When will the crypto bull run peak? Jesse Eckel and Kevin Kelly

Transcript

When do you guys see then the cycle topping? Like where are you or or what's your view? Are you how do you see that playing out? >> Yeah. Um, nobody has a crystal ball, but I don't think there's a lot of conversation now around is it a four-year cycle, is it a fiveyear cycle? I don't get too caught up in the semantics of that. It's more like what does the underlying data tell us, right? I agree that I think the top for this cycle, call it 12 to 18 months ago, we probably would have said more around this time, right, end of 2025, maybe getting into early 2026. I do think it can get extended probably into at least the first

quarter, first half of next year. If I had to a gun to my head, I would say Q2 is probably where we start to see, you know, a local top. Um but a lot of that is because again liquidity backdrop looks good. Our projections this liquidity cycle is not in the earliest stages either right it's not as if we're saying hey everything's about to start like there will be a I think a top at some point next year where liquidity growth starts to slow and potentially even reverses. Um but that the lack of a real true business cycle this time around. There's a number of indicators that point to again into the end of year and car the first half of next year being pretty favorable. So that right now is kind of my base case.

>> Let me so I I want Jesse to respond to that, but let me just quickly give one chart that I want you to talk about which is your Bitcoin top signals model chart. So just give us a little bit on this and then Jesse, I want you to jump in because I know you have great thoughts on on the top as well. >> Yeah, we we put this together. It's basically a a combination of 10 to 12 um different indicators that we look at both onchain indicators as well as call it offchain or more macro indicators. Right? So, a lot of stuff we've talked about financial conditions, global liquidity, uh we've got some credit indices in there, uh the dollar, and then just what we're seeing kind of an onchain activity, and put these together to essentially give us a more longer

term view of this isn't going to be perfect in terms of calling the exact day of the top, but roughly speaking, like where are we and and do we still have room to run? So this is a top signals here that we look at especially when we're putting together more let's say a medium to longer term outlook that will reference to almost kind of sanity check if a lot of the things we're seeing on an individual components level is lining is lining up with with that thesis and again this again points to we're not necessarily early stage but we definitely still have room to run in our view based on you know all these different indicators we're looking at.

>> Jesse I'll let you jump in on uh on your thoughts on on cycle now. Okay. Okay. So, I was just curious what you guys thought. And there's a lot there seems to be a lot of people right now that believe that like Q2 is going to be the top. And I think I'm one of the few people that like I actually super disagree with it. And and the reason I disagree with it is because if you look at past cycles, the markets tended to to like peak after liquidity crested. And if you and there's a really solid case that liquidity should go higher well into 2026, not off not just off the fact that like Pal's out of office in May.

And so if you're looking at like rate cuts, uh when do you expect the majority of those rate cuts to come? I I think it's going to be after May. And I think the reason you're going to see that and I think the reason maybe a lot of people aren't expecting it is because it's not reasonable the amount of rate cuts that I I believe we're going to get. And that's because Trump wants to, as he keeps saying over and over, and Scott Bessant, they want to run the economy hot. Ne is a midterms year. They want the economy just like pumping. And so I think we're going to get more rate cuts after May. I think because of that, you're going to see liquidity actually crest a little bit later than most people expect. On top of that, if you look at things like the changes to the

SLR uh coming uh you know, possibly early next year, uh on top of like all these like market structure changes of like all these ETF releases, all these um you know uh institutional like products launching on-ramps etc. All those things take a have a slow roll out and that means more buyers, more people coming into the market and I think just a lot of people have underestimated like how much of this market has been just kind of this structural bid. Uh what I believe is from boomer boomer money. If you look at a lot of the the buyers the the ETFs, they've been re primarily retail. Um a lot of financial adviserss are like hey you know let's let's jump into Bitcoin v these ETFs. I think that's what you're seeing is that boomer money. And so I think that's throwing a

lot of people off when they look at the charts and it's just been up only since 2023 and they're like, "Hey, this can't last much longer and they don't realize that actually it can last way longer because this has just been like pure structural bid from these boomer, you know, uh, ETF flows." Um, on top of the fact that you have like regulation changes like the Clarity Act, all these things come into place in 2026. It's just so it's just really hard for me to think like with all that happening that we'll end up peaking early 2026. The only way I can see that is if if things really got unhinged um let's say like late into this year and then early into next year. If things really got out of control, obviously Bitcoin goes up too fast, it's going to come down. The

market just becomes too unstable. Um, but as long as like it's just, you know, tempered on some level, um, I think liquidity peaks later in the year and I think we're probably going to probably July or fall of 2026, um, I don't know. That's my take. >> Yeah, I think it's also funny that I completely agree. the faster that BGC rises, if you really do get some type of like exponential blowoff top, which I'm I'm personally not expecting, but if you do, counterintuitively, it pulls forward or increases the probability that you actually do get some type of serious not like correction, but let's say like downturn, right? Because things get pulled too forward or run too hot too fast. I think an important clarification because there's a lot of things you said

that I I I do agree with when we talk about where Bitcoin's going to peak whether it's first half of next year gets extended into later next year or potentially even into 2027. I don't expect when I say like a topping signal let's say maybe around Q2, right? I don't expect us to be going through what we went through in 2022 and into early 2023 in terms of some type of massive overcorrective prolonged bare market period which I think makes this question a bit difficult right and it's also not saying like hey we're never going to see another Bitcoin bare market ever again like I completely subscribe

markets are going to continue to be cyclical the more that Bitcoin becomes a macro asset it be it's going to be impacted by the allocation changes the investment decisions that these big asset allocators are making, right? And again, all asset classes are going to be subject to that. But I agree that heading into 2026, as long as we don't see some type of major recession, the outlook is on a longer time frame, right, 6 12 months, it remains really favorable for risk assets because typically that's the thing, that's the dagger that puts in these big huge corrective bare markets and prolonged bare markets. And as long as we avoid that, I I agree with your kind of thesis or your view and that,

you know, this can continue to run hotter or longer than people expect. You could see Q2 going into Q3. Maybe again things trend well, gets a little bit long in the tooth, everyone's got exposure, leverage picks up, you see some type of corrective price action Q3, and then we set up another similar situation we're looking at today, right? Heading into a bullish Q4 2026. So I think that's also like an important clarification and why this question sometimes is tough when you get like 10 different people 10 different answers is local tops cycle peaks as long as the underlying data of what we're talking about with liquidity and you avoid the big kind of external shocks or risks.

This can run this can run much longer than people think. >> Yeah. And maybe I should clarify too I do see a pause in the middle there. So I don't think it's like up only from here. I think either one of two ways this plays out. either one, you have so many people in crypto that believe in this four-year cycle that it just creates it kind of memes into existence this sort of sell pressure at some point maybe December early January or two when we have tax season come around um that is kind of a liquidity draw right so that's equivalent in some ways of the TJ rebuild we're going through so maybe we have a pause there um instead I I don't know exactly where but I do see a kind of a runup a pause and then a second a part two runoff and then a blowoff top

because I I do think that um I agree with you that structurally the crypto markets have changed uh in a meaningful way, but I do think that peop when markets get too frothy, you have to have um you have that blowoff top and then you have this cool down period. And so I think uh what we're both referring to is that bare market is that cool down period. Um and I do see that happening after the markets have that um blowoff top moment. But, you know, for that to happen, you do have to have Bitcoin and crypto, you know, have some sort of meaningful frothy runup in the first place.

>> Yeah. And and why like longer term? Um I spent a lot more time thinking about the longer term future, right? And again, these secular trends versus where Bitcoin's price is going to be next week. When you zoom out and back to our earlier conversation of deficits and debt and liquidity, the reality too when you just look at the math is the fiscal deficit question, right? We're talking about we're running extremely sizable fiscal deficits in a non-recessionary period in the US at a time when stocks were at all-time highs, which means that the amount of tax revenue that the government is getting, right? Because again, that plays a huge part into it. When you look at government tax revenue year-over-year and you look at the S&P year-over-year,

same chart. So tax revenue is at an all-time high, right? Which is what is the revenue part of that fiscal deficit equation. The fact that we're running such massive deficits even when the earning side or the revenue side of that equation is also at all-time highs means that in a in a twisted way. We need markets to continue to run higher because at this point financial markets especially risk markets in my opinion drive the real economy. Right? We've got the tale of two economies today where the rich keep getting richer and when you look at the kind of you know bottom 50 or 60% there's a lot you could argue that that cohort is already in a recession or has been in a

recession dealing with the aftermath of inflation rising costs uh labor market right there's some data in there that's showing like that there's some weakening but the reality is top 10% of earners that make up 50 plus% of consumer spending as long as their portfolios are going up and markets are at all-time highs and continue rising you can continue to see economic growth and avoid by all statistical measures some type of real major recession that usually again leads to markets crashing right so it's this circular kind of narrative and this is why again Bitcoin is like the ultimate almost release valve for the amount of liquidity that we expect to come in is because the math right now until we get some type of really massive AI productivity boom and there's this whole kind of humanoids

aspect to it and labor market disruption like a productivity explosion the math again for the next few years still running the same kind of playbook we have been running and you could argue that if we did go fall into a recession that only pulls forward all of what we're talking about here because every time you fall into a recession fiscal deficits explode even higher right tax revenue drops so that again worsens that equation makes that equation worse like the more you try I've spent a lot of time trying to poke holes in this core thesis we've had, right? Because again, the flip side of this argument is, okay, what is it in order to be bearish Bitcoin? What do you need to believe?

And one of my big assumptions is you have to believe that we solve this deficit, debt, and liquidity problem. And I just don't see at least in the in the >> next few years. >> That's laughable. That's laughable, >> right? That becoming a reality. Well, no, you're not wrong when you say that uh recessions are are almost bullish at this point because like for example, if we went into recession next month, it it hit asset prices, but then the Fed's dropping rates, we're getting, you know, some form of QE. Um Trump's already talking, this is like the fourth time he's mentioned tariff sty checks coming next year. I think he's actually serious about this. I thought it was a passing comment, but like he keeps mentioning it over and over. And can you imagine if we get tariff sty checks in Q1, Q2 of 2026

that like I okay so I have this belief that actually 2026 for crypto. Everyone keeps saying we're never going to have like anything close to 2021. And I agree on a liquidity front that's true. But if you think about a crypto front, we have never had a more bullish uh setup in terms of like market structure uh like onboarding, adoption, ease of use, and just like retail being told by everyone and their mom in on CNBC whatever that crypto is the future, tokenization is the future, etc. I really think like the direction of liquidity could point its way over to crypto, right? you know, whatever. Nvidia is still bigger than the entire market cap of crypto. So, we don't need that much liquidity for us to go up, right? So, I I I think people are really underestimating how big and how high crypto can go uh over these coming

cycles without having, you know, a 2021 liquidity explosion. So, I I'm just I'm crazy bullish going into the future for all the same reasons that you just mentioned. >> It's why it's why 100% of your portfolio is in crypto, which is uh which is you are putting your money where your mouth is. That's for sure. >> Want insights on what's moving crypto markets and how we're trading each event? Subscribe to our channel and join the Milk Road daily and pro newsletters and start investing like the top 1%. This show is for educational purposes only. Nothing we say is financial advice. Investing is risky. Never invest more than you can afford to lose.