New Fed Chair, Gold, Silver & Crypto Tank! Where Will Markets Go From Here?

Bless nation, the big question everyone is asking is where in the heck do we go from here? It's not looking great out there. Crypto is down. Everything else is up. What is happening in this cycle? How long will the pain last?

We've got Michael Nato on the episode. You guys know we've been doing these episodes on a monthly basis or so, trying to dig into the cycle fundamentals. I want to find out what Mike's forecast for the rest of the year is. Also, there is a new Fed share. His name is Kevin Worsh. How does this change things? And stay tuned till the end where Mike, I'm going to ask you for your entry price predictions. I know you're not a buyer yet, but you're going to be for Bitcoin, ETH, and Salana.

Michael Nato, is this it? Is this the blood in the streets we've been waiting for?

That's the big question, I think, out there right now. We recorded an episode last week and I said that we were sort of in no man's land, right? Trading below support around 93k or so above like critical support at that 80k line and last Friday we ended up breaking down from 80 and we've dropped about 15% or so from 90k last week.

And I think that's the big question. There is some blood in the streets. Where my head is at in terms of where we are in the cycle, where the markets are at is that up until last week, I think if you had a bull thesis, you could still sort of hold on to that. I think the bulls still were willing to say that the market could reverse and the momentum could reverse.

I think now going into this week, there's probably less bulls out there and there's probably more acceptance in the market that this is playing out how crypto bare markets typically do play out. And so I think that's where we're at.

So I'm not ready to say we're hitting a macro low for the cycle just yet. When we do go there, you know, I expect that it will take some time, right? I don't think once you go to a macro low, it's not like there's all these buyers that are just ready and then it just takes off, you know, once you hit that low.

So, in the last cycle, we had 3 to four months of period where Bitcoin was actually trading below its realized value. So, on **MVRB** of less than one we are still at like 1.4 today. And so and even in going back to the cycle before that, you also had like a three to six month period where you know you get these really fantastic entry opportunities.

So I think we made a lot of progress just you know the last week or so of kind of like where are we at and I think the market's starting to to accept you know a lot of this but I'm not ready to say that this is like a macro low just yet. We can kind of get into that I think in this episode.

All right. Well, there's blood in the streets, but maybe not enough blood for Mike yet. He's not yet a buyer. We'll find out where he is a buyer, but we're certainly no longer in no man's land. We are somewhere else. We are maybe in one of the seven layers of hell right now of the bare market. And that's what people are feeling on the week.

So, let's get into all of that and more. But before we do, want to thank our friends over at Kraken cuz they just dropped something cool. You can make yield at any time, whether you're in a bull market or a bare market. The product is called **DeFi Earn**. So, this is the easy button for **DeFi**. It brings onchain rewards right into the Kraken app that you're already using. You don't need a new wallet. There's no seed phrase, no manual transactions.

You guys know on Bank list, we talk about the **DeFi** mullet quite a lot. This is Kraken's **DeFi** mullet because they're using **DeFi** and a set of vaults in a protocol strategy behind the wallet. This is all administered by **Veta**. There's rewards for this as well, so you want to check that out. And the yield is variable, but it's up to 8% right now. 8% APY. That of course is not guaranteed. It does fluctuate, but some fairly fantastic rates.

So, this is **DeFi** yield without the headaches. If you want to go check this out, there's a link in the show notes. You can find that at bankless.ccraen.

Okay, let's get to the prices on the week. We are at 78K on Bitcoin at the time of recording. So this is not feeling great on the month. That's about 12% down. Ether down about 23% on the month. Mike, I gave you a shout out on Twitter earlier this week because you've actually been calling for these numbers for quite some time, at least since the end of October when you made some when you made some moves with the **DeFi** report.

And I called you the most correct cycle caller that I'm following closely. And you know that is true. You've been talking about Bitcoin at 65K since the end of October. And I want to recap for folks that maybe have missed some of our previous episodes on Bank list. So the end of October you pivoted to cash. Actually you pivoted right before the 1010 event into you know majority of cash and then you further pivoted later into October and you did this because you saw some things you call them cycle fundamentals or cyclmentals that were signals to you that the cycle the bull cycle was over.

What was the main thing you saw back in October that caused you to pivot to cash?

Yeah. Uh, appreciate the shout out, Ryan. And, yeah, I think, um, go if I go back to sort of September October period, you know, we were kind of coming out of a period where we had sort of a DAT a DAT season and and risk on was was in the market. We didn't peak on euphoric like a real euphoric period like we did in 2021, but it was a risk environment in terms of you had uh, DAT season. So you had lots of new treasury companies buying Bitcoin, putting that on their balance sheet. You had the same thing happening with lots of companies doing the same with with Ether. We even saw like a longer tail of all coins.

And I think what happened was if you have a price agnostic buyer coming into the market like that, what it does is it gives traders or people that are putting leverage into the market sort of a free pass to do that when when they know somebody's in the market bidding up the tokens. And so we did have a pretty big move in a lot of altcoins. ETH that was the period that ETH did really well. And then Bitcoin ultimately got up to about 125K or so.

And the reason I started to get nervous was just that the the amount of leverage that that we were seeing build in the market. And at the same time, you sort of you're you're developing like what what I view as like a little lopsided, you know, market structure where you have all this new money that came in over the last year. You have long-term holders and sort of like OG investors that that have been in Bitcoin for for you know up to a decade. They are degrossing. they are exiting the market at the same time that you have sort of this what I would call more of like a weakerhanded market structure at the top with all the leverage.

And then you had all these narratives that I was kind of starting to disagree with. You know, just this idea that Trump is just going to pump the market, there's a new Fed chair coming in. And which we can get into in this episode. I think there's a lot to discuss there. But I think a lot of the narratives I was having trouble aligning with those narratives.

And then when you look at the lopsided market structure and sort of a reduction in demand right from the bottom up to buy Bitcoin, you know, that was kind of what what made us go risk off at at that time that you know looking back now that looks like it was it was the right call.

After we made, you know, after we sort of went to risk risk off, the next question is okay, where are we going? How do we get there? you know, we've been targeting a fair value of Bitcoin at around 65K and you know, over the weekend we got down to 75K or so within four months of that call. You know, bare markets in Bitcoin have typically, you know, lasted up to a year or so. So, we're about four months in.

And now we are in sort of what I think is potentially a new regime with this new Fed president uh or new Fed share that's going to be coming in. You know, what does this mean for some of these price targets that we've been putting out there and we're doing some of that a lot of that work right now.

Okay. So, let's talk about maybe where we are now. And I know um you entered January, of course. Uh you had a post that was uh risk on or risk off for your outlook in 2026 and you were definitively on the the risk off side of things for for for crypto. So, I've kept 80% in cash. Um, now let's talk about where we are now with this Fed chair and maybe some of the macro fiscal types of things that you're seeing in the data.

So, Fed chair first, his name is Kevin Worsh. This is the Trump appointee. I believe he's coming in uh April, but Trump just announced Kevin as the incoming Fed chair uh late last week. What's your take on him? And has it adjusted any of your predictions for the rest of the year?

Yeah, so uh still processing this. You know, I I think I was kind of lucky that I I had spent a decent amount of time just, you know, looking at some of his interviews. He was the one I probably had the most information on uh before Trump picked him. So um you know, I think I think this is this is an interesting moment here. Uh so Kevin War, he's 55 years old or so. He's a little bit younger. He has served as a governor on on the Federal Reserve Board. He did so when he was 35 years old. He was the youngest to ever sit on as a Fed governor. He has been an adviser to uh to the the White House in the past. He um he works with Stanley Denmiller at his family office currently and he teaches at at Stanford.

The reason I think the markets sort of sold off when he was announced, you know, on Friday last week and and gold and silver in particular uh really sold off.

Wait, wait. So what what did happen on Friday? I wasn't paying attention. So I know gold and silver sold off. I don't know if that was, you know, Kevin related or not, but did other markets sell off as well?

The the stock market I think was down, you know, maybe maybe we should double check this, but I think the stock market was down a little bit. nothing not a huge huge sell-off. But I think the markets were immediately trying to process you know what what does this mean? And you know the the the narrative that's been in the market is that this new Fed president was just going to be fully aligned with with Trump and you know he would just come in and and cut rates to zero and um you know we would see how the market you know processes that.

I think that what we're learning more about with with Kevin Worsh and the potential policies that that he is aligned with Trump on, um, you know, I think that that he is aligned on this idea of bringing rates down, but he's also talking about reducing the size of the the balance sheet. Um, and so how do you reduce, you know, the size of the balance sheet? You know, that's that's quantitative tightening, right? That's that's the opposite of QE. It's the opposite of these policies that um the market sort of expects the the Trump Fed president to to to implement.

And so this is the big question, you know, is he is he you know, he's talking about reducing the Fed balance sheet by trillions of dollars and and signaling that to the market and he thinks the market can actually digest that and and sort of we can create a new regime here. And he's using that to say that if we reduce the the Fed balance sheet, we can bring interest rates all the way down.

And that's this is this you know my my view since Trump has Trump has come into office is that him the Treasury Secretary um they want to sort of get the government off of this like uh this like high that it's been on in terms of you know fiscal spending too much fiscal spending too much government bloat too much fraud waste and abuse and we want to transition away from a like sort of the government as the nexus of the economy to let's get rates down and let's let the the market the free market work where rates come down, demand for loans goes up and we have a little bit more of like an organic uh economy based on on lending and and rates coming down. It's good for small business.

And it sort of takes some of this bloat, you know, out of government spending. So that's been my view and I'm this this Fed president looks fully aligned with that with that view. He's talking about, oh, the Fed, you know, is overreaching. It's getting into too many different things. Its balance sheet is too big. Um, so he seems like a kind of a free markets guy.

The question and this is what I think the markets were processing on Friday. This is why gold, you know, sold off. This is why Bitcoin's been selling off. And and it's unclear what this, you know, really means moving forward, but it's not necessarily good for crypto, right? If you if you're talking about a guy who's going to uh part of my thesis was that the economy is sort of weakening here and I would probably be getting ready, you know, when when we get to like a bottom in Bitcoin, there might be some turmoil, you know, in the markets and we would probably need somebody to come in and uh do yield curve control right QE again and that's usually what gets Bitcoin and the crypto markets going.

This guy's talking about, you know, not doing that. So, you could have a situation, and this is what I've been trying to process over the weekend, where I if, you know, I think the labor market is pretty susceptible to a potential, if if we saw a drop in the stock market, a significant drop, 10% or so, um, the labor market, I think, is pretty susceptible to to something like that, and it could could create like more layoffs.

And then what does that mean? It means you're probably going to get rates down, right? Rates can come down a lot, but but are they going to do yield curve control? Are they going to do the other things, the bailouts, all the things that we've been seeing over the last 20 years since 2008? Are we go is that done? Uh, and and are we in a new regime? And it's going to be there's going to be creative destruction and things like that that we haven't seen. So, that's what I'm trying trying to process here.

We've got a a chart up right now just looking at this is a consumer confidence chart that just shows the jobs hard to get which is the blue line and the and the jobs plentiful. When the blue line is is rising and the red line's coming down when those two things meet it's typically led to a gray bar there. That's the recession. So they look like they're about to meet. You know we we'll see. But but I'm looking at a lot of labor market data. I'm looking at quits data. I'm looking at the confidence in the labor markets. And, you know, the the unemployment rate is still pretty low, but kind of under the surface, it looks like the labor market's pretty weak.

This is a chart of data center construction. Just kind of an interesting chart just showing um, you know, the massive investment that's gone into this space and it's now rolling over. And so so where where's sort of the the growth in the economy going to be? Um if if the markets process war as a hawk and we have a selloff, how does that impact the labor market? Does it lead to a recession? And then are his policies going to just bring rates all the way down? But but like there's no yield curve control, there's no buying of longend treasuries and adding to the to the Fed balance sheet. you know, what does that look like? We haven't seen this since pre, you know, 2008 or so.

What's fascinating about that is that that sounds so counterintuitive. you know, what Kevin W is saying, what his posture is, if it's more sort of hawkish on um, you know, Fed balance sheet because like I think a lot of the market thinks of certainly I think of Trump as someone who just wants easy the easy button is kind of the the perpetual short-termist just wants to juice the market as much as he can for political reasons particularly in a midterm year, right? you know, got to win this election.

And so, I mean, could there be a difference between what Kevin is saying when he's outside of the the pilot seat and then when he gets in, he basically has to do what Trump says or else, you know, he goes he he is also uh tossed out and he's no longer in uh in the favor. I I guess when you mount all that together, it's hard to know what Kevin is going to do until he's actually in the position itself, right?

But if you're right, if you're right and things are more hawkish and things are moving from more public to more private, is it a continuation of Michael Howell's, you know, global liquidity index which is like the uh liquidity is rolling over and total liquidity especially coming out of the US uh is actually decreasing on the year and that's a bad picture for risk on assets and for crypto in particular. Is that what you're seeing? Is that the net of this that it is net um detrimental for global liquidity?

Yeah, I I think so. You know, the the view has been you know, we have another chart in here too that just showing us in particular global liquidity which I think is more um more of an indicator for the crypto market. So that's that's rolling over. We we've seen the global liquidity line actually start to go up again a little bit because China there's a lot of liquidity right now in China and Japan. So kind of in the Asian markets we've we've seen them doing well and that's like helping gold we think right this is so so uh if it's I mean one shortcut for this that we talked about on the the TDR episodes is if China's printing money gold precious metals get a boost uh if the US is printing money risk on assets US capital assets crypto assets get a boost and so now we're in a place where the US isn't printing um and China is printing so gold precious metals are catching a bid, but crypto assets are not.

Yeah. And I think that's that's sort of the regime, you know, that that we're in currently. When we look at the fiscal side of things, um the you know, this is we're we're not suggesting that we're balancing the budget or anything like that, but we we did come down. So the you know, fiscal year ends in September 30th. um we came down in in 2025 and it looks like we're going to be at like kind of a similar level uh this year. So we're still we're still running large deficits but we're not increasing them, right? We're not increasing them like we were under in during the Biden years. I think what happens on the margin there um does matter.

So this is what was kind of leading into back in September October saying okay well liquidity looks like it's rolling over in the US. we saw a lot of uh tightness in the kind of the repo markets and and in the banking banking sector liquidity. Um now we have a Fed president coming in that we we you know I believe he's aligned with Trump. Uh and and that's not the question. The question is more uh what is that alignment where where does that alignment go? Because um you know it's possible he's just you think that you you think that alignment that alignment goes with uh with a downturn of US liquidity basically. You think that's what it means?

It's possible. Trump wants that. It's possible. Uh, you know, th this Kevin Washington, we're going to learn more and, you know, we're going to find out if he's um, you know, sort of speaks like a politician or if he's sincere. Um, but he's he's some interviews that he was doing even just in in October talking about the Fed needs to align with Trump's mainstream policies. We need to reduce our balance sheet and take that money and deploy it to Main Street. like these are direct quotes uh from a from the guy who's now the Fed president just 3 months ago. So he's talking like a politician talks to Main Street and to parts of the market which is kind of you know and you can imagine this is what he told Trump right this is probably why he got the job.

Um, so the big question for me and something I've been thinking a lot about is just the is the most important thing to pay attention to populism in the United States right now. In terms of we've already seen, you know, we just saw Bumdani get get elected uh in New York and he's getting elected. the the the reason he got elected is is is about affordability and and bringing attention to these these issues. We've seen Trump talking, you know, trying to get, you know, let's cap credit card interest rates. Let's get mortgage rates, you know, down. Let's let's make homes more affordable. So, you can see that he needs to address this affordability issue. Um and now he's bringing in a Fed pre president who looks like he's going to he's got the same talking points.

Um, at the same time, like Trump sort of goes both directions, right? He says he wants he says he wants to make homes more affordable, but he doesn't want to bring the prices down for boomers. Like you can't you can't really have it both ways. So, we'll see. I just think it's important to kind of let's let's take this guy at his word. Let's look at what he's saying. Let's look what he did in the past. He was against a lot of the things that came with QE and stuff after the 2008 um big, you know, great recession.

Um, so it it to me we got to kind of wait and see here. And if the economy starts to roll over and the Fed starts cutting, I like that's what I expect to happen. Like like he's aligned with Charlie, he's going to bring rates right down. But is that like when you're cutting into a recession that that's not usually uh that's not going to boost the markets right away. You're just cutting into a recession. You're bringing rates down. Um and and if he does that, what what ultimately will happen to the long end of the curve? If they think inflation's coming back and they're not going to cap that, they're not going to go out and buy the long bonds. We could have a to we're in a different regime here potentially. It's possible that he's talking a big, you know, game right now and when it comes when it comes to it, they're just going to do the same thing they've always done. You know, it's very possible.

So, uh but I think we need to be prepared for like a potentially, you know, different regime. Based on the way that this guy's talking, Euphoria brings one tap trading to the palm of your hand. Built on Mega ETH, Euphoria takes real-time price charts and projects it over a grid of squares. You tap the squares that you think the price will enter in just 5 to 30 seconds in the future. If the price goes into that quadrant, you can pocket anywhere between two and 100x your trade. No other application helps you trade faster and with more leverage on market driving events like FOMC meetings, presidential speeches, or global macro events.

Thanks to Mega E's real-time blockchain, Euphoria is the way to get real-time price interactions with the market. On Euphoria, you'll be able to compete with friends using Euphoria's real-time social trading experience, allowing you to go head-to-head with your friends. A great party trick if you project the app on a TV. It'll be like the Mario Party of derivatives. To trade on Euphoria, people can deposit stable coins from any chain or do direct fiat transfers, and everything gets converted into Mega Eat's native stable coin, USDM, in the background. Sign up for the Euphoria weight list at euphoria.inance and follow them on X at euphoria_fi.

What if you could trade gold, forex, and global markets with the same tools and speed that you use for crypto? That's exactly what BitGet Tradfi unlocks. After strong beta demand, including over $und00 million in single day gold trading volume, BitGet Tradfi is now live for all users. Inside of your existing BitGet account, you can trade 79 instruments across forex, precious metals, indices, and commodities, all settled directly in USDT. No platform switching, and no fiat conversions. This is BitGet's universal exchange vision in action. Crypto and traditional finance side by side. You get deep liquidity, low slippage, and leverage up to 500x, letting you apply crypto strategies to macro markets. New to Tradfi? Start with gold. The gold USD pair is liquid, macro driven, and a familiar natural bridge between crypto and traditional markets. Try trading gold on bitgget now at bitgget.com. Click the link in the show notes for more information. This is not financial advice.

Let's also recap where we are in the cycle from your perspective. So this is kind of a chart that you've been publishing on the **DeFi** report for the last couple of months, but this chart indicates that we're basically since October, crypto has been been in the uh the fourth part of the cycle, which is the wealth destruction part of the cycle. You have first the early bull and you have wealth creation, then you have wealth distribution. And this is generally how crypto cycles have gone in the past. And it's exactly how this one seems to be going. And now you said late last week we got confirmation that we're no longer in no man's land. Some people were still holding out and saying, "No, we're still in wealth distribution. This is just a blip." But now there's been a lot of capitulation and acknowledgement that we are squarely in the wealth destruction phase.

Can we talk about this phase for a bit longer? How long does it last? What else can we expect to see during this wealth destruction phase and what signs can we be looking at that it has bottomed and that we're about to enter a new phase?

Yeah. So, um I do think it's pretty clear that this this is where we're at now. I was sort of open-minded to potentially, you know, bouncing out of some of those those zones we were in, but yeah, it feels like we're in where wealth destruction. um bare markets for crypto, you know, have historically lasted about a year um for for Bitcoin. So, and and I'm sort of like anchoring to what has happened in the past uh has been playing out. I think it's fascinating to me how the market fades this often times. Um but to me, it's like it's kind of worth it just to let let Bitcoin play out. And if it starts to waver from the path it normally takes then then you can kind of shift your stance. But I think like you for me like probably anchor to this is going to take a year uh to to to play out just because does that mean a year from now or like January or a year from February from now or is it a year from October?

So kind of it bottoms by October of of next year or something like that. That's what I would Yeah, that would be where you'd measure it from. So where you peaked uh beginning of October to a year out. Um that doesn't mean that it's just like you know it's going to be like this kind of like consistent sort of movement down to that place. In the last cycle we had a very aggressive move uh from like April to June and Bitcoin came all the way down you know under 20K and we came below the the um the **MVRB** came under one which is what what we typically look for to as a buy signal. that happened in June and then um we didn't actually go get to a full cycle low until uh December, right? So, and you had a pretty big period there to to be buying at pretty good levels.

So, you know, I'm kind of anchoring to a year, but you know, it's possible we get down, you know, we're only four months in and we've come come quite a ways. So, things things can can move faster. this we're just looking at here is like how we measure um kind of cycle awareness and where we're at in these cycles. And really what I'm looking at here is if you look at the far right column that says today we're looking to see some of those metrics start to look very similar to what we saw in the early bull. That's kind of the game that we're playing. We measure this through the cycle.

So when you look at the market value to realize real realized value realized value is a proxy for the cost basis of the entire network. So we're looking for that to kind of come to collapse to one um it actually went under one in the last few um bare markets and so you know we're at 1.4 right now. So that looks like it's got a little bit of a ways to to move. U we look at the supply held by long-term holders. This typically is going to be a little bit lower early in a cycle. it picks up as people come in and buy and then during wealth distribution it drops off. We can see it dropped off during wealth distribution. Now we're seeing uh long-term holders actually starting to step back into the market a little bit. Um so that's that's an interesting metric that we keep an eye on.

The supply and loss for long-term holders. You can see that in the early bull period it was like 36%. It comes down as Bitcoin rises, goes all the way to zero and then it starts to come up again. So, we're up to 19%. We're looking to see that get closer to 30% or so. Um, the price to the 200E moving average. Bitcoin typically will trade down to its 200. It's longer term 200E moving average. That's about a 4year uh moving average. In the last, you know, few bare markets, we came to it. We went below it in the last we're still above it. Uh, here we look at the 12-month RSI. It's more of a momentum indicator, but that's something, you know, we will look at. that's already down to 45 or so. It usually gets down to about, you know, 40. That's a momentum indicator. And because we've come come off quite a bit, it's it's already getting down to those those levels.

Um, and then the other thing that we look at is the hash rate. What's happening with miners? Hash rate's down about 15% or so. as the price comes below um sort of the average cost to mine one bitcoin for certain mining entities, they have to either shut off their their machines to conserve conserve energy, sometimes sell their bitcoin. Um and so these are the things that we're kind of anchoring to and monitoring to get to it's possible those those metrics will just start to line up um which with with where we think we're going closer to that, you know, October time frame. I I don't know for sure. U but we kind of anchor to the data and the timing is less important, but I sort of just anchor to like what has happened in the past typically uh will play out. Again, it's not it's not random. It's because of the way cycles, you know, how financial markets work and how cycles work. Um you we've talked about that, you know, in our writing in previous episodes. I won't go into it, but it's not random, but um I would sort of as a base case say it might it might take a year or so.

Yeah, the market psychology is is similar. Certainly the liquidity is similar. Certainly this is playing out as other cycles have in the past. um if you were to equate this to kind of a a price range for Bitcoin. So some of these numbers obviously can be equated like the the 200 um uh weekly moving average certainly is that around 65K or like what is the range here?

The the currently the 200E moving averages is like 58K or so. That's that is rising um you know as as we go. It's a moving average. We believe that the fair value is roughly around 65k for Bitcoin. Um that doesn't mean it can't go below that, right? So, you know, it's possible it could go below. It's possible it doesn't totally, you know, get there, but we think it's around 65K. That's where the realized um that's where we think the realized value is going to get to like as time goes on. That's also 58K right now. So those two metrics, realized price, uh, 200E moving average, like that to me is kind of your fair value metric. Um, and last cycle we did go below that. So that's like a extreme, you know, those are like extremely good opportunities if you actually go below that. Um, but yeah, that's that's kind of what we're tracking. And the big the big question is just um, you know, are we in like some new regime here with this new Fed? And how's the market going to start to to process this?

I think Yeah. And your answer to that question is you don't think we're really in a new regime. You think it's a continuation of what's been happening in kind of late 2025

Yes, I do. I I don't think there's any change um from fiscal, you know, we do have the Trump, you know, tax cuts that are coming and that that can be positive.