# Bitcoin Macro Outlook and Fiscal Dominance

**Podcast:** The Milk Road Show
**Published:** 2026-11-12

## Transcript

that puts us around four or $500,000 Bitcoin.
That's what makes the most sense to me.
Bitcoin is struggling to hold on to the low 70s with $10 billion of leverage shorts stacked up over its head.
Inflation is coming back and it looks like the Federal Reserve is going to hike interest rates again in December.
But our guest says that none of that changes the end game.
So what does this mean for Bitcoin?
What does it mean for investors?
And what do you need to know about all of this?
Hello and welcome to Milk Road Crypto, the show that knows that the best part about being long Bitcoin is being short the dollar.
I'm your host, John Gill, and today is Thursday, November 12th, and today we are joined by my fellow bearded Bitcoiner, James Lavish.
James is the co-managing partner of the Bitcoin Opportunity Fund, a board director at Strive, and the author of The Informationist, one of the best newsletters out there for making sense of macro and Bitcoin and all of the things in the market.
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But for now, welcome back to Milkord Crypto, one of my favorite Bitcoiners.
James, how are you, sir?
Great, John.
Good to be here.
Thank you for having me.
It's an interesting time to be talking about Bitcoin.
It sure is, man.
It sure is.
Before we started recording, you said that things are about as bad for Bitcoin as they have looked in a long time.
You, as I said in the intro, you pointed out recently that there's $10 billion of shorts stacked up at 83K on Bitcoin.
What's going on with Bitcoin right now?
What are you seeing in the market?
Just give me your high-level thoughts here.
Man, sentiment is not good.
It is like I just posted.
It feels about as bad as it ever has for me.
And I'm not an OG.
I haven't been around as long as many others in this space.
I really just, I waited in during the COVID years, just when I really moved toward dedicating my career to Bitcoin, Bitcoin space, Bitcoin ecosystem.
I mean, it's about as bad as it was during that washout in March of 2020.
It's about as bad as it was in FTX days when people thought that there's so much fraud that the entire ecosystem is just going to collapse on top of itself.
And, you know, it feels like that today.
It feels like everybody who has been invested in Bitcoin for a while is, again, it just feels like the sentiment is so negative.
And I believe what's going on here, John, is that we didn't have the blow-off top that we thought we were going to have in 2025.
It got stifled.
The reason for that may be there are a number of things, but I believe that a lot of original holders, the OGs, decided that...
at $100,000, they were just going to get out and they dumped a lot of coins.
That was number one.
Number two, we had a rotation of capital out of Bitcoin and into the AI space.
That AI trade was, it was so enticing and people have made a lot of money off of that.
And so, you know, I can't blame them.
And so the, you know, the, and then going forward, that money has rotated from AI.
to then gold and silver that became the hot trade and then it went back into ai and and now you've got the situation where the democrats swept the the midterms and so you've got um a number of things that have kind of been uh weighing on bitcoin overall so you still have that draw of the ai capital and it isn't over um you know you had spacex launch a trillion dollars or over a trillion dollars there.
You've got, well, now the size of the IPO wasn't that big, of course, but the draw of hundreds of billions of dollars into all these companies that have raised capital, that have raised debt, that have raised investments.
And now you've got IPOs like today, you've got Anthropoc is coming next week.
And I believe it's an 80 to $90 billion.
drawdown of equity for that IPO.
And that's what the float is going to be originally.
And it's oversubscribed, according to the bankers.
And so you've got that going on.
On top of that, you have, like I said, the midterms, which has been unfortunately political for Bitcoin and cryptocurrencies as a whole, in that you've got Elizabeth Warren, who's likely going to be the head of the Senate Banking Committee, who has been a vicious opponent to cryptocurrencies and Bitcoin itself.
And so that doesn't help the sentiment.
You had the Binance hack of $6 billion.
That doesn't help the sentiment.
You've got the wallet hacks and the social engineering has happened in the wallets that have just...
eviscerated confidence in holding Bitcoin on your own.
And so, I mean, the list just goes on and on and on.
And yet, here we are, hovering just above $70,000 per coin.
So how bad is it really versus how bad does it just feel?
Because people didn't have the blow off top they expected of hundreds of thousands of dollars.
It kind of topped out at 125, 126.
We're back down to, you know, we've hit lows of the high 50s.
And I think Bitcoiners and investors who have been in this space for years are just getting tired.
They're exhausted from it.
And that's really what kills sentiment more than anything else is just fatigue.
And people are getting tired of it.
They've been investing in this thing a long time.
They've watched other things.
double, triple, quadruple, especially in the AI space.
And they're like, God, I missed all of that while I'm sitting here in this thing, waiting for what?
And it's been difficult for the investors in the space.
And that's kind of what I'm hearing and what I'm seeing every day online.
You know, one of the weird things about crypto is that the longer you're in it, the more accounts you seem to end up with.
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That's why we at Milk Road are partnering with Nexo.
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We love working with them.
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Gotcha.
Okay.
Well, so the sentiment has definitely been rough here.
I want to get some of your thoughts on some of these macro headwinds.
I've been trying to bring on more macro commentators to kind of talk about this because I do a lot of crypto interviews, but macro seems to be driving the bus right now a little bit.
Anna Wong, who's one of the top economists at Bloomberg, recently tweeted out that she thought that it would be a policy mistake for the Fed to hike in December.
But she still says that she thinks that's what's going to happen here.
What are your thoughts on this?
Do you think that would be a policy mistake?
And do you think that hike is going to come?
How does that play into Bitcoin's outlook here?
And what are your thoughts around this?
Well, first of all, I respect Anna Wong and I agree with her fully on this.
And I think I even responded to that tweet.
that she made.
I fully agree.
So what's going on?
Well, we've had a lot of inflation headwinds, meaning inflation has been kind of, it has been spooling upwards over the last number of months.
And people are a little bit confused by that.
You've got, the Fed has been, you've got a new Fed chairman and Kevin Warsh wants to prove, he wants to established that he is the guy who is going to get pricing under control.
He wants to, as he puts it, he wants to make sure that the Fed restores credibility.
And that implies that the Fed lost some credibility in the COVID years.
And the reason for that is inflation raged up over 9%.
really hurt consumers.
It really hurt the lower end of that K in the K-shaped economy, the lower leg, which doesn't own assets.
And their wages did not keep up.
They lagged severely.
And even if you're looking at full CPI, which I believe that inflation is more than that, that kind of obfuscates some of the...
high costs of things that people have to deal with, like insurance, health insurance, home insurance, car insurance, and other things.
So he wants to establish credibility.
He has said that over and over and over again.
And here we are with inflation tipping back up to 3.7% was the last reading year over year.
And then if you look at the latest CPI, you can extrapolate that even though we didn't have October reading last year because of the government shutdown, you still, you can extrapolate that is about 4%.
So here we are with 4% inflation and that's double the target of 2%.
And so you're getting to a point here where the Fed is basically claiming that their hands are tied.
They've got to do something.
They can't just sit here and watch as inflation moves upward.
Well, why is inflation moving upward?
Because of the initial jump was from tariffs.
And that was like a one-time thing.
And then you've got this ongoing pressure from oil and energy.
And oil and energy is the largest component of every good and service that we have here in the United States.
And so because of that, you've got this lag of the effects of pricing of everything because energy goes into it, whether it's through transportation or manufacturing or wages from the service industry, whatever it is.
And that's the latest, that's the longest lag.
Those things have been lagging and now they're showing up in prices everywhere.
And so whatever you want to say about the war or the reason for whatever, you know, I'm, I, I'm not, you know, I'm not a, a typically a political guy.
I think all of DC is pretty much corrupt.
There are people who go there that think they're going to change it, but then they get corrupted themselves.
But, you know, it's just, we do not have a great reason to be doing this.
And, Here we are with pricing pressures that are showing up everywhere.
Well, what is the Fed going to do?
You can see that if you look at the Fed fund futures now, you're seeing that the pricing pressure is causing traders to hedge themselves and say with the Fed fund futures that they're pricing in a full cut.
I mean, a full raise in December, 25 basis points.
And in fact, they.
they're now pricing in over 100%.
So there's like almost a 10% chance that there's a second raise at the same time.
So a 50 basis point rate hike, which if you told people this 18 months ago, they would have called you crazy.
But here we are, that you've got pricing pressure, a Fed who feels like their hands are tied, they've got to do something.
Investors understand it, and they know that the Fed is going to do something.
So they're hedging themselves.
So the futures are showing that.
And then another good indicator is the two-year.
So if you look at the two-year Treasury, it's trading at 4.8%.
That's basically telling you, with Fed funds here at the upper range of 4%, that the Fed's got three more hikes at least until they get to where the market thinks they need to be.
Now, why is the market telling us this?
Like I said, there's inflation, even though it's a supply side issue.
Again, supply side issue because this is energy driven.
The bulk of upward pricing pressure is from energy.
I wrote a whole newsletter about this and you can see how it's part of every, it's the largest component of everything that we build, buy and every service that we deliver.
It's just reality.
And now you've got the Fed that's basically saying we're going to raise rates.
Okay.
This gets us to the punchline of, well, what does that have to do with Bitcoin?
Well, because Bitcoin and gold, they don't pay a yield.
They typically trade with the interest rates in an inverse pattern.
So if interest rates are going up, Bitcoin's going down.
It's just a reality is that.
You've got an opportunity cost for traders to be getting yield in something rather than sitting in what they deem to be a risk asset.
And they're not going to sit here when you've got the draw of the AI trade.
You've got the draw of now there's yield in these instruments that they're getting.
The trade of the 10-year, people are saying like, look, the 10-year yield is up over 5%.
I believe at some point when they tackle inflation that's coming down, it's a good trade.
Is it a long-term investment?
No.
I think it's one of the worst investments you can make in your entire portfolio long-term is holding treasuries.
You're not going to get a real yield on that when you look at the expansion of liquidity and the money supply.
Anyway, so that is...
Ultimately, what's going on here is that you've got all those political pressures and you've got the negativity, negative sentiment from all of the events that have happened around Bitcoin.
And on top of that, you've got the situation that people are expecting the Fed to raise.
And that just kicks in algorithms and traders move around it and it becomes a risk off for.
Bitcoin while we wait until that settles itself out.
James, I saw a recent newsletter letter that you wrote where you were asking this question, if the sell-off that we've seen in AI, turbulence we've seen in the markets, overall risk assets pulling back pretty sharply here.
And, you know, the Nvidia situation is not helping with that.
But you kind of posed the question, like, could that market pullback and that slowdown in those markets be enough to sort of deter the Fed or make them think twice about this?
Obviously, historically, they're not supposed to take market dynamics into consideration, but also there's a reality here as well.
What is your thought on that?
And do you think that the depressed performance in AI stocks and in Bitcoin risk assets could be enough to maybe give the Fed some second thoughts about hiking in December?
Well, I mean, we've seen this movie before, right?
We saw it with Greenspan back in 2000.
We saw it with Bernanke in 2008.
And these guys hike, hike, hike until they break something.
We saw it in 2018 with Powell.
And then we saw it again in 2022.
And so, you know, the question is, how much do they need to hike?
Like, remember, we're restoring credibility here.
The 2% inflation target, it's just a target that they made up.
And we've talked about this.
I've talked about this before.
There's no real solid reason for 2% except that it's basically some people say that it was tied to the expansion of the supply of gold that when you look at mining and the supply of gold, it kind of correlates to that.
There's a theory that it goes back to.
In the 80s, when New Zealand said that that's the target that they're using, and then every central bank kind of latched onto it.
But the reality is that 2% is basically what the Fed can get away with.
They basically are saying, and the government.
what they can get away with, with debasing the currency without upsetting the investors in that currency.
Meaning that if you're holding long-term treasuries and you've got an expansion of the money supply and liquidity of 2%, well, you're still getting a real yield on that likely, except in years of ZERP.
And so zero interest rate policy for those listeners who don't know what that acronym is.
But the reality is that that's basically what they can get away with.
Okay, so that's their target.
So as they are, they're targeting that 2% and that's the credibility measure.
Well, if it's above 2%, they've got to be doing something.
They're always tinkering.
They're always moving, moving, moving.
And they've got to do something to show that they're in control, that they're managing this, that they're on top of it, that they're not going to let, they're not going to let the consumers get crushed by this inflation.
They're going to do something about it.
Okay, great.
But the reality is they have blunt tools.
Their two tools are basically they can raise or lower interest rates.
That's one tool.
And the second tool is they can add or remove liquidity from the money supply.
And that's called QE, quantitative easing or quantitative tightening, QT.
And so right now, what are they doing?
They're raising rates at the same time that they're doing quasi-QE.
Why are they doing that?
And you can see it.
They're raising the money supply in that they're printing money and expanding the balance sheet of the Fed.
It's not at a fast pace.
It's nothing like it was in 2008.
It's nothing like it was in 2020, 2021, 22.
But they are expanding.
You can see the Fed balance sheet grow.
Go to Fred, pull up the Fed assets, and you can see it for yourself.
But what they're doing is they're raising bank balances and the bank reserves because there is a level at which they start getting nervous when the reserves start to dip below.
And it was approaching that level back in late 2025.
And that's why the Fed has been out there buying T-bills.
They've been out there just, and it's not a lot.
It's about $25 billion a month right now, I believe.
They started at 40 and they've moved it down.
They stair-stepped it down.
But on one hand, you've got them talking about, we're fighting inflation.
We're going to raise rates.
25 basis points is not going to do anything, let's face it.
But the mere fact that they're doing it, they're tightening liquidity, that they're raising those rates.
And so that does contract liquidity and banking liquidity and lending.
Then in one hand, they're tightening and the other hand, they're kind of loosening.
So the reality is they're out there and it's a little bit of a charade.
But the other reality is as they tighten, it does affect businesses.
It does affect borrowing.
It does affect liquidity.
And eventually things do break.
And what do I mean by that?
It's like that duck.
mean that's going after the guy saying, and the duck is saying, what's going to break?
What's going to break?
Well, it could be a lot of things.
Typically, it happens in the credit markets and it spills over into the equity markets.
We saw this in 2019 when you had the repo crisis and that was something breaking.
What broke?
There just weren't enough dollars around in September of 2019.
And so what broke was the lending mechanism for banks and financial institutions to get liquidity that they needed short term overnight.
And so you saw the short term rate spike, and credit markets basically were locking up.
And so the Fed stopped QT, they started QE almost within hours.
And, you know, they were lowering rates into it because that was just, that was not, it was a situation that could have broken something.
But let's just go back to the equity markets.
And so, yes, let's look back at the last two times the Fed did this.
The Fed was raising rates in 2018, and they just kept raising them as the S&P was coming in.
The S&P drew down almost 20% from September to late December.
And inflation at that time was only 1.9%.
And they were just, they were raising and raising and raising.
And the Fed decided, you know, One more hike.
We're just going to do one more hike and then we're going to pause.
And they did.
And the stocks ultimately fell almost 20%.
One more hike and then they paused.
And then they started cutting right after that.
Let's go forward to 2022.
Well, the Fed, you remember, inflation was raging over 9%.
And the Fed was hiking, hiking, hiking.
They were doing 75 basis points at a clip.
I mean, like at a breakneck speed.
And they kept doing it until something broke.
And basically, from January to October, the S&P was down 25% and it broke.
And then they started lowering rates because, oh God, we broke it and started lowering rates.
So why did they do that?
They do it because, well, the economy is...
it is closely tied to the markets.
That is just a reality.
The United States is a fully financialized economy.
And so we are so tied to what's going on in the markets that when the market draws down, it does affect the economy.
And what the Fed does not want to do is push the economy into recession.
which we came right to the razor's edge on that.
We all remember there was a debate.
GDP was contracting.
It was two quarters in a row.
Are we in a recession?
Are we not?
The SOM rule kicked in where the unemployment rate rose fast enough from its trough that people thought, oh, God, now that that's tipped off and that we're definitely in a recession.
It was a pretty gray area.
We didn't dip into a recession.
The Fed started cutting rates and doing enough QE that we didn't get there.
But now we're at the point, the Fed's like, well, we're going to raise rates until we don't have to anymore.
Again, it's a blunt tool.
They can't print oil, but they can create demand destruction.
by raising rates and that's exactly what they're doing but the punch line of this whole discussion is well why why do they have to stop and the reason is you can't go into recession with the amount of debt and the payments that we have at the government level if you if we go into recession right now we're running multi-trillion dollar deficits If we head into a recession, the $2 trillion deficits could turn into $3 or $4 trillion pretty quickly with both GDP coming down, the tax receipts coming down at the same time that social benefits payouts are going up.
And so if you have that delta move of $1 trillion both ways, which in a large recession that can happen, then you go from $2 trillion to $3 or $4 trillion deficits pretty quickly.
The Treasury can't have that.
And that gets us all the way around to the argument that that means that we are in fiscal dominance.
And here we are with the Treasury kind of running the show, even though they're not officially running the show.
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James, I really appreciate the analysis on that.
And it kind of makes the point of why not killing the golden goose of the markets is important to the Fed, even if they say it isn't.
I want to talk about this fiscal dominance idea.
There's a few things I want to ask about around this, because I had Lynn Alden on the show a couple of weeks ago, and she talked about this idea of a gradual print as opposed to like a big print.
And I've heard you use the phrase that we are in a debasement regime, not a debasement.
trade.
Talk to me a little bit about this idea and what this means for Bitcoin, really, and when this is going to result in Bitcoin appreciating in price as well.
That's why you keep bringing up people I completely agree with.
But yeah, I agree with Lynn.
We just talked about, okay, we're kind of in a gradual print, just exactly what we talked about.
It's not just the Fed.
It's the running...
these deficits, it's inflationary.
We're just borrowing from the future and running deficits.
We're drawing money out of, basically just drawing money out of bank accounts.
So if they're sitting idle at a bank, instead of sitting there, they go into money markets.
Money markets buy what?
T-bills.
And the T-bills are what the government is using, the treasury is using.
to finance these deficits.
They're leaning really hard on the short end of the curve, meaning that they're not terming out the debt.
They're not expanding the amount of treasury notes and the amount of treasury bonds longer term, 10-year, 20-year.
30-year bonds.
They're not expanding.
You just saw the quarterly refunding announcement that the Treasury made, and they basically said, we're going to keep them where they are.
Yet, our deficits are there, and they're growing.
You've got over $13 trillion of debt that has to be refinanced, including the interest payments between now and the end of 2027 on the US fiscal.
And then you've got $2 trillion deficits on top of that.
on the US fiscal.
So, you know, they've got $15 trillion they've got to deal with here.
Most of it is just investors, money market accounts that are just reentering the Treasury bills because they're just going to mature and they're going to buy more, they're going to mature, they're going to buy more.
That's what it is.
But the Treasury is leaning on that.
And it is inflationary.
And like Lynn said, it's just a gradual debasement between the Fed doing their Treasury bill buys, the government running on multi-trillion dollar deficits.
And then on top of that, the Treasury's out there buying longer dated Treasuries, not a ton, you know, five to six billion dollars a week that they're buying.
Basically, what they're doing is they're retiring illiquid securities and issuing liquid securities in place of them is essentially what they're doing.
And that is good for the treasury market because when you retire illiquid securities, you lower volatility, you inject just a little bit more money into the space and that the treasuries that these banks and financial institutions own can then turn around and borrow against them easier.
And it's a healthier market when you have securities that trade a bunch rather than these older securities that aren't trading at all that are illiquid.
So that's basically what they're doing there.
And even Bessent himself called it a quasi-twist.
They're issuing at the short end.
More and more and more T-bills while they're buying back just a little bit and not expanding on the long end.
So it's a quasi-twist.
And so Operation Twist, where you're twisting the long end versus the short end of the curve.
Yeah.
Explain that so that people understand what that means.
They're shortening the duration of their outstanding debt, basically, right?
Exactly.
And they're playing chicken with the Fed in that they're waiting for those rates to come down, and then they can term out the debt a little bit.
And that's basically what's going on here.
And so, but that's it.
And in essence, we talk about fiscal dominance.
I mean, fiscal, when you talk about fiscal, that's talking about the government finances.
And we're talking about the congressional budget.
We're not talking about the treasury here.
The treasury just does what it needs to do to meet the demands of that budget.
And so, and...
What we're talking about here with fiscal dominance is all that borrowing that's required to bridge the gap between the borrowing and that's needed, between the spending that is happening versus the income that's coming in on the tax basis.
When you talk about monetary policy, it's talking about the Fed and central bank activity.
And so exactly what we talked about before is adding or removing liquidity from the system.
whether you do it through interest rate hikes or cuts or whether it's through QE or QT.
And so, but right now, basically we've been told all these years that the Fed runs completely separate from the government.
And they say it over and over and over again, the Fed's independent.
You're seeing Warsh out there going, we are going to tackle inflation.
We don't care.
what it does to the treasury, because we've got to take care of inflation for the American people.
And that's kind of nonsense.
Of course, he can't, you know, do what he really wants to do.
You know, if he did what he wanted to do separate from the government and just on the Fed's basis to say, we got inflation down, you would crush demand, you would send us into a tailspin, into a recession, you would raise rates up to, you know, five, six, seven, 8%, crush it, you know, and not worry about it because, I mean, that's what they did in the 80s.
And so, but remember, back in the 80s, the government was running on a 30% debt to GDP basis.
Now we're running over 100%.
Can you imagine if we raise rates by 10%, you know?
I mean, even if you just raise rates, I mean, just think about that.
If you raise rates to, you raise them up to 5% and, or 5% from here, and you're adding, then if you're, you know, if you're looking at multi-trillion dollar deficits, you know, I mean, just think about how much interest you're adding to that pile.
And so we're already over a billion, a trillion dollars of interest annually.
These numbers are so big that the B's and the T's gets mixed up sometimes.
But in any case, so that's kind of where we are.
And so when you talk about fiscal dominance, you're saying that that relationship is reversed and the government's debt is so big, it's so large that.
it begins to call the shots, whether it's implicit or indirect, that's essentially what's happening here.
And that's just reality.
And that's the regime that we're living in now is that we're on a long-term debasement regime.
I think the Fed and the Treasury want to avoid the situation that we got into in 2021, 2022, where they had to print.
over $5 trillion.
I don't think they want to do that.
So they're careful here.
I think the Fed is going to be careful and thoughtful about raising rates to the point where they break something.
And if and when they do, they'll reverse pretty quickly to avoid having that deep drawdown and a long and drawn out recession.
They do not want that.
James, I really appreciate all of the insight about macro that you've brought to the audience today.
I want to talk about the outlook on Bitcoin specifically here.
I want to ask this question in the context of something that really caught my attention, but I feel like a lot of people missed or just ignored.
JP Morgan ranked Bitcoin at the top of the list of assets.
that they think they're going to perform well.
They ranked it higher than real estate, than equities, than other things, gold, precious metals.
And I feel like that was a really significant statement coming from JP Morgan.
So I'd like to hear your thoughts on that.
But your own price prediction that I saw you put out recently was by mid-2029, you said that you think Bitcoin will be between $400,000 and $500,000.
So I'd love to hear you unpack what your thinking is that drives that outlook, especially at a time when sentiment is so terrible.
I think people would love to hear your thoughts on all of this.
Yeah, so it's a pretty significant thing that JP Morgan included, just that they included Bitcoin in this long-term capital market assumption report that they put out.
And so what is that?
Well, basically, they talked about all these different assets and they kind of listed them all out.
And over the course of the next decade, what they expect those compound returns to be.
And so, you know, if you look at the spectrum of what they listed, they had gold at about 5.5% annualized compound return.
So that they're basically saying that they expect gold to keep up with the expansion of the money supply more or less and to return about 5.5% per year.
High-yield bonds, which is the riskier sector of the bond world, they expect 6.6%.
Corporate bonds, which are the much safer bonds, a little over 6%.
And then large-cap equities, they had at about 7.5%.
Small caps at about 7.7%.
And then they had Bitcoin.
And they listed Bitcoin at a compounded rate expected of 10%.
Now, that is a significant return compared to those other returns that we just listed.
So even if you look at the best performing asset class that they talked about, which is either emerging equities or small caps of 7.7%, you're talking about almost 50% higher return in Bitcoin is what they expect.
Okay.
Now, before we get ahead of ourselves here and say, JP Morgan, they're recommending Bitcoin.
Jamie Dimon's finally capitulated.
Well, this is his staff of analysts, number one.
It's not Jamie Dimon.
Number two, they did not recommend Bitcoin.
What they said was, we do expect it to be the best performing asset over the next decade.
However, we also expect it to be the most volatile.
And the volatility that they expect on it is annualized at over 50%, 55% is what they said, which is also more than double than the next highest volatility, which would be emerging market equities at 21.4%.
And so now because of that, they said, look, we can't, they basically, said it's not in our portfolios.
We can't recommend it.
However, we do have to recognize it.
It's not going away.
We believe it's here to stay.
And that if your portfolio has the mandate, basically having it included here, it's basically flipped the script for investment managers.
Whereas five years ago, if you said you were going to include Bitcoin in in an investment portfolio that maybe had a tech mandate or something like that you you basically were saying that i'm going to take a this i'm going to going to put this highly speculative risky asset in my portfolio and it would be a career risk for you if you had a large enough allocation that it impacted your portfolio negatively now because JP Morgan has included it in its list of assets now, it's recognized as a real asset.
It's right up there with gold and emerging markets and high yield bonds.
It's an asset that it's its own class.
And so that basically opens the door for investment managers to say, look, I had a 1%, 2%, 3% allocation to this thing because it was within the mandate of the portfolio.
And it did very well.
And it compounded at that, whatever it may be.
I believe it's going to be higher than 10%.
Maybe it's 20-something percent or 30-something percent over the course of the next decade.
But it's not without its drawdowns.
And so it has to be recognized that this is a volatile asset.
It's still in its emergence and its adoption phase.
But still, John, the script that was flipped was, I can include it, and I've got kind of air cover here with JP Morgan saying that it's something there that they expect to compound at a high rate.
With Fidelity doing the same thing.
They've been out with numerous reports about how they believe Bitcoin is one that they expect it to be one of the best performing assets in the future.
And so that's the big thing.
is that now it gives cover that it's nowhere near the same reputational and personal risk for an investment manager to include in their portfolios anymore.
That's a big change.
It's kind of a sea change when you look at the landscape of possibilities for Bitcoin now.
And how did you arrive at your price prediction of half a million dollars in 2029?
Or maybe there's more nuance to that, but I'd love to hear where that came from for you personally and just your updated thoughts on that outlook.
Yeah.
So one of the things that you can't, again, Bitcoin is so young.
It doesn't have this long history of the cycles that it's been in.
But the cycles it has gone through have followed pretty closely, one after another.
Even if they haven't been to the same extent on each blow-off top and drawdown, peak to trough, the same percentages, they have followed this cycle of four years.
Whether it's because in the beginning it was because of the mining.
And it was really very, very closely tied to that expansion of the supply that contracts in half every four years on every single block that is created for Bitcoin.
Well, it could be that.
It's also tied to the political cycle, that four-year election cycle for presidents.
That's another thing that people, it's just a period of uncertainty that grows until that cycle is over and we know who's in office and who's going to be leading this charge.
Or it could just be the economic cycle, the industrial and manufacturing cycles that we see over the four-year periods.
And so you see Bitcoin.
kind of do its thing where it peaks and troughs in those cycles.
And typically what has happened is you have this drawdown period.
And then about three years later, it reaches its peak again through that cycle.
And so if you look at and we believe, and I do believe we've reached our barring any, you know, this large drawdown in the overall markets of 25, 30%.
If we don't have that huge correlation to one negative event, black swan, whatever it may be, and we've already reached our trough for this cycle back in June, well, if you look at that, you extrapolate out about three years, well, we should be reaching our peak somewhere around early to mid-2029.
And if that is the case, then The one model that I really do think follows Bitcoin the best and gives us a best idea of where we should be seeing peaks and troughs and how big they should be and what those price parameters ought to be, it's a power law.
There are various versions of them.
There's a great debate into who created the first Bitcoin power law, but the power law is not isolated to Bitcoin.
And I wrote a whole newsletter about this before.
It's a law of organic expansion that you can see in cities, in population growth.
You can see it in prices of other securities.
You can see it in the expansion of a body, how the cells grow.
You can see it in expansion of animals.
Like it's just it.
It's just this law of a power law, and it happens to fit the expansion of Bitcoin price pretty closely on an hour squared basis.
And so when you look at that, now this is not the Bible, but it is a pretty good indicator of where I believe we are going.
And it does have large variances in it.
the last number of cycles, you had blow off tops that were peaking out at, you know, somewhere.
If we look at the last number of cycles, you could see that the power law would peak out at, it was three, it was almost four standard deviations above back in 2011.
And then back in 2013, it was about three and a half.
And then it went to 2.7 in 2018.
And then it was 1.8, 1.9 in 2021.
And then this last one, so you went from four to three and a half to 2.7 to 1.85.
And then this last cycle, it peaked out at about 0.5, give or take standard deviations above that mean price of that power law.
Again, there's no...
Power law top, there's no power law bottom or base, but you can see where Bitcoin has topped out and drawn down to over those cycles.
So just remember that 0.5 for a moment.
And then you go back at those other cycles.
And Bitcoin actually has been pretty consistent in its drawdowns.
It drew down about 1.3 standard deviations.
Back in 2011, 2012, sorry.
Then in 2015, it was about 1.4.
In 2020, it was about 1.1.
In 2022, it was 1.2.
Then this last one, it was 1.15.
So it went 1.17 back in 2022.
And then this last one over in June, it was about 1.15, if that was the cycle low.
So, if you look at that, if you just look at that power law, and it has been incredibly consistent.
I mean, it's got an R-squared fit of 0.962.
That is a very high correlation to it.
So, that fits the model very well.
So, if you extrapolate out that we're going to get to our cycle high because of whether it is because of the halving or the...
presidential cycle, or because of the economic cycle, or all three of those combined, and we top out somewhere around early to mid-2029, well, that puts our blow-off top at, if we just look at somewhere around, just underneath one standard deviation above that cycle target on that median, that puts us around four or $500,000 Bitcoin.
That's what makes the most sense to me.
I believe that our last cycle, like we spoke at the beginning of the show, I believe that this last year in 2025, that the blow off top was kind of capped out because of what we talked about, the OG selling, the AI trade, the move into gold.
It was like this hot ball of money moved out.
early and instead of it going i thought it was going to go to 180 it topped out at 126.
i was nowhere near i'm completely off and maybe i'm off on this one and maybe we don't get to four or five hundred thousand let's put that is what my target is that's what i believe that's where we're headed um and then we'll have another drawdown and you know hold on tight because it's bitcoin James Lavish, co-managing partner of the Bitcoin Opportunity Fund.
Thank you so much for being on MillCard Crypto and unpacking all of your thoughts on macro, on the power law and everything else.
Where can we send people to find more of you and your work online?
Yeah.
So if, you know, again, we're out of favor here, but if you have, if you're an accredited investor and you have discretionary capital and you're looking to expand on your Bitcoin investment itself.
And you want to do other things.
I co-manage the Bitcoin Opportunity Fund.
And if you're interested in hearing about that and hearing about investing in the Bitcoin space, and we do anything from early stage private to public companies, you can find us at bitcoinopportunity.fund.
Just reach out and send us an email through the site and we can...
get with you and see if it's something that would be appropriate for you and your investment style and your portfolios.
And then, of course, I write The Informationist.
It's a weekly newsletter that breaks down all these things that we talked about today.
Every single week, there's a free version that comes out monthly and there's a paid version.
But yeah, it's called The Informationist and you can just find that at jameslavish.com.
It's on Substack.
Other than that, I'm on Twitter.
I'm posting there pretty regularly at James Lavish, and I'll see you there.
Well, James, I love your Twitter, and I love your newsletter.
You share lots of alpha, and you're quite entertaining on Twitter as well.
So if anybody's not following you, I highly recommend it.
James, thanks so much again for being here.
I hope we can catch up again soon.
Yeah, thank you, John.
It's good to be here, and we'll talk again soon.
Thank you.
Thank you all for joining us.
I hope you all learned something today.
So until next time, stay safe, stay educated, stay bullish, and we will see you all on the next episode of Milk Road Crypto.
Thanks for being here, everyone.
Bye.
Everything you hear on Milk Road is for informational purposes only.
These are our personal opinions, not financial advice.
And we may own some of the investments we talk about.
Always do your own research and make the decisions that are right for you.
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