Is the Final Bitcoin Bottom Already In?

0:00Today, I've got the pleasure to talk about the crypto market with Michael, who's the author of the DeFi Report, the only paid crypto newsletter that I'm personally subscribed to. In this interview, we're going to talk about the past cycle, the current market, his own strategy, as well as his future outlook. Michael also shares some of his rather controversial opinions. "So when someone says the cycle is broken, they're telling me they don't understand the mechanics of the crypto markets. They're being intellectually lazy, in my opinion." "People thought I was crazy for taking it seriously." And how he structures his own portfolio: "Typically, 60 to 70 % Bitcoin." "I can have conversations now with my friends and family about Bitcoin, and they don't think I'm crazy anymore. So there's probably less upside to that trade." This video is also going to be in English and not in German. So if you aren't that fit in English, you can just turn on the German subtitles on the bottom right.

0:54Okay, Michael, before we talk about the current market, I'd like to talk about the past, because you were one of the very first people that sold a large part of his crypto portfolio before the flash crash in October last year. How come? What did you see that others didn't see? — Yeah, you know, we did exit mostly, you know, we went almost fully risk off in the September, October period last year. And we did just happen to kind of time that, like, right before the 10/10 crash. I don't think that I had some insight where I'm able to predict the markets or anything like that. Everything that we do is probability based. And the way that I think about this, my focus as an investor in the crypto markets, is deeply, deeply understanding the four-year market cycle. And I think there's a lot of confusion around that topic in particular. Like, when you get towards the peak of markets, you often will see the narrative actually turning to, like, "this cycle's broken, and there's going to be no four-year cycle." That happens in almost every bull market: five-year cycle, super cycle, cycle extends — there's usually a different narrative around it. But it's the same idea, that this four-year cycle is over. And when I start to see that, that's a big indicator to me, because I don't view this as a narrative, I view it as the first principles of how the market cycle, how markets work in crypto. And this is also true for how traditional markets work. So when someone says the cycle is broken, they're telling me they don't understand the mechanics of the crypto markets, basically.

2:33And sort of the mechanic of that, to me, is you tend to have four phases of a crypto bull market. And the early phase, when most people don't even recognize you're in a bull market, we kind of call it the early bull, the early bull market. This was, like, the beginning of 2023 up until about October of 2023. So Bitcoin doubled during that period, it's up 100 %, but nobody's really talking about it. It's not on mainstream media, Wall Street's not really talking about it just yet, but you're in a bull market, no one really recognizes it. That was the early bull. So that had played out in 2023. Then we moved into the second phase, which is the wealth creation phase, that kind of came after the ETFs were launched, in early 2024. That period went all the way up until, I would say, early 2025, kind of after Trump came into office, or right around that period. So that's kind of your wealth creation. So now Bitcoin's trading at 70/80K or so, markets are up, meme coins are up, lots of altcoins, things like the DEX volumes, DeFi lending, all of these things are starting to kick into gear. And that's kind of like how a business cycle plays out, where once there's demand to come On-Chain, users are coming On-Chain, we're seeing DeFi lending activity pick up. That's credit creation happening in DeFi, which then reflexively gets redeployed into assets. And there's a reflexive move on all of this, that takes you into your wealth distribution phase.

3:56My view was that had started when Trump came into office. So at that time, markets were repricing, we've now got a Bitcoin president, we're talking about a Bitcoin strategic reserve, the entire narrative is around this kind of new world for crypto. And so, to me, that was, like, peak euphoria, that was, like, early 2025. And I was starting to think that maybe you should be moving risk off. I actually exited all of my SOL position at that time, kept the Bitcoin, kept most of the other holdings, but that to me was, like, the peak euphoria. After you get to that point, you typically have, like, a six-to-12-month period of wealth distribution, right? This is when Bitcoin's kind of trading near all-time highs. We saw this in the last cycle, where we peaked early, in April of '21, and then the second peak was in November. So that was kind of your wealth distribution phase. And this time it was January '25 to basically October '25. And that's when the most new users are coming into crypto, that's when DEX volumes are at their peak, that's when speculation is at its peak, that's when the derivative markets' open interest is high. And so when you get into that period, you kind of want to have an eye on all of the data and sentiment and all of those things.

5:19And as we got further into 2025, what happened was we had, like, a digital asset treasury season, where you had an explosion of capital, right? This is sort of part of the mechanics of these markets, where later in the cycle the capital markets activity picks up. So everybody who wants to offer products and services around crypto is going to try to bring these new products to market. That's going to create a lot of hype. Those products are marketed to retail investors, all of this. So that was happening. Now you're getting later into your wealth distribution phase. And that created a ton of leverage in the system, because people wanted to front-run all of that activity. So the leverage just kept building. And what I was looking at that time was really, how durable is this? Is there actual spot buying activity behind all of this? Or are we kind of creating too much of a leverage premium, where the markets become a little bit wobbly at the top because there's so much leverage, new money coming in, and you start to see whales starting to exit, you start seeing smart money starting to exit. And that's when the bottom can kind of come out rather quick. So that was why I decided it was time to go risk off. It was really just everything that I would look for in terms of the market cycle playing out and everything that reflexively builds on that had played out. We had gone into wealth distribution, there was a speculative frenzy on top of that, and then I wasn't seeing the durable spot buying and things that I would be looking for to say, yeah, this can continue to extend for a while.

7:00So it's kind of a combination. There's a lot of data that goes into this. I think a lot of my strategy is to really honor this idea of the four-year cycle and just understand that from first principles, and then combine that with kind of crypto-native instincts, where we're publishing on social media, we're publishing through our newsletter, we get a lot of feedback from the market by doing that. And so that just turns into, okay, the probability looks like you should be risk off. And that was kind of why we exited the market at that time. We called for 65K BTC at that time, and that actually hit much faster than we expected, in early February. And we're now about eight and a half months into what I would say is a wealth destruction — this is the final phase, wealth destruction. We're about eight and a half months into that. We've had three 25 %-plus drawdowns so far. And we do a lot of work to understand the market structure, understand high-level KPIs, and try to really form a view on the downside, to say, okay, when does the probability point to the lows are in and you should be really in a risk-on stance. So we're kind of in that process now. We can get into more of that. But that's kind of the framework. And I think you just really have to respect this idea of why the cycle plays out the way it does from first principles. If you understand that, I think it's much easier to navigate these markets.

7:20So, okay, I've got several questions. So first of all, you've mentioned the cycle, the classic four-year cycle. Would you say you're a true believer of this cycle and you continue to believe that this cycle is going to play out in the future as well? — Yeah, so, I wouldn't even say I'm a believer. I just view it as, like, a law of nature or something. Basically the way things work in traditional markets, the same thing tends to play out, where you have monetary policy, like the Federal Reserve and things like that. And so when interest rates come down, that creates a demand for loans, right? Demand for capital then creates demand for jobs, creates demand for products and services and more business activity, which then kicks off, on the investment side, an asset allocation strategy where people want to be more into risk assets and maybe away from cash and bonds and things like this. So there's a kind of natural flow of demand for credit, how that feeds into the economy, and then an asset allocation cycle around that. The same thing happens in crypto, it's just different, and it's more reflexive and more speculative, but it's the same idea.

9:39Like, right now you have, if you think about large venture capital funds and stuff, they're out there raising capital right now in the bear market. They're going to start to deploy that capital into new projects and things like this during this quiet period. Eventually, after we bottom, what I expect will happen is at some point prices will start to rise again, right? There just won't be as many sellers and there'll be some marginal buyers. Prices will start to rise again. That tends to then draw in people On-Chain that want to trade, that want to speculate again. And that will create demand for loans, for credit, in DeFi. And when that demand for credit kicks in, most of the DeFi protocols will compete against each other for those new customers that are coming in, and they will offer very high yields to do this. It's kind of similar in traditional credit. You'll see lending standards drop because each bank is competing against the other bank and they'll reduce the lending standards to make those loans. It's kind of the same idea, it's just they're offering higher incentives in DeFi, higher yields. And that just reflexively feeds on itself and feeds into the markets themselves. So that, to me, is just a law of nature of how this works. So it's not like believing in the cycle or whatever, it's just following how things are actually working from first principles. So, yeah, I don't know how you could go back and argue against this idea of these cycles. And I think even just watching this bear market play out, it's very, very similar to what we've seen in the past.

9:48Yeah. You've mentioned, for determining the cycle top last cycle, or in October last year, you looked at the cycle in general, you looked at spot demand and other factors. Wouldn't you say — the argument of most people for an extended cycle was, well, it can't be over because we haven't seen an altcoin season yet. Was this something that you also did consider, in terms of, well, yeah, Bitcoin has risen a lot, we've seen the typical strength, but altcoins, they didn't really do anything. Was this something you factored into your decision? — A little bit. So, you know, this past cycle was different in the way that altcoins performed against Bitcoin. This was really a cycle where Bitcoin did quite well. It didn't reach maybe some of the euphoric levels that people were anticipating. I was originally calling for 150K Bitcoin this cycle, we didn't quite get there. But I also think there were plenty of opportunities to make money in altcoins. Like, Solana had gone up 20x or so — that was something that we were buying at the lows in late 2022. A lot of meme coins obviously did quite well. Those are extremely speculative and volatile. There were other new projects and DeFi things that did well.

11:04I think the difference is that it wasn't just a rising tide lifts all boats, which is really more what we saw in 2021, where your asset selection didn't have to be as good, you could sort of just deploy into things and there was so much liquidity that it kind of lifted everything. We didn't have that type of bull market this time, I think partly because of just less capital. You know, there were stimulus checks and just so much liquidity in the system back in '21 because of COVID. We didn't quite have that. But there were still plenty of opportunities. I think it just — you had to be more selective, and it was a little bit more of a stock picker's market. And in terms of the alt season thing, when I saw that — when we had that season, there were lots of Bitcoin, you know, digital asset treasuries that were created during this period, there were many in Ethereum as well, there were also many digital asset treasuries on longer-tail altcoins, and those altcoins all outperformed Bitcoin in the July, August summer period. So to me, that was a little bit of an alt season there. There was also a little bit of an alt season, like, very early in the cycle, in Q1 of 2024. So it was different, but I still think there's plenty of opportunity to make money in altcoins. It's just got to be in the right assets and buy at the right levels.

14:00Okay, got it. And after the top, you said you called for 65,000. How come you said 65,000? What was your analysis behind this number? — Yeah, so the 65K number came in primarily because we are kind of forecasting where we think some of these really high-level KPIs are trending. So the 200-week moving average is a KPI, a four-year moving average, a long-term moving average, where Bitcoin has historically traded down to that level in bear markets. And then Bitcoin's realized price is a proxy for essentially the cost basis of all the coins in circulation. And we were projecting that to be around 55K, and we were projecting the 200-week moving average to come down below 65K. So historically those are two interesting KPIs where we tend to bottom at. So that was kind of the thinking there. It was also kind of around this idea that maybe we wouldn't have as deep of a bear market in 2026 as we've seen in the past, because of institutional adoption, financialization, ETFs, all of this. And so we thought under 65K would be fair value. That doesn't mean that's the bottom, but we thought anything under 65K is close to the prior cycle top. And if you were buying the prior cycle top back in the last bear market, you were buying roughly 20K Bitcoin, and those were really good purchases over a longer time horizon. So that's kind of how we arrived at the 65K or so. We did get there much faster than I expected. And I think now we're at a stage where most of the air has come out of the crypto markets. We're clearly in the later stages, I think, of the bear market. And the key question now, and a lot of the work that I'm doing now, is really going deep on the realized losses. We can get into some of this data, really trying to assess what has played out so far in this bear market relative to past bear markets, and try to assess the probabilities that we could potentially go lower from here.

16:10So got it. Yeah. Would you say your original view has changed so far? So your original view in terms of, well, it might be that ETFs or institutions in general have changed the cycle and we don't see such a large drawback. Do you still think the same, or would you say, because the bear market so far has played out very similar, that it's probably not the case? — Yeah, it's been evolving a little bit. So I think if you asked me that question three months ago, I'd probably say, at that time, the ETFs were holding up very, very well. We were only a couple of percentage points off of the peak AUM in Bitcoin, and it looked like the institutions, the ETF holders, were going to be a little more diamond-handed. What we've seen now is a lot of weakness coming from the ETFs. So in terms of just the last 30 days of flows, we've seen almost twice as much outflows as we've seen over any other 30-day period. And we think roughly 80 % of the ETF holders are now experiencing unrealized losses on their positions. And so this idea that they were going to be buyers and also potentially not be sellers — we're not seeing that at this stage. And so I have had this view that we're probably not going to see a 75 % correction in Bitcoin like we saw in 2022, and in each bear market we've seen a smaller drawdown. So my view is, okay, maybe it's 55 to 60 % or so this cycle. We got down to like 53 %. And maybe I can get into some of the data here that we've been tracking. And right now we're trying to assess what's the probability of maybe one more final move down that would take us closer to that realized price, which is around 54K right now.

18:07So let me share my screen here. Okay, so this is coming back to, okay, what are the chances that we've actually bottomed and the macro low is in for the cycle. What we've been looking at, and this is a report that we published today, is Bitcoin realized losses relative to the change in market cap. So the realized losses are basically just tracking on-chain activity, wallets that purchase coins at certain levels and then move those coins at lower levels, and that gets recorded as a realized loss. And what we're doing is taking the change in market cap — so we have a big increase in the market cap in the run-up in a bull market, and then we're just taking, okay, what percentage of that increase in market cap has actually come out in realized losses so far. And we're measuring this through the first eight and a half months of this bear market and just comparing it to the same point in time in the past bear markets. And so what's interesting is, you can see in 2018, when we were eight and a half months into the bear market, and also in 2022, we had taken out roughly 14.5 % of the increase in the market cap at that time. When we compare that to what we see today, we've only taken out 8.3 % in realized losses relative to that increase in market cap. So that's a signal that there could be some more pain, like we haven't had enough pain experienced in the market. It makes sense — Bitcoin only went down 53 % so far. And so this is one way to think about what are the probabilities that we could go lower.

19:41There's a few different ways that we've analyzed this. Another way to think about it is in terms of the realized losses relative to the change in the realized cap. The realized cap for Bitcoin is basically all of the capital that's been invested into the network, that's one way to think about that. So the realized cap increases if, say, you bought Bitcoin at 100 dollars and it went up 100 %, you sold it at 200 dollars. The person you just sold it to now has a cost basis of 200 dollars, and because they bought it from you at a realized gain for you, that creates 100 dollars of realized cap. So it's basically the capital that's in the network that people have essentially profited off of. What we're doing here is we're just taking the realized losses relative to the change in realized cap instead of the market cap. Slightly different outputs here. You can see that when we were eight and a half months into the 2018 bear market, we had taken out 62 % of the increase in the realized cap. In 2022 it was a little bit less, but we still had taken out 43 % eight and a half months into the bear market. When we look at what we see today, we're only at 24 %. So, again, kind of a signal that we probably haven't taken enough air out, there haven't been enough losses in the market just yet. That's kind of the conclusion that we're drawing here.

21:03Another way to think about it is just to analyze the decline in the realized cap relative to where it got to in terms of its peak. And we can see that we've had much larger declines in that realized cap relative to what we're seeing so far in 2026. So I don't know if you have any questions on this data, but this is kind of some high-level stuff. We've also got these high-level KPIs. This is from our report last week. These are kind of like fair-value KPIs that we track cycle to cycle. This is the market value to realized value, the market value to realized value Z-score, the percent of the Bitcoin supply that's in profit, the percent of the long-term holder supply in profit. This is the 12-month RSI, a really long-term momentum indicator in the market. And then we've got Bitcoin relative to its 200-week moving average. And you can see that we're at pretty good levels here, like good levels to buy Bitcoin if you have a longer-term time horizon. But we haven't quite gotten to the lows that we've seen in the past two bear markets. Doesn't mean we have to get there. But this is just another way to think about, okay, it looks like we're kind of in the latter stages of this bear market, but maybe we haven't fully gone to the lows just yet. So that's kind of how I think about just assessing the probabilities of where we could end up here at some point.

21:43In the beginning, you said it's all about probabilities, right? And if I understood you correctly, you still think we're in a bear market and Bitcoin might still have a larger drawback in front of it. — Possibly, yeah. — And what kind of probability would you assign to the final cycle bottom of Bitcoin being in, if you had to today, with all the data that you're looking at? Probability that we've already bottomed, that we've already hit the lows. — So I would say probably 30 to 40 % probability that we've hit the lows, and probably 60 to 70 % probability that we could have one more drawdown. That's kind of roughly how I think about this stuff. This analysis changes as new data comes in, but that's what I would say right now: probably 60 to 70 % chance that we go lower. It doesn't mean we're going to 30,000 or something, but all we have to do is go to like 50. I think the low so far was 58.9K or so. So that just means 60 to 70 % chance we revisit that level and maybe go a little bit lower.

23:30Sorry. — No, I was just going to say, one thing that I'm sort of paying attention to on the sentiment side of things is, I think, when bear markets play out, typically in the early stages of a bear market, very few people think the top is in. And those people often will buy the dip very quickly, because once it starts to sell off they think that we're still going up, so they're buying those dips. And then if you go down another leg, more people start to accept that, okay, we're in a bear market, but it's still maybe 50/50 or so. I think if you go back to the March, April period, that's probably where sentiment was at. We've now gone down another level, where I would say maybe 60 % of people are saying the bottom is in. What I have observed in past bear markets is that the bottom tends to not be in until everyone's saying we're going lower, which is the opposite, right? You've got to be on the opposite all the time. So I think there's a lot of acceptance out there that, okay, yes, there's been quite a bit of pain, things are down, most people think it's fine to buy. I think that's true, it's fine to buy at these levels, but usually there's one more move and then sort of a quieter period. There's still quite a bit of speculation in some assets, which we can get into, things like hype. And there's probably a small handful of assets that haven't gotten the memo that we're in a bear market. So, yeah, that's just a little bit on the sentiment, psychology side of things and how I think about things.

24:58And if you think Bitcoin is going to go lower, how low do you think Bitcoin is going to go in this bear market? Do you also have data or indicators that basically allow you to look into the future at what might be possible? Are we talking about the 50s, the low 50s, 40s, 30s, or even lower? What do you think is most likely? — I tend to think like 40K would be sort of the catastrophic low. That would probably be the low where it's similar to an FTX-type situation. I don't know what the catalyst for that is. We do have some risk with what Strategy is doing right now. That's not my base case, that we're going to go to that 40K level. But I do think the probability points to us spending a little bit of time in the 50s at some point. Bitcoin has historically traded to its realized price in bear markets. That's 54K right now. So I could see mid-50s or so, possibly low 50s. And that's still a significantly more subdued bear market, a shallower bear market, even if you go to 50K relative to the 2022 bear market, where we went down 75 %. So I think you could still get to a 60 % drawdown, maybe a little more than that, and that gets you down into that mid-50 range.

26:20And what do you generally look at to determine that the bottom is really in? What kind of indicators, macroeconomics or whatever, do you look at exactly? — So we just shared some of those high-level KPI numbers. So if I see those start to flash more in line with what we saw in 2022 and 2018, that's a good way to assess it. In the last bear market, Bitcoin traded about 30 % below its 200-week moving average, whereas we're trading a little bit above the 200-week moving average right now. So if I saw something where we came down 10, 15 % below that, now you're hitting the realized price level, the realized loss data that we just went through. We'd be looking at that to see if that's starting to come in line with where we got to in the prior bear markets. So that's kind of the quantitative side of things. And then on the qualitative, sentiment, market-psychology side of things, I would be looking for all of the people that were bullish at 80K, 90K, that didn't want to accept that we were in a bear market — for all of them to basically now be convinced that we're in a bear market and not realizing that that's the bottom. So it's not one indicator, it's really more quantitative analysis, applying instinct as somebody who's been in these markets for multiple cycles, and then combining that with the social side of things, the sentiment, market psychology and that type of thing. And we cover this weekly in the DeFi Report. We share these weekly updates with our members.

27:58And what do you think brings Bitcoin down there? You've mentioned Strategy, that there's some risk over there. Do you also think the stock market is currently a risk, or even other factors that I didn't look at? What do you think could be the main catalyst? — Yeah, that's a great question. And I would say I probably don't have much edge on what the catalyst is. I would say that the crypto industry tends to pay for its sins during the bull market period. And what I mean by that is, typically during the bull market period, we have a new leverage cycle, which we talked about. This is part of what I'm looking at to assess the cycle. And what we saw in the past bull market was a leverage cycle that was sort of boosted by these digital asset treasuries. We now know that Strategy has sort of gotten a little over its skis, I would say, with the way that Michael Saylor set up his capital structure. And I think he's done a really good job with all of this financial engineering over the years and been able to raise capital, deploy that into Bitcoin. It's largely worked. And I think in this bear market he may have gotten a little too aggressive with these preferred shares that they've issued, which is kind of like a fixed-income product, where they're able to issue shares of that if there's demand, people want to access these high yields that he's paying on that. But on the other side of it, the cash to pay those yields has to come from somewhere. We know that they don't have a ton of cash on their books to pay that, I think roughly six months or so.

29:31And this is where he's kind of gotten himself in a situation where he's got two stakeholders on his cap table: MicroStrategy holders, and then the holders of these preferred products that are paying fixed-income yields. And if Bitcoin's going down in value and there's less demand for those products — I think the STRC product was trading below par, around 92 or so — that's kind of the market saying, hey, we don't think this 11.5 % yield that you're paying on this fixed-income product is enough. And so he's not going to be able to issue any more shares at that 11.5 %, which means he can't raise capital to buy more Bitcoin or potentially pay out the dividends. And so it's starting to look like the only way to keep this product going is going to be to sell some of his Bitcoin, which is a problem — I guess it's a problem if you're a Bitcoin holder. For me, that's fine. I don't own any MicroStrategy shares or STRC. I'm fine, I'll buy that dip. But if you're a Strategy holder, what's happening there is he's sort of taking from you by selling the Bitcoin, because he's reducing the Bitcoin per share for MicroStrategy holders, and then he's taking that and giving it to the preferred part of his capital stack. So that's a problem within MicroStrategy's capital structure. I don't view it as a problem for Bitcoin. I view it as, okay, this might create another dip-buying opportunity. That's kind of how I'm approaching this.

29:45I think, because Bitcoin is a store-of-value asset, it doesn't have cash flow and things like that, a lot of this is narratives, and it has a sort of mimetic nature to it. And because of that, when fear comes into the markets, things can sort of unwind rather quickly. I think what's interesting in bear markets for crypto is we actually spend more time in an upward channel. So actually, most of the trading days in bear markets, Bitcoin is in an upward, sort of a retracement move. But when we go down, it's rapid. And it's because of just fear coming into markets, leverage being wiped out and things like that. So that would be my concern. We sort of saw, like, very, very almost peak-fear-type levels, I would say, like, June 5th — that was a couple of Fridays ago — that happened without this being resolved. That's the only thing that concerns me, is that we had those peak fears, he only sold 32 Bitcoin, the markets have sort of come off and steadied a little bit, a little bit of a mean reversion, but that problem hasn't been really addressed or solved just yet. So I think that's one risk.

32:02You mentioned AI and TradFi markets. Bitcoin has a pretty tight correlation to the Nasdaq, and it's actually a stronger correlation in bear-market years. And so far this year, Bitcoin's correlation to the Nasdaq has been the strongest ever. What's interesting about that is that Bitcoin tends to lead that correlation. So Bitcoin is more the leading indicator, not following what Nasdaq is doing. So it's possible that this recent move that Bitcoin made, trading down roughly 50 % or so, while Nasdaq has been sort of going in the other direction — the question is, is Bitcoin sort of telling you where Nasdaq's going? So I don't view turmoil in the traditional markets as too much of a risk to the crypto markets right now, just because most of the leverage is already out of the crypto markets. We're clearly in a bear-market state. And I would just think it's more about potentially the AI trade or Nasdaq kind of actually selling off a little bit. In the report that we published today, we had a Bitcoin/Nasdaq chart in there. It looks like that ratio has bottomed for the cycle. That doesn't mean Bitcoin has bottomed, right? They could both still fall together. But it kind of looks like most of the air is out of Bitcoin. We haven't seen that come out on the traditional finance side. We'll see. I mean, if there's a major, major risk-off event, then I think Bitcoin or crypto would just get caught up in that as a risk asset as well. But broadly speaking, most of the air is out of the crypto markets.

32:11And I think probably the biggest risk moving forward is just how the war in Iran — is this ceasefire deal durable? Is this really going to end the war, and are oil prices going to come down? I think if all those things happen, there's less chance of a significant correction in Nasdaq, and Bitcoin is probably just going to keep doing its own thing and eventually find its low. We'll see how things shake out with Strategy. Yeah, that's kind of how I think about the risks. And, you know, one thing is, I think it's probably pretty non-consensus or contrarian to sort of project that Bitcoin will go down 60 %, which still only gets you down to like 55, maybe a little below that. That seems like kind of an out-of-consensus view, and I kind of think that's probably the more likely scenario moving forward.

32:14Interesting. Okay. And what's your outlook for the next bull run? Do you think in the next bull run we're going to see a classic altcoin season like in the past? Or do you rather think it's going to be a stock-picker market in the crypto space, like in the last cycle, that you have to do your analysis, look for the gems? — Yeah. And maybe just to correct myself on what I just said: so a 60 % drawdown would actually get us down to like 50K. So maybe that's kind of non-consensus, and that would still be a much shallower bear market. So just to correct myself on that. But yeah, in terms of alt season, I think what we saw in 2025 and also in 2026 is likely to be more what we see moving forward, where especially after we get — hopefully we're going to get the passage of the Clarity Act over here in the United States. This is regulation for the crypto markets. It's going to make it very clear what's a digital security, what's a digital commodity, how the token economics work, and basically all of these models that entrepreneurs have been trying to build into their crypto projects. We're going to have clarity around this. I think this is going to bring in new entrepreneurs, new developers, and it's also going to make it easier for the investment community to sort of separate the wheat from the chaff.

35:52So the stuff that's been doing well tends to have a clear fundamental story to it, tends to have strong revenue, strong product-market fit, a token economic model that is taking some of those revenues and doing buybacks, which is accretive to the token holders. And I think that's a really interesting model for an investor, where you've got a fundamental growth story, product-market fit, strong revenues, and then this mechanism where you've got a natural buyer in the market via the success of the product itself. And I just think most sophisticated investors are going to look at those types of things and want to allocate there. I do still think you have other interesting areas as well. So one area that I think has very durable staying power, that I think I'm contrarian on — it's kind of weird to me that I'm contrarian on it — but this is kind of the social, consumer, retail, fast-trading meme coin sector of crypto, which is interesting to me because, as a fundamental investor, you'd think that's something I wouldn't want to touch. But when I study the data on the meme coin sector, it's just very clear that lots of people like meme coins, and some of these meme coins, I think, are going to emerge as almost having store-of-value properties. We've done some really deep analysis on some of these things, because what we're trying to understand is the holder base and the conviction of the holder base. And there are some meme coins that, if you compare them to Bitcoin, the percentage of people that are selling the token at the top versus the percentage that are still holding that bought at lower levels — we're trying to assess the conviction by analyzing holder cohorts. And we can see that there's real holders of some of these meme coins.

36:59And so that's interesting. And then there's a social element to that. I think what people are missing with meme coins is that it's a product, it's a popular product. It was probably the most popular product in the crypto markets last year. Why is it popular? Why is it sticky? I try not to judge these things, I try to just say, people like to trade, they like the community elements. There's sort of a social-media element — we've been trying to figure out what's the social-crypto combination, right? We've seen friend.tech, and we've seen entrepreneurs make these attempts at building a new social network that involves crypto tokens in some ways. I think if you just look at some of these meme coin communities, that's a social network there, the token is what's binding everybody together. People like the community aspect, they like sharing the memes, it's fun to be on the internet with your friends or whatever, they like the gambling aspect of it and the fact that the price can go up and they can make money. And that just brings communities together where it's like a tribe or a cult. And I think it's just kind of interesting. I try to look at this from first principles and not have any judgment on it myself. And I just think lots of people like this. And I think it's sort of contrarian to say that this is going to be a durable thing moving forward, because it's so volatile and so cyclical. But I don't see anything telling me that this is not going to come back in a big way at some point. So that's an area that we think is interesting.

39:13Perps and on-chain options are obviously — perps, I think, is very consensus. I think on-chain options is maybe not as consensus, and there are some interesting protocols that are starting to come to market with good products there that have product-market fit. We have some allocations in our current portfolio there. Stablecoins are a really interesting sector that we've identified that we want to have exposure to. There are ways to get exposure to stablecoins. — Are you talking about Ethena or something? — So, yeah, you have kind of the regulated, more TradFi side of things, that could be like Circle. So Circle is the issuer of USDC. But what's interesting about Circle is they are coming to market with their own layer-one blockchain pretty soon, it's in testnet right now. And I think the market sort of views Circle as just the issuer of USDC, and their whole business model is really tied to the yield that they get from USDC. And I think what could start to play out here — I want to have exposure to what I think is stablecoin infrastructure — is that they may be able to offer something where a payroll company could utilize their blockchain and the Circle infrastructure to offer stablecoins into a payroll product or something like this, in a regulated environment. And this is how stablecoins start to really proliferate.

40:41Like, if you think about, how do you get mainstream users to want to have a crypto wallet? I think if your employer said, hey, we're switching up our payroll and we're going to pay you in stablecoins, and you're going to get a yield-bearing instrument, it's just going to be like cash but it's going to pay a yield right in your wallet, and you could buy your groceries with that as well — I think most people are going to just sign up for that. And now you're a crypto user. You're not even doing anything in DeFi or anything, it's just making your life better. That's a good way to sort of get stablecoins into the hands of everybody. And then maybe there's more interest in other crypto activities after that. But I think that's a sector I want to have exposure to. Ethena is another one that's a yield-bearing stablecoin operating offshore, that I think is also interesting just because there's a large market for that. And that's really all the integrations in DeFi — people that are On-Chain, on DEXes, in lending markets, they want to loop, they want to boost their yields, Ethena is sort of a tool to do that. So I think stablecoins are definitely an interesting area. And yeah, that's most of it. Obviously, store-of-value assets: Bitcoin. I think you could put Zcash and sort of privacy into that. I think privacy is definitely something that's going to be interesting moving forward. So these are all — the work we're doing is to try to identify what we think the key themes and sectors and growth areas of crypto are. We do a report every Friday where we go through an asset on our watch list and we do fundamental research for all the projects that we're initiating coverage on. So we're constantly doing fundamental analysis, identifying the themes and sectors, and then looking to allocate when we think that the tokens are in our fair-value ranges.

42:22So got it. And what's your general strategy in the crypto market? Are you more — well, I don't think you're buy-and-hold, right? It's more like buy-low, sell-high kind of thing. But do you combine it with leverage? Do you hold a large Bitcoin composition apart from your altcoins? How do you generally structure your portfolio, how do you try to play the crypto market? — Yeah. So, me as an investor, my background — I learned about investing by reading all of Warren Buffett's books, Charlie Munger's books, when I was in college, that's how I got into investing. So I'm a fundamental — it's kind of a weird thing that I'm a fundamental investor, because these guys hate crypto. But I also have a very open mind, where I'm like, okay, I'll subscribe to what you're saying on lots of things, but I can disagree with you on crypto, and there's nothing wrong with that. So I've kind of developed my strategy for investing in crypto through these tried-and-true frameworks that famous investors use. I was talking about the market cycle — I've got a book right here. The crypto market cycle basically follows what Howard Marks talks about in this book. So that's kind of the foundation of me as an investor.

43:41And then specifically for how we allocate in crypto, it's really to play these cycles. So I want to be fully risk on and get into some good positions kind of in the latter half of the bear market, which is where we're at now. So we've been allocating into our portfolio now and trying to get into good positions, and then play the cycle essentially. So, yeah, buy low, sell high, play the cycle. I like sort of going risk off after a three- or four-year period, because it allows me to book some gains and also sort of re-underwrite the thesis. Every three, four years, lots of things change, new projects come to market, we're going to have regulation, there's a lot of things happening when you're in a new blue-ocean market, a new industry. So I like getting into things that I can have strong conviction in, ride that cycle, and then kind of reset and re-underwrite everything. I'm really bullish on crypto right now, just because I'm kind of contrarian. So I get more bullish when everyone else is getting more bearish, generally. But I just think that crypto is kind of forgotten right now. Everybody's focused on AI, everyone's focused on other technologies, other commodities, other assets that have performed well. But there's a lot to like about where crypto is going. I think the same things that drive the crypto markets in terms of liquidity, innovation, venture capital investment, entrepreneurs coming into the space — I think all of that is actually going to be increasing. And after we get regulation, there's going to be a higher-quality builder that wants to come in, because they know what the rules are and they can come in and be really creative and build some interesting stuff with new business models on this new infrastructure. So, yeah, very bullish, but basically playing the cycles. And then we have a framework with all of this data and the instincts from being investors over the years.

45:33And do you only switch between long positions and cash, or do you also short the market? — Yeah, sorry, good question. So typically 60 to 70 % Bitcoin in the portfolio. And then the stuff that's not in Bitcoin is in these key themes, sectors and assets that I was talking about before. We may come down a little bit on the Bitcoin position in this cycle, not totally this year. We were thinking about possibly allocating to privacy, if we got a fat pitch — I call it a fat pitch when there's a buying opportunity in the market. So yeah. And then in terms of shorting: no, we do not short, have never shorted. I don't have a view on what's going to happen in short time periods. I can have a view that, okay, the market's peaked and the risk is on the downside from a long time horizon, but if I wanted to put on a short — when I said, hey, I think we're going to 65K — you could just get your face taken off by a little 5 % rally that just takes you out. No edge in predicting short-term behavior in the markets. So I do not short. I don't put on leverage for that reason. I think you don't need to put on leverage in crypto, because the markets are volatile enough. And we tend to always have a percentage of our portfolio that's in what I call high-beta assets. So things that, if Bitcoin goes up 10 %, these things will go up 20 %. And that's basically free leverage, is kind of how I think about it, without any of the liquidation risk. So, yeah, no shorting, no leverage, just long only and focused on the cycles.

47:10Are you also an active DeFi user? Are you using protocols or something like that? — Yeah, so, active from the perspective of an investor doing research. So I'm on these things, playing with them. If I'm going to invest in a project, I will go use it and make sure I understand how the product works and feel what it's like to be a user. So it's more from a research perspective. I don't have a lot of capital sitting in DeFi. I'm not doing any yield-farming strategies or trying to do Delta-neutral strategies. There are investors like that, that's a way to make money in crypto, that's just not our style or our strategy.

47:14Yeah. Okay. So you're also the author of the DeFi Report, the only paid newsletter that I personally subscribe to. — Thank you. — And why did you start your newsletter, and why did you focus on crypto only, or on DeFi in general? — Sure. So the DeFi Report started — it kind of became a business somewhat by accident. And maybe I'll just give a little background on me. So I started getting interested in crypto — the first time that I became interested, and I remember specifically when it happened, was in 2013 with Bitcoin, but I didn't act on it. I remember thinking, wow, this is interesting. It was in the news because there was the first bull market, I think Bitcoin went to a thousand dollars or so. And my dad's a gold bug, so I've always kind of understood gold as an investment and why gold matters. I've always understood just how money works. And so when I saw the digital currency, this digital payment network, I thought that was really interesting. And I remember I brought it up with a few people, and people just thought it was a scam or something. So I kind of just forgot about it. But then, fast forward four years, I was working at MIT's endowment — my background's in accounting and finance — and I was on campus at MIT getting to interact with lots of interesting people. And there were a few people in our office that were into Bitcoin, and now this was the second bull run, so now you're up to 20K on Bitcoin. And I started to pay a little more attention, started asking about it with some of my coworkers, and took an interest, but was not investing in it at this time.

49:05I was doing a lot of entrepreneurial side hustles, things like this. I've always had the view that I was not going to work at a corporate job forever. So when I started to realize that there was lots of data that could be tracked — and that was my background, accounting and finance, studying data all day — that was when I really started to build conviction. This is now 2019, 2020. So during COVID, I started to have a lot more time and got access to the data. For me, as somebody with an accounting background, the fact that these public blockchains are basically accounting systems — that was very easy for me to see, how valuable having a decentralized, secure system to account for all the world's assets and reduce settlement times, all this, that was very obvious to me. So it was clear to me that it wasn't just Bitcoin, it was Ethereum and all these other things that were going to be big too. And then the thing that really got me going was that these are public data networks. So anybody can access the data on them. And so I just started to go really deep. And I thought, okay, if I can get really smart about all this data on these networks, that's a clear edge, right? I don't have a clear edge in the stock market as a little guy, but in crypto I could have an edge just by working really hard and getting access to that data. So that was kind of what started it.

50:57And it was just a process. I mean, it was probably one of the most interesting periods of my life, where I thought that I had some knowledge, based on the fact that MIT had a Digital Currency Initiative, they had a famous Bitcoin club at MIT. And I knew that all this data, all this venture capital, all this interest in the space existed. So I had all that knowledge. And then I would go out and talk to my friends and family, who are smart people working in tech and finance, and the feedback was just insane. People thought I was crazy for taking it seriously. So that was probably — I don't know if I'll ever see an opportunity like that again — but it was so clear to me that all these smart people don't know what they're talking about, they're just reading the headline on the news. So that was kind of, okay, I can invest in this, and I could probably build a business by sharing all this data and things like that. I started writing on LinkedIn, just for fun and just getting feedback, and it just kind of took off over time. And we've kind of established ourselves as one of the go-to research data businesses in crypto. I think we have a pretty strong institutional subscriber base, which is really awesome. All the top businesses in crypto — the Fidelitys, Franklin Templetons, BlackRocks — all their research teams are reading our reports. But that's not really who I'm serving. I like to be able to serve a broader audience. So we also serve just the regular guy working nine to five who's into crypto and just wants a trusted source where you can get high-quality access to information.

52:31So it's kind of evolved over the years. We started as consulting. Now it's a subscription model, where we give people access to our portfolio, we share trade alerts, and we share these weekly cycle-awareness reports. And it's really just growing as a subscription model, where it's almost an alternative hedge-fund model. Like, we've been approached to do a fund multiple times, and I've put together teams multiple times to do this, it's just having the right partners. And I actually prefer to just manage my own capital. And this allows me to manage my own capital, reach a much broader audience, and almost offer that as a subscription model where our subscribers manage their own money. So they get access to what I'm doing and they can incorporate some of what I'm doing. Some of them disagree on certain assets or whatever, but they get value in just understanding my views, my perspective. And then some of them are just using it as an easy button to sort of build out their own portfolio. So it's kind of an alternative model to a hedge fund that really works for me. And I enjoy reaching a much broader audience and doing it at a very low cost.

53:37And how often do you publish your newsletters? And what would you say are the main differences between the paid version and the free version? Because you also offer a free version, right? — I do, yeah. So every Wednesday morning, 7:15 a.m. Eastern Time, we publish our weekly cycle-awareness report. Those reports are mostly geared towards high-level Bitcoin on-chain data, current-conditions data, everything you would want to know about where we're at in the cycle and what's going on in terms of speculative activity in the current environment. We also fold in a lot of macroeconomic analysis into that. So we have a view on what's happening on macro, also Bitcoin, and that tends to be the guide for risk on versus risk off. That goes out every Wednesday. Pro members also get access to our portfolio. So full access. We share alerts through email when we make changes to our portfolio. And then the free members — we have something called the watch list, which is a curated set of crypto projects, crypto equities, investable projects, that we've initiated coverage on, where we build dashboards internally on all of these projects, which are fantastic. I think they're some of the best dashboards. We don't charge for these, these are free. Other data companies charge 300 dollars a month for what we give away for free. And so we have all of this fundamental analysis on about 35 projects that we think are investable that we want to be monitoring.

55:00And so the Friday reports are fundamental research reports that typically cover a select asset in the ecosystem, possibly something that's in our portfolio or something that we may want to include in the portfolio at some point. So the free members get that, they get access to the data dashboards, occasional free research, and then the pro members get access to the portfolio alerts and then everything else that's included in the free model. So, yeah. — So, guys, you can find a link below this video in the description. You also get, I think it's 20 % off the paid plan, the plan that I've subscribed to. And, well, I'm definitely going to not only follow your newsletters, but also your YouTube videos. You're right now also active on YouTube. So I'm also going to link to your YouTube channel, which is pretty new, about five or six months. And I've seen probably every single video of yours. So it's really worth it. So, people, check it out.

56:06And with that, maybe one closing question at the end. What's something you think, or an opinion you hold, about the crypto market that probably most other crypto investors disagree with? Like, one really controversial topic or opinion that you have that most other crypto investors don't? — So I'll give you a couple. And this has become part of how I invest. What I do is I want to go out and get really smart about something that I think is interesting and potentially an investable opportunity. And then what's nice about having an audience on social media, or being able to talk to other investors in the community, is, hey, what are your thoughts on this? Like, I've already done a lot of research, and then I want to get people's thoughts. And then I kind of track what the naysayer views are on whatever topics. So one thing that is very contrarian, and this is specific to crypto markets, is Worldcoin. Worldcoin is one of these ideas that people in crypto are extremely skeptical of. I think part of that is because of Sam Altman — people don't like Sam Altman, they don't like this idea of the iris. And so, if people are familiar with what Worldcoin is, it's like a digital identity solution that's designed to help you tie your wallet address to your human identity. I believe this is going to be one of the biggest use cases in the world of AI for the internet.

56:30I think almost every single Web2 application is going to have to have some sort of identity solution like this, because you can imagine a world where there's just too many AI bots. I mean, Twitter is already sort of like this. Imagine a world where Twitter could just offer a version of Twitter where it was all verified humans that are interacting, instead of all these bots. I'm pretty sure every Twitter user would want to be on that platform. They're already working with online dating businesses, things like this, where you need to verify humans. So I think this is a really interesting company. There's also risk and plenty of things there, but the pushback that I get when I talk about Worldcoin from crypto natives is really visceral. They hate the iris, they think that Worldcoin's storing the data, and these are all things that I know are not happening. So the perception is that Sam Altman's just scamming people and they're going to steal all your data. I don't think that's what's happening. And I think it's an interesting use case when you think about the addressable market for something like that in a world where AI is proliferating more. So that's one contrarian idea.

58:44The other one — we talked a little bit about this earlier — is kind of the idea on meme coins and just what meme coins are from a social, consumer, retail-experience product perspective and why people like them. Rather, what I find with crypto-native investors when I talk about meme coins is there's a visceral reaction. So I always pay attention: when does somebody have a visceral reaction to something, where it's just their gut instincts doing something, right? So almost every crypto investor has this visceral reaction to meme coins. And so they have a view on meme coins, but they don't have a view on meme coins as an addressable market, meme coins as a product, in terms of the actual market for meme coins. They're not seeing the world as it is, they're seeing the world as they are. They don't like meme coins, therefore meme coins are bad. And they're just being intellectually lazy, in my opinion. So I look for these types of behaviors in the market from smart people, right? These are smart people, and I respect their opinions, but I'm looking for things like that, where I've got a bit of a different view, and I have data that backs up my view, and I think I sort of have an edge or see something differently. So those are probably the two. A lot of things become consensus. If those two things become consensus, I will probably be exiting the market when they become consensus, right? That's how you have to trade these things. Bitcoin is not as — I can have conversations now with my friends and family about Bitcoin and they don't think I'm crazy anymore. So there's probably less upside to that trade. And that's how you can kind of assess some of these things. — Awesome. Michael, that was super helpful. Thanks for taking the time. And guys, if you want to see more of Michael, let us know in the comments. And with that, have a good one and take care. — Thanks for having me, Kevin. Thanks for having me, Kevin.