you’re going to see more and more inflows into IBIT. I think that’s why Larry Fink changed his tune so quickly. That incremental buying is what gives me confidence in this asset class.

Every time we nuke, I’m not looking to flatten myself out with perpetuals and wait on the sidelines because I do believe in this long-term outcome. In fact, I think we could suddenly start seeing Bitcoin pump like crazy for reasons that aren’t necessarily clear.

You see this in other asset classes, where the market just starts pumping. It’s not necessarily headlines. A trickle of allocations can turn into a fire hose of allocations, and then it’s anybody’s game. It becomes price-discovery mode to the upside.

Between now and then, though, we have this weird sentiment gap between Bitcoin, where there’s tons of product-market fit and the outlook is so bright, and everything else, where I think people are finally throwing in the towel.

It’s the darkest moment for alts, right before the dawn. If we had been in this regulatory setup 3 years ago, the market would have been euphoric. Yet the market was euphoric 3 years ago with no prospects whatsoever of regulatory clarity or a friendly SEC.

I really think we’re almost there. I just think people are rage-quitting at a very inopportune time.

I can’t remember if I saw this in a private conversation or if I said it publicly on the podcast, but it remains relevant right now: I’m actually quite bullish on alt-BTC ratios. I think things are looking pretty good and pretty bad for BTC dominance.

The first reason is that alts have been absolutely destroyed. A lot of them have retraced the entire Trump move, and they’re not encountering a tremendous amount of selling down here because I think people are out.

For example, I see a lot of charts that bottomed on February 9. Then they came back and bounced 20% or 30%, and that all got retraced. Now they’re back above where they were on February 11, while BTC is basically flat. Actually, BTC is a little bit down since then—about 1%.

That tells me there just aren’t that many sellers left in the market for a lot of these things. The one thing I would be worried about, if you were a holder of HYPE, is the hype around it.

I’d definitely be nervous about holding it right now because, when you expect an alt season, what tends to happen is that the assets where everybody has been hiding do really poorly when the rest of the market comes back.

That says nothing about HYPE itself. I own it in smaller size than I did last week, but I own it, I like it, and I think it’s a great team with a great product. Historically, though, the assets that have done well during downturns do not do well during upturns.

They do well during downturns because they outperform for 1 or 2 days, and then everyone piles in because they think they’re safe and convince themselves of that narrative. I think the same thing probably happens with LTC unless it actually gets an ETF approved quickly.

If you want to make the bet that there’s going to be an alt season and the market is going to go up, you probably want to trim the stuff that has outperformed during the downturn and buy the stuff that has performed poorly.

That’s definitely a counterintuitive, contrarian narrative. I would think of Hyperliquid as the most negatively gamma, negatively convex crypto asset out there.

What I mean by that is, if the whole market nukes and token prices are down across the board—if it’s despair, bear-market panic, and people are pulling out of crypto—there’s less activity. Hyperliquid is the on-chain hyper-casino, with all this leverage and no KYC. It’s the fun place to trade on-chain in big size with big leverage and the best user experience.

When there are fewer users engaged because we’re in a bear market, there’s probably less action on there. During bull-market pumps in crypto, Hyperliquid is all anybody can talk about because it’s the most fun place to play around with leverage to the long side.

I think the whole market feels short Hyperliquid when the market is rallying, and the market feels long Hyperliquid when the market is selling off.

I think that’s a good narrative, but it’s not what people are doing. I think the reason Hyperliquid has outperformed is because it has outperformed. It’s reflexivity: “Let me go hide in this thing while the rest of the market is going down because I want to be long something.”

People start diversifying out of that safe bet the moment the market starts doing well. It’s looking like it’s outperforming here.

Oddly, Bitcoin is outperforming the stock market. S&P futures collapsed on Friday. It was definitely the biggest red candle of 2025. We had some big ones in 2024, including Wednesday, December 18, after some pretty big rallies, but for the most part, the stock market is getting a lot more volatile.

I have to say, I’m heartened by the fact that BTC didn’t just collapse the way the S&P 500 did on Friday. It feels like it’s holding in there. Obviously, it’s 1 day, so you can’t take too much from it, and some of that may be Strategy, but it is an interesting point.

If you look at the BTC-to-Nasdaq chart, it looks pretty good. It looks like it’s really found a base. Just chart the BTC divided by NDX ratio. Right now, I see it at 4.43. You see a base around 4.35, and we had a little wick down on the weekly chart to 4.25.

The weekly chart actually looks pretty good, with a reasonable stop-out level. I can’t say exactly why BTC would be outperforming massively, but I think it has to do with why the equity markets are underperforming.

Why do you think the equity markets are underperforming?

People are getting scared about tariffs. It’s just 1 day, but I think Bitcoin not puking on tariff fears gives you some tea leaves into how it’s going to trade if we enter a major trade war.

It’s going to trade less like a risk asset that gets hurt by trade barriers and tariffs, and more like an asset that gets stepped up in relevance as an alternative reserve currency.

We’ve talked about this on the show a thousand times. If the world goes multipolar, you need an alternative reserve currency that isn’t the dollar.

I like that perspective. It’s too soon to say, but I have too much exposure to Bitcoin in general, and I’m salivating with excitement when I see Bitcoin outperforming on tariff fears.

This is the time in the episode where I make my analogy to commodities trading. Your biggest wet dream as a commodities trader is that rare moment—it doesn’t happen every year, maybe once every 2 to 4 years—when everybody else gets poor while you’re getting minted.

For oil traders, it was 2020 and then again in another period. This could be that moment for Bitcoin. If we enter a major trade war and equities nuke, but countries start accumulating Bitcoin at the federal level, on federal balance sheets and in central-bank balance sheets, to facilitate global trade across the poles of a multipolar world, that could be huge.

If you have a Chinese sphere of influence, an American sphere of influence, a Russian sphere of influence, and a European sphere of influence, and everybody is at odds with one another, you could probably still do most transactions in dollars. But the number of nondollar-denominated major commodities and global trade transactions that need to happen goes up by a lot.

Right now, you’ve got Iran, Venezuela, North Korea—we can talk about them later with the Bybit hack—and a couple of pariah states that need it. But if you slice up the world, NATO is on its ass, and alliances are getting broken and restructured, it’s not just a couple of pariah states that need it anymore. It’s a lot of countries that need it for more and more transactions.

If Bitcoin starts to trade like, “As the expected value of that scenario goes up, Bitcoin goes up,” we could be in for one of those glorious moments as a crypto community where we accumulate money not just as beta to the equity market, but as alpha.

That would be pretty sick. That’s when you can take the proceeds of your crypto trading and actually make a real difference in your personal life if you get it right.

Bitcoin goes to $200,000, equities stagnate, and then you just roll it all over.

To go back to the original question—why is the equity market underperforming, and why is Bitcoin doing okay? I think it’s just 1 word: uncertainty.

Prior to Trump getting elected, this was my take as well, although I’ve updated it. I thought Trump was going to be very good for business—cutting regulation and making it a fair climate to run companies. I thought there would be a tremendous amount of investment into the United States.

What has happened is that Trump has been a lot more unpredictable than even a lot of his detractors would have said he would be. He’s a lot more manic than he was in his first term, and he’s doing a lot of different things.

From the potential of laying off 1 million federal workers to tariffs on countries like Canada—we didn’t think he was serious about that. We thought it was just a campaign pitch, but it’s not just the tariffs. It’s the unpredictability of Trump, his cozying up to Russia, and the rejection of European allies.

It’s 1 word: uncertainty. Markets hate uncertainty, and I don’t think Bitcoin does. Bitcoin actually thrives if the world becomes more uncertain. That’s the divergence we’re seeing right now.

Companies are struggling to figure out how to map out a future when they don’t know what the world is going to look like. Bitcoin is saying, “Chaos is great. This is really good.”

If Europe can no longer depend on the United States, and other countries are becoming allies while Canada is getting more distant, then if every country is out for itself, that actually makes the game theory of Bitcoin a lot stronger.

In the past, you could have said, “The European Union is on board with the US. They’re tied at the hip, and so are Canada and Mexico. They can wait to see what the US does with Bitcoin because, if the US does something with Bitcoin and it’s really good, they’ll still benefit somehow because they’re all allies.”

That argument doesn’t hold water anymore. They all have to make their own individual decisions. It becomes more of a geopolitical tool. If you think the US is going to buy something that would be very supportive of Bitcoin, get in there before them.

We’re looking at a much more adversarial world than we were prior to Trump. Regardless of whether it’s amazing for BTC, it could just be worse for the stock market than it is for BTC. It might not even be great for BTC, but it’s definitely worse for the stock market.

You’re totally right about all of that. It should be in the back of every crypto trader’s mind to think the way you just described because this is a macro asset.

During Trump’s first administration, it was all about stock-market record highs—the Trump pump, or the Trump bump. He was always tweeting about how great the stock market was under him.

We’ve talked about this on previous episodes: maybe he’s moving the goalposts, and the stock market isn’t his KPI for success anymore. Maybe it’s something else. Hopefully it’s not a lower 10-year yield, because that would be scary for crypto.

Why would a lower yield be bad for crypto? If he’s focused on shoring up the bond market and making sure that US sovereign credit is as solid as possible, that would mean an end to deficit spending—the end of the fire hose of cash that comes out of the government. That’s probably a tightening event for the money supply and markets.

I think that would suck some air out of the room and deprive the system of capital to buy speculative assets like Bitcoin. Bitcoin goes up a lot when the M1 money supply goes up a lot. I don’t think it goes up during austerity.

He’s stated multiple times that he’s focused on getting interest rates down.

I think he means rate cuts at the front end. I don’t think he’s trying to put an end to deficit spending. Saying, “I want rate cuts,” just means it’s easier for private enterprises and individuals to borrow and spend money.

That’s very different from what I’m saying about the 10-year yield, which is more a statement about whether Trump is going to put America through Greece-in-2012-style sovereign austerity to make our balance sheet better—to lower our interest payments and balance the budget through a painful process of reducing federal spending.

DOGE could do some of that, but I don’t think he’s going to.

Do you remember when we talked about the risks of the Trump presidency? One of the tail risks was that the unemployment rate would go up substantially because he actually manages to cut a lot of federal workers.

I think that’s going to happen, although I think it’s going to be very short-term pain. What I didn’t like at all was his tweet over the weekend saying Elon needs to be more aggressive. Elon seems to be very aggressive already.

He does seem to be very aggressive. I’m sure you’ve seen the tweets about screenshots from Zillow of the DC metro area. Real estate prices are tanking, and there are lots of new homes up for sale in the last 30 days.

Avi, is somebody from the DC area?

I talked to a realtor because I was looking at buying a house down there. At least in DC proper, most of that is just the turnover from the administration. You actually see a lot of this.

Okay, so it’s a normal 4-year cycle? Normal compared to 2020, 2016, and 2012?

It’s like a normal increase.

Are you sure you’re not just getting shilled by the real estate agent? They’re saying, “This is normal. This is fine. Buy a house, Avi. Come on.”

Why? No, because if a lot of stuff were really coming onto the market, they would say that. They would say, “You’re getting an amazing price.”

Fair enough.

They didn’t say that. They weren’t saying there’s a fire sale. There’s also a family friend, so it’s trustworthy intel.

I didn’t know what to make of that, but I wouldn’t be shocked. I grew up in DC, in the heart of the swamp. My dad was a government worker for many years. Technically, the IMF is a government organization—that’s where he worked. My mom worked for the Postal Service for 35 years, so she was basically a government worker as well.

I didn’t know that. Where was I going with this? The amount of money involved is incredible. After I graduated from university, every single person I knew who went to work in DC worked there for about 6 months. All of my friends who ended up in DC were working for places like Centra Technology and Deloitte. They were all working on massively bloated government contracts that are very likely to get cut.

I know somebody who interned for a certain agency whose job was to research online memes to find out how right-wingers were talking to each other in encoded meme form. This was a multimillion-dollar budget project. I can’t imagine that continues under this administration.

Weird. Why?

Put it this way: back to the point about crypto that I was originally making, we got sidetracked for a second there.

No, I mean, I love it. We have to entertain these tangents because this is the type of thinking that helps you avoid complacency in a sideways market.

Basically, my point was that Trump’s KPI during his first administration was the stock market. That’s what he was all about. The big fear is that he takes the government into super-painful, recessionary austerity. That would be the other end of the same spectrum.

I think we’re going to land somewhere in the middle. I think Trump is looking back at the stock market’s performance during Biden’s administration, when there were tons of record highs and huge 20%-plus years in the S&P 500.

And that didn’t really do Biden a solid, right? It kind of did the opposite: There was a lot of inflation, which pissed a lot of middle-class people—non-asset holders—off. It made housing unaffordable for vast swaths of the American population.

I think Trump is looking at that and probably thinking, “I’m not going to take the country into austerity, but I’m probably not going to do everything I can to pump the stock market, either.” I think we’re going to land somewhere in the middle.

I tweeted out this roadmap for his administration, which I think is kind of what’s going to happen. I want to hear your take on whether or not you agree with this. First, DOGE fires a ton of government workers, pumping up unemployment and labor-market slack. Risk assets wobble.

That’s where we are now, right? There are going to be a lot of people getting fired, and the trickle-down effects of this are going to happen everywhere. Even my mom’s Nextdoor neighbors in Berkeley—the guy’s a neuroscientist at UC Berkeley—the NIH just cut funding for his project. It’s the first time in decades that’s ever happened, and they’re devastated.

A lot of professors are probably going to move on. Their research is going to get cut. It’s just job loss everywhere, and at the government level, anything that the federal government touches is going to be affected. That’s going to cause some risk-asset wobbles, because those people aren’t buying homes anymore; they’re selling homes.

Then I think the next thing is that Trump negotiates a ceasefire in Ukraine. I think commodity prices get nuked, CPI goes down, and it’s probably a pretty good time to buy Russian equities, if you think that’s the case—and short oil, short LNG, and basically short wheat.

I was about to interrupt: Apparently, ETFs that track indices in Russia are no longer tradeable or investable.

Land of the free.

Land of the free. Are there any Russian tokens? Putin coin—$POOT?

So, basically, I think rates get cut, crypto rips, and equities grind higher. Then I think that, by the time we’re 6 to 12 months into the administration, that’s when the mass deregulation starts to happen. That’s when the pro-business, happy times start.

They’re not going to be right now. Right now, we’re in a painful, uncertain realignment of things, and everybody in business is upset. I think if you’re trying to start or buy a business, or buy equities, you want to do it before the mass deregulation. That’s when it’s just moon time for equities and crypto.

That’s also, I think, 1 to 2 years out. That’s probably where AI productivity gains start to kick in in a big way. We were singing the praises of Deep Research last week, and I do think those productivity gains are going to cause continued deflation and higher highs for equities and crypto.

Against that super-bullish backdrop, we’re not going to have Trump saying, “All right, we need to make new highs. That’s the most important thing to me.” I think he’ll say, “Okay, we can use this momentum to really lean into ramping deficits, ramping tariffs again, and achieving things with the slack provided by constructive, wide-open capital markets.”

I think that’s when corporate bonds and Treasury bonds just go to shit. I think that’s when you should not buy bonds. I think that’s when Bitcoin starts to moon, because people start to lose faith in the dollar.

That’s kind of how I think it plays out. I think we’re just in the first phase of this very clear but difficult path for traders and investors.

Let’s go through it point by point. DOGE fires a ton of government workers, pumps up unemployment and labor-market slack, and risk assets wobble. I think that’s actually in the process of happening. The probability that we get some sort of market pullback because of that is 85%.

Trump negotiating a ceasefire in Ukraine also seems reasonably likely. I kind of wonder what Polymarket puts it at. I don’t know if you’ve checked.

I haven’t.

Great idea. Let’s see. A ceasefire in Ukraine—33% chance that he ends it in the first 90 days. That’s quick. A Ukrainian election held in 2025 is a 46% chance, which I think is a good proxy for whether there’s a ceasefire.

Yeah.

Actually, no. Interesting: A Russia-Ukraine ceasefire in 2025 is a 70% chance. I was wrong about that being a good proxy. Holding an election is different from announcing an election. Polymarket is just so ahead of the curve.

So, 70%. I actually think that’s pretty reasonable. It might be higher. Then rates get cut, crypto rips, and equities grind higher.

That’s the part where I get nervous, just because the inflation data hasn’t been what we want it to be.

No, that’s what I’m saying, dude. Let’s say you agree with 1 and 2: A ton of government workers get fired, unemployment is higher, and then there’s no more war in Ukraine. Commodity prices, which are the major input prices for CPI, tank.

You have inflation in the rearview mirror, unemployment is higher, and the Fed has this giant green light to start cutting.

It depends on how much you think inflation is driven by commodity prices, which we can look at. Outside of commodities, is there anything else?

The cost of labor.

Okay, so the things you really need to look at—the cost of energy and the cost of labor—are 2 big ones. If oil is trading at $45 a barrel, you could see OPEC go into a price war if the Ukraine war ends, because its cuts aren’t going to work anymore. There’s going to be too much oil sloshing around.

I think you get $50 or $45 oil versus the $75 oil we have right now. I think CPI eases meaningfully. LNG, too.

Energy prices were a significant contributor to the increase in the last CPI print.

Okay. So rates get cut, crypto rips, and equities grind higher. I think in that scenario, equities rip as well.

That’s very good for alts. I actually think it’s less good for Bitcoin. This particular scenario is very bad for Bitcoin dominance, in my personal opinion, because it’s an easing of geopolitical tensions while reallocating appetite to risk.

Yeah, it gives you higher alts. I think BTC is higher in this particular scenario, but the real winners might be Solana and Ethereum, which is, by the way, doing quite well. I want to talk about that at some point.

Point 4: Mass deregulation, party time for equities and crypto. I do agree that mass deregulation, while it’s happening right now, is going to be the story and the driver after all of this stuff gets done.

AI productivity gains kick in. I actually think this has already been happening. It’s quiet, isn’t it? Maybe it’s not point 5 on this list. Maybe it’s just a constant backdrop to everything else.

I’ll tell you something funny. Back in 2023, this guy named Hal Press, who is North Rock Digital on Twitter, came out to Puerto Rico, and we spent some time together. One of the things we talked about was AI.

At that point, in May 2023, AI wasn’t really mainstream. People were talking about it, but ChatGPT was still very new. It was mostly small circles that were discussing it.

The 1 takeaway we had was, “This is insanely good for the Nasdaq. This is going to be a huge driver of the Nasdaq.” Good call. I think we were right.

A huge amount of the gains in the S&P 500 and the Nasdaq have come from the top tech stocks. Everything else is kind of stagnating. The companies that had the most value to gain from deploying AI gained the most.

I don’t think these layoffs would be feasible in a world without AI. Since we talked in May 2023, the Nasdaq is up like 90%. That was 70%—that was a good call.

Anyway, the next point here: I think we agree on AI, but tariffs and continued deficits ramping up are a problematic backdrop. This is the part that feels like a huge logical leap. Do continued deficits ramp up? Why? In a world where they do manage to cut spending, where are you getting the continued deficit ramp?

Here’s where I’m getting it. You’ve got cheap commodity prices fueling the economy, and you’ve got AI-led deflation and productivity gains bolstering not just tech companies but pretty much every company.

Even WD-40 can hire fewer people to analyze how many squeaky hinges are out there, because they can just ask Deep Research. Pretty much any company in the Russell Index and the S&P 500 can benefit from this.

McKinsey does this kind of work. You don’t need to pay McKinsey $10 million to figure something out for you; you can just pay Sam Altman $200.

This is such a constructive setup that Trump can start doing things that are bad for the stock market, like threatening our adversaries with tariffs and screwing with global trade. In terms of deficits ramping, you can feel comfortable cutting taxes and continuing to spend money on the things the government spends money on if the economy is at its highs, whereas you wouldn’t be able to do it if you were in a recession.

I think DOGE is going to cut a lot of fat and a lot of jobs, but, as we know, most government spending goes into 4 things: Social Security, Medicare, the Defense Department—the defense budget—and interest payments.

Those are all really hard to cut. What DOGE can cut will probably be a lot of waste, fraud, and abuse; a lot of garbage; a lot of jobs; and a lot of unnecessary real-estate bills, USAID-type things, and NIH-type things.

You’re going to need sweeping bipartisan legislation, or maybe even a real change of heart in America, if you want to start cutting things like Social Security, Medicare, Medicaid, and the Defense Department budget enough to move the needle.

We’re going to be in deficit world for a while. I think the government will get comfortable with that if everything else is going super well. That’s why I wrote that.

I’m going to put 50% on that one. Maybe lower. I think I’m going out on a limb—I’ll admit it—but a lot of what you said contains truth. The underlying piece is that Trump has promised over and over and over again, and has made it a core tenet of his campaign and the way he’s governing right now, to reduce the deficit, cut waste, and generate activity in the private world.

I think it’s going to be very hard for him to reverse on that, just from an ego perspective as well. I don’t see increased spending happening. I think tax cuts could happen in a way that is larger than the spending cuts, but my point is that the 2 levers he has are: “I’m going to cut a ton of spending, and I’m going to lower taxes, and I’m going to balance the budget.”

He’s very concerned about running the American economy like a business. I think it’s very hard for him to go back on that.

If I were to err on the side of what he’s probably going to do, I’d say he’s more likely to cut aggressively than to lobby for tax cuts aggressively.

We have to be careful. If you’re right—and in a way, as an American patriot, I hope you are, but as a Bitcoin holder, I hope you’re not—if he slashes the budget enough to balance it, we’re going to have a real recession. The markets are going to crash, because deficit spending is about 7% of GDP right now. It’s insane.

You take that away and bring it down to 2% or 0%, and the economy is going to have a massive problem. The way I read your tweet is not that we continue to have a deficit year over year. The way I read it is that the deficit blows out.

Oh, I see. I think it’s very unlikely that he manages to actually balance the budget. What I’m saying is that I think it’s very unlikely for him to accelerate the deficit.

Yeah, I don’t think the deficit is going to blow out, either. If I wasn’t clear, what I was trying to articulate—maybe inefficiently—was that I don’t think he’s going to take any steps to drastically increase the problem of the deficit.

Oh, you’re right. If the deficit goes up from here, the dollar’s going to have a problem. I don’t think that’s the case, but that’s neither here nor there for BTC. It doesn’t really matter.

No, you’re right. We’re on the same page now. I just poorly worded the tweet. Now I understand what you’re saying in response to it.

So, what we’re left with, I think, is what I wrote in the conclusion: Avoid bonds like the plague, short commodities, and go long stocks and long Bitcoin. I think that’s kind of how I want the portfolio to look here.

I never thought about that being good for alts, but you brought up an extremely solid point: If most of this stuff happens, we’re going to get a pretty amazing alt season in there, especially when the deregulation happens.

What about alt season? You know what’s doing interestingly well? I don’t want to say it—the ETH/BTC pair.

One thing I’m surprised we haven’t talked about is the Bybit hack at all. That was the news of the week.

The interesting thing about the Bybit hack is, first, how massive it was. This thing was huge—$1.5 billion worth of ETH.

The other thing is how nonchalant Bybit was about it. They’ve clearly printed an insane amount of money, and despite the fact that it was a massive exchange hack, nobody seems to have actually lost any money. Bybit seems to be covering it for now.

The most interesting part was the reaction of ETH/BTC. I saw the headline within about 30 seconds of it coming out, and I immediately shorted ETH/BTC. That was my first reaction: “Okay, I’m going to sell a bunch of this.”

It sells off from where I saw the headline and tried to short it—like 2%, or maybe 2.5%. Then it just bounces, stays there, and doesn’t go lower.

The hack happened at 10:00 a.m. my time, and by the end of the day, ETH/BTC wasn’t at the lows. It was about 1% or 1.5% higher than the lows. As a trader, you have to think that’s weird. That shouldn’t happen.

If $1.5 billion of ETH gets hacked, ETH/BTC has been trading so horrendously poorly, and we literally got down to the bottom of the range—it didn’t even get to the bottom of the range, which was another 2.5% lower—then it couldn’t tap the bottom of the range it’s in, let alone go anywhere near its lows.

In theory, there’s $1.5 billion of ETH to be sold on the market. I realized, “Holy shit, there’s nobody left to sell ETH except this North Korean guy who just stole it from Bybit.”

Exactly. Except for that guy, there’s nobody else left. Everyone is out of ETH.

ETH/BTC has been in a downtrend since December 9, 2021. That was the peak. This asset has been spiraling into the abyss for more than 3 years now.

You’re right. I think all the ETH maxis are just out. They’re done. There’s no more ETH to be sold, and now everyone is too scared to go buy ETH.

As any good analyst and trader does, I went to look for whether I had overlooked anything happening on Ethereum. I read a report recently that detailed 50 companies—50 non-crypto companies—that are working on Ethereum. I went through them all, and there was literally nothing interesting in there. It was mostly people launching one-off NFTs.

One interesting thing was that Lamborghini apparently launched an NFT tied to a metaverse that is now launching on Base, not Ethereum anymore.

Very 2021 of them to do that.

Very 2021 of them. But the interesting thing was that most of the real-world-asset activity still takes place on Ethereum.

RWA—real-world assets—is like the little brother of stablecoins. It’s completely overlooked because it’s a runt compared with its big brother, but it’s the next logical step if the financial system is going to move into crypto in a meaningful way.

It goes stablecoins, RWAs, and then actual companies issuing tokens in the form of equity, along with actual crypto protocols. I did find that interesting.

It makes me think there’s potential for a massive ETH short squeeze at some point in the next year, where ETH outperforms BTC by 50% or something like that. Maybe it goes back to 0.04 at some point. I guess that would be a 40% move, but it would still be a massive move for ETH, where it catches the narrative of the moment and nobody owns it.

I could totally see that. I think if it’s going to happen, it’s going to happen in the next month. The reason I think that is because of an old trading heuristic: If good news can’t send the market higher, it’s not going higher. If bad news can’t send the market lower, it’s not going lower.

Let me poke 2 holes in that theory. I think you’re probably right, but while we’re sitting here debating markets on a call, I need to ask: Why a month?

The stablecoin bill is going to get passed in 2 to 5 months, or 2 to 6 months. That’s what brings a lot of capital on-chain and onto Ethereum. That’s probably when you see the ETH wallets getting refilled.

The other thing is: Why would we get an ETH pump if the guy who just stole $1.5 billion worth of ETH—the happiest man in North Korea—is just waiting to sell it? He’s got the ETH, but he doesn’t want ETH. He wants a bulletproof Mercedes for his supreme leader. He has to liquidate that somehow.

There are 2 things here. One theory is that part of the reason for this ETH outperformance is that Bybit has to buy back the ETH. That is true. The ETH is going to get bought back.

That’s what Jump did after Wormhole got hacked. They went and lifted the ETH in the open market. They lifted $400 million worth of ETH. That’s what’s happening here.

Exactly, because Bybit is short ETH now and North Korea is long. Bybit probably bought it right away for solvency reasons.

Kim Jong-un—

Let me amend my statement: It either happens in the next month, or it happens from a lot lower. The reason I’m cautiously constructive on ETH/BTC is, first, that there are actual potential narratives. People tend to get excited about these things before they actually happen.

Second, we finally have a reason for ETH/BTC to go up. I know that sounds facetious, but it’s true. You just had—well, it tells you about the stock-and-flow equation. It tells you about the stock. It tells you there’s just no more ETH to get sold.

Yes, exactly. I think traders like you and me will realize that now and maybe reallocate a little bit to ETH—just small amounts.

The idea of buying ETH gives me the willies. It’s scary.

That’s bullish. That’s actually quite a bullish signal to me. Shell-shocked—I like it.

Yeah, but I’m actually getting more bullish on ETH by the day now. It starts with people like us. It starts with people like Yolo Sam.

This could be fun. I think I’m at Yolo Sam.

I’m telling you, for the last year I’ve been using ETH as a short leg on every single trade. Every trade on every alt, I just short either the equivalent amount of ETH or more ETH, because it won’t go up as much as any alt, and it goes down more.

I’m not doing that anymore. There’s basically zero chance that I’m shorting ETH for at least the next month. I’m just not doing it anymore. A lot of other traders did this as well, and I’m probably not going to be shorting ETH at these levels, either.

What’s the new short leg? AI? Fartcoin?

You’re shorting FARTCOIN?

SOL, for sure. SOL until the unlocks pass.

It has to be Solana. When do the unlocks pass?

After that, hopefully, once the Solana unlocks pass, ETH has its pump and I can go back to using it as a short leg, because it’ll be zero eventually.

We’re here to talk trading, aren’t we? Hello again, old friend. That’ll be a good feeling, coming back to a comfortable trade.

When do the unlocks pass? I forget.

Mid-March is when they start. Solana volume across OTC and all the exchanges has to be at least $1 billion or $2 billion a day.

The old rule of thumb says that if you don’t want to move the market, you execute no more than 10% of daily volume—10% participation. If $1.5 billion of Solana gets unlocked, maybe people are holding on to some of it. Maybe $2 billion worth of SOL is unlocking around mid-March.

Some of that might be priced in, though. Unlike the ETFs or the Trump election, where you just can’t buy enough to price in the outcome, the market can either sell or not buy plenty of Solana ahead of that unlock.

Let’s say, of the $2 billion, $1 billion gets sold. Of the $1 billion that gets sold, $500 million gets sold sloppily at market. Maybe $250 million of that is already priced in. There might be $250 million worth of SOL that people want to buy, but they’re waiting until after the unlock.

I don’t think it’s the end of the world for Solana, but I agree that it’s definitely not the time to be buying lots of Solana.

Not the end of the world, for sure, but I think it’s good to use as a short leg if you’re going to be long in anything else.

Agreed.

Anyway, we can leave it at that.

Yeah, a good chat. A good suggestion for a short leg. This was really fun.

I came into this thinking, “What the heck are we going to talk about?” It wasn’t really that active a week. Okay, Bybit got hacked, but once we got going, this actually got me thinking. This is useful stuff for me.

Thank you, Avi. I appreciate it.

Yeah, this was great, Jonah. I’ll see you again next week.

See you again next week.

Talk to you soon, buddy.