# Crypto Winter Ends Amid Macro Reacceleration

**Podcast:** The Milk Road Show
**Published:** 2026-02-04

## Transcript

I think we have seen a massive blow off top and a speculative blow off top.
We've just seen it in gold and silver and in some sense in our artificial intelligence, and not where we have seen it in past cycles, uh, which is in Bitcoin and crypto.
Well, what's up, everybody?
It's LG Du Set here, and welcome to the Milk Road Show, the daily crypto show that is the last place in the universe where you'll find somebody actually bullish on ETH, I guess at this point in time.
Today is February 4th, 2026.
Crypto is getting absolutely hammered.
Everyone's capitulating.
ETH is down to 2100, Bitcoin down to 72,000, but we are still here.
Today's episode is going to feature myself and my fellow podcast host, John Gillen, riffing on what the hell is actually happening in the market and what the bigger macro picture is actually telling us.
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John, it's a pleasure to speak to you again, the two voices of Milk Road together for uh for the end of the world, really.
I you spent so long trying to get that intro right that I kind of forgot that I was about to go live.
You just startled me so bad.
Um hey, man, it's good to talk to you.
I'm excited to find out what we're gonna discuss today.
Listen, what do you want to discuss?
This is you know, this is a hard show to make, and it's also a fun show to make, uh, although not fun for anybody listening who's been holding crypto majors, which I think is mainly you and I and a lot of our audience and a lot of our pro members.
Uh a pretty ugly week, John.
That's going on.
If you log on to X, there's everybody has an opinion about a what is happening, why it's happening now, and or how much lower we're gonna go.
There's only talk now.
I like when we were in the 80s and 90s, it was okay.
Here's when we're gonna bounce.
But now that we cross into the 70s for Bitcoin, it's like, oh, well, well, now we're obviously gonna go to 50.
I like it.
We just suddenly we went down another 10k and suddenly we're just it's all doom and gloom.
Um, and the only and the other thing going on um is people just victory lapping on crypto saying, I told you so about ETH, John, you're a big ETH bull.
Give me your thoughts, give me your feelings, man.
Let's hear it.
All right, well, we can get to Ethereum in a second, but I think that the the first thing to do here is to set the the larger backdrop and the micro outlook on this.
Um, we recently published a macro pro report.
We'll we'll dive into that a little bit more, but I think what's going on right now, what's getting a lot of attention, um, and what's what's spooking the market is this idea that artificial intelligence is going to kill the software as a service economy.
There is a huge amount of exposure to the software as a service economy among private credit lenders.
And so the market is sort of speculating that software as a service businesses are you know at risk of of losing their their moat around their businesses and going out of business.
And then a lot of this private credit is now at risk as well.
So that's what you've been seeing, seeing in the market in terms of now, you know, this this fear in the crypto space has been here for several months.
You're now starting to see fear creep into the equities market.
Um, and I think that the result of that has been the sell-off in in SaaS and in um private credit.
Uh, where that bottoms, I'm not quite sure.
I think it's a little bit overdone because I don't think you're gonna be able to vibe code your own AWS, you know, for example.
So, like, you know, Jensen Wang has been saying, hey, I think these fears are overdone.
So there are some people going out there now and sort of like, you know, doing some therapy around this narrative and like calming the markets a little bit.
Um, however, that hasn't kind of matriculated yet.
As far as Bitcoin and crypto is concerned, the interesting thing that I've observed here, or like, you know, we haven't seen this this bull market.
If you want to, it's debatable if it has been a bull market, but um, it hasn't followed the same trajectory as past cycles in terms of time, in terms of correlations with liquidity and the ISM and so forth.
So there's been some deviation from the historical norms here.
But one of the things that Bitcoin is doing is it is tracking very closely with a lot of these software technology stocks.
Um, and so what the market seems to be telling us, whether or not people agree with this thesis, is that it sees Bitcoin and all of digital assets as software technology.
And uh the market apparently seems to assign a similar sort of risk to the digital asset space as it does to a lot of these softwares and service uh economy businesses.
Now, like I said, I think all these fears are overdone.
I think there's a lot of good buying opportunities in certain assets um that is being presented by the market because of this overdone fear.
But that I think is sort of where we are for the moment.
And then, you know, added on to that, there's been a huge amount of speculative attention in precious metals, gold and silver, um, you know, which that that fever pitch is not till totally broken yet.
But um, so that's like sort of the combination of things I think that are playing out right now in the markets.
That's how it's impacting Bitcoin.
And we'll we'll have to see what changes that narrative or where we get a turn from there.
I don't agree with this call for Bitcoin at 50k necessarily.
I think we will see some some resistance or some support some support rather, before we just drop like a rock to that zone.
Where we are right now, we've broken the lows from April 2025, which is what I was looking for for support here in the short term.
The next support would be 70K, 69k, which was the 69k, nice.
Um, but that that's the the previous top of the last cycle.
And that should act as some measure of support for us on the way down before we then drop like a stone.
After that, I'd be looking at the 200-week moving average, which historically has served as the bear market bottoms.
That usually takes us between 12 or 18 months to work our way down to.
If we do get there after only four months of bearish price action, or like severely bearish price action, um, you know, that that would be to me a very strong signal that bears have kind of exhausted themselves and we're we're kind of through the bear market.
Um and and maybe ready to start a bull market, or a way I would frame this, and the way I think our macro outlook frames this, ready to start the bull market that we were expecting to come, but it never really came to digital assets.
Um long-winded answer, but that's sort of my thoughts for the moment on where we are in the markets here.
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So this blue line is the top and last cycle.
And then we've got down here the orange line that I I bolded super thickly is the 200-week moving average, which is just about at just above just a couple a couple couple dollars above uh 58k, which from here, I guess would represent what another like 20% drop or so, another 20-ish, 20-ish percent drop from from this current level.
And that's just Bitcoin.
And that's also something, John, that uh Ben Cohen has been saying for a really long time, right?
And he he was on this bear market narrative very early once he saw his his death cross, as he calls it.
Um, you know, and he's been he's been saying that I think the quote is that Bitcoin has a date with destiny, which is the 200 week moving average, and that it often has to touch that before bullish conditions can actually resume.
Do you do you generally concur with that now that now that that that prophecy seems to be cut now that he's been right?
Seems like he's been right about this for a couple months now, or at least that is the trajectory.
Yeah, I want to be very careful about how I frame this answer.
I think Benjamin Cowan has been the most right.
I've been following him.
I haven't missed a video he has put out, I think in the last like four or five years.
Um, actually, probably going back even further than that, closer to six years now.
But anyway, I I don't want to say that I think Ben is wrong here.
I think Ben is doing a lot of great analysis.
He's been very clear and consistent throughout this this bull market, the last several years, the bear market, all of this.
So a lot of credit to Ben and his analysis here.
And I think that his read of the market is correct, but it rests upon the assumptions that Bitcoin has continued to behave the way that it has in prior markets based on timing and based on certain market behaviors and context.
I think that there is reason to believe that a lot of the underlying macro conditions have shifted and deviated such that it, you know, to me, it's a a non-zero chance that there'll be a deviation.
I also know that Ben, to his credit, is a great analyst and will update his outlook based on what price action we do see, right?
So if we got a recovery back of a back above 101, 103k, Ben would be the first one to tell you that, hey, all this is out the window, we're not going to the 200 week and and things have shifted shifted here.
So we're gonna see how this plays out.
I've been hoping, you know, he he Ben is fond of saying that I'm going to get something wrong.
I just don't know what I'm gonna be wrong about.
Um, and what I'm hoping is that the underlying when I did an interview with him, I asked him about this, but I'm hoping that the underlying, the real underlying motivators that have driven a lot of these bull markets in Bitcoin are are shifting and are going to result in this new higher high.
Um, that basically kind of comes down to liquidity to the business cycle, to the economic reacceleration that we're seeing and seeing how that plays out in the markets here.
But we also have to be very careful to make sure we're taking in the information that the market is giving us because we have deviated from history in a lot of ways.
That is, you know, in some sense disorienting and can cause some fear, but it's also a great way for us to get more information from the market than we would have otherwise had.
If we were just getting this playing out exactly the way that it always had, which so far it seems to be following pretty closely as Ben has observed this four-year cycle thesis, this four-year pattern.
If it just continues to do that, we don't necessarily gain a lot more information.
But the ISM never picked up this cycle, it's beginning to do that now, and we'll see how that plays out.
But if that continues and sustains, uh Bitcoin has always followed that ISM into a bull market.
Um, and so we'll we'll see if that holds or not.
But there's a lot of correlations of history that are breaking, and we'll see what we what we ultimately end up with as far as information learned from this deviation from history.
What do you think about this?
So four-year cycle is it is it dead or not?
I feel like that's the big question because the big thing right now, and it's I feel like four-year cycles are like a self fulfilling prophecy, right?
That it's it's it is silly to rely on that, and there's a lot of evidence that potentially that that would break.
But also until it's officially broken, that is the truth, in a sense, right?
And I think it's a lot, a lot of the people saying that it is that simple that there is a four-year cycle.
They're sticking to that because they're like, listen, until this actually changes, you can't disprove it, right?
That it still works.
Um, one of my favorite memes right here, that the four-year cycle is the only thing that that the market killer can't can't disrupt in a way.
Um, yes.
So is that is that and another thing, John that I find kind of very interesting, uh, and while we're speaking about um, you know, top analysts like Ben Cohen, top voices in the space, is that all summer, including here at Milk Road, are saying, listen, Q4, this is the quarter you have been waiting for in crypto.
This is it, man.
Get ready, you know.
And a few people before 1010 were starting to sell off, like Michael Nato, who comes on the show uh once in a while.
He he told us that he had started to write in his newsletter that we're approaching dangerous territory, late September.
He kind of flipped, um, and a few other similar ones.
And then after 1010, you had kind of a cascade of other people flipping.
Um, but all those people up until mid-September were like, listen, Q4 is gonna be amazing.
And now a lot of those same people like Ben Cohen are are on the again, once again, all on the same narrative.
That's like, we're gonna go, we need to bottom some more, and you will not see that reversal until Q3, right?
Generally, that's what most people are saying.
What are the chances that a lot of them will turn again, similar to how they turned right before Q4 started or right as it started?
Yeah, and look, I think that the ideal outcome is that people do take in new information and update their outlooks, right?
So, like I I wouldn't be upset or begrudge anybody changing their thesis if we do get you know a reversal much higher uh prior to Q3.
Um, so I I would hope that that does happen and that they change their outlooks.
I wanna just uh that meme that you posted is from Bob Lucas.
That's not just some random guy on Twitter.
Bob Lucas is one of the original popularizers of this four-year cycle thesis.
I watch all of his videos as well.
He does a lot of great analysis, and I think there's a lot of wisdom to be learned there.
But what he's saying is that you know, there have been a lot of other things in the market that have correlated with these Bitcoin bull runs, and people have argued for a long time about what's actually driving that.
Um, and we're we're learning more as we break different theses about what what actually might be the real underlying driver of this four-year cycle.
And so Bob is kind of in a joking way saying, like, yeah, it's just the four-year cycle.
Um, the followers of the four-year journey, he calls it.
Um, yeah, so look, I think what we're looking at right now, I think is an interesting setup from a macro perspective.
Um, a lot of people have updated their their priors.
Matt Hogan from Bitwise says that upon reviewing the data, he thinks we've been in crypto winter for a year, but we are now nearing the end of crypto winter.
And that that winter was masked, he said, by these ETFs and digital asset treasury companies doing a lot of buying at the same time.
A lot of the rest of the market in crypto retail um were exiting their positions.
There's been, I think now a cumulative total of around 100 billion dollars of selling pressure just from retail investors.
Um, so that's it's been a long and sustained downward uh trend and selling pressure from um the broader market that's been kind of massed and offset.
So there's some wisdom to that thesis.
I can see some value there.
I would also say that uh Raul Paul has been very much uh on this global liquidity train.
He recently posted something where he talked about how actually US liquidity is more important right now than global liquidity, um, because global liquidity in China is mostly going into gold and not into digital assets or other assets.
Um so there's a nuance he's added there.
He's also commented on how we have another government shutdown happening now, which is causing a liquidity drain.
That to me is a big reason why we did not see the performance we were expecting in Q4 of last year, which you commented on, right?
So we got this huge amount, basically crypto just tripped on its dick with the whole October 10th thing, right?
Like we got so bullish, everybody got so over-levered that people got liquidated.
There was this flash crash, it cascaded.
There was a huge problem with the, you know, the technical issues, let's call it.
We've called it a glitch now as an industry, but whatever you want to call it on Binance.
Um, and there's been sustained selling since then.
Sentiment got broken.
A lot of traders were over, I think over two million different positions were liquidated.
So a lot of traders, the number, not just the volume in terms of dollars transacted, but the number of market participants in crypto, I think was uh reduced greatly by that.
So, you know, that that was a a lot of these like black swans events stacking on top of each other.
The longest shutdown in government history happened, um, and that caused the TGA to get refilled over a trillion dollars when their initial target was 850 billion.
Um, so there's a lot of liquidity drained and a lot of sentiment got changed.
Um, and then you saw other things take the narrative, right?
So, like artificial intelligence has gotten way more VC capital and investor instrument interest and speculation um than digital assets.
Gold and silver have obviously had this huge breakout.
This a huge amount of that demand, I think has come from from other uh economies, other nations, China, India specifically.
Um, but yeah, there's just been a lot of things that have been different.
And so all of us as analysts have had to sort of update our outlooks for this.
And I'll say one final thing, which I haven't heard anybody else say, which is in the back of my mind, I think we have seen a massive blow-off top and a speculative blow off top.
We've just seen it in gold and silver and in some sense in our artificial intelligence, and not where we have seen it in past cycles, uh, which is in Bitcoin and crypto.
My read of this situation, which I think is controversial, but it's something that Ben Cowan has been saying, which is that this is much more like 2019 than um 2018-2017 or the 2021-2022 bull runs.
So his his observation on 2019, he keeps saying that we have topped on apathy and not euphoria.
I agree with that.
However, I think that that 2019 analogy is much more apt than he realizes in the sense that it's not just a one-year period of this kind of like mid-cycle growth period, not necessarily a bull market period, um, but we've we've seen that happen from Bitcoin.
It hasn't had a blow off top.
Matt Hogan is right.
We haven't seen this like kind of broader secular bull run in crypto and digital assets.
The macro backdrop, I think, explains that most more strongly than other theories I've seen.
And what I mean by that is that when we have this acceleration in the ISM, we get this bull run, which leads to overvaluations in risk assets later in the in the in the cycle.
We haven't seen a huge ick uptick in the ISM manufacturing PMIs.
We haven't seen this massive economic reacceleration.
And so we haven't ever gotten to that huge speculative blow-off top phase in crypto and other risk assets.
What we are seeing now is more reflective of, you know, we're seeing the the Russell 2000 breaking out.
If that sustains, that that's a sign of cyclical rotation into economic growth and and parts of the economy strengthening that are not just speculative, like the Mag 7, but are actually associated with real economic growth.
The ISM is picking up a lot of other economic indicators are picking up.
If that continues and sustains, that's a sign we're actually starting uh the cycle that we've been expecting this whole time.
And that would be what would lead to ultimately this sort of breaking of the four-year cycle thesis, where we would see new all-time highs in risk assets, inflation-sensitive assets like crypto and like other um speculative risk assets later in 2026 or into 2027, because that's what kind of breaks that thesis for me.
If we see Bitcoin trading over 150K at any point really in 2026, um, to me, that breaks that that four-year cycle thesis.
And then a lot of people go back to the drawing board and reevaluate their outlooks.
All of this stuff right now, for me, I don't have it's all probability outcomes, right?
Like I can't sit here and tell you confidently that I think Ben is gonna have to update his uh his models and his forecast because this is going to be proven wrong.
But I think that there's what I'm what I keep coming back to is that this is a really unique deviation from history.
There's a lot to be learned, and it's a great time to pay attention to digest all of these um outlooks and all this analysis people are doing, and then see what the market actually tells us, what actually plays out.
Because this huge correlation between Bitcoin and software that's been holding very strongly.
It's not something a lot of people have talked about, but it's been what's um I guess been most explanatory for the price action and the deviation that we've seen from Bitcoin.
But you know, again, what's actually underlying that we'll find out.
Um, but there's just a lot of thoughts going on right now.
And I think I'm a little confused in my own answer here, but I forgot what what question I was even answering when I started this.
But this is what I want people to take away from this is like there's an enormous amount to be learned here, right?
Not just like who's right or who's wrong, but like why, what's their rationale, what's their reasoning, how are they updating, what's the new information telling us, and just use this more as an educational opportunity and a long-term opportunity, as opposed to getting like uh just bogged down in fear and finger pointing and um you know yelling at Vitalik and CZ.
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I do want to dive into that macro report that Thomas wrote that you're kind of, you know, that you're referencing the ISM and the Russell.
So we're gonna do that in just a second.
Really quick, before we do that, um, I do want to look at two other, I guess, factors that anore me like me, uh, it considers very important uh to the prices of crypto, even though you gave us a much better macro outlook.
Uh, I'm gonna pull up our um on the on the Milk Road website.
There's actually now a crypto pulse section uh that you can check out that has uh total crypto market cap, it has performance of assets, uh including two that I I've thought would do well.
Hyperliquid and canton right there at the top of the 30-day.
Uh, and then at the bottom of the 30 day is Zcash.
Sorry, Zcash people.
Anyways, a lot of great info here.
Uh, right on the front page though, John, is something that I feel is always so simple, and yet it it's overlooked in its simplicity as a market as a as a bottom signal and both as a top signal, which is the fear and greed index.
Uh, and you've given us so many other factors that factor into the the price, but uh I think it's always worth looking at this and we filter it even by the five year um, you know, you gave us a lot of factors as to as to why this is happening, but I think it's also worth zooming out to think about that.
We only ever spend so much time in this level of despair, right?
And it's usually, at least in my experience in the space, you know, all these factors that you're listing, everything at this point, of course, a lot of the negativity and the FUD and the oh, Vitalik is selling his ETH, all these different factors start to come out and seem so dire that maybe it's really over.
But that's also what pushes the fear and greed in the index down so low.
And if you look historically, we really don't spend that much time there.
The longest stretch there's been in the last five years, um, was from May until July 2022.
And that's I think that that's like the whole FTX scandal.
I think that that's like when all of that was happening.
Um, and even by the time I think that it actually that they actually put Sam Bankman Fried or caught up to him, it was we were already at a somewhat higher level, way out of the red.
Do you care about this at all, John?
Does fear and greed index matter to you?
Because I feel like I feel like we can only dip into it so many more times today, being at 14.
I like to say buying fear is a good deal at any price.
I do pay attention to this, and I do think that a lot of this is um why I'm so confident in in the investment in the asset class because the fundamentals are only getting stronger.
The use case, the adoption, the volume.
Like stablecoin settled 10 trillion dollars of volume in the month of January.
Just for some context, Visa does about 15, 16 trillion dollars a year.
So the the growth has been enormous in terms of the adoption of digital assets, the acceleration is huge.
The the volume on on ETH is is growing enormously.
Um Solana, same thing.
The the growth metrics are just really, really strong.
The fundamentals are there.
Their fundamentals are solid, they're getting stronger.
So the the fear that we're seeing and the the selling due to this panic to me presents what we call an investment opportunity, right?
Like if the market is based on fear and sentiment selling things that are are worth much more or have much more economic value than the markets assigning to them, that's an opportunity.
I'll also say that there's a a huge deviation on the RSI indicators, right?
So, like the the momentum, the strength of the selling pressure that we've seen has been remarkably strong, unusually so, and it's mostly sentiment and fear based again, right?
Like nobody has hacked Bitcoin, nobody has, you know, like yeah, exactly.
Like none of these things have like catastrophic failures have come into the market.
So it's just a sentiment thing.
I do think that we will see a mean reversion on this on fear, on RSI and on price.
Um, but it's just it not I can't tell you exactly when or what that's gonna look like, right?
Like it could look like a dead cat bounce, it could look like a gigantic bullish reversal.
A lot of people have been posing this Wyckoff accumulation pattern and saying that Bitcoin is about to hit this spring that sends it much higher.
Um, so we're gonna have to see how some of these put things play out.
But I do think it's really important to pay attention to those sentiments because they tell you a lot about how the market is feeling about things.
And trading emotions is not something a smart investor does.
So that's why I like to say buying fear is a good deal at any price.
Absolutely.
And the other thing that um that we haven't mentioned at all is clarity, right?
And that caused or at least was part of a huge bullish spike a couple weeks ago.
We got the draft, Brian Armstrong said no way, it got sent away.
Government is kind of partially shut down now, might actually shut down for real.
And that clearly it felt like if there was going to be this big Q1 rally, that clearly stopped it in its tracks.
And then so many other geopolitical events have happened since then.
So many it that's just disappeared from the headlines completely.
Um, but I think people forget that that was literally like three weeks ago that that you know, that that was almost going to the to the Senate floor, and then now has been, I guess I don't know, I don't know what the status is, but polymarket still has it as a at a 71% chance of passing or 70% chance of passing it in 2026.
So still relatively optimistic that this thing will happen.
I guess the question is when.
Yeah, and we're all still waiting to find that out.
I went to the Ondo summit here in New York City, and the president's chief of digital assets was there talking um with Patrick McHenry, uh, who used to be in in government uh around digital assets.
Um, but they were discussing this exact thing, right?
Because I think most people, especially at the Ondo summit, were hoping and expecting that the Clarity Act would already be law of the land by now.
Um, but there's still a lot of hotly debated tensions around this.
Um, and you know, what whatever that the result of that is, there will be some kind of market structure legislation that comes out.
It's just going to be fraught with compromise, and that's not really um what you want to see, honestly.
We would like to see um uh a market structure bill that is very accommodative and supportive of digital assets.
I think it will be, um, but there's still some uncertainty as to the specifics of what that compromise will look like and when that actually becomes law.
I think that we were rallying back up towards 98k at around the time that it seemed like it was going to be all green lights for the Clarity Act.
And then once Coinbase said, hey, this is a non-starter for us, um, the market kind of collapsed and sold, sold off, and now we're back down to 73 so or 72, wherever we are right now.
But we're back to a level way below where we were before any of that good news started to percolate.
Yeah, and I think this is just much more important, I think, to people than uh I guess maybe some people understood or believed.
So that's that's that's what's going on there.
Well, let's let's look a little further ahead.
Um, we have a fantastic uh a product on pro or on macro Pro, uh that's mainly led by Thomas.
Uh and you do the pro AMAs as well for anybody that wants to actually talk to John.
Uh he's available a few times a month, but also specifically there's an AMA for where John can talk more macro stuff.
But Thomas puts out this amazing report.
This this month's it's it's a it's a monthly report.
This one has a 70 plus charts, and it just came out this past Sunday.
Uh, we wanted to give you guys, um, even if you're not a pro member, we want to give you guys kind of like a general overview and kind of preview of what this is.
Uh, and even if you're just a listener, you don't need to look at these charts.
Um, you know, you probably heard some some previews of it from John today.
But this came out Sunday, February 1st.
The title was Markets Are Sending a Message.
And John, from what I understand, and again, you're the expert here.
This is basically Thomas is basically painting a picture for us that we're actually not at the end of the cycle.
We're we're somewhere maybe early mid cycle, at least in traditional like business cycle terms, correct?
Yeah, so I think that I I don't know if I would say early, mid, but it's definitely not like late winter in terms of the business cycle.
And I think what Thomas is is illustrating here is that the the broadening out in the stock market that we've seen has been very bullish.
So, like for a long time, people were talking about the K-shaped economy, how like the Mag 7 were leading, but the other 490 uh stocks and the SP 500, we're flatlining.
Now we're finally starting to see some of that rotation and this broadening out of the bull run, along with that, right?
So we're also seeing this pickup in the ISM.
All of these things suggest that we are in a mid-stage cycle from a business cycle perspective, and that the the bull run that we've seen is is strengthening, broadening, and likely to continue to have a lot of strong strength and momentum.
So, from an economic perspective, the market seems very healthy.
And a lot of what Thomas is writing about in this report is just sort of like giving much more context to those details because a lot of people just look at things like the SP 500 or the NASDAQ and like Bitcoin's price, and they don't really drill drill much deeper down into the rest of the economic data that we have to kind of give a more complete picture of what we're looking at as far as the business cycle goes right now.
Got it.
And then so you mentioned earlier the ISM and the Russell, which are both heavily featured in here.
So I'd love for you to kind of circle back onto those and what that means for the this as you know, and especially related to Bitcoin, but also, you know, we were talking about uh software selling off, what that means kind of for the bigger picture.
Yeah.
So the the key thing that he's watching with the Russell 2000 is that these mid-cap stocks are breaking out in terms of their performance.
That's always been something associated with the the acceleration of the bull run and sort of this broadening out of the bull run, right?
So like the mag seven have turned into the lag seven and the Russell 2000 is breaking out.
If that price action is sustained, now it's it's possible and historically it has happened where there's been a breakout that's failed and it's come back down.
But this breakout here seems like this break of a large cup and handle, and it seems like it's likely to continue much higher.
That is very bullish for the continued strength and and uh breadth of the the bull run here.
Um, and that's why we're paying such close attention to that.
The other thing I'll say about that specifically is that Ethereum tends to follow this chart of the Russell 2000 very tightly.
Um, so this is also bullish for the rest of the altcoin space, if those historical correlations hold, and if that breakout that we're seeing doesn't get rejected but does continue and is sustained.
So it's it's early on this breakout, but that's something he's been watching for.
And this is one of the longest periods of building up to a breakout in the Russell 2000.
So, like I said before, right?
Like Ben Cowan has this thesis that we've seen kind of like a 2019 style rally.
I think we have, but it's been instead of like one year, it's been more like a three-year, four-year period of building up to this next phase of this rally.
So it seems like we're getting into that next phase of the business cycle.
Uh, and you know, you mentioned the ISM as well.
It was a huge beat on the ISM, um, and an even bigger beat on new orders on the ISM.
So, what does that mean?
So, like the uh the ISM manufacturing PMI survey, um it's it stands for the purchasing managers in uh uh index.
Um, but it's it's a survey that says, like, you know, like is a measure of the the purchases of of materials and how we how we are um it's a way of measuring the business cycle acceleration.
So as this goes up above 50, it's a sign that there's increased demand, increased consumption, increased growth, increased economic activity.
This beat X uh the print, I think was at 56.5.
So above 50 is what we're looking for.
Above 56.5 is a very strong print.
Some people have said this is just seasonal noise because it always kind of spikes at the beginning of the year, but that is still one of the highest prints we've seen, I think, in four years now on the ISM.
Um, and this historically is correlated with these cycles, right?
Like the cycles in the business cycle, but also in in Bitcoin.
So we're we're kind of anticipating that that will lead to uh a continuation of of the pattern of the economic acceleration and of the business cycle.
Um the other thing I want to say about this is that the new orders was even stronger, right?
So the new orders came in.
I don't think that's mentioned in this report specifically.
Um it might be somewhere, but um it came in at 57.1, which is an even higher beat.
The reason that's encouraging is that if new orders are so much higher, it would seem to indicate that the future prints of the survey should continue to show strength and hold above 50.
Um, so there's a a lot of reasons to look at this data and say that there's um going to be an acceleration of the business cycle, which by the way has been the entire thesis of the Trump administration, right?
You're starting to see some of these things impact the actual economy and play out, right?
Like all of the tax cuts, the incentives for um capital expenditure, um, just all the impacts of the big beautiful bill are starting to play out.
So what the expectation is that we'll continue to see this acceleration.
A quick little time out from the pod here, because we've got a huge problem.
You're listening to the show, but most of you are not actually subscribed, which is crazy because we're here every single day dropping the stuff you actually want to know the liquidity, the charts, the major players, and which way the market's gonna go.
So hit subscribe, hit like, and let the algo know that you actually kind of like this.
Okay, so we're just looking at so this is the new orders, which is now spiking, and this is on the weekly, and then here's a closer look at the Russell.
Because this, you know, what's funny is that this report um kind of gave a preview that that something like that may happen, but it did list it as a question mark.
And Thomas's line in the sand here was 50.
And then a couple of days after this, we do have that ISMPMI actually going now to uh 52, which I think a lot of people are saying was like that's going to be a turnaround, right?
So that's pretty valuable.
Is this so you're telling me that from this administration, this is kind of by design, maybe now going into this midterm election year as well, right?
Like that's that this seems like this is very intentional in some way.
They are trying to kitchen sink the economy to get both the economy and the markets to accelerate because they don't want either to be left out, right?
Like the economy accelerating means that Main Street effectively look to simplify the whole thing, right?
Economic acceleration means that there's a broadening out of the bull run and that Main Street is participating in the growth that the United States is experiencing, keeping the markets at high valuations as well, also makes people feel uh wealthier and they experience more wealth and like, you know, speculators and the rich people who own all the assets in the country also feel like they're doing well.
So they're trying to balance between these things and make sure that both of them stay strong through the end of the year.
I do think that they have been open about favoring Main Street, which is why you're starting to see this economic acceleration happen.
It took a long time to pivot from the prior administration's strategy to the Trump administration's strategy, but it's the indication here seems to be that we're beginning to see the early stages of that playing out in the markets.
Got it.
Okay, okay.
So that is starting to happen.
And I'm gonna bring this all the way back to what we're saying at the start is that this typically these factors, this and the Russell, and the right, and can you just remind her, remind us again?
What is the Russell?
The Russell 2000?
The Russell 2000 is an index of mid cap stocks that are commonly associated with cyclical increases in the economy.
So it's not like tech stocks, it's not like yeah, it's it's a different kind of an index.
It's not like Dow Jones is industrials, NASDAQ is tech and speculative.
The Russell is like mid cap um and cyclical stocks.
Got it.
So then usually when these the ISMPMI and the Russell here, I'm just gonna bring us back to this Russell uh section.
Usually when we see this kind of breakout, you're saying that this typically correlates with a breakout of crypto or at least of ETH.
So, yes.
So, this chart here typically, when this breaks out, Ethereum breaks out.
The historical correlation on this, if you overlaid the two of them, you would see there's a very tight correlation between Ethereum and the Russell 2000.
So, usually the correlation, the the thesis goes like this, right?
Like nobody, so this kind of goes back to what we were saying before.
The four-year cycle thesis is holding, but what is the underlying reason for that?
That's what people are debating.
That's what we're trying to find out and understand.
And that's what we should be learning more from as we get deeper into 2026 here.
But the the correlation goes like this the economy starts to reaccelerate, the ISM picks up, the economic reacceleration leads to a broadening out of the bull run and the participation of a lot of these cyclical stocks and mid caps that are in the Russell 2000.
The Russell 2000 breaks out once the economy starts to grow.
The business cycle is picking up.
And in that environment, right, when the business cycle is picking up and interest rates are are low, and there's kind of like this like fiscal conditions being loose, which they are very loose and getting looser, that generally leads to a environment where Bitcoin, digital assets, and then the rest of the altcoin space as well, thrive and do very well.
It's been a long time now, like a very long time since we've seen that environment, which is why there's so much confusion, frustration, why people's timelines have been all different.
So I it's like one of those things, the most dangerous things you can say is that this time is different.
I don't think that this time is different.
I think that the time horizons and time scales of these things are different.
So we'll we'll see if all these things line up again the way they have in the past, just at a different scale of time.
Um, but that's why this correlation has happened and why we're watching this so closely.
If the Russell 2000 holds this breakout, that should be bullish for the rest of the business cycle, and then ultimately should lead to this this blow off bull run that we've seen in risk assets and in crypto.
And one interesting point that he makes right after this Russell, uh, this this Russ potential Russell breakout, too, is he talks about the bubble, which I love because he said, you know, forget the AI bubble that everybody's talking about.
The bubble that I'm seeing is that there's a K shaped economy narrative bubble where everybody keeps talking about this K-shaped economy, and yet now you're seeing uh, you know, I guess the the indicators that that that show that the little guy, the every man, might have a good year starting to rise back up so that that K shaped is no longer kind of a valid theory.
I just love that I just love this take uh kind of midway through this report.
Uh, the unique one from Thomas, I haven't seen anywhere else.
This has been very strongly debated a bunch of uh by a bunch of macro analysts.
Like, is the top part of the K going to collapse down, or is the lower part of the K going to rise up?
We're going to see.
I think there's definitely a strong tug of war right now.
It seems like the bottom part of the K might be starting to rise for the first time in many years.
Um, so we'll see if the top, if that causes the top part to collapse or not.
Um, but that's that's the tug of war that we're seeing, and we'll we're gonna have to watch closely to see how that plays out.
Right.
And he also points out, you know, and and you kind of explain what the Russell was to us that the Russell is the real economy and he overlays it as well with consumer sentiment and how consumer sentiment is at an extreme low.
Uh only only as low.
The only time it was recently as low was was mid-late 2022, and that it has not been that low in 30 years on either of those levels.
Um, but that consumer perception sentiment should pick up as the Russell starts to to move higher.
Um, so a lot of great analysis in here from Thomas, man.
This is this is a fantastic report.
Uh, pro people can check this out if they want, but we also just gave you a little preview, uh, a general overview of it.
John, before we sign off on the macro side, give me some, give me some hope, man.
Listen, we got all the Thomas analysis here saying that maybe we're mid cycle, that there's some good some good indicators of of somewhat positive things in the economy, even as uh we see these other things this week that software and and crypto are selling off.
Give me give me something helpful to finish on.
I did an interview recently with Jeff Park um from ProCap Financial, and I asked him about Ethereum.
His answer kind of went a little bit viral.
I would really encourage people to go back and watch that.
But Jeff has been talking a lot about the rise of the ideological investor.
I think now it is more important than ever to be an ideological investor and to not invest based on moment to moment returns, fear, speculation, greed, but to invest on or invest on and invest into the assets and the kind of technology that you want to see lead the next century of finance, because that's what this is about.
That's what's at stake here.
And I want to give one specific example of what I'm talking about here.
After the global financial crisis, Dodd Frank and a lot of legislation was passed, and the there was a lot of regulatory capture that happened.
The globally systemically important banks in the United States got the Senate banking committee and basically the entire financial regulatory apparatus of the United States federal government aligned with them and got into their heads that they had to be protected in order for there to be fiscal security and stability in the United States and the globe.
Now, what is happening is happening is that the stable coins being able to pay a little bit of yield, 4% yield on $300 billion of assets, they have couched this as an existential threat to the security of the United States of America.
They took out ads against Brian Armstrong specifically, calling him, quote, big crypto.
When in reality, the banks, the control and custody over like the bank of New York Mellon has over 50 trillion dollars of assets under customers.
I have not seen that.
That's right.
Yeah.
Well, so but they're trying to frame this as he's the big, he's the man trying to keep keep the little guy down, right?
And he's gonna run all these regional banks out of business.
The reason the regional banks are struggling is because the the central bank, the the globally um important banks, they put in all this legislation to make it effectively impossible to start a bank in the United States.
You'd need a team of 40,000 lawyers to get off the ground and it's not economically viable.
That's why the number of banks in the United States has been declining ever since the global financial crisis.
Nobody can start a new bank, and all these regional banks are up against the wall and and going to get uh, you know, they're they're they're at risk of being closed.
There was one in Chicago that was closed last week and nobody really talked about it, but there's a real problem with all these things.
The what's at stake here is not just your returns this week, but it's how we're going to operate the financial system of the planet in the next century of finance.
Are we going to allow the people that have all the power and control to co-opt crypto and turn it into a new kind of handcuffs to keep us under their power for the rest of our lives?
Or are we going to invest ideologically, vote with your capital, and choose an economic system that values individual sovereignty, human liberty, and flourishing, and uh puts everybody on an equal playing field and allows them to have access to property rights and financial liberty.
That's what's really at stake here.
So we're talking about the macro picture.
That to me is the ultimate macro picture.
And you know, as far as hopium goes, um, the oversoldness here, the sentiment here is so so negative and so disconnected from reality.
Um, that that makes me bullish.
So I don't know where the exact bottom will be, but we are much closer to the bottom than a top.
There's an enormous amount of opportunity here.
So um zoom out, stay safe, stay educated, stay bullish.
Um, and those are my thoughts for right now.
I love you, man.
That was great.
That was great, great, great way to end it.
Uh, John, good I like let's do way more of these, please.
I think uh generally we get good feedback whenever it's it's you as the expert and not as the host.
Not that people don't love you as a host.
That's not what I mean.
But you know what I'm saying is people want to hear your thoughts too.
People love to hear you rant uh and for and and listen to me say whatever I say.
So uh let's do a few more of these shows.
Let's do them more often uh and get more milk road people on as well.
Because I think you know, the the only person that can rival you and your rants is Kyle.
So we got to get him back on here more often.
Well, I'm happy to take a break from buying Bitcoin and staking more ETH to come on and do more of these.
So yeah, anytime you want, man.
Take a break.
Uh okay.
Thanks, John, and thanks everybody.
Stay safe out there, like John said.
Uh, and we'll talk to you.
Uh we'll talk to you again at 60K or at 90K, uh, or hopefully or maybe at 75k in three months.
Maybe we'll still be here.
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