Hey Hivers,
It's been a while since I've made a good 'ol fashioned Macro post about the state of the market. 2025 has been about as choppy of a year as I expected. As we entered Q4, it was anyone's bet as to where we would be, but there was a sense of cautious optimism. There are a lot of things all converging at once, and it has created a lot of noise.
Before I mention where I think we are now, I'll lay out the thesis that I have been carrying all year: Currency Debasement will be the theme of the year playing into 2026. Precious Metals will run, and the Global Financial system will pivot to Blockchains as a way of Revolutionizing the monetary system, using stable coins as a way of propping up demand for Fiat Currencies.
In the simplest of terms, I expected Gold to run up throughout the year. Then The Fed/Treasury would revalue the Gold Reserves, add a few Trillion of Dollars to the Balance sheet, and then use that to reverse QT and expand their own balance sheet. This would coincide with a restart of the rate-cutting cycle and an eventual pump in Risk assets that would likely manifest in November and run until mid-December before the steam runs out and the entire house of cards comes crashing down.
What had been becoming increasingly apparent the past years was that lending had gotten out of control since the pandemic. Private Equity's greed has built up a timebomb that will eventually blow and it will likely be the thing that tanks the entire Equities and Crypto market. What Saylor has been doing with Microstrategy has been done in many industries. All of the AI spending has been absurd. OpenAI announcing 100 Billion dollar deals when their valuation is like 300x their annualized revenue. And this is before we take into account the massive Energy bills that will need to be financed once all these data centers come online. It's all crazy.
Then you have to throw the Tariffs into the mix. If Covid taught us anything, it is that there is NO WAY you can cause that much disruption in global supply chains without triggering inflationary pressure. A lot of households had paid down their debts after receiving stimulus checks, but since 2022, we have seen the credit default risks rise steadily. You can't just levy a massive tax increase like that and not expect average households not to get squeezed. It was always coming, but there has been plenty of credit to keep absorbing the hits before the last bit of air gets pushed out of the bubble.
It all sounds so bearish, where does that leave us now? I'm not going to sit here and say that I feel super confident, but I still believe that the thesis remains intact and believe there is a good chance we will see a blow-off top style rally into December. It seems insane after everything that's happened the past 7 days, but the reality is that Pullbacks like the one we are experiencing now often proceed the final rally as Leverage is flushed out and loads of people throw up levered shorts. That is the Powder that fuels the explosive rallies to the upside with the right catalyst.
And what might that be? Rate cuts are coming. ETFs are launching. And the Fed and Chinese Central bank are both likely to intervene to avoid Credit Crises and dump liquidity on the market. People forget that the 2008 financial crisis first showed signs in mid-2007, but the fed stepped in and poured gas on the market and that is what caused the parabolic rally.
There will be calls (like always) that we're in a Super Cycle. And it is from that position, that we will see the market break down and the Fed won't have any tools left to save it. But with Powell having announced the end of QT, and with 2 more rate cuts this year all but guaranteed, I'm not ready to reject the Thesis and pack it in for a prolonged bear-market. Will that come? Yes I believe it will, but sometime in 2026 and not Q4 2025.
IF we see sustained closes below the 200 MA on Bitcoin and Ethereum, I think that would confirm the rejection of this Thesis, but for now I believe there is still a good chance we have one last big run into the end of the year. Think about it, how many times have we heard Crypto Twitter flip to extreme bearishness and call the end of a Bull Market only to have Bitcoin Jolt back to life and go parabolic. One might even say that this move was expected, and I'll admit that buying here feels terrifying, but when I revisit my thesis from the start of the year, I expected to be buying at a period when everyone was screaming it's over.
What do you think? Are we entering Crypto-Winter and witnessing the start of a pretty savage recession, or are we kicking the can down the road and riding the wave on a Year ending Pump?
I really have little idea about economics and investment. I would think we need some stability, but there are disruptive forces at work, some of them very impulsive. We don't really need more billionaires.
You know, that is one of the things that made me fall in love with "Crypto" in the first place. The sad reality is that it has been co-opted by the Market Makers and used to enrich the Billionaire class. It's the reason that the price of Hive has never mattered to me. I'm here for principle and not economics. But I still do like Macro and invest in other sectors (and BTC/ETH) mainly because as a Self-Employed person I have no faith in receiving a livable pension 😂
That seems like the right attitude. Of course I'd love my Hive to go up, but I'm not depending on it. I'm fed up with corporate social media and I'm sure others are too. We need more of them to discover this alternative.
Remember, tariffs and other disruptions in trade affect prices, but are not the root cause of inflation. Inflating the money supply is where the real problems begin, and these take times to filter through the economy because productive processes and malinvestment take time to start, and then it takes time for reality to overcome initial assumptions.
We have been seeing inverted yield curves in the bond market and reluctance to buy Treasury notes, suggesting a long-term problem with the dollar is finally being noticed by big investors and international holders of government debt. The metaphorical printing presses also went wild during COVID, creating out of thin air something like 40% of all the dollars ever created. Then those dollars are now chasing a reduced supply of goods and services thanks first to quarantine and now to tariffs.
I think assets like crypto and bullion are likely to be seen as safer havens than fiat money, stocks, and bonds, but disruptions can also force the sale of assets like them to cover losses. It's hard to forecast what will happen, but the speed of price increases suggests a bubble even in those commodities. Pullback is likely at some point. We are also seeing the real estate bubble reinflated over and over, because of that asset falls, people with that establishment mindset will see there are real problems, too. Right now, they feel comfortable because at least their house is "appreciating." If that goes away, all hell could break loose.
Absolutely true, which is why I meant that Currency Debasement was always going to be the trade of 2025. The Pandemic print was always going to need to be paid for, though the debt crisis has been accelerating since 2008 really. The Tariffs do exacerbate inflation, which is why the Fed is in such a tricky spot.
I still think that Bitcoin will undergo a cyclical bear market in 2026, just as I believe that there will be volatility spikes in gold like in the 1970s. There are a lot of similarities in the Geopolitical and Macroeconomics of then and now. Likely the best trade is to just buy Commodities and Bitcoin and hold through the next decade... but I do think we're going to have some epic meltdowns along the way that are going to be generational buying opportunities. You only have to catch one to set yourself up for a healthy future.
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