Is this the end of crypto cycles? A bearish short-term outlook

Transcript

GM good morning welcome to the milroad show The Daily crypto show that tries to understand macroeconomics until we realize nobody actually does I'm your host Jay Hamilton it's Tuesday March the 11th and this week is all about one question are we in a bar Market or are we in a bow market yesterday we had a bear case today we're going to see what Felix from Bor has to share with us now there's many different perspectives and Views to answer the question of where we are in the Market cycle but one thing that I think is really important is my view and the view of milk road is that the most important perspective in understanding where we are in the market is based upon the macro view not the

onchain data or the fundamentals not the technical analysis not the market sentiment but macro and that's why we brought on Felix from the brockworks team today he's a macro analyst he is the director and Lead host over at the podcast forward guidance and really no one understands macro as well as he does or talks to macro experts on a regular basis as much as Felix does now before we jump in if you guys want to hear Kyle's view from the mcro pro team on macro join us tomorrow Live on YouTube and Twitter at 12:05 PM Eastern Kyle's going to join and we're going to talk about where he thinks we are in the cycle whether he's a bear whether he's a bull and where he sees us going for the rest of this year now today's episode is

brought to you by definitive Advanced trading on every chain it's also brought to you by coin shift powering top crypto treasuries with their yield bearing stable coin CSUS DL you're going to hear more from both of them later in the show without further Ado Felix welcome to the milk Road show what's up great to be here how you yeah man excit excited to have you first time having you on the show hopefully first of many okay let's let's start with the simple question uh not a simple answer but are we in a bull market or a bare Market we are closer to a bare Market than a bull market um it depends how you measure it right I you know just to to walk back a little bit you know there's always this

discussion I feel like inherent to a bull market versus a bare Market of this idea of Cycles you know a lot of people have different opinions on whether the idea of a four-year cycle exists um and whether it will continue to exist obviously that's been pretty anchor to The Happening cycle in Bitcoin and and some of these traditional factors and metrics that we look at so if you subscribe to that worldview there's a lot of metrics that are saying on on like a Time based perspective that it's in the last Innings of that cycle from that perspective now I personally have the complete opposite view which is that I'm not a big believer in Cycles anymore I mean if you just take it from the

happing cycle perspective the law of diminishing returns in terms of just like how much those happenings impact Supply um coming onto the market is is changing exponentially so there's there's a lot less of that Dynamic occurring and then you start to add on these more trafi idiosyncratic comparisons of you know we've had the Bitcoin ETFs right and we've had a change in the type of buyer that is more interested in smaller size but more passive and consistent allocation versus The Fast Money hot money but you always have that layer on top of the leverage Deens that are traing 100 Lex leverage right on Perpetual Futures and that's always going to create some

interesting opportunities to play around around that so this it's like this conflict of increasing like volatility dampening from these passive buyers that are just you know they're only interested in getting like a 5% allocation to bitcoin or whatever in their portfolio sitting in a diversified basket of other things and then you still have that like classic fast money that's you know 100x leverage longing shorting getting liquidated and that's going to impact price too so there's a lot we can get into the macro of how I'm thinking about that but you know we're at this point of contention where I I feel like we could see a sustained continued either chop or bleed or or pullback here and then for things to improve pretty substantially in 2026 and what's interesting is comparing that

with this traditional like fouryear cycle framework is it's almost the opposite of that so I think that's going to catch a lot of people off guard okay so your view is short-term bearish or maybe not fully are you are are you you bearish or are you still in the undecided Camp so I've been we can tie in some of the macro here but I've been pretty bearish since mid December and the reason for mid December is we started to see a shift I I view risk assets and risk markets and crypto obviously Falls within that through a macro lens that's how I think about everything so within that lens in mid December the Federal Reserve drone Powell had a pretty notable shift in the narrative and the language and during

you know every couple meeting we get an update on what they it's called the summary of economic projections and also called The Dot Plot and through that we can see what is our forecast for this coming year for you know how many Cuts or hikes or pauses that they anticipate what's their outlook on economic growth on the labor market on inflation they publish all of that every couple meetings and during that meeting in December we saw a pretty notable shift towards hawkishness so before that obviously we had this initial rate cutting cycle starting in September we we started with a 50 basis point cut that came with a couple more 25 basis point cuts and then in December that shifted pretty drastically so the market was expecting quite a few cuts to sustain and drw and pal and the FED came

out and what shifted everything higher they shifted their their inflation forecast for 2025 significantly higher and when you read the te what's that telling you is that they're more concerned about inflation this is at a time where if you just remember the FED has a dual mandate they care about inflation and the labor market doing well so the labor market is doing was doing fine at the time so they're squarely focused on inflation and within that framework they decided okay we're going to jack up our inflation forecast it's more and more evident that that was largely due to political and Trump and tariff uncertainty baked into it and so then you have to figure out okay where does that sit within the context of what's actually occurring so my personal view is that they were being

too hawkish they were being too complacent about pausing and waiting things out versus the economic re ities there's been a lot of issues with economic data basically since postco that's led to a lot of head fakes so that's you know we've seen this like the last inflation print in February was pretty high but there's also been some really interesting I won't get too deep into the weeds but there's been some factors that have been skewing that and leading to these head fakes so because of all this complacency from the FED sitting within there's a lot of inty obviously from the the fiscal and the Trump side of things you're creating this environment where the Tailwinds of positive monetary policy have turned into headwinds so that is continuing to not change we had a speech from drone

pal last Friday where he reiterated the same you know we're staying we're we're pausing we're keeping an eye on things they're not really worried about this recent volatility in markets if anything he I think he almost welcomes it um lower lower stock prices lower risk asset prices is one of the few things I think that's been holding up their lack of achievement of like the 2% inflation Target Target so pretty much every Tailwind is a headwind right now so you're battling against that and I I see no change in that narrative in the way they talk about things obviously we have the next Federal Reserve meeting coming up on the 18th I believe next week so we'll see what happens there but overall there's a lot of headwinds and very

little Tailwinds so I'm just not trying to fight that that's how I view the market so it's telling me to just not fight that for now if you're only trading on centralized exchanges then you're not going to make it the best Traders know the elf is on chain definitive founded by coinbase alums let you trade any token on salana base or any chain all in one platform what makes definitive different is its Advanced order types you can execute limit t-w and stop loss completely on chain plus you get the best prices as your order is routed instantly through every Dex and liquidity pool getting you up to 19 times lower fees trusted by funds whales and the Milkman himself now you too can

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gitcoin and hundreds of leading institutions cycs usdl is gaining traction at milro docomo ship okay so you you mention some head fakes in some of the data the uh inflation data and the jobs reports over the past few years have it feels like they every time they come out two months later they change and it's like what can you trust anymore but you also mention the impact that Trump is having and we are at a historic level of economic uncertainty right now last time we had this much economic uncertainty was during covid what is Trump's master plan in your view and what is he trying to achieve because I think coming into him

his second term in office a lot of us or his first term depending upon how you look at it I know it's not his second term immediately following but a lot of us believed it would follow a similar Playbook to last time it doesn't seem like it's it might not play out that way so what do you think he's trying to achieve how do you think it's going to play out yeah I definitely think that's a good way to look at it is that this is not Trump 1.0 being repeated he has different goals so something that's been talked a lot about recently is this framework that in Trump 1.0 he was tweeting and looking at the stock market every day and pumping that up and this time there's been a notable narrative shift where he's much more tuned into the 10-year bond yield so the government

bond yields and where those are at and there's a lot of different reasons they're focused on that but the simplest way I could put it is that so treasury secretary Scott bessent who was nominated and confirmed last month he mentioned in an interview that when he first met Trump the first thing Trump asked him is you know how do we get out of this mess without crashing the economy and by mess what he means is that our debt to GDP levels are too high most of the like the only sustained economic growth we've seen since 2022 out of Co has been through government funded stimulus so you know state level hiring like if you just look at the jobs reports it's it's been mostly government employees and that sort of thing so we floated through that and what that

process has led to huge fiscal deficits so the we don't need to get into the crazy MTH but the simple way to think about it is that we're running a recessionary fiscal Playbook during an expansion so you know typically during a recession the fiscal deficit increases because they're providing stimulus into the economy to try and make it recover the last couple years we've been doing that during a time where the economy has been doing fantastic like real GDP growth around over 3% steadily so you know you start to wonder why are we doing that and that has a lot of long-term impacts we've seen you know debt levels Skyrocket at the same time that we've seen the private sector actually begin to get crowded out um so this is crowding out

effect that economists talk about which is that if you have too much of a heavy hand of the public sector it crowds out the private sector and and you know it's it's hard for the private sector to be competitive when these people can go get a job with government and it's always going to be less efficient it's just a a law of nature really so Trump wants to reverse all that he wants to reinvigorate the private sector and bring down the public sector he wants to do that for a few reasons it's it's the most sustainable growth path really you you can't just continuously prop up GDP growth through government expenditure so you need to reinvigorate that that private sector there's a lot of concern about the fiscal health of the government right so you know you

hear like the simple way that El mus says this in the news is that he's he's worried about the the US going bankrupt now the US is never going to go bankrupt um you know as long as as as they can print their own currency there's not going to be a a debt default but but damn it's a good headline by Elon it's it's good it's a good fun headline um you know the modern monetary theorists wouldn't agree with it but it is it is it does get to an important point which is that the trajectory of the fiscal deficit we're in is not sustainable and it leads to less and less people wanted to own US Government debt because of you know as you get increased fiscal deficits you get more inflation

you get more supply of debt coming on that leads to lower Bond pric that that leads to losers you know suckers at the table so yeah they want to they want to shift all that and and they're willing to see some pain in the short term to get to a more healthy fiscal path there's a lot of different speculations on what the game plan is there you know obviously Trump is is the big tariff guy he's been talking a lot about tariffs as a means to basically recalibrate the trade deficit to bring in more tax revenues and you know tariffs are attack like it gets confused a but it's it's the domestic country that is paying it and it's being levied by the actual government it's not the country that they're fighting against putting on that

tariff right so there's a lot of different recalibrations and we're all trying to figure out where does this lead us and what the timeline is so there's been you know they've been quite explicit on it like you know Scott Besson has just been doing these like 45 minute interviews almost every day on every news outlet and they're saying these things about you know we need a detox we need to move towards a private sector economy from this public heavy one that we've been in and there might be some pain involved with that things are rolling a bit over and I think they want to frontload this pain because the sooner they do it to when the previous administration was in the more they can blame these issues on them if they wait it starts to be on their own book and it starts to be

closer to the midterms so there's a lot of trying to press it as fast as we can and so I think a lot of this this chaos and uncertainty and driving down of asset prices is intentional because in their perspective and ideologically I agree with a lot of it I definitely have some criticisms on the way they're going about it but that's what they want to do they want to recalibrate the economy back to this like ronom you know private sector Le economy okay and so in order to achieve that we have to go through a reset we have to go through some pain in the markets what do you think that pain looks like does it look like a short fair market does it look like a

sustained long be Market obviously as you said Trump is concerned about the midterms he is very much motivated by the market in order to show all of his voters especially the higher wealth ones that he is favoring them how do you what are the probabilities of scenarios that you think could play out over the next year yeah I think it's a I think they're looking at it like a three to four month detox period you know they keep okay so pretty short yeah pretty short is interesting there's an axios article that came out this morning and there's there's a lot of Insider headlines you know just like White House sources and you know top level Republican senates and a lot of their talk is that you know

we're all good with this the stock market downturn right now but if it's still like this in a month's time we got a problem so that was really interesting to me to hear a bit about like what time of timeline they're thinking about there so I think I think it's like a three to four month thing I'm still not in the camp of this turning into a recession I I I see it more as being so there's a lot of nuance you know there's recession there's there's a growth scare there's a growth slowdown and really what we're talking about here is that we've had overly elevated real GDP growth like 3% is elevated 2% is the long longterm normal anything below that starts to get into that grow scare Camp so I'm definitely all in the camp that we're going from like a 3% to a 2% and then in

that process there's a pretty good likelihood that we could also see a scare of 1% Maybe but to get to an outright recession is still not my Bas but it is getting riskier every day they're they're playing with fire here you know it it's a it's a bold strategy to think you can do this and then also be able to come in underneath and save it in the in the 11th Hour especially you know they're they're following a lot of like the the Reagan Playbook like this is what he did when he came in is is you know nuked things pretty aggressively and then recalibrated the economy towards this more like supply side economy but he was doing that when debt to GDP was at 50% and now we're at 140% or whatever we're at now so at

least double almost triple when you're doing this with that much leverage like it's it's starting to be playing with fire so I don't think we're in full danger zone yet it is going to be a buyable dip probably sooner than later um I think it's too late to turn fully bearish now um you know if you're locked into things you just got to grit your teeth but then if you know if you have if you cash on the sidelines it is more so time to start thinking about what to do next knowing that I don't think this is going to be like a two-year bare Market how much how much lower do you think we go like how H how at what point are they like we've achieved the wash out like we've gotten to the asset

prices and I think this is more of a equities question than a crypto question yeah so you know we're I think we just passed about like a 10% which is a correction in equity terms um typically like 10% is correction 20% is a bare market so we're around halfway towards a bare market now and basically as soon as we started to pass that we've started to see some headlines from the White House saying you know we're we're looking at it but we're not too worried yet so historically speaking anytime equities get to around down 20% um you know Let's ignore Co because I was unique but if we look at like 2018 there's some there was a pretty big Equity pullback back then we

hit like down 20% in in spy this is when J Powell was also the head of the fed and around down 20% is when they fully pivoted and started to try to get under this ease pretty aggressively so I think 15 between I don't maybe 17 to 20% downturn you you could start to expect the Cavalry to start to arrive now the issue is that a lot of people get confused and think that the FED just looks at the S&P 500 and reacts to that they don't they look at credit they don't look at equ they don't really care about equities but people getting mixed up so I've been kind of pounding the drum that you need to be looking at credit spreads um which is basically the the probability or the likelihood of of

corporate credit or corporate bonds to basically default um what is it what is the probability of default that is the mechanism that they really care about because credit spreads get mechanically CED into every part of the economy it's not just like Equity holders where you know it's just like oh the rich people lost some money but this is like the the nuts and bolts of the economy and it does trickle into other things so what's interesting is that if you look at equities you know we're we're in a correction zone now but if you look at like high yield you know you just look at like Ticker hygh on trading view this is a really C clean way for people to track this and there you know we're down a little bit but we're still in a pretty good area so you to start thinking about

okay either either we're too far pulled back in the equity Market because the credit Market is saying things are fine mostly recessions aren't anywhere close right now or credit markets are lagging and about to turn down lower here so credit spreads will B in and that means that that's when we start to get into this like Panic zone of potential recession and also sustain lower prices in in Risk assets so you really got to hon in on that that is what they care about um they're really focused on looking at those credit spreads looking at the plumbing of the economy in markets as well and seeing where we go so yeah 20% I think is is a pretty big buy Zone in

equity um if you transfer that to like Bitcoin or something like that you know we're sort of I I look at it a bit more technically and I'm just looking at the chart but we obviously had the breakdown of this range in the 90 to 108,000 area and now we're sort of in no man's land and and chopping right now as we try to recalibrate and understand where we're at and not really interested in in being too brave in this SN man's land area but we know that below that between like 50,000 and 70,000 is a is a very big support zone so I you know you you get anything below 70,000 and I think you you start buying hand over fist there um I yeah I would be shocked

to see it Go much lower than that okay so we've talked a bit about growth we've talked a bit about inflation let's talk about liquidity because you know liquidity is China is gonna fire the they're already starting to fire liquidity bazooka and they've got to fire it the US has said they won't do QE but QT seems to be done what what's the state of liquidity what are you watching and where do you think that go yeah liquidity is a a bit a bit of a nightmarish term because so many people have different definitions for it in

different ways they view it some people assume QE just or sorry liquidity just means QE some people view it as like you know the FED balance sheet you know we've seen it like minus RP minus TGA that's been like this like net liquidity function that a lot of people started to tout around it's it's a dangerous game to play because it's quite nuanced I think like I don't know if you've had her looked much into like Michael Howell and like had him on the show a few months ago nice yeah so he's got the most robust framework of liquidity because it's a lot more complicated than just looking at like those three simple things that you can just substract in trading VI or whatever and really what it's showing is just the inflows outflows of Bank Reserves within the

system that's really actually what it's tracking and so that us liquidity situation or just like the Bank Reserves levels it's it's in an okay place but there's there's no real there's no real downside moves much more so the way like the FED thinks about this is they want bank reserve to be at about $3 trillion doish and the way they calculate that is like Bank Reserves plus the reverse repo balance the reverse repo balance has pretty much offset all the quantitative tightening of the last couple years that's where it's come from so if you look at like Bank Reserves themselves we've actually been like at this3 trillion dollar level for like a couple years now um but the way they view it is Bank Reserves plus RP uh which ends up being like five trillion but now with

both of those netted out we're around we're really close to the floor of where they want to get to um this is why you're starting to see talk about ending quantitative tightening some other you know acronyms coming to light starting to think about it but really the simple way you can break it down now is that we're we're near the bottom range of where they want to get to they don't want to go much lower so they're looking for the exit of things like quantitative tightening but they're also not looking for adding a T of of liquidity and this is where it gets really messy if you just look at the FED balance sheet and when it goes up people call that QE it's a lot more Nuance Nuance than that um I don't want to get too deep into it today but really there's there's multiple

variations of what's driving that balance sheet higher the traditional version of quantitative using has never happened with fed funds rate above zero it's only a thing they've ever used when it's at 0% and it's something they've reiterated that they'll only ever use at 0% so this idea of oh the FED is always going well they say they don't want to do QE but they always do yeah they always do but only when the rates are already at zero like there's never been a time outside of that where they haven't the thing that people get confused about is that there's other things that can drive the balance sheet up and down namely different loan facilities so we had like the btfp loan facility that came out during the svb crisis and that was maybe like it depends on how you nuanced you want to

get on the on the nomenclature of all of this but it's it's not quantitative easing in terms of a permanent purchase it's it's a form of a loan facility and so those loan facilities can always come up at any given time we don't need to be at a rate of zero for that to happen and in the same vein you know there's there's a forecast like even if you look at like the Congressional budget office like they forecast the FED balance sheet to increase basically from here for the next five years and that has more to do with the reserve level matching GDP and basically there's ways they do that where it's pretty much liquidity neutral so it's it's going to head fake a lot of people in six months time I guarantee it where they're going to see the FED balance sheet going up and say

oh my God they're doing QE even they're saying they're not they're not doing QE it's it's something they do with just the bank reserve level management so all that to say is that the US liquidity Outlook is neutral at best I I don't see any real positive uh opportunities for it to go meaningfully higher unless things get a lot worse right like if we get a recession and they Jack down to zero and it's still not helping then Qi could come but like you know your your crypto coins are going to be down another 70% so it's like I I wouldn't really be I wouldn't really be holding out hope for that and then the China side he mentioned yeah there's there's a lot of monetary stimulus coming from there but we're still seen them be pretty headstrong on not going all out on the fiscal side of things which is

really what is needed here China's going through what the US did in 2008 in terms of real estate the leveraging and so during those sort of leveraging you can throw as much liquidity at it as you want but unless somebody comes in and underwrites the deleveraging I.E the government um through fiscal stimulus comes in and and covers that underwriting you you're still going to see very very lack from China so we're all you know most macr pundits are waiting out to see for that to change and my theory has been that they've been waiting for a weaker Chinese Yuan relative to the US so it's always gets confusing when you talk about foreign exchange because it's in

pairs so it's like one has to move to offset the other but really it's that the US dollar was too high for them to meaningfully stimulate now obviously the US dollar has come down quite a bit recently which has strengthened the uon and so maybe now they'll be thinking about doing the fiscal but again to put that all simply is that we're still waiting for Meaningful liquidity from China and us is neutral at best and so it's it's yeah there's not much there to to get too excited for Bulls I would say okay okay so is everything summed up pretty nicely in this I'm just going to bring up a tweet that you re-shared uh in this in this image yes so yeah this is super interesting because people keep thinking

that oh the you know Trump and Besson are trying to force Powell to cut rates and that you know they're they're infighting I think Scott Besson and Trump or sorry Scott bessent and Powell are totally aligned they meet they meet for lunch every week I don't know how many people know this but they meet every week for lunch and they discuss things there's a lot of coordination in this day and age between the treasury and the FED for you know Powell's main headache has been this inability to get inflation back to 2% because this entire couple years he's been fighting against an extremely loose and doish fiscal impulse so the Biden isation has been extremely loose in terms of the amount of levers they can pull so you know time and time

again while he's trying to Jack rates up and and and tame inflation he's finding that on the other side and I think that's a big reason why we've seen stocks hit alltime highs throughout this phase of rate hikes in QT that's why we got two years of just incredible Equity run yeah exactly doesn't make sense yeah and it's because of the fiscal strength of everything so that's been a headache for him it's been going completely against what him and the FED have been trying to do the best way to truly kill inflation is obviously recession I don't think either of them really want that but I do think meaningfully lower stock prices and pulling back the fiscal impulse at the same time those have been the two things that have been floating us is you know we've he this talk of

like the k-shaped economy where the the the the lower K has just been basically in a recession and struggling for the last two years while the the you know High income earners the stock owners the asset owners have been doing extremely well in living life and so that has been continuing on and the only way you stop that is through lower asset prices so I think I think Powell is very happy to see stock prices lower I think that's why you know even his speech last Friday he seemed happy he seemed upbeat he was not worried about the market volatility at all he's he's totally aligned on it so that achieves a lot of his goals and then obviously we've talked about the goals on the best and the Trump's side right is that they want to they want to

get the 10-year yield lower for a variety of reasons that we discussed about um obviously another one that I didn't mention is just the ability to refinance what has been you know the Yellen yeah so so secretary Yellen and the binance administration they're their strategy in this fiscal dominance that we've seen the last few years has been to issue treasury bills very heavily and dominantly and to avoid at all costs adding any marginal increase in coupon duration on the longer end so now we have this situation where our our composition of debt is very very much skewed towards bills and that's just not like a sustainable path for a fiscally prudent economy and government to be in it's it's much better to be in a in a

realm where you have debt issued on longer term uh maturities so I think the best course of action of what they want to pursue there is to be able to get the rates as low as possible to then refinance that into longer duration debt so there's there's two ways to think about this is that obviously they have these bills and bills means that it's anything less than one-ear maturity so no matter what every Bill gets refinanced within a year's time we've had 100 basis points of of cuts so far and that directly impacts those Bill yields so there is this positivity where some of those bills that were issued when the FED funds was 100 basis points

higher can now be refinanced 100 basis points lower so that's good but overall like that starts to you know we're starting to see the end of of that positivity in terms of the refinancing eventually we get to this point where it's like like okay either we just keep rolling these and and refinancing them every year um and that that provides a lot of of uh we we call it roll risk in in fixed income but it's it's the idea that instead of just owning a 10-year bond and knowing that's the coupon you get for 10 years you have to you have to roll it maybe if it's a three-month Bond or a three-month bill every three months and you don't know where interest rates are going to be right like that can change with the economy so that provides a lot of risk to the economy so no

matter what when they talk about trying to get to a healthier economy avoiding this idea of like a bankrupt like Elon says it they need to be able to transfer this comp this overweight composition of bills towards longer durations so you know they want to be able to do that at the best cost possible the lowest yield possible right so I think there's a lot of that in there where they want to be able to get the the long bond yields as low as possible and then refinance that on longer durations and could that be achieved within three to four months I think so I mean like even let's see here what are we at right now like we're at 4.25 right now and even just before this shift in in tone from the Trump

Administration we're almost at 5% so that's already s 75 basis points cleared off right like you know if we think about than that in like Federal Reserve terms that's like three cuts that have come into the long bond yield market so that's great but I think they want to meaningfully lower and I think they're actually a little bit frustrated with the lack of progress on the long end so far and I think that's why you know anytime you it feels like anytime that you see any sort of meaningful bounce and risk assets um Trump comes in with some sort of headline about a new tariff idea just something chaotic to hit it and then we just get slammed right back lower so I think they want it meaningfully lower and they're and they're fighting the bond market a little bit I I don't fully know why you

know maybe it's just we need that recession scare to get fully trickled into the market maybe the Market's just waiting up for like we had the CPI print tomorrow I think that's going to be a big Market mover so maybe it's after that and if it comes in soft we see that Bond rally that they're hoping for but yeah I think they wanted at least below four so we got some work to do okay uh let's let's go back to the beginning of the episode and sort of wrap everything up in a nice bow here so your outlook on the next let's go a little bit longer let's say the next uh I would say 12 to 18 months so you're your short term is that we still have more pain to go we chop slash probably go a little bit lower than this maybe

another five to 10% inequities uh who know Bitcoin maybe gets down below 70 take us take us beyond that these next three to four months what how do you think it goes from there yeah I think you want to buy those moments hand over fist I think it's going to psych out a lot of traditional crypto traders that view this through that Theory because that mid so we're talking about yeah like late 2026 that's historically a time where it's like you know just bear bear bear yeah yeah and I think it's going to be the opposite and I think that's going to confuse a lot of people I I just I think they people need to cleanse themselves of the Cycle Theory because you know we are a we are a macro

asset class now and more and more like correlations are or more tied to that than anything and I I still believe that you know liquidity yes for the next six months is flat at best but in 12 to 18 months time I think it'll be meaningfully higher I I think a lot of you know if if we if they continue with what you know bessent and and pal are aligned on here in terms of the short-term pain to really kill inflation and achieve a refinancing wave that they want to do that's going to lead to the FED to finally like really start to cut um aggressively back towards they want to get back to probably 2 to 2.5% and so that's going to give them the the leeway

to do that um so I think it's I think things will be meaningfully better and I think that's going to head fake a lot of people that look at these traditional cycle structures because yeah I think I think in 15 months things will be meaningfully higher from here so I guess the real question that that nobody knows the answer to Is just uh can they Achi how long will it take them to achieve this this push to lower right right will it be can it be done in three to four months what would the probabilities that you would give it would you would you say prob one probability three to four months would you give that a high probability and then would you also give a low probability that this might we maybe do go more recession and this

extends a little bit longer or would you not give that a probability at all yeah I'm definitely in the camp of of speed so here here's how I think about it is if you look at like every shock or crash or anything like you know 2020 market crash like Co crash that this the velocity has increased every single time we've we've gone from like 2008 was a slow crash and then slow recovery took a couple of years and then as as The Leverage in the hyperf financialization in the economy has increased every year since we've seen these crashes be more pronounced and quicker in terms of their velocity so 2020 was just like down and then straight up and I think I think you need to continue with that framework that things move a lot quicker now like

by the time we the market price price is in a recession we're probably already coming out of a recession because when debt levels are as high as they are they need to react so aggressively and so quickly or else the whole house of cards fals so I think it's I think it's quick um so again like keep an eye on that hygh ticker keep an eye on where credit spreads are because as soon as that thing falls apart that's when they're going to be coming in and then we're just going to V like crazy I think so yeah you know I would say in terms of probabilties like four months thing i' i' I had ass sign that at like 65% and a sustained pain path yeah whatever the difference is there too early for me to do that kind of math you both both in the west coast so

early in the morning for us okay okay is there um how much conviction would you say you have in your view right now uh because what I'm hearing is quite a bit of conviction from you you whereas I think a lot of the market feels incredibly uncertain and I'm not getting a lot of conviction from all of our guests right uh are you still in the discovery and listening and seeing what's out there or do you have very strong conviction in your view right now yeah I have so mean you always he this idea of like strong opinions loosely held and that's definitely where I'm at right now so I have conviction because I am listening like that Meme

you showed earlier I am listen listening to what they're telling us you got bessent Trump and Powell all saying the same thing I'm just going to ride that wave and I think they will tell us when the time has come so I I I don't see why people are fighting themselves here trying to catch and fade this and front run it do all this knife catching when it's very clear that they're being very clear in their messaging and I believe that that messaging will be really clear when it shifts and every day we're getting almost confirmations from them that it has not shifted yet so I am I have the conviction because I'm taking them at their word and and what they're implying but I will also be very Nimble in knowing that that can change on a dime you know we can we can have one day

where stocks you know go limit down 5% and out of nowhere Trump can just completely turn off all tariff talk and then we just send like crazy so I'm I'm being very Nimble but I'm being very attentive to what they're saying because they're they're making it clear for us and yeah so I'm writing that so yeah I'm I'm strongly convicted but I also change my view within five minutes if I see it maybe maybe not that fast Felix come on you're a little bit you're not that easy 10 minutes yeah all right Felix absolute pleasure to have you on the show thank you so much for your time today and for breaking it all down for us everybody listening in uh we'll link to Felix's show if you want to go check that out forward guidance over block works great show where he Dives deeper into the

macro stuff if you want to learn more about that highly recommend thanks for listening to today's episode everybody before I let you go I wanted to let you know that I am going to be at consensus 2025 in Toronto and I would love to hang out and meet you guys there too we've got a discount for you in the show notes you guys can save $350 on your tickets that's May 14th to 16th consensus 2025 in Toronto come hang out with myself Kyle and a bunch of the members of the milk Road team and let's jam out and talk everything crypto and markets hope to see you guys there thanks again for listening everybody have a wicked awesome day as always if you liked today's episode please hit subscribe and make sure you follow us you don't miss

out on the next one there's also a link in the description to our free 5 minute daily newsletter where we simplify crypto for you well making you laugh and if you're willing to step up your crypto investing game we're going to also leave a link for milk Road Pro you get access to our portfolio where you can see exactly what we are buying this is your number one resource to help you invest successfully in crypto one final note this show is for educational purposes only and nothing we say is financial advice investing in crypto or any asset is risky and you should never invest more than you can afford to lose thanks so much for listening in my friends have a wicked awesome day