Today’s edition is brought to you by Sensible - your new secret weapon to grow your Bitcoin and Ethereum bags. 

Start growing your crypto today 👉 Skip the waitlist with code MILKROAD

TWO TAKES (BEARISH AND BULLISH) ON THE CURRENT MARKET

On Monday and Tuesday’s episodes of The Milk Road Show, we had two guests join us:

So in today’s edition, we’re going to lay out what we learned from each guest, and give our take on the current market – because these insights are priceless, and we know some of you prefer to read more than you do watch/listen!

1/ The bear case (as outlined by Michael Nadeau, founder of The DeFi Report)

First up: Michael isn’t in ‘full bear’ mode as much as he is:

‘Trying to figure out if this is a pullback or a breakdown, in the meantime, I’m moving into cash, and looking for the next opportunity to buy’ mode.

That said, he is concerned about a few things, and essentially breaks his analysis into two pieces… 

‘Conservative crypto asset data’ (represented by Bitcoin) and ‘Degen/animal spirits’ (represented by Solana).

His worries around Solana:

Solana’s DEX volumes are down ~94% from their peak…

While 95% of Solana’s gas fee revenue is being generated by just 0.95% of wallets on the network (that’s a lot of reliance on a small amount of people)!

The key points here: 

👉 The euphoric final leg of the bull run is typically marked by an increase in gambling behavior, but Solana DEXs (home of the gamblers) are seeing their volumes dry up FAST!

…is this decrease in degeneracy a signal that the bull run is ending? (Historically, it has been).

👉 What’s left of this trading volume is being supported by a very small amount of wallets. 

Michael’s view is that if they decide to leave the casino altogether, this could not only cause problems for Solana, but signal that the ‘broader market party’ is over.

His worries about Bitcoin:

Bitcoin is a BIG asset nowadays ($1.6T), and the bigger an asset gets, the less it tends to increase/decrease in percentage terms.

Which means, as it grows over time, we should expect diminishing returns. 

Bitcoin ran up 12x from top to bottom in the last cycle (Mar 2020–Nov 2021) – and so far, in this cycle, we’ve seen a 7x from top to bottom (Nov 2022-Jan 2025).

…but what if that’s it for this cycle? It would fit nicely into the ‘diminishing returns’ theory.

2/ The bull case (as outlined by Felix Jauvin, from Blockworks)

What Felix is seeing:

Felix’s recommendation: take them at their word, and prepare for more pain/chop.

As to why they want this? The US government needs to refinance $9T worth of debt ($7T of which is due in the first half of 2025).

To refinance without getting stung with crazy high interest payments, they need to lower rates. 

The fastest way to do that? Scare the market into thinking US growth is going to slow (tanking markets/rates in the process).

Ok, sounds kinda bearish – where’re the bull vibes that were promised? 

Say no more! Here’s Felix’s predictions:

So, bull market as usual, or a prolonged bull market…not bad!

The better news? Felix notes that market crashes and recoveries are much quicker these days.

The 2008 financial crisis was measured in years, but as things have progressed, time frames have tightened (see: the 2020 COVID crash, which was measured in weeks/months).

So if a recession hits, it could well be short-lived.

The one thing both sides can agree on?

Expect months of choppy, painful sideways price action before either case (bear or bull) is confirmed.

…ok, now, wanna know our take?

Keep scrolling and we’ll break it down for you. 👇

OUR TAKE ON THE CURRENT MARKET ✍️

At the start of December, we released a PRO report that essentially said:

We expect a 30% pullback at the start of 2025, before markets move higher as the macro conditions begin to clear up.

We still believe this is true today.

What we didn’t see coming was the INSANE route we’d take to get to the 30% pullback – so let’s go through how we got here, and what comes next…

As mentioned in the last article, the US needs rates to come down so it can refinance its debt, and a fast way to do that is to push the expectation of a recession (aka: a growth scare).

(🚨* Tin foil hat alert * This is just a theory! 👇)

The crazy route Trump may have intentionally taken to create such a growth scare has (so far) unfolded like this:

The result?

1/ The $DXY (a measure of the US Dollar’s strength): down

All global currencies are valued against the US Dollar, so if it weakens, other countries can print cash, without devaluing their own currencies as much. 

Translation: a weaker dollar = permission for other major nations to print money and pump the global economy with fresh cash.

2/ Treasury rates: down (though they need to continue lower)

Treasury bonds = Government IOUs (you give the government a loan, they pay you interest on it). The lower treasury rates are, the less the US has to pay out over time.

3/ February’s CPI YoY (aka – February’s inflation rate, year-on-year): down

The closer CPI gets to 2%, the closer we get to the Federal Reserve lowering interest rates.

(Making our loan/credit repayments cheaper → giving us more disposable income → boosting the economy/asset prices.)

4/ Truflation (a real-time estimate of inflation): down even more than CPI

Truflation is currently at 1.32% – so when we look back at March’s overall inflation (measured by CPI in the first week of April), we could be much closer to the Fed’s 2% CPI target rate.

Ok, seems like it’s working so far…but what are the risks – and what comes next?

We still need the dollar, inflation and rates to be lower than they are today, so we don’t think we’re on the other side of this just yet.

Prices don’t necessarily need to go lower – but the growth scare needs to continue.

Good news: this should eventually lead us to the Fed’s 2% CPI rate, and open the door for them to begin lowering rates. 

Bad news: this is a dicey game to play, and a recession is not off the table.

That said – we can’t imagine Trump wants a recession on his record, so he will likely do anything he can to avoid it getting to that point.

And right now, he has the tools needed to reverse course – hell, he made the tools (DOGE, tariffs, stoking geopolitical uncertainty).

Our guess is: the Trump administration will reverse action on some/all of the above if the chance of a recession becomes too high.

This is one of the reasons that we think being sidelined right now is a bad idea, things can and likely will, change quickly.

Now, we’re going to dig deeper into all of this, along with how to position yourself, and which tokens you might want to add to your shopping list in this Saturday’s PRO Report.

(Which you can get by going PRO here.)

In the meantime, our Head Of Research, Kyle Reidhead, just laid out his thoughts on the current market in today’s episode of The Milk Road Road Show, including:

Watch it here! 👇

YouTube | Spotify | Apple Podcasts

BITE-SIZED COOKIES FOR THE ROAD 🍪

MILKY MEMES 🤣

RATE TODAY’S EDITION

ROADIE REVIEW OF THE DAY 🥛

VITALIK PIC OF THE DAY

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.