Metals Crash & Bitcoin Breaks $80k

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Jonah, I was just typing a tweet. Come hang out with us and commiserate. It's pretty bad out there, isn't it? It's nasty out there. I always feel bad saying this, but I did say it was the worst looking chart I've ever seen.

Which chart? Bitcoin. The Bitcoin chart was disgusting. I was like, "Ah, maybe you should buy 85." But the moves so far have been pretty violent.

Actually, if you go back to the original buy zone that was outlined a few months ago, that original buy zone was somewhere from 71 to 77. That was sort of the ideal, like I buy a ton of Bitcoin here at these levels. And we're kind of here now.

When I said the chart looked nasty, I said I was on the sidelines. I was waiting to see what happened. And then the move happened so fast that I haven't had any time to buy.

But I think this level, this 78k level, we got all the way down to 74. This is what you wait for as a trader. This is what you wait for as an allocator. This is what you wait for as an investor.

You're down 40% off the highs in Bitcoin and things are starting to look very attractive from a risk-reward perspective for long-term allocators and that's really the key. I also don't think you're probably not getting a ton of old money selling here.

If you have money in the system, if you have cash, I think this is where you're supposed to be deploying it. Things are starting to look cheap, and Salana's defending that $100 level. ETH really got absolutely nuked on high volume.

I'm probably not a huge fan of ETH here, but I'm a big fan of Bitcoin. I'm a big fan of generally all the altcoins that we've been talking about and I think this is if not a good time to allocate for the long term. I mean this is a phenomenal trade, right?

The risk reward on this trade is great because I think you can get back up to 90 on a balance and you can cut below 74 on a drawdown. So the risk reward as a trader looks good as well.

What do you think?

Yeah, I like that. I mean, I think it's about to get insanely volatile here. I can't tell. So, first of all, the four-year cycle is broken because the previous bull market only lasted three years, and we're definitely in a bare market right now. This is bad.

So, we've been trading down pretty much in a straight line with a couple of bull traps since the highs last year. So, I guess, let me just pull up the chart here.

Really?

Really since October 6, 2025 was the high. And basically we've been straight down on a daily chart. We've been straight down 40% with that consolidation period from the 21st of November up until January.

Again we thought that we own our dubs and our L's on this podcast. I thought that the beginning of the year would lead to a more sustained rally and then when we retraced that rally and we got back into the range, I started to say this is one of the worst things I've ever seen.

That's actually a pretty good I'll show you an example of this actually because I think it's useful to understand as just a general chart pattern and psychology. I'll show you Let me pull this up.

If you establish a range like this, this was a range for some time here, right? You establish a range and then you break out of the range over here and then you go back inside. That's a really bad sign. That's always a really really really bad sign.

You don't want that. You don't want to see that breakout and then failed breakout. What that normally means is that everyone that sold during the range, starts to buy the breakout, and then when you go back in, everybody panics that you didn't break out of that range, and then they all sell at the same time, and that forces a break of the low.

Actually, it's funny because the same basically the same thing happened happens here, right? It's like it happens pretty frequently. Let's go to a weekly over here. You have you have a range set here. You have this false breakout right here. You go right back in and then you collapse.

So that's that's Go to your original drawing. Go back to the daily chart and go to your original drawing.

Let me just This one?

Well, I can draw it again for you.

This is what I was talking about over here. Yeah, basically like the little head fake above a range and then just like a little little head fake above a range and then you go right back in. That's never a good sign, is it?

That's always a bad sign just for markets in general. Now kind of I'll show you I'll show you one more thing you should be paying attention to just as a trader if you're thinking about how to buy.

Generally what happens here is you get you want to look for volume. You want to look at volume here. We sort of had our first drive out of the range, our second drive out of the range, and our third drive lower.

And the volume's come down a bit. You see how this over here the volume was a lot higher. And over here the volume's a lot lower. That signifies that we're I think in the middle of forming a bottom.

So what you want to look for is you want to look for somewhat of a retrace here. You never ever ever want to buy on a bounce up to the previous consolidation. This is probably going to come down.

Like my guess if you're short-term trading, my guess is you want to buy around 75 to 77. You don't really want to buy 78. If you're if you're a short, this is strictly if you're a short-term trader. If you're a long-term investor, buy here, and just hold a position.

But maybe what you want to do is you want to layer in some ladders. You want to like lad it in down here if like these are representing orders. That would be what I would do.

Right.

Okay. Fair enough. I mean, yeah, I kind of agree with all that. Let me let me start with a bit of cope.

Okay.

One thing that I've noticed.

What's that?

Start with the cope. Let's start with the cope.

Gold, the indestructible metal that we thought was eating our lunch is off 22% in like from the highs. And basically if I pull up the daily chart, it peaked on the 29th of January and then at $5,600 an ounce and today it hit 43.99. So that's a 21 a.5% move in one, two, three candles.

So my cope slash I think relevant observation is that there's something bigger going on here than crypto just spiraling while everything else proceeds with business as usual. I think that's an important distinction to make.

The stock market's nuking. There's sort of like a broader riskoff move happening. So we can't just look at Bitcoin in a vacuum and tear our hair out and decide to rage quit the industry, move on to other stuff. Other stuff is in bad shape, too.

It's important to notice that. The second thing is like we've had a 40% move in Bitcoin over the course of October 6 to February 2nd. We've had almost half that move in three days in gold. So, I think we've had and we've had more than that move in silver.

How insane is that from?

Look, we were talking about this on the last podcast and you you were super bearish on metals. You're like, "This this is all retail mania. This is all nonsense. This is all crazy." And my response was, "I agree on silver, but I don't know about gold." And then both gold and silver totally just nuked themselves.

Well, I will what you said specifically, if I remember correctly, is you said that when the unwind happens, it's going to happen really fast because every everyone is going to nuke their positions at the same time because you can't it's very difficult to hold on to gold and silver is a long-term investment unless you have like a 10-year thesis and basically nobody buying gold and silver at these levels had a 10-year thesis. They were all just in it for the FOMO trade, right?

So yeah, I mean basically there was another thing I said. So I will own a dub here. I did say don't buy metals when metals were on the highs when we were talking about it last week. I cautioned against that. I said I don't really know when it's going to top out, but when it unwinds it's going to be ugly.

And the unwind's not going to be short. And here's why. We talked about CTAs last week. I don't know exactly what moving averages they use or what speeds they use or how complex the math is, but like we're, you know, we're definitely below the 50-day moving average in silver and maybe and gold.

Probably below the I'm not pulling up the chart here because I'm talking, but like probably below the 100 day moving average in at least silver and then 250 would be the longest one. I doubt we're below that one yet, but basically once you start to cross below those moving averages, a CTA is going to start to flip and sell what it's long.

And these CTAs are probably long, gargantuan in size. And another thing that a CTA will do that's very important is and you know you have to know what the part what the flows are in your space in order to trade something appropriately. Like a CTA they basically volatility adjust their their trades.

So they attempt to keep their variance constant. So what does that mean for somebody who hasn't worked inside of a trading firm? It basically means that they want their daily P&L variance, like the number by which their P&L moves every day in each asset to kind of stay consistent, right?

They don't want to have like three years of $10 a day moves in their in their P&L in gold and then suddenly for, you know, six months they're having like hundred million dollar a day moves in in gold in their gold portfolio. They want it to be smooth over time.

So basically what they do is when an asset is less volatile they trade larger size and when an asset is more volatile they have to reduce their size. Right? So basically as gold has been ripping they probably accumulated gargantuan size from it just being this incredibly smooth thing that was just moving up a little bit every day.

I think for most of this gold rally it was still less volatile than oil or natural gas or Bitcoin. It only started to get crazy volatile at the end. So maybe they would have taken a little bit of profit when gold was like melting up just to reduce the size of their position from being just to keep their variance constant.

But now now that you're getting like the wildest volatility that we've seen in my entire life in gold to the downside, the CTA is basically saying, okay, I the model's telling me I have to sell because I'm below moving averages, but the model's also telling me that I have to reduce because the P&L volatility is too extreme. I have to downsize my positions.

That's a double whammy. So basically that unwind like that's not that's not they're not going to go and vomit that all in a day. They have armies of quants basically trying to figure out how to reduce slippage. The last thing they're going to do is say right we're long like a third of the open interest in silver. Let's just go liquidate that this afternoon. No, they're not going to do that.

They're going to basically they're going to be selling for a long time. they have a long long way to go to get out of all this risk across all the precious metals, gold, silver, platinum, palladium, whatever else.

So, you know, the the initial kind of move here in silver and gold was very vicious. But I don't think this is a time where you want to like catch the falling knife. The biggest participants in these markets aside from central banks who will not be selling here. They'll probably be buying more if anything or or pausing and feared like the rest of us.

The biggest participants that'll actually be actively trading are far and away the CTAs. And I would guess they're like they're probably 25% of the way through the wood. They have to chop if that.

Does that make sense?

I think that I think that makes a ton of sense. But that that doesn't that doesn't bode well for the retail that is, you know, got got caught up got caught up in this trade.

I mean, look, to be honest, I've never retail that listened to this podcast wouldn't have gotten caught up in that trade.

Yes that is that is true because there was there there were a lot of warnings I mean we basically spent half the podcast talking about how nuts this silver move is and how it's entirely driven by by retail FOMO and what was kind of interesting is that I sent this tweet out a few days ago that said crypto has really trained me to trade retail FOMO and extension and insanity

And one of the big correlations actually is there was apparent there's apparently a silver ETF trading in China that was trading at a 42% premium to to to the underlying futures were going were going were going totally nuts. And that's basically exactly how we thought about trading Bitcoin in 2021 with GBTC and futures is when Bitcoin is going into pure euphoria mode, you look for retail products that are trading at a premium to the under to to the underlying to get a sense for how much craziness is actually in this market.

If futures were not trading, you know, I if if demand for leverage was not high on silver, if ETFs were not trading at a massive premium, then it's much harder to say that there's euphoria. but they were and then the thing starts to collapse and that really started happening after 80 like that that's really where silver I think went totally nuts is is is is after $80 all these all these statistics started to started to blow out and at that point you got to say to yourself as a crypto trader I've seen this I've seen this before like I know I know exactly what retail euphoria looks like another great another great little little thing is whenever people feel really comfortable clowning on the on the Bears.

So, like Mike Alfred, by the way, kind of an annoying guy, but he did tweet out, you know, whatever. He's got he's got his quirks. Um, but he did tweet out, I'm taking a silver short, and every single comment, Jonah, every single comment is, "You're an idiot."

And that's only normally 30% of the comments on Mike Alfred tweets, but it got to like 100%. And so when when that quantify that and make an indicator, yeah, the the the the Mike Alfred hate indicator was like at 100%. And so I saw that and I was like, "All right, maybe this guy's going to make a lot of money on this on this silver short."

Um I unfortunately did not make a lot of money on the silver short because I was not I was not confident enough to hold it for an extended period of time. However, uh I do think that now is not the time to be short metals anymore. Now actually offers you I like to set up trades on this podcast.

And my setup was guys, I'm really bullish on critical rare earth minerals and I'm really bullish on uranium and I think these have mega trends driving them forward and a nuke and a pullback. We said that we were talking about this when silver's, you know, trading like 110 or something.

If silver and gold go down a lot, if it all collapses, that's going to give you phenomenal entries on these other metals that were sort of even the RMX is just nuking, right? Because it was dragged around unfairly. I think by by these metals because there was there were a lot of people like this was classic like truly classic crypto price action where the leader runs, gold runs and then the secondary asset ETH run, silver runs and then all of the other random people just start buying it because solely they want beta to the main asset.

And so these assets got unfairly dragged around despite there being real fundamental reasons for them to go up. The other the other thing is that they got unfairly dragged up in a way that you don't really see in the crypto market these days. I mean there's huge dislocations between the alt market and the and BTC in general.

And that's because there are 10 million cryptocurrencies and they're what like 16 tradable metals. They're not that many. And so everyone was just crowding into the metals trade like buying every metals product that they possibly could.

Um and that obviously I think again unfairly dragged it around like uranium here buying uranium here the URA ETF at 53 I think is a great trade personally. Um I think buying RA RMX at 85 great trade right because because these things these these things genuinely have mega trends supporting them.

I mean, nuclear power is going to be ramped up tremendously over the next five years, and we're going to we're going to start seeing that really play out. And I think you need as a retail trader, like you kind of can only invest in mega trends because shorter term trading, you're in a rock fight with really smart people and algorithms, whereas mega trends, your timeline is just beyond theirs.

So, it's sort of white space that you can occupy. And so I don't, you know, just to the like the comments you just made, I I don't think anybody out there should feel guilty about not top blasting silver and getting short and then covering here. Like that's just impossible. You can't pick the top of anything almost by definition.

That's why it tops. It's because the buying stops, right? It's not because like there's just some sort of obvious plateau that gets shorted by everybody on the highs. You know, markets rarely consolidate on the highs. Usually it spikes and then plummets.

And you you would have had to be in there with like with such pre precision like you you couldn't just sit there and wait for your spot and then get lifted on the highs and ride it back down with confidence. You literally have to be like the the native warrior hiding in the tree with the the loin cloth and and the blow dart waiting for your opportunity like like you know it's it's freaking Are you are you calling are you calling us retail traders savages? Is that what you're calling us Jonah?

In a sense and are the are the civilized men gonna come and wipe us out with their smallpox like what I'm saying is that certain types of retail traders certain types of retail traders are savages. They are the the guy with the blow dart in the tree trying to hunt something something far larger and more menacing.

Whereas like realistically, why not just arm yourself with the bazooka that we know as like investing in mega trends and holding on for dear life and all of those good things that crypto teaches you to your point, Obby, rather than attempting to arm ourselves with the blow dart of like um using a human meat computer to attempt to top blast quantitatively traded liquid international markets like silver ETFs and futures, right?

So, basically I what I'm saying here in a nutshell is we're setting up for some a great buy. I don't think the great buying opportunity is coming yet because I think CTA selling is a feature that you you know should not be ignored and will persist for some time.

But like never in a million years would I short a market that's like melting upwards in parabolic fashion. Absolutely will I try to get into REMX. Uh, I missed my first shot because I didn't even I had never heard of it until you brought it up at which point it had already rallied too far.

But now maybe it'll get dragged down unfairly by this other stuff and it's time to buy. I put Bitcoin into that category too. Like realistically it's zooming way out. What's happening here? Like we're we're having we're having a bit of a indigestion global global macro indigestion for a couple of reasons.

The first is hey instead of that who just wants to cut rates to zero like the like the president of Turkey did even though there was a problem. I forget his name. Uh the guy that we've that betting markets were saying was going to win last December. Now it's looking like Rick No, who is it? The guy um Kevin Worsh.

Yeah. Worsh who's like he's an economist. He's not going to he's not going to run the car off like in he's not going to redline it, right? So, I don't know much about him, but like there's a little bit of like it people are sobering up a little bit. Then the second thing is this tariff thing against Europe is looking kind of bad. We're having another tariff tantrum like what we had last April.

But you you I think that's we know that's always going to be walked back. It's a screaming fate like so that's another reason to buy. Um the only reason not to buy metals specifically is CTA flow. Bitcoin though I I guess you know I guess what you're you know in the value and momentum framework concocted by one AI Felman you have value now but you don't have momentum.

It's kind of rare to have both isn't it? So maybe we're supposed to wait for it to bottom out and get a little bit of upwards momentum before we buy. Or at the very least bitcoin isn't really a CTA traded market yet I think. So yeah, maybe you buy it here, stop out at 74K and take profit at 92 and just start range trading Bitcoin in this like crazy volatile range. I don't see it going back much lower than, you know, where it is now, frankly.

Yeah, look, I I do I do think that Kevin is going to be long-term good. I mean, he, you know, I think the the issue is obviously the the short term the short- termism here is, hey, this guy this guy is not going to just cut rates to zero and he's not he's not going to be uh, you know, super super super doubbish.

But I think one thing that's very very important is is obviously that he handles the potential for inflation to come back. And that's that's why I think long-term he's obviously good for the markets because I actually think the markets would be wor it's it's like a it's a sugar rush, right? It's it's the sugar rush mentality. You cut you cut rates to zero, it's going to feel good for about half a second and then if inflation starts coming back, everyone's like, "Fuck." And then they actually things start to fall apart again.

And so hopefully the the mark the long-term market reaction to him will be, "Okay, this guy's going to be able to land the plane effectively, right?" like or or continue continue flying the plane effectively because I think drone I mean Jerome landed like he he he landed he landed the plane in turbulent weather and now you know we we we've taken off again and now we just have to proceed smoothly and hopefully Kevin can can do that as opposed to trying to take us straight up and then inevitably crashing the plane.

I know is an it was an extended plane analogy but you guys understood what I was talking about. It basically would have like the whole economy every every chart could have looked like the silver chart. Yes. You know like and that's actually really not what you want at all. Like you you really don't want a chart that looks like that because it's scare it really scares people from buying an asset when it goes down 40% or you know 20% in 3 days. That's that's a scary thing.

Now, I happen to believe personally that gold is coming up on some pretty damn good buy levels because if you look if you look at the if you just look at the chart, uh I'll just pull it up. This is this is very simple. I think that prior to breaking 4,000, gold was advancing at what I call a healthy clip, right? It was a very steady rate.

And anytime you got too far away from this trend line, you would inevitably come back down into it. And that's what happened here, right? You get you just get too far away from this trend line. The distance the gap here is too large and you come back down because my view is still very much so central banks will continue to accumulate gold. people are still going to continue to diversify out of US equities into into into gold and we're going to see gold at much higher levels over the next three years.

But what we're not we we're not going to see is gold go up, you know, go up 22% in just basically two weeks. That's obviously unsustainable. That's that's a that's a very very very unsustainable clip. I think we're we're getting back to the levels where you can start to get into gold. Like if if gold trades at 4500 for example again uh in in the in the coming days I'm probably buying buying a gold position because that that that means it's advancing at a healthy clip still.

Yes, I agree. But let me let me just quickly put in a it's a little bit of a tangent, but I think you and the listeners will appreciate it. So here I know some precious metals hedge fund guys. It's a it's a niche, right? like there aren't that many of them because it's it's not a big enough market for you to kind of have all-weather P&L. There are like entire decades where the precious metal space is super uninteresting.

Anyway, those guys have been in party mode for two years. They've been crushing it. Basically 2024, precious metals were grinding up every day, right? Then anybody who was a precious metals hedge fund trader, hedge funds don't give you a lot of elbow room. You know this, Obby, right?

No, I'm I'm I'm well aware. They don't let you blow up. So basically 2025 rolls around. Anybody who's still in a precious metals seat at a hedge fund has been is a bull, right? Like because 2024 took all the bears and uh led them out back and shot them in the head, right? So 2025 is just bulls and not not just like not even thoughtful bulls just like like like being long and not even thinking about it or maybe how can I get leverage being long to try to get paid more.

Then 2025 gold goes insane, right? And silver and these guys are probably expecting the biggest bonus of their lives. like they're probably pre- buying Mediterranean villas and expensive cars and uh doing all the things that hedge fund guys do, booking vacations on yachts they can't afford. Um we've all we've all been we've all known those guys, right?

Anyway, I've even been to a couple of their parties. They suck. Gonna say known those guys, buddy. I've been that guy. You've been a precious metals hedge fund trader. No, I'm buying buying buying the yachts. I probably shouldn't have.

Fair enough. Anyway, so my point is your your 2025 bonus at a hedge fund, they rarely like wire you the cash on January 1st. Usually they'll make you they'll like communicate the bonus in January and then it hits the bank in February, right? By the way, that's one thing I loved about the last place that I worked is that they paid you out on January. It was insane. is like the most because every every other hedge fun I've ever worked at they you know it's like March like February or March.

That's right. Yeah. Like that's how most places do it because what they want to do is say like okay like we want you to get to you know the next year off to a good start and then the big ones like you know Blue Crest or sometimes Millennium they'll like hold a little bit of your bonus as a reserve in case you blow up.

Well, almost almost all hedge funds that I know of now, the way that they structure P&L is that they're gonna take like at least half, if not 66% of your bonus if it's over a certain amount of money, and they'll pay it out to you over three years.

So, so, okay, now we pull up, hold on, let me share my screen here. Now, we pull up the gold chart like Okay, so you're expecting your bonus in a couple of weeks, right? It's the beginning of February and it pukes 20%. The reason why this move is so exaggerated is because hedge fund guys were obviously still long in 2026 because this is January, right? Like obviously they're partying expecting a huge bonus and expecting another huge bonus in 2027 in February. They're all still long.

This is all of them getting stopped out at the same time, right? Hedge funds have pretty tight risk limits, too, which none of them ever would have been triggered on this smooth as smooth as ever rally up here, but like they're all getting stopped out now. And that's part of what created this move.

So where that leaves us is this an entire community of precious metals traders is not only not rece if they still have jobs they're not receiving a bonus in 2026 they're they're negative gargantuan money on 2027 and as you know Obby it's impossible to claw yourself out of a hole at a hedge fund because they cut your risk right they're like oh you had a 10 million VAR and you drew down to X all right now you have a three million VAR and you have to climb out of that yeah good good luck.

I always thought that was so funny. It's like, yeah, it's like you lose you lose money and then they're like, well, luckily I didn't really have to deal with this, but you know, you you see it around you see it around you. So now none of these guys are going to get a bonus for 2026 paid in 2027 either. They're getting no money until 2028 at the earliest when when they were, you know, and so at basically what's going to happen now is that this is this is going to be a feeding frenzy for the head hunter community.

This is when all the gold traders are like, "Oh, he's, you know, the head hunters are like call calling up the senior traders at various firms like," oh, oh, this guy, yeah, he's got huge P&L, massive, massive trader. He's not really looking, but you know, this might be a, you know, he'd consider a good offer if you showed him one. And then by June, it's like these guys are basically moving places for free because there's no other way out of the holder in at their current shop.

Basically, it's it's kind of it's from a Shaden Freud perspective, this this gold chart is kind of hilarious to look at the behind the scenes stuff because basically we you know, you know, there's like a bunch of a bunch of commodities traders who are going to be changing jobs and not getting paid for three years. It's always hilarious to watch.

Well, time for time for fresh blood. We'll come back to we'll come back to talking about that after we hit this this ad break.

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Welcome back, guys. You know, one thing that I was very proud of on the last uh on the last pod is calling the literal pico bottom of Hyperlquid, which was done almost entirely by mistake.

Good one. I just I was just looking at the was looking at looking at the supply. I didn't know that that like I I did not know that they were going to cut the supply that were was handed out to team members, which I think is a huge reason for the rally. But what I was aware of is that their volumes on real assets are trending up massively because HIPP3, right? They're they're trading they're trading silver hundreds and hundreds of hundreds of millions of dollars traded through their silver and gold products. Bill more than a billion dollars between between the two of them easily. Uh and they're really really turning into a genuine competitor to to the NASDAQ, right?

They're running a lot of volume, Jonah. And and not only are they running a lot of volume, it's so easy for anywhere, anyone from around the world to just go deposit money onto Hyperlid and trade any asset that they could ever possibly want in the next year or so